In The News

Bone McAllester Norton Expands Emphasis on Estate Planning, Elder Law and Taxation

[caption id="attachment_11376" align="alignleft" width="200"]Jonathan R. Burns Jonathan R. Burns


Bone McAllester Norton PLLC is pleased to announce that Jonathan R. Burns has joined the firm.

Jonathan concentrates his law practice in the areas of estate planning, probate, elder law, corporate law, mergers and acquisitions, real estate and taxation.

“Adding Jonathan contributes to our strategic growth plan for the firm,” said Chairman Charles W. Bone. “He brings significant experience in the estate planning and taxation areas of law which is increasingly important to our clients.  He’s a welcome new member of our dynamic group of highly skilled attorneys.”

Jonathan received his J.D. from the University of Mississippi in 2010 and received his L.L.M. in Taxation from Washington University in St. Louis in 2011.  He graduated cum laude from Middle Tennessee State University in 2006 with a Bachelor in Business Administration degree.  Jonathan is licensed to practice in both Tennessee and Mississippi.

Before joining Bone McAllester Norton, Jonathan practiced law with Watkins & McNeilly where he was able to develop his skills in the areas of business law and estate planning.
Jonathan has prepared the following information about Tennessee Community Property Trusts that might be of interest to our clients and friends. - Charles W. Bone




TENNESSEE COMMUNITY PROPERTY TRUSTS



I have been honored by many clients who have entrusted their assets earned and retained over many years to my skills and advice.  We have many options to consider as we help clients with their important decisions, so we look for all possible ways to be of assistance.

In addition to having a proper estate plan in place that will minimize or eliminate federal estate taxes, a married couple can also incorporate into their estate plan an income tax savings mechanism that is unknown to most clients.

The Tennessee Community Property Trust Act of 2010 allows a married couple to establish a trust to hold property that will be treated as "community property."  The Internal Revenue Code provides for a step up in cost basis to fair market value for the entire amount of community property owned by a married couple upon the death of the first spouse.

In contrast, for a married couple that has joint property but does not live in a community property state or does not hold such property in a Tennessee Community Property Trust, at the death of the first spouse, only one-half of the joint property will receive a step up in cost basis to fair market value.

The benefit of a Tennessee Community Property Trust can be easily shown through example.  If a married couple in Tennessee jointly owns, not within a Tennessee Community Property Trust, stock worth $1,000,000 with a cost basis of $100,000, at the death of the first spouse, half of the stock will get a step-up in basis to fair market value for income tax purposes leaving the surviving spouse with a total cost basis in the stock of $550,000 ($500,000 for the step-up in basis to fair market value at the first spouse's death and $50,000 for the surviving spouse's half of the original cost basis).  If the surviving spouse sells the stock the day after the first spouse's death when the stock presumably still has a fair market value of $1,000,000, the surviving spouse will recognize gain upon the sale in the amount of $450,000 ($1,000,000 - $550,000), and with a potential capital gains tax rate of 20%, the surviving spouse would owe $90,000 in tax.

If instead the married couple transfers the stock worth $1,000,000 with a cost basis of $100,000 to a Tennessee Community Property Trust, at the death of the first spouse, all of the stock will get a step-up in basis to fair market value for income tax purposes.  If the surviving spouse sells the stock the day after the first spouse's death when the stock presumably still has a fair market value of $1,000,000, the surviving spouse will not have any gain to recognize as the surviving spouse's cost basis is equal to the stock's fair market value and therefore no tax will be owed.

We have found this relatively new concept to be very beneficial to many families in Tennessee.




Jonathan's Impact on the Middle Tennessee Community
"Jonathan has been a great legal adviser over the last few years.  I use his advice on everything and trust his opinion."
“Jonathan’s expertise and dedication to our Families' legal concerns and overall goals is truly exceptional based on my experiences as a Financial Advisor and individual.  Jonathan has taken the time to be there at the Hospital when an urgent change needed to be made, has provided exceptionally prompt answers to any and all legal questions we have ever had, and has served my family and Client’s with absolute integrity.
Jonathan has shown absolute dedication to our needs, incredible expertise in estate & trust planning, and above all Jonathan possesses a unique level of integrity like no attorney I have ever worked with.”

