Observations on LB400

LB400 was introduced in the Nebraska Unicameral, in January of this year to raise the minimum wage of tip earners.  The current minimum wage in Nebraska for tip earners is $2.13 an hour with restaurants ensuring tipped staff obtain at least $9.00 per hour combined standard wage and tips.  The bill was to raise the minimum wage to $4.50 an hour, without indexing the wage to the regular minimum wage.

The bill includes raises the following questions to assure compliance with wage laws:

  1. Are the restaurants actually ensuring that the employees receive the $9.00 an hour combined standard wage plus tips or are they “gaming” the system to ensure more profits for the company?
  2. Can the employees genuinely rely on the tips of the patrons?
  3. Can “standard tips” accurately be reflected in the $9.00 per hour combined minimum standard wage plus tip?

As business owners, employers should consider reviewing current pay policies, including the often-used practice of tip pooling and/or tip splitting, in order to remain in compliance. Another compliance approach to consider would be the modification and reclassification of employees to non-tipped personnel.

 

https://trackbill.com/bill/nebraska-legislative-bill-400-change-the-minimum-wage-for-persons-compensated-by-way-of-gratuities/1636386/

 

The legislation is not finalized so there will be updates on the status of this bill.

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Omaha’s New North Makerhood

Omaha’s New North Makerhood is intended to develop a creative zone for artists, craftspeople and related businesses. It is also located in an opportunity zone, opening the potential for creative investment and capital options for businesses locating there as well.

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Hair Based Discrimination

Expansion of protected classes to include hair in New York City; given the examples cited in the article, it seems that this sort of discrimination is already largely covered by existing law prohibiting discrimination on the basis of race. Employers in Nebraska and elsewhere should be aware of those issues, and establish clear policies regarding dress code and grooming standards, with uniform and consistent enforcement.

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FCRA Disclosure Requirements

Two federal court decisions out of California should serve as reminders to employers that the requirements of the Fair Credit Reporting Act will be strictly interpreted and applied. In a class action against Walmart, and also in a Ninth Circuit Court of Appeals decision, FCRA disclosure requirements were at issue; the Ninth Circuit’s holding reaffirms the FCRA’s requirement that disclosures be in a standalone document, without including additional state-mandated disclosures. The Walmart case allowed claims that its disclosures were similarly faulty to move forward as a class action. To avoid potential liability, employers would do well to closely adhere to the disclosure requirements, as required by the explicit language of the Act; guidance on the issue can be found at the FTC’s website: https://lnkd.in/gtVY2Jq

Preventing Third Party Harassment

By Matthew G. Dunning

While most employers are aware of their legal obligation to protect employees from harassment by co-workers, supervisors, and managers, a recent case from Mississippi highlights the need to prevent harassment by third parties, including patients and customers. Previous cases have involved harassment by customers at restaurants and casinos, with differing results based on the specific facts.

The plaintiff from the case in Mississippi worked as a CNA for an assisted living center, and was assigned to care for a patient with dementia who had a history of violent and sexual behavior toward patients and employees. The plaintiff alleged that the patient repeatedly made sexual comments and requests, and that he would physically grab her. Management was aware of the behavior based on employee complaints, documentation in the patient’s chart, and firsthand observation. The plaintiff was ultimately terminated for allegedly taking a swing at the patient in a particularly abusive incident during which she was groped and punched repeatedly. Following another incident with a fellow resident, the patient was moved to a nearby all-male facility. Based on affidavits, deposition testimony, and other documentation, the lower court granted summary judgment to the assisted living center, and dismissed the case.

On appeal, the Fifth Circuit noted that Title VII does not prohibit all harassment; a plaintiff must subjectively believe there is severe and pervasive harassment, and the plaintiff’s belief must be objectively reasonable. Previous cases involving repeated verbal sexual harassment by home health and nursing home patients were determined not to be sufficiently severe and pervasive when the conduct was not “physically threatening or humiliating, and did not pervade the work experience of a reasonable nursing home employee.”  That is, potential liability must be considered in light of the specific environment, and the “unique circumstances involved in caring for mentally diseased elderly patients.”  The appeals court held that, contrary to the lower court’s opinion, the allegations of persistent and often physical harassment in this case were sufficient to send the case to a jury.  “The ultimate focus of Title VII liability is on the employer’s conduct; in the case of alleged harassment by a third party, “a plaintiff needs to show that the employer knew or should have known about the hostile work environment, yet allowed it to persist.”

Regardless of potential legal liability, employers should take care to protect employees from this type of behavior. Mandatory training regarding sexual and other harassment should be provided to all employees, and a clear and effective policy and complaint mechanism should be in place so an employee has the opportunity to make allegations, and have them addressed. Supervisory and management personnel should receive separate training on how to recognize harassment and other discrimination, and human resources personnel should be trained on conducting investigations and recommending action by management that will prevent the harassment from continuing.

