Three Documents Every College Student Needs to Sign

Graduating from high school is an exciting time in your child’s life. If you are anything like I was, you are probably busy with last-minute shopping, packing and worrying about roommates. However, as parents, we need to be aware that this also means that there will be a legal change in his or her status when they turn 18. Your child becomes an adult in the eyes of the law at age 18, even if he or she is still in high school. He or she is now of legal age to make decisions, sign contracts and documents, and determine medical treatments without your approval, or even knowledge. There are still times when you may have to act on your child’s behalf, which is why you need to know the three documents every college student needs.

The three documents your child needs to sign are:

1. Power of Attorney
2. Health Care Proxy or Surrogate
3. HIPPA Authorization

Why does your child need these documents?

You never know what the future holds. An issue may come up that requires a signature, and your child may not be able to handle the matter. Even worse, a medical situation could arise, and you may not have any rights without legal authorization. The risk is real. Accidents are the leading cause of death for young adults, and a quarter-million Americans between 18 and 25 are hospitalized with nonlethal injuries each year. However, it doesn’t take something nearly this dramatic for parents to need to act on a child’s behalf. The son of a friend of mine was studying abroad and had a scooter accident. Although the injuries were not life-threatening, the young man was under sedation and was unable to provide authorization for the hospital to speak to the parents for the first day. The only information that the hospital was willing to provide to the parents was that their son was “stable”. Having these documents in place would have provided information to the parents.

The first of the three documents is the Power Of Attorney. A power of attorney is a document that permits the child to designate a parent or parents to make legal decisions on his or her behalf, such as:

Dealing with financial institutions, signing leases or loan documents, arranging for renter’s or car insurance, speaking to a landlord, consulting with an educational institution or a health care provider.

In the medical context, a power of attorney is a legal document that names you as the parent a “medical agent” for your college student. What this means is that if your child becomes medically incapacitated in some way, you have the ability to make informed medical decisions on their behalf. This document can name you as the sole point of contact and decision-maker as you decide the best course of action with the doctors. The reality is that if you don’t have a healthcare or medical power of attorney in place, the doctors will be the ones who make the decisions about care.

What is a Health Care Proxy and why do we need that?

The second of the three documents is the health care proxy. Also called a medical or health care advance directive, this form permits the parents to make medical decisions for the child. You may think that this is not necessary because you are the legal next of kin. However, without proper authorization to do so, you may not be able to make a decision on your child’s behalf.

If your child is admitted to a hospital and unable to make his or her medical decisions, the power of attorney for medical decisions will allow you to discuss the situation with medical personnel and make urgent decisions regarding care.

What is a HIPAA form?

Have you ever tried to get an update about a loved one in the hospital over the phone when there’s a medical issue? If so, you know it can be difficult, if not impossible, to get the info you need if you’re not authorized. That’s because of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

That is why you need a HIPPA form. This document lets a patient (your college student) designate certain family members, friends and others that they want to be apprised of their medical info during treatment.

The HIPPA form becomes extremely important if your child is living away at school and is involved in an accident, because you’re not getting any information over the phone even though you’re their parent.

What is the HIPAA Form and how is it different from the Health Care Proxy?

While the HIPAA form allows for the sharing of medical information, it does not provide parents with the ability to make decisions on the child’s behalf. That is why you need the medical proxy form.

Don’t worry if your student is already on campus and you haven’t filled these out yet. Just put it on your to-do list and get it done as soon as you can.

Keep in mind that all of these forms should be updated each year, and that you’ll need one form in your state of residence and a separate one in your child’s state of residence if they’re attending an out-of-state school.

Do You Have a Crisis Management Plan?

