Posts by: LevinGinsburg

Predictive Scheduling Legislation: What You Need to Know to Avoid Costly Surprises

In approximately a dozen states and a number of smaller municipalities across the U.S., initiatives have been introduced that would allow state and local governments to dictate how restaurants (and retailers) schedule their employees. Some view this approach as interfering with employers’ rights to control the workplace, while others view it as a necessary tool to protect the rights of food industry and other retail workers.  The impetus for the new rules – often referred to as predictive scheduling laws – emanates from the fact that workers often have very little ability to make adjustments to their work schedules in order to meet their responsibilities outside of work.  Unpredictable and unstable work schedules have been fairly well documented in the food service and preparation industries, as well as in retail and custodial occupations.

Predictive scheduling laws and proposals generally include certain common provisions: (i) advance posting of schedules, (ii) employer penalties for unexpected schedule changes, (iii) record-keeping requirements, and (iv) prohibitions on requiring employees to find replacements for scheduled shifts if they are unable to work. In Congress, the pending Schedules That Work Act would require that schedules be provided in writing two weeks in advance with penalties for changes made with less than 24 hours’ notice.  As those changes are implemented, restaurant owners are finding that they must make significant adjustments to how they run their businesses in order to stay in business.

“On-call” or “predictive scheduling” activists argue that retail employers too often use scheduling practices that directly interfere with employees’ personal lives and ability to plan around their work hours, while others believe government intervention in the scheduling of employees through a one-size-fits-all approach intrudes on the employer-employee relationship and creates unnecessary mandates on how a business should operate.  Many in the food service industry are concerned that predictive scheduling legislation will impede employers’ need to adapt to changing conditions in a store, particularly small, independently owned businesses that have limited staff and resources and may not be able to afford the penalties related to violations.  Some employees have also voiced concern that they could lose some of the flexibility that attracted them to the food service industry in the first place.

There are a variety of common components of predictive scheduling legislation.

  • Employee Scheduling Requests.  Giving employees the right to make scheduling requests without employer retaliation.  Employers would be required to consider scheduling requests from all employees and provide a response. In some instances (for healthcare issues for example), the employer would be required to grant the request unless there is a bona fide business reason not to do so—e.g., an inability to reorganize work among existing staff or the insufficiency of work during the periods the employee proposes to work. The right to request provision can be found in laws recently enacted in Vermont, New Hampshire, Seattle, Washington, and San Francisco and Emeryville, California.  (Similar laws have been in place for more than a decade in the United Kingdom.)
  • Shift Scheduling Changes.  Requiring employers to be pay employees for a minimum of four hours of work or the minimum number of hours in the scheduled shifts, whichever is fewer, when an employee is sent home from work early without being permitted to work his or her scheduled shift.  In addition, if an employee is required to call in less than 24 hours before the start of a potential shift to learn whether he or she is scheduled to work, an employer could be required to pay the employee a premium, equivalent to one hour of pay. This provision is found in eight states and the District of Columbia.
  • Split shift pay. If an employee is required to work a shift with nonconsecutive hours with a break of more than one hour between work periods, an employer could be required to pay the employee a premium for that shift, equivalent to one hour of pay. Provisions like this exist in District of Columbia and California.
  • Advance notice of schedules. When an employee is hired, an employer could be required to disclose the minimum number of hours an employee will be scheduled to work. If that minimum number changes, the employer could be required to give the employee two weeks’ notice of the new minimum hours before the change goes into effect. In addition, employers can be required to give employees their work schedules two weeks in advance and, if an employer makes changes to this work schedule with notice of only 24 hours or less, the employer could be required to pay the employee a premium, equivalent to one hour of pay. San Francisco, Seattle, New York City, and Emeryville, California have enacted laws to require employers to provide two weeks’ advance notice of schedules to employees in certain large retail and/or food service establishments.

