Blog, Environmental Law
2015 Environmental Crimes Top the List
The most likely federal offenses faced by U.S. companies are for environmental crimes, per a recent report by the U.S. Sentencing Commission. http://www.uscourts.gov/news/2016/12/22/environmental-crime-tops-list-organizations In fiscal 2015, environmental crimes accounted for nearly one-third of all offenses by corporations, partnerships, trusts, nonprofits, etc., followed by fraud (21%), food and drug violations (12%), antitrust violations (7.7%) and import/export violations (6.1%). Convictions increased by 12% over this period, with 97.8% of those charged with crimes pleading guilty. The Environmental Practice Group at KGR can help you and your business if and when the need arises.
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Noncompetes – A Breach Does Not Entitle a Company to Increase the Length of an Injunction
The Indiana Court of Appeals has provided additional guidance on the enforceability of noncompetition and nonsolicitation agreements. Noncompetes, as they are often known, are regularly enforced when a former employer demonstrates that the restriction is reasonable. The reasonableness of a restriction is measured in two steps: 1) Whether the employer has a legitimate protectable interest, and 2) whether the covenants are reasonable in scope as to the time, geography and activity restricted. See our prior post here The Court recently considered whether a provision that extended the time of the noncompete for the length of a breach was enforceable. See Hannum Wagle & Cline Engineering, Inc. et al v. American Consulting, Inc., d/b/a American Structurepoint, Inc., found at http://www.in.gov/judiciary/opinions/pdf/11301601jsk.pdf In Hannum, the noncompete provided “that the ‘Non- Compete Period’ shall be extended by the duration of any violation by [Kuntz] of the terms of Paragraph 2 of this Agreement.” These clauses are common and are important to former employers who know that litigation takes time and want the offending employee barred for competing for as long as possible. Without such clauses, an employee is incentivized to delay litigation as long as possible, because he or she can run out the clock of any inunction for the noncompetition period. The former employee does run the risk that he or she may later be held liable for breach and damages will have accrued. However, the whole point of seeking an injunction is because it is difficult to prove damages. However, the Court affirmed Kuntz v. EVI, LLC, 999…
Read MoreBlog, Corporate Law, Employment Law
11th Hour Federal Court Injunction Blocks New FLSA Overtime Rules
Blog, Corporate Law, Ethics Investigations and Crisis Management
Documenting and follow-up for the investigation
In a prior posts, we wrote about why you may need an internal investigation, who should conduct the investigation, and the planning and conduct of the investigation. In this post, we will discuss documenting and following-up on the investigation. Documenting the investigation is crucial – the work isn’t done until the paperwork is completed. You must evaluate the facts you discovered and determine the merits of the complaint. Segregate the facts into disputed and undisputed facts. Can you reach a decision solely by looking at the undisputed facts? If so, you do not need to move forward and consider the disputed facts. Review the witness statements and determine whether the statements were consistent. Where inconsistencies exist, consider whether a witness had any reason to be less than truthful. Do documents support one side or the other? In assessing the credibility of the statements, consider additional factors such as prior incidents that may reflect on credibility, the witnesses’ motives, demeanor and plausibility. Generally, you will find that when conflicting evidence exists, one version of the events is more plausible than the other. If does not mean that the less plausible version could not happen, only that it is less likely. After you have gathered and examined the facts and reached your conclusion, have someone else review the facts and conclusions. A fresh set of eyes will point out missing evidence, conclusions not supported by the evidence, and may have alternative conclusions. Once you have determined what likely happened, you must apply the conclusions to determine if misconduct…
Read MoreBlog, Corporate Law, Employment Law
New Overtime Regulations to Take Effect December 1, 2016
On March 13, 2014, President Obama issued a memorandum directing the Department of Labor (DoL) to update the regulations that define which “white collar” employees are protected by the overtime standards of the Fair Labor Standards Act (FLSA). On May 28, 2016, the DoL issued its Final “Overtime” Rule, which more than doubles the previous salary threshold for determining which employees are entitled to overtime. Prior to the rule change, only white collar workers making less than $23,660 annually (or $455 per week) were entitled to overtime if they worked over forty (40) hours per week. Under the new rule, white collar employees making less than $47,500 annually (or $913 per week) will be entitled to overtime when working over forty (40) hours in a week. The DoL has estimated that the new overtime rules will be extended to 4.2 million workers. Subject to the implementation of a Court Injunction as requested by more than 20 State Attorneys General, the new regulations are scheduled to take effect on December 1, 2016. Employers should begin planning for the change now. Who is Impacted? The new rules also do not change the classification of job duties that make an employee exempt from the FLSA. Rather, the new rules primarily affect those employees who are properly classified as executive, administrative or professional employees, and whose salary is between the old threshold and the new threshold.The new regulations require a worker to satisfy three criteria to be exempt from overtime requirements. First, they must be paid on a salary basis…
Read MoreBlog, Corporate Law, Ethics Investigations and Crisis Management
Planning and conducting the investigation
In a prior posts, we wrote about why you may need an internal investigation and who should conduct the investigation. Once you decide an investigation is necessary – what’s next? In this post, we will discuss planning and conducting the investigation. Planning the investigation The “5Ps” apply here: Proper Planning Prevents Poor Performance. A plan streamlines the investigation by giving it focus. It results in a thorough investigation, completed swiftly, and thereby creating the least disruption for the institution. A good plan begins with understanding the allegation – who did what to whom? If it is a written complaint, read the complaint, then read it again. If you were to accept everything in the complaint as true, identify what witnesses you would need to interview to confirm the facts and what documents would support the allegation. Then, look at the complaint from the other perspective, are there any other witnesses you would want to interview or documents you would want to review to disprove the allegation. If electronic documents will be reviewed, contact IT or the person responsible to ensure all the documents are preserved. Find out what back-up or archived materials might be available to rebuild evidence that might otherwise have been destroyed. Do you need others on your team? Is the investigation so large or is speed so necessary to require multiple investigators? Do you need to bring in a forensic accountant or computer examiner? With those thoughts in mind, develop a written plan for conducting the investigation. Begin with the allegation and the…
Read MoreBlog, Corporate Law, Ethics Investigations and Crisis Management
Investigating employee misconduct is not enough, the right person must lead the investigation.