Bone McAllester Norton June Newsletter

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Bone McAllester Norton 2015 Highlights

Bone McAllester Norton 2015 Highlights
Clients and Friends,
Charles W. Bone - Bone Mcallester NortonWe've recently learned from the Nashville Business Journal that our firm ranks as the sixth largest law firm in Nashville (behind the five large, multi-state firms here). While not a surprise, this news provided an opportunity to reflect back to 2002 when a small group of us joined with a genuine sense of excitement.
 
"The creation of Bone McAllester Norton in 2002 is what I consider the most significant development of my career.  Every lawyer is treated as a partner, we embraced state-of-the-art technology, hired the best team, and aggressively pursued diversity."
Mike Norton wrote those words shortly before he passed away in 2015, the year we said farewell to our distinguished name partner and best friend.  Mike was a renaissance man in every sense of the word, a person with remarkable legal intellect but even more so, an incredible person who shared his love of art, music, film, baseball, postcards, postage stamps, food, and scripture with an untold variety of clients, friends, artists, and students of art and the law.
 
While we've grieved the loss of Mike in 2015 we have been lifted up by the unprecedented demand for the expertise of our firm's lawyers.  Our success in 2015 speaks to Mike Norton's legacy and his pride in the firm we founded. We invite you to share in our reflections on 2015.
 
BoneLaw Participates in Nashville Real Estate Boom
 
Charles Robert Bone was selected as lead counsel by Southwest Value Partners to assist in
its $125 million acquisition of the LifeWay Christian Resources campus in downtown Nashville.  According to the Nashville Business Journal, "the transaction was the second-largest sum of money ever paid for a Nashville property or building."

Distilleries Everywhere and Lots to Drink! - Tennessee moving forward as “Spirits Capital of the U.S.” 
 
Distillery Winery Brewery - Bone McAllester NortonTennessee has always been known for Jack Daniels and George Dickel, but over the past 5 years the distillery movement has positioned Tennessee to become the “Spirits Capital of the United States”.
 

In the Courtroom
 
Ed Yarbrough and Alex Little were honored to represent the victim in the Vanderbilt rape case before the Tennessee Supreme Court in a case of first impression to protect her privacy under the Tennessee Victim’s Rights amendment of the Tennessee Constitution.
 

Review Your Employees' Rates Now, in Anticipation of New FLSA Exemptions and More

This is an exciting time for Bone McAllester Norton, as we celebrate David Briley's election as Vice Mayor, the addition of a skilled litigator, awards and recognitions. We also have an important update about Fair Labor Standards Act changes that affect employees' pay. Click here to read more.

 

 

Bone McAllester Norton PLLC is a full-service law firm with 38 attorneys and offices in Nashville, Sumner and Williamson counties, Tennessee. Our attorneys focus on 18 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

 

 

Update: U.S. EPA and U.S. Army Corp Announce Final Clean Water Rule Today

By Sharon O. Jacobs

Today, the U.S. Environmental Protection Agency and the U. S. Army Corp of Engineers announced the final rule revising the definition of the Clean Water Act (“CWA”) regulatory term “waters of the United States.” The draft rule was previously discussed on March 27, 2014. The final rule includes eight categories of jurisdictional waters, maintains existing exemptions for certain categories of activities and waters, and adds additional exclusions for categories of waters not covered under the Act. This rule is projected to result in an increase in CWA jurisdiction and provide some clarification regarding which waters are covered by the CWA.

For the first time “tributary” and “tributaries,” “neighboring,” and “significant nexus” are defined in the new rule. The rule maintains existing exclusions for certain categories of waters and adds additional categorical exclusions that were previously applied by regulators. The rule recognizes jurisdiction for three basic categories: waters that are jurisdictional in all instances, waters that are excluded from jurisdiction, and a category of waters subject to a case-specific analysis to determine whether the water is jurisdictional.