In order to handle predictive scheduling mandates, business owners should explore software options and even retaining outside vendors that provide scheduling and labor management solutions.  A lack of training or understanding of predictive scheduling can be detrimental to a business’ bottom line, and scheduling practices can have a dramatic impact on labor costs.  As with most new legal developments in the food service industry (or any industry for that matter), training and education is key.

 For more information on this and other issues, contact our office at 312-368-0100 or Jon Weis at jweis@lgattorneys.com

 

Recent Changes in Illinois Law Will Place Additional Burdens on Employers

In 2018, Governor Bruce Rauner signed into law a number of changes that are already in effect or will go into effect starting January 1, 2019. As with each New Year, it is important to reflect on those changes and how they impact your business.

Amendments to the Illinois Wage Payment and Collection Act

As of January 1, 2019, all employers will be required to reimburse its employees “for all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.” 820 ILCS 115/9.5. The act defines “necessary expenditures” as “all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.”

To be reimbursed the employee shall submit a request for reimbursement, along with all appropriate supporting documentation within 30 days. This deadline can be extended pursuant to a written expense reimbursement policy. If the employee does not have supporting documentation, a signed statement regarding the expense will be sufficient.

Employees, however, will not be entitled to such reimbursements if: (1) the employer has an established written expense reimbursement policy and (2) the employee failed to comply. In addition, an expense need not be reimbursed unless it was authorized by the employer or was authorized pursuant to a written expense reimbursement policy. The employer may also put limits or caps on its reimbursement policy provided it is not de minimis or eliminates any reimbursements.

What Should Employers Be Doing? Work with your Illinois Employment Labor attorneys to do an annual review and check of your policies regarding expense reimbursements. It will be critical for all employers to have a policy so that there is adequate cost containment. Many employers will need to evaluate reimbursing its employees for cell phones, gas, and other expenditures they are required to incur for purposes of performing their job.

Nursing Mothers Must be Paid

As of August 21, 2018, nursing mothers in Illinois within one year after the child’s birth must be given “reasonable break time” to express milk and an employer “may not reduce an employee’s compensation for time used for the purpose of expressing milk or nursing a baby.” 820 ILCS 260/10.

What Should Employers Be Doing? Review your handbooks and policies to ensure new mothers understand that they are entitled to express milk as needed and that they are not being docked any pay for doing so.

Amendments to the Illinois Human Rights Act

On August 24, 2018, the Illinois Human Rights Act (“IHRA”) was amended in three meaningful ways. Some of the changes went into effective immediately, while others go into effect on January 1, 2019.

1. The amendments extended the deadline to file a charge of civil rights violations from 180 days to 300 days from the date of the alleged violation of the IHRA. The EEOC and IHRA deadline requirements are now the same in Illinois.

2. As of January 1, 2019, the Illinois Human Rights Commission composition will change from 13 part-time members to 7 full time members. This is expected to expedite matters before the Commission and reduce the number of cases pending before the Commission.

3. The Illinois Department of Human Rights (“IDHR”) is required within 10 days of a new charge, to notify the complainant that they have the right to opt-out of the investigation process and immediately receive the right to file a suit in circuit court. Once granted by the IDHR, the complaint must file suit within 90 days in circuit court.

What Should Employers Be Doing? Employers should expect a steady increase in claims filed before the IDHR. Previously, if an employee filed at the EEOC after 180 days it was not concurrently filed at the IDHR. So long as it is timely filed before the EEOC it will also be timely filed before the IDHR. Additionally, charges that are dismissed quickly at the EEOC may still be pursued at the IDHR that would have otherwise never been refiled.

The opt-out procedures will lead to aggressive plaintiff attorneys avoiding the investigation process entirely and filing suit as quickly as possible, increasing costs and the burden to defend these claims. Employers should continue to work closely with counsel to evaluate all terminations and be prepared to defend any claims that may get filed quickly in state court.

Levin Ginsburg has been working with employers for approximately 40 years to help them protect their businesses. If you have any employment or other business related issues, please contact us at 312-368-0100 or email Walker Lawrence at wlawrence@lgattorneys.com

Will 2 Years of Continued Employment Be Enough in Illinois to Enforce a Non-Compete?

