New Federal Overtime Laws May Be Pay Dirt for Franchise Employees
For years, franchisors and franchisees alike have assumed that most of their 'managers' are exempt from federal (and parallel state) wage-and-hour 'overtime' rules requiring payment of wages calculated at the standard rate multiplied by 150% of the hours worked over 40 hours per week. But a recent flurry of class action lawsuits challenging the classification of certain categories of employees (for example, franchised restaurant or hotel unit managers or shift supervisors) as exempted 'management' employees who are not entitled to 'time-and-a-half' overtime pay has brought this issue under close scrutiny. Plaintiffs are winning many of these cases, sometimes with huge recoveries for employees who worked many hours of uncompensated, or compensated but at straight time, overtime. Earlier this year, the U.S. Department of Labor (DOL) jumped into the arena with proposed revisions to long-standing federal rules under the Federal Fair Labor Standards Act (FLSA) that define who is and who is not entitled to overtime pay for hours over 40 per week.
IN THE MARKETPLACE
Highlights of the latest equipment leasing news from around the country.
Fraud Claim Released in Settlement Agreement Preserved in Bankruptcy Proceedings
Suppose that a lessor has a legitimate fraud claim against its lessee. Also suppose that in an effort to save the costs of litigation, this lessor agrees to settle the matter. The lessee executes a promissory note in favor of the lessor in exchange for a release. Now assume that the lessee not only defaults on its obligation under the promissory note, but also files for bankruptcy. As counsel for the lessor you feel safe assuming that the underlying fraud claim is nondischargeable under Section 523(a)(2)(A) of the Bankruptcy Code, and therefore the lessor's position is fairly strong. Well, in the jurisdiction of the Fourth and Seventh Circuits this assumption was incorrect before a recent ruling by the U.S. Supreme Court finally resolved this issue.
Lessors and Bankruptcy
Obtaining the authority to make Critical Vendor payments is becoming more 'critical' than ever in the early stages of a bankruptcy case. Bankruptcy proceedings are supposed to be fair and reasonably predictable. However, the fair and predictable system of who gets what and in what order is becoming a lot less clear due to recent high-profile cases involving Critical Vendor payments.
A Lease, or Not a Lease: That Is the Question
At its May 15, 2003 meeting, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) came to a consensus on Issue No. 01-8, 'When an Arrangement Contains a Lease,' ending almost two years of deliberations on the issue. As the name implies, the purpose of Issue 01-8 is to provide guidance to accountants to assist them in identifying when an arrangement, including one containing multiple elements, is a lease. Determining when an arrangement is (or includes) a lease can be a difficult and judgmental process. Although the guidance in Issue 01-8 will prove helpful to accountants in determining whether a certain population of transactions contains a lease, it will not remove the difficulty or judgment involved in determining whether a lease exists for a large number of structured transactions.
Bit Parts
Recent developments in entertainment law.
Courthouse Steps
Recently filed cases in entertainment law, straight from the steps of the Los Angeles Superior Court.
<b><i>Decision of Note</b></i> No Credit Needed For Public Domain Materials
In a major narrowing of the Lanham Act, the U.S. Supreme Court has ruled unanimously that the law allows the copying of public domain material without giving credit to its source. The 8-0 ruling in <i>Dastar Corp. v. 20th Century Fox Film Corp. </i> removes Lanham Act liability from parties that repackage facts or information that originated elsewhere. It could sweep away lawsuits often filed against major studios and publishers by authors and others who claim they were given insufficient credit for their contributions.
Protecting Against Defamation Claims From Docudrama Productions
Producers are rushing to meet the public's demand for reality content. This content includes film and TV productions based on the lives of real people. But there are pitfalls in producing 'biopics' or 'docudramas.' By their very nature, concocted scenes and contrived dialogue inherent in these types of productions may give rise to liability. In fact, there have been a growing number of civil actions or claims made concerning the manner in which certain parties have been portrayed.