MY FIRM HAS BEEN ACCEPTED TO THE NEXTLAW GLOBAL REFERRAL NETWORK

Posted: October 5, 2016 in Uncategorized
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Nextlaw Global Referral Network was created by Dentons, the largest law firm in the world. The network, which is free to join, employs a detailed screening system to guarantee the quality of its member firms and has developed proprietary technology to allow members to identify lawyers at other member firms with the appropriate experience where clients need legal counsel. I am proud that my firm has been accepted. The Nextlaw Global Referral Network will enable my firm to connect our clients to high quality lawyers around the world. Nextlaw Global Referral Network is the largest legal referral network in the world, with 283 member firms, 18,600 lawyers covering 160 countries.

The Law Office of Adam P. Whitney specializes in business and employment law and also handles disputes among shareholders, partners and LLC members. We represent private businesses, majority and minority owners of businesses, professional and executives, and others.

About Nextlaw Global Referral Network

Nextlaw Global Referral Network is the client focused legal referral network created by Dentons, the world’s largest law firm. Nextlaw Global Referral Network is the largest legal network in the world. It’s free to join, open to all high-quality law firms regardless of size and does not grant geographic exclusivity to its members. This enables the network to connect clients of member firms to the best lawyers with the appropriate experience in the locations where clients need legal counsel. The network utilizes a proprietary technology platform to help member firms research, contact and rate the performance of network members in order to guarantee that clients receive the highest quality legal advice and business solutions. http://www.nextlawnetwork.com

About Dentons

Dentons is the world’s first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world’s largest law firm, Dentons’ global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

Don’t Be Damned by Your Own Employee Handbook

Posted: May 24, 2016 in Employee Contracts, Lawsuits, Personnel Policy Fun
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I’ve blogged before about the need for drafting and updating your employee handbook: https://damnedif.com/category/personnel-policy-fun/

I know, handbooks are boring. But you know who they are not boring too? That plaintiff’s lawyer who wants to take your company for a million dollars. She’ll do her job and read every word of your employee handbook that you haven’t bothered to read in, what, three years? She’ll find every ambiguity, every outdated policy, every discrepancy with how you do things. And she’ll smack you in the mouth with all of them at deposition or trial.

Here are just some of the ways that you can screw yourself with your employee manual.

  1. You have policies that you don’t follow.

Every employer has policies and provisions in the manual that they do not really follow. They are outdated, irrelevant or ignored. Get rid of them. They serve no purpose other than showing how you don’t follow your own manual, which can be used in a variety of ways to make you look bad in litigation.

  1. You have no or an outdated sexual harassment policy.

Massachusetts is serious about sexual harassment, as it should be. Employers with six or more employees by law must have a sexual harassment policy. You also must provide the policy to new employees, and to all employees yearly. Our diligent plaintiff’s attorney will certainly use it against you if you don’t do these things. They may also use it against you if do not train employees – at least your supervisors (which is recommended, but not required, by Massachusetts law). Your company is automatically liable if a supervisor commits sexual harassment of a subordinate. Training takes about an hour, so just get it done.

  1. You don’t include disclaimers and at-will language.

All the lawyer speak in modern employee manuals are nauseating, but strictly necessary.  Why?  Because the Massachusetts courts have told us so.  If you fail to put them in there, you may have bound yourself to a contract whereby you have all the obligations of performance. If you fire an employee or take other action, you may have breached the “contract.” This would be like winning the Darwin Awards, employer version.

  1. You don’t have a comprehensive leave policy.

There are many types of leave required by federal and state law. You can’t simply stick your head in the sand and give people time off whenever they need it. No good deed goes unpunished. If you give one person leave and not another, you may just have committed discrimination. Unless you are okay with a “come in when you feel like it” policy, you need to address vacation time, military leave, jury duty leave, sick leave, family and medical leave, small necessities leave, maternity leave, domestic violence leave, voting leave, etc.