Previous definitions of “waters of the United States” regulated all tributaries without qualification. The final rule defines “tributaries” as waters that are characterized by the presence of physical indicators of flow – bed and banks and ordinary high water mark – and that contribute flow directly or indirectly to a traditional navigable water, an interstate water, or the territorial seas. The rule states “adjacent waters” are “waters of the United States” and identifies three circumstances where waters will be “neighboring” and therefore “waters of the United States.” The rule also identifies certain waters that can be “waters of the United States,” where a case-specific determination finds a significant nexus between the water and traditional navigable waters, interstate waters, or the territorial seas.

The rule excludes certain waters, certain water features, groundwater, certain types of ditches, stormwater control features created in dry land and certain wastewater recycling structures created in dry land.

For more information, click here.

EPA Expands Definition of Solid Waste

By Sharon O.  Jacobs
On Tuesday, January 13, 2015, the U.S. Environmental Protection Agency’s (EPA) Administrator posted the final rule revising the definition of solid waste, also known as the DSW rule, expanding the definition of solid waste. In this new 2015 DSW rule, the EPA is imposing significant new regulatory requirements upon industry, pursuant to the Resource Conservation and Recovery Act, revising several recycling-related provisions and exclusions associated with the definition of solid waste.

The 122-page Federal Register notice includes changes of the current definition of solid waste, revised exclusions and lengthy explanations regarding the changes. The EPA estimates approximately 5,000 industrial facilities in 634 industries that handle roughly 1.5 million tons of hazardous secondary materials annually may be affected by the new rule. The facilities that will be affected most will be recyclers who handle metals and solvents. However, manufacturers of wood products, paper, printing, petroleum and coal products, chemicals, plastics, rubber products and nonmetallic mineral products will also be affected.

The rule affects certain types of hazardous secondary materials that are currently conditionally excluded from the definition of solid waste when reclaimed. There are six major regulatory areas that have been revised. The Federal Register summarizes those six areas, provides a brief overview and gives the EPA’s rationale for the changes.

More information about this rulemaking can be found here.

Uncertainty with Drones can Translate into Opportunity

If, like me, you have been following the developments in both the law and technology surrounding Unmanned Aerial Systems (UAS, or commonly known as "drones"), you know the area is fraught with uncertainty. This uncertainty can be translated into opportunity for bold entrepreneurs and investors with the risk-tolerance to move to the front of the line in this evolving industry.

A recent article in The Economist highlights how venture capitalists are emerging from the fear of being displaced by startups utilizing advancing technologies like drones. Of course, as the article  shows, having deep pockets helps as well.

Intel and Google are leading the way by investing in growing technologies whose business value is still largely speculative.  They believe, as I do, that the uncertainty lies in the application and timing of the systems, not in their eventual success.

Click here to read the article.

Jury Awards Nearly $500K for Sex Harassment and Retaliation

By Bryan E. Pieper

November 3, 2014

Last week, a federal jury awarded three former employees $499,000 against healthcare company EmCare, Inc. for sex harassment and retaliation. The plaintiffs alleged that the division CEO and other managers subjected Executive Assistant Gloria Stokes to “constant lewd sexual comments” that included comments about female body parts, derogatory references to women and sexual jokes. Ms. Stokes alleged that she complained about the harassment, but HR failed to take appropriate action.  The other two plaintiffs, Luke Trahan and Bonnie Shaw, complained to HR about the sexual comments and were fired six weeks later.  Title VII of the 1964 Civil Rights Act prohibits sex harassment and prohibits retaliation against employees who oppose sex harassment.

The jury awarded Ms. Stokes $250,000 in the sex harassment claim. While EmCare claimed Mr. Trahan and Ms. Shaw were fired for performance issues, the jury found that they were fired in retaliation for complaining about the sex harassment and awarded them $167,000 and $82,000, respectively, bringing the total award up to $499,000.

This jury verdict highlights several important rules for employers:

  1.  Employers must take employee complaints of harassment seriously by investigating thoroughly and taking appropriate action to prevent and correct any sexually harassing behavior.

  2.  Anti-harassment rules must apply to everyone and must be enforced against even the highest ranking company officers or owners.

