Taking Care of Business – Emerging legal issues impacting the business community.

12 Nov

US DOL Seeks to Clarify Fluctuating Workweek Pay Method

Under the current U.S. Department of Labor (DOL) regulations, if certain conditions are met, an employer may pay an employee who works fluctuating hours a fixed salary for all hours worked and then an additional half-time for all hours over 40–a number that decreases as the number of hours increases. Uncertainty regarding this fluctuating workweek method has resulted in many employers opting not to use it. However, on November 5, 2019, the DOL announced a proposed rule that seeks to clarify that employers may provide additional pay such as bonuses or premiums to employees subject to the method, even when the additional pay is tied to the number of hours worked, without jeopardizing the use of the method. (more…)

05 Nov

Succession Planning and Transitioning Your Business Leadership to the Next Generation

This post was originally published by Michael Verrill at The Sharp Financial Group.

After years or even decades at the helm of a business, all business leaders must eventually pass the torch to someone else. For business leaders who are also parents, the “someone else” is very often a son or daughter. Unfortunately, despite the idealistic image many mothers and fathers have of passing their business on to a daughter or son, the reality of planning a business succession strategy is far more complicated.

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14 Oct

Culture Shock: When Two Culturally-Different Enterprises Combine

By: Carl Koerner

Client issues often arrive like schools of fish – rapidly and in huge numbers. Sometimes this is the result of external events such as tariffs, shifts in the credit market, constraints on supply or falling demand. But sometimes there are no external events and I am left to conclude that it is just something in the air (cue Phil Collins), karma perhaps. Lately, I have been working with several clients who have been grappling with the challenges that come when business enterprises of different cultures combine. (more…)

The Long Arm of the Law Lengthens: What the <i>U.S. ex rel. Medrano v. Diabetic Care RX, LLC</i> Settlement Means for Private Equity Investors

07 Oct

The Long Arm of the Law Lengthens: What the U.S. ex rel. Medrano v. Diabetic Care RX, LLC Settlement Means for Private Equity Investors

By: Lori Smith and Dana Petrillo

In March 2018, White and Williams issued an alert covering the Department of Justice’s (DOJ) intervention in the False Claims Act (FCA) case United States ex rel. Medrano v. Diabetic Care RX, LLC, No. 15 Civ. 62617 (S.D. Fla.). We noted at the time that this case “should put private equity firms and their partners on notice of possible expansion of regulatory scrutiny in FCA complaints,” because, in an unprecedented move, the DOJ for the first time named a private equity (PE) owner in an FCA complaint-in-intervention alongside the portfolio company accused of making false claims.

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Delaware Court Of Chancery Extends <i> MFW </i> Framework to Board Decisions on Controlling Party Compensation

27 Sep

Delaware Court Of Chancery Extends MFW Framework to Board Decisions on Controlling Party Compensation

By: Marc Casarino, Lori Smith and Ryan Udell

It is a basic precept of Delaware corporate law that a corporation is managed by its board of directors. One of the board’s key managerial functions is the determination of executive compensation levels – a decision typically entitled to great judicial deference. When the board’s decision as to executive incentive compensation is submitted to stockholders for approval, and such stockholder approval is given, the decision is entitled to even greater deference. However, in Tornetta v. Musk, et al., C.A. No. 2018-0408-JRS, decided September 20, 2019, The Court of Chancery highlights an important exception to the general rule when the recipient of the compensation package is also a controlling stockholder.

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29 Aug

Signed, Sealed, Delivered, I’m (Not) Yours: How a Lapse in Record Keeping Can Lead to Non-Binding Contracts

By: Lori Smith and Gwenn Barney

Usually, once a contract is signed, sealed and delivered, it is a binding agreement between the parties. However, a recent Delaware case serves as a reminder that a murky path to a signed agreement and lack of good record-keeping can lead to a finding of non-enforceable contracts. (more…)

08 Aug

Delaware Supreme Court Clarifies That a Response to a Books and Records Demand Is Not Presumptively Confidential

By: Marc Casarino

Section 220 of the Delaware General Corporation Law permits stockholders to request inspection of a corporation’s books and records. This access is not unlimited. For example, the stockholder must demonstrate a proper purpose, such as valuing its investment or investigating mismanagement. Further, Section 220(c) provides that “the Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other or further relief as the Court may deem just and proper.” Therefore, beyond the statutory access restrictions, corporations often seek limitations on the disclosure and use to which the stockholder may put the information learned from the inspection. The most frequent limitation is a confidentiality order. Indeed, confidentiality orders have become so ubiquitous that a presumption of confidentiality pervades Section 220 inspections. (more…)

06 Aug

IRS Reduces Affordability Requirement for Employers’ Healthcare Coverage

By: Stephen Bowers

Employers subject to the Affordable Care Act’s employer mandate (generally, those with 50 or more full-time equivalents) are required to offer qualifying, affordable health insurance coverage to substantially all full-time employees in order to avoid significant penalties. Note that “full-time equivalents” include both full-time employees, as well as part-time or temporary employees, if the total number of hours worked is sufficient. It is also important to note that the number of employees is determined on a “controlled group” basis, meaning that even employers with a sufficient level of common ownership are counted together, even if their business operations are unrelated. (more…)

26 Jul

Third Circuit Decision Highlights Important Distinction Between Directors and Board Observers

By: Lori Smith, Ryan Udell and Adam Chelminiak

A recent decision by the U.S. Court of Appeals for the Third Circuit offers an important reminder of the distinction between the roles (and exposure to liability) of corporate directors and board observers. In a precedential opinion on a matter that previously lacked judicial guidance, the appeals court held that as a matter of law the functions of the defendant nonvoting board observers were not “similar” to the functions of board directors for purposes of imposing liability under Section 11 of the Securities Act of 1933.

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25 Jul

FCC Proposes Pilot Program to Fund and Promote Telehealth in Underserved Communities

By: Ryan Udell and Patrick Devine

The Federal Communications Commission (FCC) recently took another significant step on the path towards expanding the availability of connected healthcare for certain underserved communities. Through the creation of a Connected Care Pilot Program (CC Pilot Program), the FCC aims to increase access to remote healthcare for patients who do not live near physical facilities, low-income urban patients and veterans, thereby promoting quality care and better outcomes. (more…)

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