  1. You restrict NLRA rights.

Even non-union employers now have to worry about the National Labor Relations Act, which historically was thought to apply only to union employees. Employees have rights to engage in “concerted” activities regarding the terms and conditions of employment. Your policies regarding standards of conduct, social media, distribution of materials in the workplace, confidentiality, etc. could inadvertently run afoul of the statutes and land you in hot water.

  1. You have an overly detailed and rigid progressive discipline policy.

This is a rare occasion where non-specific may be better. If you are too rigid, you may create a presumption that employees cannot be fired unless you progress through the stages of discipline. Moreover, if you do not follow your explicit policy to the letter in every occasion, you will open yourself up to claims that you treated employees differently on the basis of gender, race, religion or other protected class. This is not just theoretical. It was a costly lesson for an employer in a recent Massachusetts case.

  1. You have wage and hour policies that violate the law on their face.

If you are going to have wage and hour policies in your handbook, including overtime, comp time, and break polices, make extra sure that they are accurate and up to date. Wage and hour law is very detailed and frequently changes. I often see employers unwittingly put their illegal policies in writing, which will make our hypothetical plaintiff’s lawyer very, very happy.

  1. You inadvertently run afoul of the federal ERISA law.

If you are not careful about how you describe your employee benefits, you could trigger compliance with strict obligations under federal law. Don’t do that.

In summary, dust off your employee handbook in your bottom draw and have your employment lawyer review and update it. Out of sight may be out of mind, but that won’t keep you out of court.

By Adam P. Whitney, Esq.

617-338-7000

You’re Damned if You Fire an Employee Who Takes FMLA Leave, Even if She Does Not Return After 12 Weeks

Posted: May 16, 2016 in Disability Liability, Discrimination, Hiring and Firing, Lawsuits
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(I’ve taken about 11 months off from blogging. I’m back, baby.).

Most employers (of over 50 employees) know full well that they have to provide up to 12 weeks of leave under the FMLA and that you generally cannot terminate an employee who is on leave. But don’t assume that means you can terminate an employee who is not medically cleared to come back when her FMLA leave is exhausted. In some cases, doing so will lead to a large verdict in favor of the former employee, as was demonstrated by a recent case from the Massachusetts Supreme Judicial Court, Esler v. Sylvia-Reardon, 473 Mass. 775 (2016).

The following is from the SJC’s rendition of the possible facts most favorable to Ms. Esler, and I do not represent them as true (the hospital may have presented different alleged facts). Esler worked as a registered nurse in the acute hemodialysis department of MGH. She went out on FMLA leave in December 2008, although there was some hassle from her supervisor about her paperwork. Her doctor suggested that she engage in light exercise and pleasurable activities. So she went to New York City. Her supervisor accused her of “vacationing,” and sounded displeased. When Esler then said that she broke her wrist while ice skating, her supervisor allegedly said “I need to have you back here next week or I can’t hold your job.”

In spite of her supervisor’s alleged statements, to its credit, the hospital extended her FMLA leave past her statutory 12 weeks of leave. However, the hospital said that it could not accommodate her temporary lifting restriction (no lifting more than five pounds in left hand) and need to wear a splint. Esler was expected to return on February 15, 2009. She spoke to her supervisor on January 28th and reported that she was making good progress. Although there was no equipment that required lifting more than five pounds, Esler’s supervisor canceled an occupational health assessment that was part of the return to work process and put Esler on inactive status. The hospital stated that her job could not be accommodated with the restrictions. However, the hospital hired a replacement with less training, who could not have fully performed the job until at least April 6th, a date that was after the date that Esler would have had no medical restrictions.

