Advances in the White-Collar Overtime Proposal

As previously discussed the FLSA White Collar Exception will be expanded to millions of currently exempt Americans by December 2016. White-Collar exception will be expanded from the 2004 – $23,660 per year – threshold (in 2004 $23,660 was equivalent to approximately $30,000 today) to $47,476. The original proposal drafted in 2015 would have been the largest increase since 1975 – 2004, proposed at $50,440 per year. The Department of Labor likely decided on the $47,476 threshold to reach the largest group of American workers without seeing great resistance from employers.

As a reminder, the white collar exception, is a threshold that federal law is triggered requiring employers to pay their employees time-and-a-half for working beyond 40 hours per week. In addition to requiring a salary of at least $23,660 the employees must preform managerial, administrative, or professional duties. For a detailed analysis of exactly what those “managerial” “administrative” or “professional” duties entail, consult a local attorney (local rules apply).

The Labor Department does not need congressional approval to enact the changes, but congress may review the changes within 60 legislative days after it is finalized by the department. If by joint resolution both the House and Senate rejects the proposal the President may sign its rejection. It is possible a newly elected 2017 president might sign the rejection.

Summary

  • The salary threshold for the executive, administrative, and professional exemptions is increased to $47,476 ($913 per week). This number includes the 40th percentile of full-time salaried workers in the South (the lowest-wage region in the country).

  • Highly compensated employees subject to a ‘minimal duties’ test will increase from $100,000 to $134,004, which nationally includes the 90th percentile of full-time salaried workers.

  • The salary threshold ($47,476) for the executive, administrative, professional, and highly compensated employee exemptions will be automatically revised every three years (December 2019) to maintain the 40th percentile in the lowest-wage census region.

  • The salary basis test allows employers to use commissions, incentive payments, and non-discretionary bonuses to satisfy up to 10 percent of the salary threshold.

 

FTC: Deceptive Advertisements and Native Advertisements

The FTC has issued enforcement policies regarding the new wave of advertising to his America. And whether you are aware of it or not, you have been subjected to deceptive advertising and native advertisement in an increasing frequency since 2010 (although it began decades ago). The FTC believes that “advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they misleading consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.” (FTC statement entitled: “Enforcement Policy Statement on Deceptively Formatted Advertisements“)

What are these deceptively formatted advertisements?
These are the messages integrated into written (social media, blogs, mortgage relief solicitations from governmental-sounding companies), video, and audio broadcasts that is presented as non-commercial content. The FTC considers the ‘net impression’ of the advertisement in determining whether it misleads the consumer (including its format).

For example: You have encountered a product review or two on your favorite fashion or technology blog. Sometimes they are difficult to distinguish (format, native) from the rest of the blog, since they are written like the other articles within the blog. The authors have been paid and/or given the product free. This example can stretch to audio broadcasts and video broadcasts as well, how often have you listened to a radio program that discusses the release of a tv show or movie (interviews with the lead actress or actor), or watched your favorite morning news show and the hosts are reviewing the latest fashion or gadget? They appear as ‘news stories’ but they are not.

The issues: For the same reason, but probably for significantly lower stakes, that people feel skeptical when large campaign contributions are made to a political candidate (usually ones you disagree with) in a race to an electable position; the FTC feels these ‘advertorials are biased and are likely to mislead consumers. After all, a blog author is incentivized to write neutral or positive reviews so manufacturers continue to send money and products.

Deception is deception: Although this advertorial strategy isn’t now, Consumers have increasing power to block, skip, or avoid advertisements; thus, advertisers are turning more frequently to this method of slipping in undetected. However, irrespective of the reasoning or justification, to the FTC, deception is deception.

The new policy release by the FTC doesn’t particularly change anything. Rather, it is released as a reminder to advertisers and a ‘heads-up’ to new media publishers (blog authors) that the FTC has taken notice and believes that some activities are deceptive. This is usually a sign that the FTC is preparing to target the practice in several ‘easy-to-win’ cases to make an example, set a precedent and create a deterrence in the future.

If you are an advertiser or more particularly blogger or social media specialist, take notice of this new advisory writing of the FTC. Contact your attorney to discuss how you may remedy or avoid a potential violation.

Changes to the housing law of Michigan: Senate Bill 0394

Public Act number 14 of 2016, becomes effective May 16, 2016. Last amended in 2008 (MCL 125.401 and MCL 125.526) the current amendment changes sections 1, 125, and 126 (MCL 125.401, MCL 125.525, MCL 125.526). Where the previous act, as amended, was a floor (minimum requirements) the new changes to this act creates a vaulted ceiling.

MCL 125.401 as amended applies to municipal populations of 10,000 or more, excluding private and 2-family dwellings located in municipalities of 100,000 or less.

MCL 125.525 as amended requires an owner of a multiple dwelling or rooming house (rooms for rent such as certain AirBnB hosts) to register within 60 days, with an enforcing agency if such a registry exists. Property management companies are required to also register with the owner of such properties.