  3. While an employer cannot stop managing an employee simply because the employee has complained about harassment, the employer must acknowledge the additional risk associated with terminating or disciplining such an employee. Recognizing that the timing may appear suspicious to a jury and the decision closely scrutinized, the employer should take additional care to make sure that the performance or other legitimate reasons for termination or discipline are well-supported by the evidence and consistently applied.


For more information about the EmCare jury verdict, read the EEOC's press release here.

Doing Business with Foreign Suppliers or Manufacturers? Beware Their Illegal Practices

By Bryan E. Pieper

Yesterday, the 9th Circuit Court of Appeals held that Nestle, Archer Daniels Midland and other companies that sell chocolate from Africa can be sued for importing cocoa harvested by child slave laborers in the Ivory Coast. Three former child slave laborers sued the defendant food manufacturers for allegedly using and selling the product of their slave labor, under a 1789 law allowing suits in U.S. courts for violations of international human rights.

The trial court dismissed the lawsuit, holding that the law did not apply to the defendant U.S. corporations’ alleged involvement in the illegal activities that occurred abroad. The Court of Appeals disagreed, holding that they could be sued in U.S. courts if their actions in the U.S. substantially contributed to human rights violations overseas.

The defendant companies argued that they were simply searching for the cheapest sources of cocoa. Writing for the dissent, Judge Johnnie Rawlinson agreed, arguing that the U.S. companies should not be held liable to the former child slave laborers for the abuse done to them by companies in Africa because the lawsuit did not show that the U.S. companies “acted with the purpose of aiding and abetting child slave labor.” Rather, their motive was merely to increase profits by obtaining cocoa from the cheapest source available.

The majority rejected this argument and reinstated the case, arguing that the defendant companies knew the suppliers were using child slave labor but did nothing to end it or even to stop using those sources. Writing for the majority, Judge Dorothy Nelson argued that the plaintiffs’ allegations were sufficient to establish that the defendant companies willingly accepted the benefits of slave labor, writing “Driven by the goal to reduce costs in any way possible, the defendants allegedly supported the use of child slavery, the cheapest form of labor available,” and that they “placed increased revenues before basic human welfare.”

You can find the entire court opinion here.

 

Bone McAllester Norton PLLC is a full-service law firm with 38 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 17 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

Where Is My Wine in Grocery Stores, Protecting Your Copyright & More

Bone McAllester Norton has important updates and announcements to share with you, our valued clients and friends, in our latest newsletter. Click here to read the latest on wine in grocery stores, which of our attorneys were named "Best Lawyers" and the advice Stephen Zralek gives about protecting your copyright.

Bone McAllester Norton PLLC is a full-service law firm with 38 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 17 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

White House Tightens Standards on Contractors Who Can Do Business with the U.S. Government

By Bryan E. Pieper

Last Thursday, President Obama signed the Fair Pay and Safe Workplaces Executive Order, designed to ensure that the U.S. government spends taxpayer money on contractors who comply with the law, pay their employees fairly and protect the safety and health of their employees. Congressional studies show that many companies that are guilty of large or repetitive wage and hour or safety and health violations continue to win billions of dollars in government contracts year after year. Allowing the worst or repeat offenders to compete for federal contracts without complying with pay and safety laws puts those contractors who play by the rules at a competitive disadvantage, according to the White House, which stated that the new standards for awarding federal contracts will help level the playing field and encourage violators to get into compliance.