Crisis management has been defined as the process by which an organization deals with a disruptive and unexpected event that threatens to harm the company or its stakeholders. Before a crisis happens, business owners should think about how the situation will impact employees, customers and the company’s value. A crisis can happen at any time, which is why advanced planning is critical. Although there are several steps that a company can take, here are some critical steps to consider:

  1. Have plan in place. The plan should be in writing and it should include specific steps that will be taken in the event of a crisis. Your action plan is basically a crisis management check list for your crisis team. It  ensures that no important task gets forgotten or overlooked when things get hectic. When creating your action plans you’ll want to identify the tasks and action items that each department would need to undertake and accomplish within the first 24-48 hours of a crisis occurring.
  2. Activation guidelines. Not all incidents and issues escalate to crisis level. And while your crisis plan should address all types of issues and crises, your crisis plan is meant to only be activated when an issue escalates, or has the potential to escalate, to crisis level. The first section of the plan should define this criteria and provide your team with the tools and information they need to make this determination in the heat of the moment. Some elements you may want to incorporate into this section may include:

    a. Definition of a crisis – whether in the broader sense of the term or by narrowing in and defining certain specific crisis scenarios

    b. The crisis management levels that all incidents should be categorized into

    c. Internal escalation protocol(s)

    d. Specific impacts that you want your team to consider when determining the level of an incidentIdentify a spokesperson. By selecting one person, the company can ensure that it speaks with one voice and it delivers a clear and consistent message.  The spokesperson must be trained and must be prepared to answer questions and participate in interviews.

  3. Identify a spokesperson. By selecting one person, the company can ensure that it speaks with one voice and it delivers a clear and consistent message.  The spokesperson must be trained and must be prepared to answer questions and participate in interviews.
  4. Be honest and transparent. Honesty can minimize remarks and diffuse media frenzy.
  5. Communicate with all stakeholders. Information should come from you first.
  6. Update often. It is better to overcommunicate than to allow others to spread rumors.
  7. Be aware of social media. Establish a social media team to maintain, post and respond to social media activity throughout the crisis.

The point of developing a crisis management plan is to think through any difficult decisions and map out, to the best of your ability, the necessary tasks, communications and information that will help make managing a crisis easier and more efficient. As a company develops its crisis management plan, it should seek advice from experts that includes your leadership team, employees, communication experts, and lawyers. Each of these individuals can add value that may prove critical should a crisis hit your company.

The Value of Attending Automobile University

Many years ago when I was a young lawyer starting to represent businesses, I started looking for ways to learn more things that I could offer to my clients. Of course, I could read more articles about legal topics. I could also attend seminars and listen to continuing legal education tapes or CDs. However, I wanted to be able to offer my clients more than a legal opinion. I wanted to become a trusted advisor that they could rely on for counsel and support. The challenge with trying to learn more and more is that there is a finite amount of time in which to try to learn more.

As I searched for ways in which to become better versed in areas in addition to the law, I came across the work of Zig Ziglar. Zig was  an author, salesman and motivational speaker, who introduced me to the “Automobile University.” Automobile University is not an actual university, but rather a learning experience that can occur every time you step in your vehicle. Rather than listening to talk radio or country music, I started to listen to books on tape about topics such as business marketing, entrepreneurship, creating business excellence, salesmanship, leadership and other topics that interested me. As a result, I learned many more things than I would have otherwise learned if not for Automobile University.

I recently read that a study at USC has shown that if a person drives at least 12,000 miles per year and uses this method of education, in three years he or she would have the equivalent of two years of college education. I have not read this study, nor have I read any literature to support the claim that listening to education materials for three years in your vehicle is the equivalent to two years of college education. However, I can attest to the fact that I have learned a lot of new information without spending hours upon hours sitting down to physically read.

As technology has improved, we can now listen to audiobooks and podcasts that do not require that you purchase and carry around books on tape. I am sure that most of you do not have “extra” time during the day to simply sit and read. In my situation, I am busy keeping up with legal trends, changes in the law and meeting with clients and I have limited time during the day to indulge in reading books or articles on topics that interest me outside of the practice of law. This is why listening to an audiobook or a podcast is so attractive to me.

It has become extremely easy to find audiobooks., for example, contains over 100,000 audiobook titles and the list continues to grow. Whether it’s a “how to” book or a novel, you can probably find it at  Audiobooks can be listened to in more places than just your vehicle. I have downloaded the Audible app for my iPhone and now sync audiobooks I have purchased online with my mobile device. Doing it this way allows me to listen to my favorite stories or “how-to” books at any time.

I have also started listening to podcasts. Rather than getting into a long explanation of what a podcast is, consider the word “podcast” itself. The “pod” of podcast is borrowed from Apple’s “iPod” digital media player; and the “cast” portion of podcast is taken from Radio’s “broadcast” term.  Think of a podcast as “Internet Radio On-Demand”. Podcasts are “On Demand” and can be listened to on your schedule. Podcasts can be produced by just about anyone wanting to share and communicate with the world.