MCL 125.526 as amended no longer requires a local government agency to inspect the multiple dwelling or rooming house unless a complaint is received from a lessee (priority to dwellings and rooming houses with children). Inspection periods for multiple dwelling or rooming houses must not be longer than 4 years, unless a local ordinance that requires an inspection finds no violations and the ownership has not changed, and in that case then the maximum can be 6 years between inspections. Houses that do not fall within multiple dwelling or rooming houses may be inspected at reasonable intervals (undefined). An inspection by the federal government through the Housing and Urban Development agency may be accepted by local municipalities as substitute for inspections (municipalities may also delegate inspections to other agencies).

Prior to entering a property the agency conducting the inspection must request and obtain permission to enter, except in cases of emergency. The agency may require the owner/landlord to:

(a) provide access if the lease allows the owner to have access;
(b) provide access to all other areas of the property (not just rented spaces or common areas); or,
(c) notify the lessee that the agency wants to make an inspection (i) make a good faith effort to get permission and (ii) arrange for the inspection (unclear but this likely means scheduling). If the lessee vacates the property after the agencies request, the owner must notify the agency within 10 days.

The enforcing agency and owner may not discriminate against an occupant for refusing entry to the leasehold. The enforcing agency may not discriminate against an owner who has been unable to obtain permission to enter (a-c above). Obviously if the lease allows the owner to enter, the agency may as well.

The agency may charge a reasonable fee, and may not exceed the actual, reasonable cost of providing the inspection. An inspection fee does not have to be paid until 6 months or less before the inspection is to take place (think yearly fee).

No fee is payable if the inspection is not performed and the agency is the direct cause of the failure to inspect. Thus, if the tenant refuses that is not the agencies fault and the owner must pay.

For a complete reading of the act see MCL 125.401 to MCL 125.543). The remaining portions of the act are unchanged. Between February 16, 2016 and May 16, 2016 municipalities may begin changing its ordinances to reflect the amendments, if no changes are made to the ordinances in your municipalities (of 10,000 or more) then it remains enforceable as written.

Firearms and Landlord-Tenant: Apartments and the Second Amendment

Second Amendment and Landlords: Can landlords prevent tenants from possessing firearms in leased apartments?

The right to bear arms: The Constitution, as amended (Bill of Rights), provides: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” Two general rules to remember, (1) as society changes, so too does our interpretation of the Constitution, and (2) the Constitution does not apply to the States unless the provision says it does, or the Supreme Court has found it does.

And a recent Supreme Court interpretation (2008) found that the second amendment encompass an individuals right to bear arms, not only when connected to militia (see District of Columbia v. Heller, 128 S. Ct. 2783 (2008); where the District of Columbia regulated handguns). The Supreme Court continued in 2010 and found this right extends not only to the Federal government but to the States as well (see McDonald v. Chicago, 130 S. Ct. 3020 (2010); “the Second Amendment right is fully applicable to the States”).

From those two recent cases, it is fair to conclude, an individuals right to possess and own firearms must not be interfered with, by State or Federal regulation or legislation, unless such legislation can pass the proper level of scrutiny necessary.

Although the Second and First Amendments are presently some of our Nation’s strongest, they generally do not apply, in any form, to private individuals. Rather, individuals are afforded protections to regulate or conduct themselves however they please, in particular, on their own private property; unless otherwise prohibited. Since landlords are private and not public actors, generally they may allow or disallow whatever they choose. A landlord may prevent you from posting signs in the windows of your apartment, wearing blue, lighting candles, keeping Christmas trees, or possessing firearms.

Therefore, yes, a landlord can prevent you from possessing firearms in your leased apartment.  That does not mean you have to lease from that landlord though, you may take your business elsewhere, or contact your representatives to change the law.

Corporate and LLC: Fiduciary Limitations of Liability

The Michigan Limited Liability Company Act (“LLC Act“) and the Michigan Business Corporations Act (“MBC Act“) afford limited protection of managers from historic breach of fiduciary duty claims brought by shareholders. Generally, three years is the statute of limitations accrual period for such claims, unless such claims are discovered or should reasonably have been discovered then the plaintiff is limited to two years after actual or constructive discovery (see MCL 450.4404(6); MCL 450.4515(1)(e); and, 450.1541a(4)).

A prudent plaintiff however, may toll this statute of limitations period by properly applying the Michigan Fraudulent Concealment Statute (see MCL 600.5855), whereby the LLC Act and MBC Act maybe tolled so long as the defendant has taken affirmative action of concealment. Note: this is a plaintiff’s only method of tolling a limitations period since the court in Trentadue v. Buckler Automatic Lawn Sprinkler Co., 479 Mich 378; 738 NW2d 664 (2007) decided Michigan no longer recognizes common law tolling.

Thus, so long as a plaintiff may establish a defendant fraudulently concealed his or her cause of action, the plaintiff may bring its claim, even if it exceeds a statute of limitations. Managers, members, officers, directors, and other company stakeholders with fiduciary duties to shareholders or members should not only ‘follow the law‘ but also (1) follow the operating agreement or corporate bylaws, (2) disclose as much as is reasonably prudent to extinguish a member or shareholders actual knowledge or constructive knowledge standard, and (3) review and supervise the actions of other manager, directors, and individuals with fiduciary duties to members or shareholders be certain that the actions taken are proper and allowed, and finally that those actions fall on the individual manager who is acting. Do not rely on the actions of others, unless the operating agreement or bylaws specifically allow such reliance.

Failure to follow these best practices may lead to imputed joint liability by a shareholder for stale claims made by a co-manager.