To achieve this, the Executive Order provides that, before being awarded a large federal contract, a contractor must provide certain information regarding its compliance with labor and employment laws and take certain steps designed to protect its employees’ ability to enforce their rights under those laws.
  • Before an agency will award a contractor a federal contract worth more than $500,000, the contractor must report all labor and employment law violations for the past three years. Contracting agencies will screen for the worst actors with the most egregious violations or repeat violations to ensure that they do not get taxpayer funded contracts.  The goal, however, is not merely to prevent violators from getting federal contracts but to help more contractors come into compliance with workplace laws. Contractors with labor law violations will be offered the opportunity to receive early guidance on the violations and to remedy them. Contracting officers will take these steps into account before awarding a contract.
  • Contractors will be required to give employees specific information on their paystubs regarding hours worked, overtime hours, pay and any additions to or deductions from their pay so that employees can verify they are being paid what they are owed and that the pay is in compliance with wage and hour laws.
  • Before an agency will award a contractor a federal contract worth more than $1 million, the contractor must agree not to require its employees to sign arbitration agreements that prevent them from going to court for discrimination, sexual assault or harassment claims.  This would not apply to valid agreements already in place.
The White House contends that these new criteria will also improve federal contracting efficiency and result in greater returns on taxpayer dollars, as companies with workplace violations are more likely to encounter performance problems or to have projects delayed by litigation. These requirements likely will not become effective until the issuance of final regulations, after a period for public comment, which the White House estimates could be as late as 2016.

Some observers contend that requiring contractors not to make employees sign pre-employment arbitration agreements is in tension with the strong congressional policy in favor of arbitration that is expressed in the Federal Arbitration Act.  Others respond that the Executive Order is consistent with the congressional policy expressed more recently in the Department of Defense Appropriations Act of 2010, which conditions the award of any federal defense contract more than $1 million on the contractor agreeing not to require arbitration of certain employment claims.  For this reason, it is likely that the Executive Order may be challenged in court.

Click here for the Fact Sheet published by the White House.

 
 
Bone McAllester Norton PLLC is a full-service law firm with 38 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 17 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.
 

 

Keep Tennessee Courts Fair & Impartial

Bone McAllester Norton's board of directors sent out a memo yesterday to friends, colleagues and clients, urging voters in Tennessee to retain the state’s current appellate judges. The question, on the current ballot, asks voters to retain or replace three members of the Tennessee Supreme Court. The board unanimously approved a resolution supporting the retention of these judges.

To read the full memo, click here.

 

Bone McAllester Norton PLLC is a full-service law firm with 39 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 17 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

Final Rule for Cooling Water Intake Structures-Existing Electric Generating Plants and Factories

By Sharon O. Jacobs

On May 19, 2014, the U.S. EPA released the final regulation to the Clean Water Act that follows through on a settlement agreement where they agreed to issue regulations aimed at reducing injury and death to fish and aquatic life caused by cooling water systems at large power plants and factories. Section 316(b) of the Clean Water Act requires National Pollutant Discharge Elimination System (NPDES) permits for facilities with cooling water intake structures to ensure that the location, design, construction and capacity of the structures reflect the best technology available to minimize harmful impacts to the environment. The rule applies to facilities that use cooling water intake structures and have or require an NPDES permit.

Many industrial sectors are affected (see the definitions in 40 CFR 125.81, 125.91 and 125.131). The new rule covers roughly 1,065 existing facilities that are designed to withdraw at least 2 million gallons per day of cooling water. EPA estimates that 521 of these facilities are factories, and the other 544 are power plants.

  • • Existing facilities that withdraw at least 25 percent of their water from an adjacent waterbody exclusively for cooling purposes and have a design intake flow of greater than 2 million gallons per day are required to reduce fish impingement under the final rule. The owner or operator of the facility will be able to choose one of seven options for meeting best technology available requirements for reducing impingement.

  • • Facilities that withdraw large amounts of water--at least 125 million gallons per day--are required to conduct studies to help their permitting authority determine whether and what site-specific controls, if any, would be required. This process will include public input.

  • • New units that add electrical generation capacity at an existing facility are required to add technology that achieves one of two alternatives under the national best technology available standards for entrainment for new units at existing facilities. The two alternatives are explained in the regulation.


For more detailed information regarding the new Section 316(b) Clean Water Act rule, visit the Federal Register website.