The Answer: It’s Complicated.

In 2013, an Illinois Appellate Court in Fifield v. Premier Dealer Services, Inc., decided that absent additional consideration, continued employment for less than 2 years after the restrictive covenant was signed, would not be sufficient to enforce a restrictive covenant. The Fifield decision was unusual because courts often do not consider the adequacy of the consideration ̶ only that there was consideration to support a contract. Often, the promise of continued employment was acceptable. This decision sent shock waves throughout Illinois and required employers to reevaluate the value they were giving employees when entering into restrictive covenants.

Since that decision, Illinois state courts have routinely followed Fifield and applied its bright line test in cases where there is no additional consideration given to the employee except continued employment.

For example:

• October 31, 2017 – Employee signed a restrictive covenant after working for his employer for nearly 12 years and also served on the company’s board of directors. He announced his resignation and left 6 months later. He was finally removed from the Board a year after signing the restrictive covenant. Upon leaving he started a new business that directly competed with his employer. The Court found that the restrictive covenant was not enforceable because he did not work for at least two years after signing the restrictive covenant.
• June 25, 2015 – Employee worked for employer for more than three years and left. After working for the new employer for one day, the employee asked to come back. As a condition of his return, the employer requested he sign a restrictive covenant. The employee quit 18-months later. The Court held that because he did not work at least two years after executing the restrictive there was not sufficient consideration to support the restrictive covenants.

Complicating matters, however, Federal Courts in Illinois have consistently rejected Fifield’s bright line test and adhered to a more comprehensive fact specific analysis. The Federal Court’s decisions believe that the Illinois Supreme Court would not adopt Fifield’s rigid and bright line test and continue to a support a “totality of the circumstances” review. As a result, it has led to decisions that are at odds with the State courts:

For example:

• October 20, 2017 – Employees left after 13-months of employment, took confidential information, and started working for a competitor. Employees argued that Fifield governed and therefore the restrictive covenants were not enforceable. The Court disagreed and rejected Fifield’s bright line test.

• July 24, 2017 – Employee left after working for employer for nearly ten years. He signed a restrictive covenant 16 months prior to leaving. The Court rejected Fifield’s bright line rule. The Court noted that “[f]ive federal courts in the Northern District of Illinois and one federal court in the Central District of Illinois have predicted that the Illinois Supreme Court will reject the Illinois appellate court’s bright-line rule in favor of a more fact-specific approach.”

What does this mean for employers?

Because all Illinois employers should expect that they will have to enforce these agreements in a state court, the Fifield holding must continue to be respected. Employers should review their restrictive covenants to ensure the agreements are carefully drafted to improve enforceability.

Levin Ginsburg has been working with employers for approximately 40 years to help them protect their businesses. If you have any employment or other business related issues, please contact us at 312-368-0100 or email Walker Lawrence at wlawrence@lgattorneys.com

Have You Looked At Your Buy-Sell Agreement Lately? Business Succession Planning

John, Alexandria, Mary, Martin, and Yvette, formed the Jammy Sleepwear Company over thirty-five (35) years ago.  They were equal partners and formed a corporation.  On the advice of their attorneys, the entered into a shareholders’ agreement that contained buy-sell provisions.  This type of agreement is sometimes referred to as a “buy-sell agreement”.

Their buy-sell agreement contained various provisions, including under what circumstances a departing shareholder’s shares would be purchased, what the purchase price of those shares would be, and the terms of payment.  Since the business was in its infancy, they agreed it would be valued at its “book value”, meaning that the value of the assets on its financial statements, less all obligations, would be the business’s value.  There was no adjustment for good will or other intangible assets.  Also, the increase in value of any assets would not be taken into consideration.  The purchase price to a departing shareholder was to be paid in twelve (12) months, in equal monthly payments.  The business was required to purchase a departing shareholders shares.