Esler sued for retaliation, which is prohibited under the FMLA (and most other employment statutes). A jury returned a verdict in her favor of back wages consisting of $567,500 and front pay of $672,686. The judge overturned the front pay award, and this decision was upheld on appeal. The trial judge also overturned the backpay award, but this was reinstated on appeal (subject to further proceedings at the trial court). Because the case was filed in 2010, if the backpay award sticks, interest will add a staggering 75% and counting (12% per annum in Massachusetts), which I calculate to be $425,625. Liquidated damages equal to the back pay could also be awarded. With an award of attorneys’ fees and costs surely on the horizon, the total verdict could approach or exceed two million dollars, even with the front pay being overturned. Not to mention the Defendants’ own legal fees, which are surely sizable.

Takeaways

There are a few lessons for employers. First, if an employee takes FMLA leave, don’t assume that her FMLA rights end after 12 weeks. In fact, the FMLA provides “proscriptive provisions” to protect employees from retaliation after exercising substantive rights.

Second, an employer should take a realistic look at accommodations an employee needs. Although it appears that Esler did not file a disability discrimination claim, she could have. Employers should always consider whether continued leave or other accommodations are reasonable for an employee who has been out on FMLA leave. You should also be careful to not use the FMLA leave in any future employment decision, as that could be deemed retaliation.

Third, train your supervisors to not make comments that are hostile to protected FMLA leave.

Fourth, for God’s sake call your employment lawyer before firing an employee who went out on FMLA leave! A short phone call might save you from a $2 million mistake. If the facts were as Esler alleged, the decision to not accommodate her for a short time was foolhardy and reckless.

As always, the above is not legal advice, just general information.

By Adam P. Whitney, Esq. 617.338.7000

You’re Damned if You Assume that the Safe Harbor Provisions of the Massachusetts Sick Leave Law Mean that You Can Ignore the Law.

Posted: June 12, 2015 in Overzealous Government Regulators, Personnel Policy Fun
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As I previously blogged, the Massachusetts Sick Leave Law goes into effect on July 1, 2015.  The law is potentially bad news for employers with respect to productivity, expenses, and legal exposure.  See previous blog.

Recognizing at least some of these issues, the Attorney General issued Safe Harbor provisions for employers who currently provide (by a policy in existence on May 1) at least 30 hours of paid time off/sick leave for 2015, if certain conditions are met.  But don’t just assume that the Safe Harbor applies to your business or that you don’t need to do anything if it does apply.  Among other things, you will have to make provisions for part-time employees and other employees who do not currently earn paid time off.

Have your employment lawyer evaluate your current policies and practices.  For many employers, you will need to make changes before July 1st.  Also, you might as well start getting ready for 2016 even if the Safe Harbor applies to you.  You will also have to post notice of the new law.  The Attorney General has provided a sample poster.

Keep in mind that the new law impacts all employers, even if you have only one employee.  Violating the law, even inadvertently, could get you sued by your employee and/or fined by the Attorney General.

As always, the above is general information, not legal advice.

By Adam P. Whitney, Esq.

You’re Damned if You Don’t Prepare for the New Massachusetts Parental Leave Law

Posted: January 14, 2015 in Discrimination, Personnel Policy Fun
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If you are a Massachusetts employer with six or more employees, effective April 2015 you must provide up to eight weeks of unpaid leave to a full time man or woman for the birth or adoption or court ordered placement of a child (previously, the law applied only to women).  So sharpen your pencils and get ready for yet another change to your employee handbook. There are also new procedures that an employer must follow if the employer wishes to limit the leave to eight weeks and retain the right to terminate the employee who does not return in a timely fashion. Larger employers will need to coordinate with the FMLA.  As an aside, you’ll also have to consider if pregnant employee has a pregnancy-related disability that may require an accommodation.

Governor Patrick signed amendments to the Massachusetts Maternity Leave Act on his way out the door on January 7, 2015, which made these changes to the law.  In addition to including men, the amended law has provisions that provide broad protections for employees, and potential headaches for employers.  Employees will also be protected under the employment discrimination statute, Chapter 151B, which gives the parental leave statute teeth.