New Federal Rule Proposes to Expand Jurisdiction of the Federal Clean Water Act

By Sharon O. Jacobs

On March 25, 2014, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) jointly proposed a new rule defining the scope of waters protected under the Clean Water Act (CWA). The rule would expand EPA’s jurisdiction to waters that were previously not subject to EPA’s jurisdiction as “waters of the United States.” The new rule, if it becomes final, may allow the EPA or the Tennessee Department of Environment and Conservation to expand its jurisdiction to small bodies of water on private property. Under the joint proposed rule, all natural and artificial tributaries and wetlands that are adjacent to or near larger downstream waters would also be subject to the federal CWA. The EPA and the Corps purportedly proposed the new rule in an effort to clarify the CWA program. However, the end result appears to be an expansion of the scope of “waters of the United States” protected under the CWA. Specifically, the proposed rule provides that under the CWA:

    • • Most seasonal and rain-dependent streams are protected.
    • • Wetlands, ponds and other waters near rivers and streams are protected.
    • • Other types of waters may have more uncertain connections with downstream water, and protection will be evaluated through a case-specific analysis of whether the connection is or is not significant.

The proposed rule defines “waters of the United States” as “traditional navigable waters; interstate waters, including interstate wetlands; the territorial seas; impoundments of traditional navigable waters, interstate waters, including interstate wetlands, the territorial seas and tributaries, as defined, of such waters; tributaries, as defined, of traditional navigable waters, interstate waters or the territorial seas; and adjacent waters, including adjacent wetlands.” In addition, the agencies propose that “other waters” (those not fitting in any of the above categories) could be determined to be “waters of the United States” through a case-specific showing that, either alone or in combination with similarly situated “other waters” in the region, they have a “significant nexus” to a traditional navigable water, interstate water or the territorial seas. However, at this time, the “significant nexus” has not been defined. The agencies seek public comments on alternate approaches to determine which waters are jurisdictional as “other waters.”

The proposed rule allows the EPA and the Corps to seek comment on a case-by-case basis on whether the aggregate effect of geographically isolated wetlands and other waters that “significantly” affect the physical, biological and chemical integrity of federally protected downstream waters are jurisdictional pursuant to the CWA. An interpretive rule was also included which clarifies that 53 specific conservation practices identified by the Agriculture Department's Natural Resources Conservation Service to protect or improve water quality won't be subject to dredge-and-fill permits under Section 404 of the CWA.

The agencies seek public comments on the proposed rule. Public comments will be accepted for 90 days after the date of the publication in the Federal Register. Because the rule alludes to other bodies of water, which could be regulated, it is important for the public to review the proposed rule carefully and provide comments. The rule is a game changer for small bodies of water if it becomes final.

The public should submit feedback by identifying Docket ID No. EPA–HQ–OW–2011–0880 using one of the following methods:

    • • Mail: Send the original and three copies of your comments to: Water Docket, Environmental Protection Agency, Mail Code 2822T, 1200 Pennsylvania Avenue, NW, Washington, DC 20460, Attention: Docket ID No. EPA–HQ–OW–2011–0880.

 

From What Every HR Department Needs to Know to Restaurant Openings, Bonelaw Has the Latest Updates

Bone McAllester Norton has important updates and announcements to share with you, our valued clients and friends, in our latest newsletter. Click here to read about the impact a recent lawsuit could have on common severance agreement language, how our Alcoholic Beverage Law group opened two high-end restaurants in Memphis, awards and accolades our attorneys have been given and our involvement with Habitat for Humanity.

EEOC Attacks Common Severance Agreement Language

By Bryan E. Pieper The U.S. Equal Employment Opportunities Commission (“EEOC”) has filed a lawsuit against CVS Pharmacy, Inc., claiming that a severance agreement CVS has employees sign violates the employees' rights to communicate with the EEOC and to participate in EEOC investigations. Click here for the full lawsuit. Many of the provisions targeted by the EEOC are considered fairly typical in employee severance agreements. As is common in severance agreements, the employer, CVS, agrees to give the employee severance benefits, conditioned on the employee making certain promises in exchange. The EEOC takes issues with those required promises, specifically identifying the following provisions:

    • The employee releases any and all claims he or she may have against CVS;
    • The employee agrees not to file any claims again CVS in any court or agency;
    • The employee agrees not to make any statements that disparage CVS or its business;
    • The employee agrees not to disclose to any third party any of CVS's confidential information, which is defined to include personnel information;
    • The employee agrees to cooperate with CVS by notifying CVS promptly if the employee is contacted regarding any lawsuit or administrative proceeding against CVS; and
    • If the employee breaches the severance agreement, CVS will be entitled to an immediate injunction, and the employee will reimburse CVS for any attorneys’ fees incurred enforcing the agreement.