Since they formed the business in 1980, they acquired other businesses and purchased real estate through a separate LLC.  They did not think to have a buy-sell for the LLC.

John has announced he would like to retire, but he has objected to the purchase price as being “unfairly” low.  He has advised the other owners that he will keep his interest in the real estate, since it will provide him with a “good stipend” during his retirement.  Shortly thereafter, Mary announced her retirement.

The remaining owners are concerned that the business will not be able to support payments to John and to Mary.  Also, the remaining owners would prefer that John and Mary also sell their interests in the LLC.

Unfortunately, the shareholders (and LLC members) did not regularly review their buy-sell agreement.  As the value of the business grew, the amount of the payments increased and would put a strain on the cash flow of the business.  If more than one owner were to retire, it would cause a bigger strain.  Either the business would have to borrow money, the owners would have to make capital infusions, new investors would be needed, or the business would need to be sold.

Some buy-sell agreements address these types of situations, by limiting the amounts that must be paid out to departing owners on an annual basis.  For example, the payments cannot exceed a specific dollar amount or a percentage of gross profits.  Also, when the owners buy real estate to be used by the business, they might consider including the real estate as a part of the buy-sell process.

Buy-sell agreements should be reviewed periodically to ensure they continue to meet the needs of the business and its owners.  Levin Ginsburg has been advising business owners regarding legal aspects of their businesses, including buy-sell agreements for almost forty  years.

Please contact us with any questions you have regarding your business (including any buy-sell issues) at 312-368-0100 or Morris Saunders at msaunders@lgattorneys.com.

The Plaintiff’s End Game – Collecting the Judgment

It was a hard fought battle. You successfully sued a party in a commercial dispute who wronged you and a judge or jury awarded you seven-figure sum. Because the Defendant didn’t immediately take out its checkbook, however, you now face the task of collecting the judgment. Oftentimes, litigation doesn’t end when the judge bangs the gavel and you walk out of the courtroom with a judgment – a piece of paper saying that you’re entitled to money. You can’t bring the judgment to a car dealership and buy a car with it and the judgment itself won’t pay your mortgage. So what do you do to turn the judgment into actual dollars?

The Illinois Legislature and Illinois Supreme Court have carefully crafted laws and rules that allow you, as the successful plaintiff, to discover the judgment debtor’s assets in an attempt to collect your judgment. The process usually begins by serving the defendant with Citation to Discover Assets. The Citation to Discover Assets is first served on the defendant, usually either a person or a business, and, much like a summons or a subpoena, commands the defendant to appear at a specified time and place, usually a courtroom, to answer, under oath, questions about its assets. Typically, a Document Rider is attached to the Citation to Discover Assets requiring the judgment debtor to produce documents, such as bank records, titles to property, and the like, that will enable your attorney to locate assets. Importantly, service of the Citation to Discover Assets also acts as a form of lien or injunction on the defendant’s assets, generally preventing the defendant from disposing of assets while the post-judgment proceedings are pending.

As the victor, you are not only permitted to serve a Citation to Discover Assets on the defendant, you are also entitled to serve one on anyone who holds the defendants assets or who owes the defendant money, such as a customer, employer, bank, relative, investment company or anyone holding assets belonging to the defendant. These Third Party Citations require the third-party to provide sworn written answers to your questions within a certain period of time and, if it fails to do so, the judgment can also be entered against that third-party.

After you’ve been able to discover the existence of assets, you then ask the court to enter an order requiring the party holding the assets to turn them over to you. It takes a court order to get a bank to turnover a defendant’s cash. If you’re asking the court to order the turnover of tangible things, as opposed to cash, typically the order will require the assets to be turned over to the sheriff so the sheriff can sell them and turn them into cash.

There are many effective ways to satisfy a judgment, many are complex and require the assistance of an attorney familiar with the procedures. While most litigators know how to obtain a judgment, far fewer know how to effectively collect the judgment, leaving you holding little more than a very expensive piece of paper.