Employers will need to change their policies and post notices about the new law. Failure to follow its provision could result in significant liability.  As always, this information is general and not legal advice.

By Adam P. Whitney, Esq.

You’re Damned if You Don’t Prepare for Massachusetts’ New Sick Leave Law

Posted: November 17, 2014 in Disability Liability, Drug Testing, Etc., Hiring and Firing, Personnel Policy Fun, Privacy
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Every private employer in the Commonwealth must be aware of the new Massachusetts law on sick leave. From the employer that already provides paid sick leave, to the employer of a single employee, this new Statute, which will be codified at General Law Chapter 149, Sec. 148C, will affect everyone when it goes into effect on July 1, 2015. Employees will be allowed to start taking sick leave on September 29, 2015 or 90 days after their start date if hired after July 1, 2015.

Ignore the Statute at your peril, as the result could be a claim against your company for triple damages and attorneys’ fees, or an enforcement action by the Attorney General, even if you already provide paid sick leave.

For Employers Under 11 Employees

The good news is that you do not have to provide paid sick time. After July 1st of next year, however, you will have to allow all employees to earn up to 40 hours of unpaid sick leave a year. This includes part-time and temporary employees. No one is excluded.

For Employers with 11 Employees or More

After July 1st of next year, all employees will earn up to 40 hours of paid sick leave a year. Even if you already provide such paid sick leave, your policy will likely need some tweaking because (1) the statutory sick leave is likely broader than your policy, and (2) your certification requirements might be more stringent than allowed under the Statute.

Part-time and temporary employees count towards the 11 employee threshold. The Statute is silent about what happens if you downsize in the middle of the calendar year from 11 employees to 10 employees or less. My best guess would be that employees would not lose sick time that was already accrued, but that they would stop accruing sick time when you downsized. Hopefully, the Attorney General will address this issue before the statute takes effect.

If you have more than 50 employees, you will have to coordinate this leave with the FMLA and the Massachusetts Small Necessities Leave Ace.

How Sick Leave Is Earned?

All employees will earn sick leave at the rate of 1 hour for every 30 hours worked, up to a maximum required 40 hours. Most full-time employees will earn the full 40 hours. Exempt employees paid on salary will normally be presumed to work 40 hours per week. Part-time workers might not earn the full 40 hours, but they may not need to. Sick time must be earned starting with the first day of work, although you need not allow any leave until after 90 days.

For What Can Sick Leave Be Taken?

This is where your current policy may be in conflict with the new statute. Under the new statute, an employee will have a right to take sick leave to care for a child, spouse or parent or parent of a spouse, including to attend the employee’s or family member’s medical appointment. Sick leave is also available for mental illness or preventive medical care. Sick leave may also be used to address the psychological, physical or legal effects of domestic violence, which could include going to court. The term “sick leave” could be a misnomer in many circumstances.

To make matters worse, sick leave can be taken in hourly increments (or smaller, depending on your policy for tracking time). On one hand, this makes sense because sick leave can be taken for a routine medical appointment. On the other hand, it may create a “get out of jail free” card for employees who simply over sleep and are late. The employee could claim that he or she felt ill and take an hour of sick leave. Theoretically, an employee could show up an hour late once a week, claim sickness, and be protected from punishment.

What About a Doctor’s Note Requirement?

This is another issue that may conflict with your current policy. The statute states that an employer “may require certification” when an employee takes more than 24 consecutive hours of earned sick time. A fair reading of this provision is that an employer may not otherwise ask for certification. So if an employee takes 2.5 days of sick time leave, the employer is apparently supposed to just take the employee’s word for it. The employer may not require that the certification explain the nature of the illness or the details of the domestic violence. Even where certification is required, the employer cannot delay providing the leave or paying for the leave on the basis that it has not yet received the certification.

What Penalties Are Available Under the Statute?