Some of my favorite podcasts include “The Tim Ferriss Show”, “The Art of Manliness”, “Happier” with Gretchen Rubin, “10% Happier” with Dan Harris and “The Jordan Harbinger Show”. However, you can find virtually anything that interests or inspires you if you conduct a search.

If you want to try to make the most of your commute time or the time that you are simply sitting around doing nothing valuable, I strongly suggest that you consider investing in yourself by purchasing audiobooks or downloading podcasts.

Happy listening!

Family Business Law is Not Family Law: Handling Management and Legal Challenges in a Family Business

Unlike family law that deals with issues such as divorce, child custody and alimony, family business law deals with the issues associated with starting, growing and transferring your business. However, there really isn’t an official area of law called “family business law”. It includes practice areas, such as general business or corporate law, real estate law, trusts and estates, securities, and often family law.

The management and operation of a family business involves many challenges that traditional businesses rarely face. These challenges include, among other things, dealing with the possible termination of an underperforming employee that also happens to be your mother, father, husband, wife, son, daughter or nephew, effectively running a business when a marriage is falling apart and how to run a business when the founder is looking to step down and his heirs are not interested in running the family business.

Some of the issues that need to be considered and addressed are day-to-day challenges, and some are part of a long-term strategic process known as transition and succession planning.

In connection with the day-to-day management of the family business, the leader or head of the family business is often required to separate issues of ownership and wealth from issues of management and control when developing a business. The founder is tasked with considering the current business from many perspectives including sons and daughters joining the business, siblings who do not enter the business, the spouses of the founder’s children and the founder’s employees. For all of these groups, there are issues of career and financial planning, career opportunity and career satisfaction, fairness of treatment by the founder, family relations and often, unfortunately, politics and greed.

Thus, family business owners and operators must view their roles as a responsibility to the founders as well as to future generations. The preservation of family wealth is in the continuity and proper management of the business.

Succession planning in a family business is complicated because each family member may feel that he or she has a vested interest in the company’s future. They may also feel entitled to some level of participation or involvement in the business.

There are several key steps that should be taken to assure the effective operation of the family business and set the stage for a smooth transition in the future. These steps recognize that any successful transition is a process that will take time. Some of these steps include:

– Preparing an Organization Chart With Defined Position Descriptions. Determine now which family members (and non-family members) will hold which positions, with clear statements of duties and responsibilities, as well as the performance goals to which they will be held accountable. In assigning positions, be guided by merit, education and commitment, not by love or nepotism.

– Training. Set up a system for training, coaching and formal mentoring so that the current generation of leadership can begin to impart knowledge, experience and trade secrets to the next targeted generation of leadership. The training should be structured as a mix of formal classroom training, field experience and informal training at social or family events.

– Seeking Good Advice. One of the keys to peaceful current management structures, as well as an eventual smooth transition, will be driven by the quality of the advice and input that you will get from your professional advisors, such as your accountants and attorneys, who should be experienced with the succession planning and transition management needs of closely held and family-owned businesses. You should consider having a Board of Advisors, made up of outside business leaders and professional advisors who can help the company with difficult transition management decisions, as well as with the implementation of the transition management plan.

– Establishing Corporate Governance and Communication Structures. Many well-run family businesses anticipate succession issues well in advance and create a culture of genuine interest and involvement early on by creating a “Family Council” or even a “Family Assembly” depending on the size of the family. These non-traditional governance and communications groups may have certain protocols or by-laws (or even a constitution), which leave key decisions to be discussed and even voted upon by affected family members in a manner which augments and supersedes the traditional decision-making structure set forth in typical state corporate laws. These group-developed core principles will assist in the selection of the next generation of leadership. For example, once the vision for the family business is articulated, the Family Council then has a better idea of the types of future leaders it needs to begin to develop today.

– Communicating Often. The current generation of leadership must constantly communicate with the next generation, sharing information and imparting knowledge, not only to build trust, but also to evaluate goals and get a feel for the outlook and thoughts of the next generation of family business leaders. The communication channels should be established and kept open throughout.

