LJN Newsletters

The Department of Labor's new Fair Labor Standards Act (FLSA) (Wage and Hour Regulations) regulations, which went into effect Aug. 23, 2004, are an attempt to modernize pay scales, increase employee coverage, and clarify rules for employers. The salary levels had not been updated since 1975. The Korean War had not yet begun the last time the primary duties regulations were revised, and until last August, the regulations included such anachronistic titles as "legmen," "straw bosses," and "key punch operators." Nevertheless, if one were to judge merely by the sheer number of opinion letters the U.S. Department of Labor (DOL) has issued since the regulations went into effect, it would seem that the new regulations have generated as much confusion as the previous regulations.

Many people believe that the most difficult job of a director is being a member of the Audit Committee. However, in many ways being a member of the Compensation Committee is more challenging and much more likely to result in the director becoming subject to public scrutiny and possibly criticism.

As corporate scandals continue to dominate the financial press, the actions taken by members of corporate boards of directors are under attack by the civil class action bar, the Securities and Exchange Commission, federal prosecutors, and state regulators. As the activities of board members are increasingly subjected to challenge in civil and even criminal proceedings, the existence of a clear record of the board's activities has become an increasingly critical element in establishing a corporation's decision-making process. Thus, boards of directors should take a fresh look at how their decision-making process is described in corporate minutes to ensure that the minutes will permit the directors to defend the actions taken in the boardroom, as well as to demonstrate that the directors have performed their oversight duties with appropriate care.

The recent 11th Circuit ruling in Palmer & Cay, Inc., et. al. v. Marsh & McLennan Companies, Inc. means corporate counsel should reconsider their approach to drafting and enforcing non-compete agreements.

Recent rulings of interest.

You've endured the roller coaster of a white-collar trial and hold out hope that protracted jury deliberations may presage an acquittal. But then the trial judge dismisses, for refusal to deliberate, a juror who may favor your client, installs an alternate and directs that deliberations begin anew. A guilty verdict and prison sentence ensue. It can happen; it did recently. In this age of protracted financial fraud and public corruption trials, it raises interesting cautionary issues for the white-collar defense lawyer.

On Jan. 12, 2005, the Supreme Court in United States v. Booker ended months of speculation as to what was to become of the Federal Sentencing Guidelines after the Court's June 2004 decision in Blakely v. Washington, and held that the guidelines were unconstitutional. To remedy the unconstitutionality, the Court excised portions of the Sentencing Reform Act that required the sentencing judge to sentence within the guidelines range and that set the standard of appellate review of sentences.

On July 27, 2005, a Seattle federal judge sentenced the so-called "Millennium Bomber," who was convicted of conspiring to bomb Los Angeles International Airport during the 2000 New Year's holiday season (and who cooperated with the government for a period of time and then stopped), to 22 years in prison. The government had sought a 35-year sentence for the 38-year-old defendant.