Employers are prohibited from interfering with an employee’s rights under the statute, or using the fact that an employee took earned leave as a negative factor in any employment action or otherwise disciplining the employee for using earned sick time. Employers are also prohibited from retaliating against any employee who opposes practices which the employee believes is in violation of the statute or supports another employee’s exercise of his rights under the statute.

The Statute will be enforced by the Massachusetts Attorney General, which has not yet issued any regulations or Advisory. The Attorney General can get an injunction against any employer violating the statute. Penalties, including potential criminal prosecution are available to the Attorney General. Additionally, the Statute has been incorporated into General Law Chapter 149, Section 150, which provides for a private right of action for triple damages and attorneys’ fees. It is not expressly clear if an employee would be entitled to recover for lost backpay in the event of a wrongful termination, or, if so, if the backpay would be tripled.

Other Statutory Provisions.

An employer is not required to pay out unused sick time upon separation of employment. This could get tricky if you combine a policy with paid time off or vacation pay.

Employees can carry over unused, earned sick time from year to year, but may not use more than the maximum 40 hours per year (unless the employer allows).

Employees must give notice if the need for leave is foreseeable.

Employees can make up the sick time by working another shift during the same pay period or the next pay period if both employer and employee agree. In that situation, the employer need not pay for the missed time, and the employee does not need to use earned sick time.

However, an employer cannot require an employee to work additional hours to make up the missed time, or require that the employee to search for or find a replacement employee to cover the hours during which the employee uses earned sick time.

Employers will be required to post notice of the rights under the statute.

Observations

The new Statute will impact all employers, some much more than others. The economic impact is potentially huge. If you have 100 employees earning an average of $40,000 per year, this new Statute potentially just added $80,000 to your yearly expenses, or $80,000 in lost productivity depending on how you look at it. Given the breadth of the statute and the anti-retaliation provisions, there will be little reason for any employee to not use his five days of sick leave a year. The likely result is that some employers will be forced to cut down on paid vacation and personal days. Sick leave will become the new personal day/vacation leave for many employers. In fact, the statute states that if you provide paid time off that meets the same parameters as the statute, you don’t need to provide additional sick time.

Worse yet, the statute arguably prevents an employer from rewarding attendance, as it could be deemed to be a de facto punishment to employees who took leave.

Problem employees will find a lot of room to abuse this statute. Virtually every termination becomes actionable by employees because virtually every employee will have taken sick time in the recent past. It will be the worst employees who will abuse the new law. The result will be that firing these worst employees will become risky. Employers who terminate unreliable or chronically late employees who are adept at gaming the system will risk exposure.

Employers will need to make (sometimes expensive) contingency plans to cover for sick workers. No longer can an employer place the responsibility on the employee to find someone to cover the shift. This will be a big change for some industries, such as the restaurant industry. It is not clear whether an employer can require an employee who is going to use a few hours of leave to be out for the entire shift. Although the statute does not expressly prevent this, it could be considered retaliatory and subject the employer to suit under the statute. The statute arguably requires employers to allow employees to take a few hours off and then show up and work their shift. Some jobs do lend themselves to allowing an employee to take a few hours off, such as a driver, a home health worker, etc. Some employers will face additional costs by being over-staffed to account for being under-staffed (keep in mind that if a replacement employee must report to work, they must be paid at least three hours).

Virtually every term in the statute is defined broadly in favor of the employee, so employers will have to err on the side of caution. For example, a “parent” includes any “person who assumed the responsibilities of parenthood when the employee or employee’s spouse was a child.” Another example is that leave is allowed for “preventive medical care.” Could this include acupuncture? Massage? Dental cleanings? Leave is allowed for medical conditions and mental illness,” so employees who are depressed, have anxiety, or sleep disorders are likely allowed to take leave.

Employers will have the additional burden of calculating sick time earned, especially for part-time, temporary or new employees. You may want to consider simply providing your full time workers the full 40 hours at the beginning of each calendar year, although this creates the possibility that the employee could use days that are not earned.