– Encouraging and Even Recommending Initial Employment Outside of the Family Business. The traditional approach has been to require that the next generation starting as teenagers, work their way up the ladder and eventually retire as family business employees. This is quickly disappearing. A better approach may be to support and encourage a career track that includes employment outside the family business, which may be within or outside the family business’s underlying industry, with the possibility that these family members will return to the family business at the appropriate time.

Family businesses are still businesses. Therefore, it makes sense for the family members to memorialize their understandings in order to clarify expectations. You can use a number of agreements, such as a Shareholders Agreement, an Operating Agreement, a General Partnership Agreement, a Limited Partnership Agreement and more.

As part of any agreement that is utilized, a few important provisions should be:

Buy-sell and transfer provisions. These clauses will explain what happens to your family business in the event of a disability or death of one or more family members. These clauses will also address and in many cases prohibit the transfer of interests outside of the family

Valuation provisions. These clauses will be used to determine the value of the business in the event of a transfer.

Corporate governance. These provisions will set forth the manner in which the family business will be managed now and in the future.

Sadly, the many litigation cases involving family businesses that have been filed demonstrate that agreements, even among family, are necessary. At a minimum, the family members can clearly state their desires and vision in these legal agreements.

In summary, although running a family business may seem like the most natural thing in the world, it may also become the most unnatural. If it is handled, it can create wealth, deepen relationships and provide employment for future generations of family members. If handled badly, it can break up families and lead to legal disputes.

The Benefits of Meditation in the Workplace

Companies are facing new and different challenges that were never considered in the past. Employee retention, increased government regulation, increased cost of legal compliance, global competition, political uncertainty and many other factors have created issues that owners have been forced to confront in an ever-changing business landscape.

However, in order to remain competitive in today’s market, successful companies need:

  • To establish clear goals
  • To be innovative
  • To provide leadership
  • To foster and promote teamwork

Focus on People

Multibillion-dollar business owner Marcus Lemonis, the star of CNBC’s TV program, The Profit, preaches about his three-part evaluation process, in which he breaks down any business into these three key components: people, product and process.

This article focuses on one topic that can assist with the “people” component.

Studies have shown that stress is the no. 1 epidemic of our civilization. Stress has been directly and indirectly linked to conditions such as insomnia, anxiety, fear, cardiovascular illness, inflammation in the body, heart disease and autoimmune illnesses.  All of us experience varying degrees of stress throughout the day, which include spending long hours trying to manage project deadlines, presentations, full email inboxes, and dealing with difficult co-workers and bosses.

In the past, workers would ignore stress, possibly allowing it to fester and would simply plow ahead. Consider how much of our working day is wasted by lack of focus, stress and general negativity.

Today, many corporations have become aware of another way for employees to deal with stress that yields better results, both for the person and the company: meditation.

Meditation has been proven to be a very effective way to start tackling this problem.  Meditation has been around for thousands of years, and studies show that it actually works.

Benefits of Meditation

Studies at companies such as Google, which has offered meditation courses since 2007, have shown that meditation can result in workplace benefits such as:

  • Improved employee focus

Regular meditation helps train the mind to focus fully on whatever is happening in the present moment. A person who meditates regularly is trained to recognize when their mind starts to wander, and to bring themselves back to the present.

  • Reduced employee stress

Workplace stress has been proven to negatively impact employee productivity.

  • Improved teamwork

Regular meditation has been proven to encourage feelings of empathy and acceptance and can help employees to become better team players.

  • Increased ability to prioritize effectively

The increased ability to focus has the added effect of helping employees to prioritize tasks that need to be done.

  • Improved listening and decision-making

In addition to alertness and stress reduction, studies have shown that bringing meditation to the workplace also improves listening and decision-making skills, as well as improving employee engagement.

  • Health benefits

In a study published in 2014, the researchers found that people who underwent a meditation-based stress reduction program did significantly better than others in managing chronic pain and appeared to have more vitality.

Where do we start?

Just like with any other corporate initiative, I would suggest that companies interested in considering implementing a meditation program start with baby steps.

Some companies that I have spoken to have hired outside consultants that have come into their offices on a weekly or monthly basis to meet with their employees and teach them how to meditate. Some other companies have hosted a one-time seminar for their employees on meditation and have created meditation breaks within the work day. It is not a one-size-fits-all process.