 

For more information on post-judgment proceedings, please contact:

Howard Teplinsky at hteplinsky@lgattorneys.com or 312-368-0100

You Can Run But You Can’t Hide… More On Privacy Regulation, GDPR And California. Who’s Next?

On May 25, 2018, the European General Data Protection Regulation (“GDPR”) went into effect.  US-based companies that had offices in the European Union or European Economic Area (collectively, “EU”) or those companies whose target market consisted of persons living in the EU were forced to take both IT and legal measures to ensure compliance, or face heavy fines or potential court damages.  However, many US-based companies simply decided that they would disable their e-commerce websites to the EU, and discontinue selling products to the EU, as a means of avoiding compliance with the GDPR.

While this strategy of avoidance may be successful for certain companies to avoid taking compliance measures required by GDPR, it will not be successful as a long term strategy as more States (and potentially the federal government) adopt privacy laws similar to the California Consumer Privacy Act of 2018 (“CCPA”).

Passed in June, 2018, the CCPA will become effective January 1, 2020.  Once effective, US companies will have additional regulations with which to comply regarding the processing of personal information (“PI”) of California residents.  PI is defined broadly to include “any information that …relates to … a particular consumer or household”.   The law was designed to provide California consumers with a means of controlling their personal information, putting them in a better position to protect their privacy and autonomy.   Specifically, the CCPA:

  • Gives California consumers the right to know what PI a business has collected about them or their children;
  • Gives California consumers the right to know if such PI has been sold or disclosed for a business purpose, and if so, to whom;
  • Gives California consumers a right to have their PI deleted;
  • Requires businesses to disclose to California consumers if it sells any of the consumer’s PI has been sold, and if so, allows California consumers to request that the business cease any sales of the consumer’s PI;
  • Prevents a business from denying, changing, or charging more for a service if a California consumer requests information about the sale of the consumer’s PI, or refuses to allow the business to sell the consumer’s PI; and
  • Requires businesses to safeguard California consumers’ PI and hold them accountable if such PI is compromised as a result of a security breach arising from the business’s failure to take reasonable steps to protect the security of consumers’ sensitive information.

Who Must Comply?     Companies must comply if, in the course of their business, they receive PI from any California residents and if they or their parent or subsidiary either: (1) generate annual gross revenues in excess of $25 million, (2) collect PI of 50,000 or more California residents, households or devices annually, or (3) generate 50% or more of its annual revenue from selling California residents’ PI.  Interestingly, parent companies and subsidiaries using the same branding are covered by the definition of “business” even if they themselves do not meet or exceed these parameters.  Thus, essentially, most all US companies whose websites collect PI (even though obtaining IP addresses) are subject to the CCPA, unless they can ensure that less than 50,000 California residents or less than 50,000 of their devices visit the company’s site annually.

What about Companies Who Do Not Do Business in California?

Many US companies may have difficulty showing that they do not do business in California.  According to the California Civil Code, only companies whose “commercial conduct takes place wholly outside of California” would be able to avoid the CCPA.  Further, a company outside California is deemed to be “doing business” in California if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California”.  Those companies outside California but that are qualified to do business in California may be subject to the CCPA if they enter into “repeated and successive transactions” in California, including online transactions.  However, while this is only limited to California, it is very probably that other states will adopt similar legislation.

Whose Information Is Affected?

The new law defines “consumer” broadly to include not only customers, but also employees, patients, tenants, students, parents and children.  (Cal. Civ. Code Sec. 1798.140(g).  A “resident” includes natural persons who are in California for anything other than a temporary or transitory purpose, and, those natural persons who are domiciled in California who are out of the State for a temporary or transitory purpose.

What Are The Penalties of Non-Compliance?

If a business is not incompliance with CCPA, the California Attorney General’s Office may bring a civil action against the business.   The Office may levy penalties for non-compliance of up to $7500 per intentional violation of any provision or $2500 per violation for unintentional violations that are not cured within 30 days of notification.

What are Companies To Do?