Be careful about paying people as independent contractors. This is very risky in Massachusetts anyway. Curiously, the sick leave Statute does not use the statutory definition for employee, but simply defines an employee for private employers as “any person who performs services for an employer for wage, remuneration, or other compensation.” Presumably, the Attorney General and the Courts will use the definition contained in the previous section of the Statute, General Law Chapter 149, Section 148B, which is also strict, but which does provide a working definition to distinguish between employees and independent contractors.

As always, the above is not considered legal advice, but is general information only.

By Adam P. Whitney

You’re Damned if You Overreact to Disputes with Competitors and Other Business Enemies.

Posted: October 16, 2014 in Competitors and Business Enemies, Lawsuits
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Revenge is best served cold. The phrase is apt in the business-legal world. Some industries are very cutthroat. Some of your competitors or other business enemies are dirty, rotten scoundrels. They may pull various dirty tricks on your business. Steal your key employees. Defame you to clients or strategic partners, suppliers, contractors, employees, etc. Falsely report you to authorities, such as licensing agencies, taxing authorities, or other government entities who have some control over your business. They may even file frivolous lawsuits against you or your clients. If you are feeling paranoid, it’s only because they are out to get you.

These dirty tricks can hurt your business. They enrage you. That’s human. But resist the temptation to go off half-cocked and respond in kind. Tell yourself that it is just business. Part of being a success is becoming a target. Now, smile and start plotting your revenge. But there are many traps for the unwary business owner plotting revenge against a scoundrel competitor.

Don’t defame them just because they have defamed you. Generally speaking, defamation is making a false oral or written statement about another person or entity to a third party, that holds them up to scorn or ridicule. What is “false” and what is a “fact” are often gray areas. Unless you are 100% sure that the nasty letter/e-mail you are about to send is not defamatory, and not even arguably defamatory, you probably should not send it. You could also get tagged with a business tort known as Intentional Interference with Contract or Contractual Relations, even if your statements are not defamatory. If your business enemy loses business, you could be on the hook for the damages.

Additionally, you usually cannot sue someone just because they sued you or because they made some report to the government, because such actions may be protected under the Massachusetts Anti-SLAPP Statute. This could subject your company to immediate dismissal of the lawsuit and award of the other side’s attorney’s fees.

These laws are very complex; and the damages caused can be significant. Businesses can get themselves in serious trouble when they act to harm a competitor, even when the competitor drew first blood. It’s like in sports when the referee always notices the player who reacts to a dirty play with one of his own. Your reaction, or over-reaction, may get your business in trouble and even mask the original bad act by your business enemy. My (admittedly self-serving) advice should be clear. Consult a qualified business litigator before plotting your revenge or taking action to defend your company.

How to get back at your business enemies? The best revenge is to continue your success and crush your competitors in the market. You also may have a legitimate legal claim against them that will allow you to sue for your damages. While you should only file legitimate suits seeking legitimate damages, litigation may send an additional message that you will not be a punching bag. Sometimes there are other legal and ethical guerrilla tactics, but those are not for a public discussion.

By Adam P. Whitney, Esq.

You’re Damned if You Don’t Understand Insurance Coverage Issues in Massachusetts

Posted: October 1, 2014 in Business Contracts
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Insurance companies are not in the business of defending your company and paying claims. They are in the business of collecting premiums and avoiding paying the claims and the costs of defense. Forget the commercials touting the insurer being on your side. The insurance contract (the policy) and insurance laws form the basis of your relationship with your insurer.

I’m not being overly critical of insurers, but they are in business to make a buck, not to look out for you. Insurers have, literally, hordes of in-house and outside lawyers. The deck may seemed stacked against you, because it is. But some knowledge and the assistance of a qualified attorney can even the playing field (to mix the metaphors some more, you can put the shoe on the other foot).