Maspons Advisory Services hired an executive coach that worked with us on establishing, among other things, a meditation program that started with weekly coaching sessions that began with a short meditation.  We were encouraged to download a meditation app that we tried to use daily or at least several days a week.  The goal was to learn how to meditate on our own. Meditation is not something that you ever master. The key to meditation is to be aware of when your mind wanders and to try to bring it back without judging yourself.

The results for our firm were amazing. Although we continue to face challenges associated with the demands of our profession, meditation has provided us with a new tool to deal with the every-day stresses that we all face.


How Can ADA Litigation Impact Commercial Property Owners

More than two decades after the Americans with Disabilities Act (ADA) was signed into law, many facilities covered under this law are still being sued for their alleged failure to comply with the standards.

What is the ADA ?

The ADA is an important statute designed to give persons with disabilities an equal opportunity to access and enjoy places of public accommodation.

The ADA is a complaint-driven law. Most of the complaints are generated by individuals with disabilities, their families or disability-rights organizations. Private lawsuits can be and usually are filed directly in federal courts by those who believe their civil rights have been violated. Unlike other federal regulations, ADA does not have an “inspection” mechanism like the Occupational Safety and Health Administration and litigants are not required to notify the alleged offenders and provide an opportunity to cure the defect prior to filing suit. It relies on entities to comply with the requirements proactively. This can be problematic for business owners that either believe that they are in compliance or are not aware that they may not be compliant.

Problems can start with something as seemingly minor as lack of accessible parking (including access aisle and signage), to more serious issues of restrooms, sleeping rooms (hotels and residence halls in higher education), hospital patient rooms and bathing facilities.

Unfortunately, many businesses are not aware of the law which has resulted in many lawsuits.

Why is there so much litigation so long after the law took effect ?

Record numbers of lawsuits are being filed by a small group of plaintiffs and lawyers who have partnered together to file dozens, and in some cases hundreds, of ADA accessibility suits in federal courts. Although the ADA does not authorize an award of damages to a private plaintiff, it does allow them to recover their attorneys’ fees and costs, making these fee-driven lawsuits a profitable industry to pursue against shopping centers and other commercial properties.

These “serial filers”, as they have been called, are known to drive around from business to business solely for the purpose of identifying violations and bringing suit. In addition to the cost of achieving compliance with the law, defendant businesses are responsible for their own defense costs and the plaintiff’s costs. In many cases, the costs of litigation are far greater than the cost of the remediation ordered to be completed.

Also, in some cases, the initial filing of an ADA lawsuit has served to alert other litigants to potential violations of the law, resulting in the filing of multiple lawsuits against the same defendant for the same violations and creating an obligation to pay attorneys’ fees to multiple plaintiffs’ lawyers.

Unfortunately, under the current law, there is no mechanism in place to prevent such exploitation of the law.

How can you avoid being sued?

The only sure way to avoid ADA litigation is for owners and operators of commercial properties to conduct audits of their properties and correct any violations before falling victim to a lawsuit. Identifying and correcting violations before they become a problem costs far less than litigating the case and ultimately making these same corrections.

What do you do when you are sued?

In the event that an audit has not been conducted and corrections have not been made prior to being sued, the first step after being served with a lawsuit is to determine whether the allegations are valid. Firms that defend litigants in these cases usually advise their clients to hire a professional firm to conduct an ADA evaluation.  A thorough analysis of the allegations of the complaint and the professional findings is often helpful. If the issues can be addressed quickly, the cases can often be resolved without tremendous time, attention or legal costs. On the other hand, if the professional evaluation provides evidence that areas identified in the complaint are in compliance with ADA, the business owner has critical information that can be used to negotiate.

How can you minimize the risk of litigation?

Although, nothing can guarantee that a business will not be sued under the ADA, failure to take proactive steps will increase the likelihood of getting sued.

Some of these steps may include:

  1. If you have an ADA compliance plan, confirm that it has been followed;
  2. If an ADA plan has not been created,    it should be prepared. This would include performing an evaluation of the facility by engaging an outside professional with experience in ADA compliance.

Legal Issues to Consider in Performing Criminal Background Checks on Potential Employees

All businesses who conduct criminal background checks on potential employees should be mindful when determining how to use the background checks in making hiring decisions. While federal law places some limits on how employers can use criminal background checks in making job decisions, Florida law provides very little protection for applicants. In fact, it provides employers a valid basis to run criminal background checks.