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Virginia Expands the Virtual Meeting Space, Allowing Nonstock Corporations to Hold Annual Meetings in Cyberspace

Trying to find a location for your annual shareholder meeting, but concerned about cost and picking a place that is convenient for and will be attended by most of your members?  Virginia lawmakers recently enacted legislation with the aim to address these problems for nonstock corporations grappling with the difficulty of getting member participation at their annual meetings.  The Virginia General Assembly, effective July 1, 2018, passed House Bill 1205, which amended the Virginia Nonstock Corporation Act, allowing nonstock corporations to conduct annual and special meetings of members via electronic means, provided their Articles of Incorporation and bylaws do not require the meetings to be held at a specific location.  This allows nonstock corporations to move their meetings from a physical boardroom to a virtual boardroom.

Allowing virtual meetings for corporations is not a new phenomenon.  Delaware amended its General Corporation Law in 2000 allowing stock corporations to conduct virtual shareholder meetings.  In the age of the convenience of the Internet, many corporations have begun utilizing virtual meetings to reduce costs for both the corporation and individual shareholders, while increasing shareholder participation and board of director control over the structure of the meeting, as board of directors can limit any or all member communication.  Since 2000, additional jurisdictions have also begun allowing corporations to use online real estate and conduct their meetings without any in-person attendance.  Virginia, however, is one of the first jurisdictions to expand the use of virtual meetings from stock corporations to nonstock corporations as well.

Nonstock corporations are corporations that generally do not have owners or members that share in the corporation’s profit and are formed with no intention of generating a return of income.  Examples of these types of corporations are organizations that have Internal Revenue Code Section 501(c) tax-exempt status, such as charitable, fraternal, political, religious, trade, or civil organizations.  Nonstock corporations are typically managed by a board of directors and members have voting rights, just not a right to corporate profits.  Similar to the concerns of stock corporations preferring virtual meetings over physical meetings, nonstock corporations are also concerned with cost, convenience and member participation.  For example, without a bylaw specifying what constitutes a quorum, Section 13.1‑849 of the Virginia Nonstock Corporation Act only requires 10% of members to meet a quorum.

Virginia’s latest expansion allowing nonstock corporations a virtual means to hold annual shareholder meetings versus the confines of a physical venue is likely an attempt to remediate these problems and increase member participation.  It should be noted, Virginia House Bill 1205 does not alter notice requirements for the annual meetings.  The amendment also requires the nonstock corporation to implement reasonable measures to (1) verify that each person remotely participating is a member or proxy, and (2) provide the members a reasonable opportunity to participate in the meeting, vote on matters, and to read or hear the proceedings of the meeting.

While there is still little guidance on how nonstock corporations should organize virtual meetings with their members, it is yet to be seen how many nonstock corporations begin conducting virtual meetings or how many other jurisdictions follow suit and expand the ability of nonstock corporations to conduct virtual meetings.  As the Internet and technology, however, continue to connect the way people communicate, so too could formal corporate mechanisms enter the cyber world to conduct business meetings with their members.

© 2018 Vandenack Weaver LLC
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U.S. Supreme Court Expands Rights of States to Collect Tax on Internet Transactions

by James S. Pieper

Since the dawn of the Internet, online sellers have benefited from a line of United States Supreme Court precedent that prevented states from requiring out-of-state businesses to collect and remit sales tax on sales in states where the seller has no “physical presence.”

On June 21, 2018, the Court discarded its longstanding “physical presence” test, thus opening the door for state governments to impose a broader range of duties on remote sellers, including the duty to collect and remit sales tax.

In South Dakota v. Wayfair, Inc., South Dakota sought to defend its statute that imposed a duty on all retailers with more than $100,000 of sales or 200 transactions within the state to collect sales tax on transactions and remit the tax to the state.  For retailers with no physical presence in the state, the statute was clearly in violation of the historic interpretation of the Commerce Clause of the United States Constitution, which limits the ability of states to regulate “interstate commerce” unless there is a “substantial nexus” between the state’s interests and the commercial activity.

Prior court decisions concluded that a state could have no “substantial nexus” with a seller that had no “physical presence” in said state.  As a result, online sellers with no “brick-and-mortar” presence or employees working in a state were free from the obligation to collect tax on their sales.

In South Dakota v. Wayfair, the Court rejected its prior interpretations of the Commerce Clause and held that a “substantial nexus” could be created by online sales alone despite the lack of “physical presence.”  The decision was decided with a bare 5-4 majority.

As a practical matter, the majority of online sales already entail the collection of sales tax due to either requirements that were valid under prior law or voluntary compliance by larger online retailers (including amazon.com).  Some retailers with no physical stores, however, will lose the advantage of being able to undertake transactions without collecting tax (including the respondents in the case, wayfair.com, overstock.com and newegg.com).

It will be up to each state to set the parameters of which remote sellers might be exempt from collecting tax due to a lack of significant sales, and the Court did not set a constitutional standard for what level of sales would constitute a sufficient “substantial nexus” to allow a state to impose duties (only that South Dakota’s standards were more than sufficient).

Perhaps more importantly, by jettisoning the “physical presence” standard as inappropriate in an era of “substantial virtual connections,” the Court has raised the prospect of greater opportunity for individual states to tax and regulate the actions of businesses whose only connection to said state is via online presence.

All businesses that connect with customers in other states via online connections will need to have heightened awareness that state tax and regulatory requirements in those other states may now apply to those interactions due to the Court’s new reading of the scope of a state’s authority under the Commerce Clause.

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