Understand that you are required to promptly put your insurer on notice of any claim or potential claim. Failure to report a claim can give the insurer an argument that it has been prejudiced and thus can disclaim coverage. You also generally must to cooperate in the defense of the claim.

It’s great if your insurer assumes coverage of a claim. You likely won’t need to worry as much about the claim, other than assisting in the claim, so long as the coverage is adequate. The insurer will assign one of its panel attorneys from a local firm to represent your company in the suit. You will likely not get to choose the attorney. The insurer will pay any settlement it negotiates, or any judgment within the policy limits. Keep in mind that the costs of defense may diminish the policy.

However, the insurer could deny coverage altogether, and assert that it has neither the duty to defend, nor the duty to indemnify. In that scenario, you must promptly defend the case yourself with your own attorney before you the court defaults you. But don’t give up too easily. Insurers often deny coverage. A call or letter from your attorney familiar with insurance coverage issues may get the insurer to reverse its decision. It’s easy for the insurer to deny your claim if they have at least a colorable argument.

If you don’t challenge it, the insurer has saved tons of money, so it is in the insurer’s interest to deny claims when arguable. You can also file a Declaratory Judgment lawsuit to ask a Massachusetts Court to rule that the insurer has an obligation to defend and/or indemnify you. If you win that case, the insurer could be on the hook for your legal fees, as well as paying its own lawyer, and the lawyer who defended the original claim. It is a risky proposition for the insurer. Given that exclusions are strictly construed against the insurer, you may have a fair argument on coverage.

The insurer could also agree to initially cover you under a “reservation of rights.” This means that the insurer believes it might not have to defend and/or indemnify you, or that it acknowledges the obligation to defend only (the duty to defend is broader than the duty to indemnify). But it is covering the costs of defense until it can work through the coverage questions. The insurer may even file its own Declaratory Judgment action to have a court declare that it has no coverage obligations.

The reservation of rights does not come without consequences for the insurer. In Massachusetts, you will usually have the right to choose your own attorney, at the insurer’s expense. Some insurers are sneaky and will not inform you of your right to choose your own attorney. They will try to steer you toward their panel counsel, with whom they work on hundreds of other cases. Although the attorney will represent your business, will he be loyal to you, his one-time client? Maybe, but are you better off with a lawyer you choose who does not have an economic relationship with the insurer?  You should at least consult with your own lawyer to make sure your company’s best interests are being represented.

As always, the above is meant for general information, and is not legal advice.

By Adam P. Whitney

You’re Damned if Your Massachusetts Business Doesn’t Have a Well Drafted Operating Agreement, Partnership Agreement or Shareholder Agreement.

Posted: September 24, 2014 in Business Contracts, Corporate Formalities, Shareholder Rights
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They say that half of marriages end in divorce. This (perhaps made-up) statistic is equally true for business partnerships. Like an in-love, engaged couple, entrepreneurs often see their business partner relationship through rose-colored glasses. It hardly enters their mind that they could disagree on things, have different visions, and expectations, or that one side would abuse the relationship.

An operating agreement (for simplicity, the term will refer to all types of agreements between business partners, shareholders, members, etc.) is akin to an engaged couple’s prenuptial agreement. But it can and should be much more than that. Like the name implies, it should govern how the business is to work. In particular, what are the agreements among the partners? What role will each partner have in the work, in the management, in the finances? Will any partner receive a salary? How much? Are partners entitled to a job? What fiduciary duties does each owe to the business? How will profits be distributed. What about losses; will the partners have to invest more in the business? Will there be other employees? What happens if there is not enough business income to pay employees? What will the exit strategy/buyout be? Are the parties married to one another for any future business of the same type?

Many entrepreneurs have not even addressed all of these and other critical topics. This can be a recipe for future disagreements, or worse. Sometimes people go into a business in good faith, but they have different expectations about the business. If you are the primary financial backer, is your sweat equity partner expecting a salary from day one? If so, are you okay with funding the salary until the business generates substantial revenues?