Federal Protections for Applicants With a Criminal Record

There are two federal laws that may provide some level of protection to applicants with criminal records.

    1. The Fair Credit Reporting Act (“FCRA”) creates guidelines that employers must follow when hiring a third party agency to run a background check and provide a consumer report, which includes information regarding credit history, criminal records, and other information pertaining to an applicant’s character. The FCRA imposes obligations on employers who request criminal background checks and on the firms that provide them. Employers must do all of the following:

a)  Obtain written consent from the applicants prior to running a criminal background check.

b)  Inform the applicant if the employer intends to disqualify him or her based on the contents of the report. The employer must also give the applicant a copy of the report.

c)  Inform the applicant after the employer makes a final decision not to hire him or her based on the information in the report.

Firms that run background checks also have obligations under the FCRA. When it comes to criminal records, agencies are not allowed to include arrest records that are more than seven years old, unless the position pays an annual salary of more than $75,000. Agencies may include conviction records regardless of when they occurred. Consumer reporting agencies must also take reasonable steps to make sure that the information they provide is accurate and up to date. If an applicant disputes the contents of the report, the agency must conduct a reasonable investigation. If the investigation reveals that the report was incorrect, the agency must inform the applicant and any other person or company to whom it has provided the report.

2)  Title VII of the Civil Rights Act of 1964 protects applicants and employees from discrimination in every aspect of employment, including screening practices and hiring.

The Equal Employment Opportunity Commission (“EEOC”) has issued guidance explaining how employers can screen out applicants whose criminal records pose an unreasonable risk without engaging in discrimination. In deciding whether a particular offense should be disqualifying, employers must consider:

    • the nature and gravity of the criminal offense or conduct
    • how much time has passed since the offense or sentence, and
    • the nature of the job (including where it is performed, how much supervision and interaction with others the employee will have, and so on).

The EEOC has said that employers should give applicants with a criminal record an opportunity to explain the circumstances and provide mitigating information showing that the employee should not be excluded based on the offense.

Florida Laws on Use of Criminal Records

Florida law prohibits state and local agencies from denying someone a license, permit, or certificate to engage in a particular profession or industry based on a prior conviction, unless the conviction was for a felony or first-degree misdemeanor and is directly related to the type of work the person will do in that profession. The law creates special rules for certain drug offenses. Beyond that, Florida does not have additional restrictions on performing background checks.

In fact, Florida law provides employers with an incentive to consider an applicant’s criminal record. Some states allow people who are injured by an employee’s misconduct to sue the employer for “negligent hiring,” claiming that the employer should have known that the employee posed a risk of injury. In Florida, employers are legally presumed not to have been negligent in hiring if they conduct a background investigation before hiring employees, including a criminal records check. As long as the employer conducted such a check, and it didn’t uncover any information reasonably demonstrating that the employee was unfit for the job (or unfit for employment in general), the employer is entitled to a presumption that it did not act negligently. Employers are not required to conduct background checks, and they will not be presumed negligent if they do not. However, an employer is legally protected only if it conducts these checks, including a criminal records check.

Upcoming changes in the Fair Labor Standards Act (“FLSA”)

The Fair Labor Standards Act (“FLSA”) is the federal law that establishes minimum wage and overtime pay requirements. Under the FLSA, employers must pay employees at least the federal minimum wage and overtime at a rate of at least one and one-half times the employee’s regular rate for any hours worked over 40 in a week. However, there have been several exemptions from the overtime requirement for employees who meet certain criteria.

The most common exemptions from the FLSA overtime requirement are the executive, administrative, and professional exemptions. These exceptions are commonly referred to as the “white collar” exemptions. In general, employees have qualified for these overtime exemptions if: (1) they are paid a fixed minimum salary for each workweek regardless of the number of hours they work of the quality or quantity of work they perform (commonly referred to as the “salary basis” test); and, (2) they perform specific executive, administrative or professional job duties outlined by the current regulations (commonly referred to as the “job duties” test). Many workers have been included within these exemptions, and lawsuits challenging exempt status and seeking unpaid overtime are very common.

