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2008 Legal News

EMPLOYMENT LAW (FEDERAL), LITIGATION, US SUPREME COURT DECISIONS, TAX LAW, EMPLOYMENT LAW – NJ, “GOLDEN HANDCUFFS” INCENTIVE PLAN, REAL ESTATE/ENVIRONMENTAL LAW – PA:

1. Employment Law – Recent changes to the Federal Family & Medical Leave Act (FMLA) (applying generally to companies with 50 or more employees), require that such leave be afforded to employees to care for a spouse, child or parent (or “next of kin”) who becomes seriously ill or injured while serving in the line of duty in our military. An employer may be required to extend up to 26 weeks of annual leave (rather than the 12 weeks per year normally applicable under the Federal Act) to such eligible employee caring for a covered servicemember. There is also an allowance for leave for immediate family members in cases of certain “qualifying exigencies,” which will likely mean troop mobilizations, calls to active duty and similar circumstances. This Federal leave remains unpaid leave, unless an employer designates otherwise. If this law applies to your workers, it is likely wise to update your FMLA employee notice, often via poster-notice and employee handbook, to reflect these changes.

FOR PRIOR LEGAL UPDATES, PLEASE CONTACT ONE OF OUR ATTORNEYS.

In the area of pending (not yet passed) legislation: a) there are existing proposals to revise other key areas of the FMLA, including medical certifications and the definition for “continuing treatment” of a serious health condition; and b) New Jersey has proposed to both i) impose greater sanctions than Federal law on employers who knowingly hire illegal immigrants and ii) become just the 3rd state in the Nation to (indirectly) require paid family leave under New Jersey’s separate state arrangement.

 

2. Litigation – Recent amendments to the Federal Rules of Civil Procedure have made it clear that case litigants must be prepared to submit all of their discoverable electronic documents (emails, etc.) to their adversary early-on in the lawsuit process (along with other “old-fashioned” paper discovery), and that a failure to do so can lead to enormous fines and other Court sanctions, as was evident in the Qualcomm v. Broadcom case that made recent national headlines. The upshot may be that it is critical, if you think your business is headed to litigation, to ensure that you maintain, and have full access to, all pertinent “e-documents.”

 

3. United States Supreme Court Decisions – In a products liability case that should give some comfort at least to a limited segment of the business community, the US Supreme Court just ruled that a case claiming injuries under certain state law, allegedly caused by a particular medical device, could not proceed – the state claims being “pre-empted” – because the allegedly faulty device had already been pre-approved under pertinent Federal (here, Food & Drug Administration) regulations.
On the other hand, the US Supreme Court also recently expanded the potential liability of certain pension plan fiduciaries for failure to follow investment instructions of a plan participant. Before this decision, generally only fiduciary breaches affecting an entire plan, rather than one participant, could give rise to such (ERISA-based) claims. Perhaps the watchword here is that employer sponsors of such plans, and the plan fiduciaries, ought to be satisfied that plan documentation, and operational procedures, are current and clear.

 

4. Tax Law – IRS Mileage Rate Increase — In response to recent gasoline price increases, the Internal Revenue Service recently announced a mid-year increase in the optional standard mileage rates. The new rate has been increased to 58.5 cents per mile for the period from July 1 through December 31, 2008. This is an eight (8) cent increase from the rate for the first 6 months of 2008. The IRS notes that taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business purposes.

 

5. Employment Law – New Jersey Paid “Family Leave”New Jersey recently amended its existing “family leave” law to allow for part of such time to be paid leave. The eligibility requirements are essentially the same as they were under the law prior to this amendment (when all leave was unpaid), except that the new paid portion of leave runs for 6 weeks in a 12 month period (rather than 12 weeks in a 24 month period with the unpaid arrangement). The money to fund this program (at least to begin with….) will be in the way of an increase in the employee’s payroll deduction for NJ’s unemployment compensation program, beginning January 1, 2009. Eligible employees will be able to start taking such paid leave beginning July 1, 2009. As presently designed, an employee on paid family leave will be entitled to 2/3 of his/her compensation, up to $524/week.

 

6. “Golden Handcuffs” Incentive Plan Gets Court OK – Also in NJ, its State Supreme Court recently approved an employee stock purchase plan that included forfeiture provisions if a participant quit his/her job before full vesting. The plan was put in place by Smith Barney Co. to try to keep its brokers from quitting. The plan allowed those brokers to elect to direct some of their compensation to the purchase of restricted stock of Smith Barney’s parent company, Citigroup, at a well below market price. The “hook” was that the stock ownership did not fully vest until completion of a 2-year period, and employees who quit before that period forfeited their interest in any such unvested stock. There were, obviously, many nuances to the plan – as well as to the Court opinion – but, in upholding it, the Court mentioned facts including that the participating brokers had the right to any dividends from such stock, as well as the right to vote it, during the 2-year period; and that plan participation was entirely optional, with the risk of such forfeiture (as well as other risks and terms) plainly disclosed, in writing, to the participants.

 

7. Real Estate/Environmental Law – PA Environmental Covenants Act — On the other side of the river, in matters of real estate, Pennsylvania recently adopted changes to the way an owner of contaminated property must deal with disclosure of the contamination. Previously, again generally, deeds to certain such real estate needed to describe the contamination and any property usage limits due to same; now a specific “environmental covenant” must generally be submitted to PA’s DEP (Department of Environmental Protection) for approval, and that covenant must also be filed in the county/ies where the land is located. Another “highlight” of the new law is that pre-existing environmental deed notices/restrictions (as per the prior law) must be converted to environmental covenants by approximately the end of the year 2012.

 

For prior Legal Updates, please contact one of our attorneys.

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