Having litigated major and bitter disagreements between business partners, I have seen the ugly divorces of the business world. The infidelity. Desertion. Dishonesty. No one believes it will happen to them, but business partners lie, cheat and steel. They will fire you and freeze you out of a business. They will expose the company to liability. They will become drug addicts or non-functioning alcoholics. They will hire their do-nothing son-in-law who drives you crazy. They will spent all the profits on their own salary and salary of family members. The will start a competing business and try to take all the clients. They will exploit any ambiguities in an “off the shelf” operating agreement you got on-line. They will die, and their clueless spouse will become your business partner (a cross-sell agreement with life insurance is a topic for another day). Or you will die and they will take advantage of your spouse. I’ve seen all these things and more.

Your best first defense against misunderstandings is misdeeds is a specifically tailored operating agreement. This doesn’t mean that it is a panacea, or that you are defenseless. But courts respect operating agreements, especially if they are negotiated and tailored to the business at issue. You hope that your operating agreement keeps you out of court, but if you have to litigate or arbitrate over your business, you will be in a much, much better position. The relatively small amount of time and money that you spend at the beginning of the business formation (or before significant disputes develop) is some insurance against spending that same money hundreds of times over.

By Adam P. Whitney

You’re Damned if You Automatically Fire an Employee Who Has Cancer

Posted: September 12, 2014 in Disability Liability, Discrimination, Hiring and Firing
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I greatly admire employees who are able to work while battling a life threatening disease like cancer. Employers also face difficulties when they learn that one of their employees has cancer, albeit not as great as the employee’s struggles. If you are an employer of any size, sooner or later you will face these issues. The private employers whom I have counseled are, of course, very sympathetic. Most will bend over backwards to help their employee, often to the detriment of everyday operations.

Employers often wonder what they can and what they should do in these situations. Is the employee qualified to work? Do we have to give the employee time off? How much? Does it have to be paid? What do we do if the employee’s performance is slipping? Do we have to allow work from home? Do we have a right to obtain medical information? Can we replace the employee temporarily? Permanently? What if the employee does not want to come back to work? Do we have to provide severance? Do we have to pay the employee’s medical insurance?

The answers to all of these questions is beyond the scope of this article, and will vary according to the law of your jurisdiction and, as to federal law, the number of employees you have. What you should not do is make any negative assumptions about a person with cancer. That’s what this employer appeared to do: http://www.huffingtonpost.com/2014/09/11/woman-laid-off-cancer_n_5806194.html. It now appears that the employer is facing a public relations backlash, and potentially serious legal ramifications.

Under Massachusetts law, if you have six or more employees, you are subject to the provisions of state law comparable to the Americans with Disabilities Act (which currently applies when you have 15 or more employees). Generally speaking, under both laws, you cannot simply terminate someone because they are disabled or facing a disabling disease, or because you think that they are disabled. There may be protections under other laws as well.

If these laws apply, you have an obligation to consider reasonable accommodations, including a leave of absence. That does not necessarily mean that you have to provide a leave of absence, especially a lengthy or open-ended one. Each situation is different, and must be separately evaluated. What you also should not do is to automatically terminate an employee after 12 weeks of FMLA leave, which some employers have learned the hard way. You may also have to consider work at home, and intermittent time off for treatment, as well as other accommodations.

The above being said, you still have the right to operate your business. You owe it to your business and your other employees to set clear standards of conduct and performance and to hold employees accountable. Cancer does not discriminate. It strikes the best employees, and it strikes employees who are not the best. Some employees will want to come to work everyday, if possible. Others will, understandably, want to focus their energies on their treatment and their family. As an employer, you will have to carefully consider how to strike a balance between accommodating the employee, and not harming your business. I wish I could tell you that this was easy, but it’s not. But if you face it head on like other business challenges and seek sound advice, you can get through it.

By Adam P. Whitney

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