Based in large part on these long-standing disputes, in March of 2014, President Obama directed the Secretary of the U.S. Department of Labor to prepare and propose new FLSA regulations to specifically address the rules for exemptions of certain employees from the FLSA overtime requirements. President Obama’s executive memorandum directing the introduction of new regulations made it clear that the regulation changes were intended to address the “white collar” exemptions. Since these exemptions are commonly applied by employers in a variety of industries, revisions to the regulations governing these exemptions will be significant for a very large number of employers.

Based on the directive from the President, the U.S. Labor Department recently proposed a substantial increase in the minimum salary amount required to meet the basic compensation criterion for the “white collar” exemption. The anticipated changes are likely to reduce the number of employees who qualify for exempt status. As a result, the cost of doing business for employers will increase. This is an important issue that business owners should be informed about and prepared to address. However, there appears to be some uncertainty as to how an employer should evaluate whether and to what extent this possible increase would affect employee compensation.

What happens next ?

Firstly, keep in mind, that the newly-proposed salary level will be irrelevant to some segments of the nation’s workforce.

Non-exempt employees who are paid on a salary-plus-overtime basis are not affected.

Others who will also remain unaffected include:

♦ Salespeople falling within the “outside salesman” exemption;

♦ Employees qualifying for the “teaching professional” exemption;

♦ Employees authorized to practice law who are actually practicing law;

♦ Employees authorized to practice medicine or any of its branches who are actually engaged in the relevant practice;

♦ Employees holding the degree required to practice medicine who are working in a medical internship or residency; and

♦ Employees whose work meets the computer-employee exemption requirements who are paid on an hourly basis at a rate of at least $27.63.

The above list does not include all employees who are exempt from the FLSA’s minimum-wage or overtime requirements and is merely used to highlight a few categories.

What should employers do?

Indications are that, due to Labor Department’s proposed automatic-“update” approach, $970 per week (annualizing to $50,440) would soon come to be the minimum. However, it is possible by the time the proposal actually takes effect, this figure or a higher one will control.

Employers must begin to consider longer-range planning and budgeting in order to be ready for the new minimum salary that will apply. Additionally, the Labor Department is also considering whether “nondiscretionary bonuses and incentive payments” should be credited to at least some extent in meeting the salary test.

Employers must be proactive and consider whether there are alternative ways to pay in order to comply with the FLSA’s minimum-wage and overtime requirements at levels that are financially palatable. Some options that have been discussed include commission-based plans; day-rate, job-rate, or shift-rate payments; and a variety of other approaches.

The Advantages Of Having A Shareholders Or An Operating Agreement

While there are differences between a Shareholders’ Agreement and an Operating Agreement, there are many advantages to entering into such an agreement. Putting such an agreement in place is often not addressed when starting a new business, but it is advisable to have such an agreement in place from the beginning as often views will differ, circumstances will change and disagreements can build between the owners leading to issues in the company.

Although there is no legal requirement to have a formal agreement between the shareholders of a corporation or the members of a limited liability company , every entity with more than one shareholder or member should strongly consider having one. These agreements address the appropriate running of the company and the responsibilities of the owners. They also provide clarity and certainty as to what can or cannot be done and the decisions that can be made by consensus and discussion.  As a result, it will reduce the potential for conflict between the owners and help the company to be run smoothly.

Some of the key benefits of having such an agreement in place include:

  1. An agreement can address the appointment and removal of directors by allowing a shareholder or member or a group of shareholders or members each to appoint one or more directors
  2. An agreement can address the raising of capital to avoid dilution of shareholdings
  3. An agreement can address restrictions on changes to the nature of the company’s business
  4. An agreement can provide for the resolution
  5. An agreement can be used to protect the position of minority shareholders by requiring a supermajority or unanimous approval for important company decisions
  6. An agreement can prevent situations where changes in one owner’s personal circumstances can have an effect on the company or other owners within the company
  7. An agreement can address the disposition of ownership interests in the event of death, disability, divorce or disagreement


The agreement will remain private and confidential and will not be open to view by others such as creditors or non-member employees. The existence of such an agreement is often required by banks when opening a bank account and it can assist in raising finance from banks or creditors and also demonstrates the stability of the business to other potential partners.

Unfortunately, in their hurry to start doing business, too often individuals choose not to enter into such an agreement and end up losing control of the business and the process. Serious consideration should be given to entering into an operative agreement as early in the process as possible.