In a prior post, we wrote about why you may need an internal investigation. Once you decide an investigation is necessary – what’s next? In this post, we will discuss who how to select an investigator. In follow-up posts we discuss planning and conducting the investigation, and documenting and following-up on the results of the investigation. Deciding who will conduct the investigation. Generally, internal investigations are conducted by someone inside the organization or by outside counsel. Depending on the nature of the allegation, there may also be reason to hire private investigators or other professionals in order to conduct technical reviews such as audio or video surveillance, a computer forensic search or a forensic accounting examination. But by and large, investigations are run in-house or through counsel. An in-house investigation should be led by someone with independence. Of course it does little good if your “independent” investigation is led by someone who is not-so-independent. Independence is not determined by the quality of the person nominated to run the investigation, but rather the perception of independence. Below are just a few of the considerations. Does the nominee have a stake in the outcome? Certainly you would not appoint someone who is in the department where the misconduct occurred. But did the nominee work in the department in the past – a former head of the department, or someone currently in the chain of command, would be perceived as benefiting by not finding systemic misconduct that may be traced back to her leadership. If the nominee wants to…
Read MoreBlog, Corporate Law, Ethics Investigations and Crisis Management
Your Employee Did What? How a Corporate or Internal Investigation Protects What You Have Built.
As leaders too-often learn, employee misconduct occurs despite the best possible recruitment, vetting, and training. Misconduct occurs in the corporate world, non-profits, government agencies, and schools. The source of the allegation and the nature of the act may vary. The report may come from another employee, a client, a vendor, or a regulatory official, and it may concern criminal activity, violation of policies, or other actions with the potential to tarnish the organization’s reputation. Regardless what was done or how you found out, a thorough investigation is required for a number of reasons. A well-run internal investigation benefits the company in a number of direct ways. It stops the conduct, cutting off the damage. If the victim of embezzlement or other financial impropriety, you must stop the flow of money; in the case of harassment, you must stop the harassment, and create the opportunity to build a better, and more productive, work environment. In all cases, a thorough investigation demonstrates to the employees and customers that the institution takes its employees’ conduct seriously. Failure to act may expose the institution to liability in a number of ways. If an investigation could have prevented further harmful conduct, the victims may pursue a claim against the company (including through a claim of negligent hiring, negligent supervision, or the doctrine of respondeat superior). Further, a prompt and thorough investigation demonstrates the proactive nature of the company and makes a finding of culpability and acquiescence by the company less likely should a claim be made against the company. From a…
Read MoreBlog, Corporate Law
The Series LLC – A new corporate form for those requiring a holding company or multiple divisions
The Indiana Legislature recently enacted a new option for business owners selecting a corporate form – an option particularly suited for owners who require a holding company, umbrella company, or multiple divisions. House Enrolled Act (“HEA”) 1336, passed March 23, 2016 and codified as Indiana Code Sec. 23-18.1 et seq., changed a number of aspects of business and other association law, including the ability to create Series Limited Liability Companies (“Series LLCs”). Effective January 1, 2017, Indiana will become the 14th state (plus Puerto Rico) to have statutes allowing for Series LLCs. A Series LLC consists of a Master and one or more separate divisions referred to as Series. An important feature of Series LLCs is the ability to provide limited liability protections between Series and also between a Series and the Master. Although this is possible today through the use of separate LLCs, the process is convoluted and requires separate filing fees for each company, as well as separate applications to do business in other states. So what does that mean for you? A Series LLC is not for everyone, but does have a number of advantages. First, a Series LLC can reduce the number of filings and the costs. While each individual LLC requires that a biannual report be filed, the Series LLC only requires the filing of a single biannual report for all entities within the Series LLC. After the Master LLC is formed, it is also cheaper to form new Series. However, with only a few series, the filing costs may…
Read MoreBlog, Environmental Law
A unanimous U.S. Supreme Court?
Yes, on the issue of wetlands determinations by the Federal government. The U.S Supreme Court justices held, using varied rationales, that the courts should be able to hear an appeal of the initial determination by the Corps of Engineers that a site is a “wetland”. This determination triggers a raft of costly and time consuming studies to support a permit application. Previously a landowner had to wait to appeal until the permit application was rejected, or face an enforcement action for proceeding without a permit. This new decision now permits a landowner to object to the wetlands determination prior to deciding whether to apply for a permit. This will streamline the process and foster even more litigation in this muddy area of water law in the U.S.
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