Moving forward, all US Companies must engage in data mapping to determine what PI it collects, and then put in place updated privacy notices, and other procedures to comply with all relevant regulations.  While California is often the ringleader, certainly other states are also developing similar laws aimed at the protecting PI of its residents.  Until such time as a federal privacy regulation is put into place, US companies will need to analyze carefully where they do business and comply with a patchwork of state laws.

To learn more about the CCPA and other privacy related matters, please contact the author:

Natalie A. Remien, CIPP/US at:

nremien@lgattorneys.com or (312) 368-0100.

Morris Saunders will be a presenter at a seminar entitled “Estate Planning and Administration: The Complete Guide” for the National Business Institute. Morris will be giving two presentations at Illinois Business and Industry Services located at 1100 East Warrenville Road, Suite 150 Naperville IL 60563. The first presentation titled “Transfers During Life and Inter-Vivos Trusts” will take place on September 26 from 2:30-3:30,  and the second presentation titled “Tax Consequences of Trusts”  will take place on September 26 from 3:30-4:30. To register, or for more information please click here.

Purchaser Collection of Pre-Closing Rent Deficiency

In the purchase and sale of real property which is leased to tenants, sellers and purchasers must pay particular attention to the allocation of rent collected both before and after the closing.  A typical purchase and sale agreement will include, among other things, language addressing the allocation of rent by the parties for the current period as well as the collection of delinquent rent after closing which is attributable to the seller’s period of ownership prior to closing.  In negotiating a contract, the parties will need to determine whether the purchaser is responsible for attempting to collect pre-closing delinquent rents and the rights of the seller to pursue tenants after closing for any such pre-closing delinquent rents.

Collection of pre-closing delinquent rent can be a complicated issue for purchasers and sellers to resolve.  On the one hand, the purchaser may be reluctant to allow the seller to undermine the financial condition of a tenant by pursuing lawsuits against a tenant that may be paying current rent to the new landlord.  On the other hand, a former owner does not have a full range of typical landlord remedies at its disposal to effectively induce tenants to pay delinquent rent as the former owner cannot assert an eviction action against a tenant and terminate the tenant’s right of occupancy.

The tension between purchasers and sellers with respect to pre-closing, delinquent rent is further complicated by a recently decided opinion issued by the Illinois Appellate Court in 1002 E. 87th Street LLC v. Midway Broadcasting Corporation (2018 IL.) App. 1st 171691, June 5, 2018).  In that case, the Court upheld a lower court ruling that Illinois law does not permit the purchaser of real estate to pursue claims against a tenant for pre-closing, unpaid rent under a lease assigned to the purchaser at closing.  The purchase and sale agreement between the purchaser and seller in that case contained standard provisions confirming that the “landlord” under the lease included any successors and assigns.  It also provided that all obligations and liabilities of the original landlord were binding on the purchaser, as successor landlord.  That would include any pre-closing landlord defaults that remained uncured.  Notwithstanding the successor landlord’s assumption of the lease, including, potential liability for pre-closing defaults of its predecessor, the Court ruled that the successor landlord did not have the right to recover pre-closing rent.  The Court specifically stated that the rule in Illinois is that rent in arrears is not assignable.

The lesson to be learned from the 1002 E. 87th Street case is that it is important to negotiate and set the expectations of the parties with respect to pre-closing delinquent rents at the time of contract.  Since a predecessor landlord may have little power other than initiating litigation (which is not desired by the successor landlord) against a tenant for delinquent rent and the successor landlord is unable to maintain an action for that delinquent rent, parties must give careful thought to the method of addressing the collection of pre-closing delinquent rent.  Fortunately, there are a number of different approaches that the parties may employ to coordinate and enhance the collection of pre-closing, delinquent rent.

For further information regarding the purchase and sale of commercial real estate as well as matters involving the rights of sellers, purchasers and tenants, please contact:

Jeffrey M. Galkin at:

jgalkin@lgattorneys.com or 312-368-0100.

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