In its Complaint, the EEOC asserts that the combination of the above provisions deprives an employee of his Title VII right to participate in and cooperate with an EEOC investigation and enables an employer to conceal a pattern of discrimination by thwarting the EEOC's ability to learn about and investigate employment discrimination. The EEOC alleges that in 2012, more than 650 individuals signed the CVS severance agreement. "Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law," explained the EEOC’s lead attorney on the case. "For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make." Click here to read the EEOC's full press release. The EEOC asked the court to do the following:

    • • Enjoin CVS from continuing to use the current version of the severance agreement;
    • • Reform the agreement to comply with Title VII, both for individuals who have already signed it and for those who sign it in the future;
    • • Require CVS to issue a corrective communication informing its workforce of its right to file an EEOC charge and to initiate and respond to communication with the EEOC;
    • • Require CVS to provide its management with additional training regarding an employee's Title VII right to file charges and participate in EEOC investigations; and
    • • Provide a window of 300 days for any former employee who has signed the severance agreement to file a charge of discrimination with the EEOC.

Because employers typically enter into severance agreements and pay severance pay in order to get the peace of mind that they have made a clean break with an employee, the agreement provisions discussed above are rather common. This clean break is often essential to an employer’s willingness to provide non-mandatory severance benefits in the first place. However, the EEOC contends this lawsuit is part of its new emphasis on attacking systemic patterns of discrimination and the methods employers use to protect and hide them. This is consistent with the EEOC's practice of using investigation of an individual charge of discrimination as an opportunity to look for class or group claims, which would be difficult if all former employees are bound to silence. Employers are encouraged to have their current severance agreements reviewed by counsel and to keep an eye on this case as it progresses through the courts.

EEOC Attacks Common Severance Agreement Language

By Bryan E. Pieper The U.S. Equal Employment Opportunities Commission (“EEOC”) has filed a lawsuit against CVS Pharmacy, Inc., claiming that a severance agreement CVS has employees sign violates the employees' rights to communicate with the EEOC and to participate in EEOC investigations. Click here for the full lawsuit. Many of the provisions targeted by the EEOC are considered fairly typical in employee severance agreements. As is common in severance agreements, the employer, CVS, agrees to give the employee severance benefits, conditioned on the employee making certain promises in exchange. The EEOC takes issues with those required promises, specifically identifying the following provisions:
  • The employee releases any and all claims he or she may have against CVS;
  • The employee agrees not to file any claims again CVS in any court or agency;
  • The employee agrees not to make any statements that disparage CVS or its business;
  • The employee agrees not to disclose to any third party any of CVS's confidential information, which is defined to include personnel information;
  • The employee agrees to cooperate with CVS by notifying CVS promptly if the employee is contacted regarding any lawsuit or administrative proceeding against CVS; and
  • If the employee breaches the severance agreement, CVS will be entitled to an immediate injunction, and the employee will reimburse CVS for any attorneys’ fees incurred enforcing the agreement.
In its Complaint, the EEOC asserts that the combination of the above provisions deprives an employee of his Title VII right to participate in and cooperate with an EEOC investigation and enables an employer to conceal a pattern of discrimination by thwarting the EEOC's ability to learn about and investigate employment discrimination. The EEOC alleges that in 2012, more than 650 individuals signed the CVS severance agreement. "Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law," explained the EEOC’s lead attorney on the case. "For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make." Click here to read the EEOC's full press release. The EEOC asked the court to do the following:
  • • Enjoin CVS from continuing to use the current version of the severance agreement;
  • • Reform the agreement to comply with Title VII, both for individuals who have already signed it and for those who sign it in the future;
  • • Require CVS to issue a corrective communication informing its workforce of its right to file an EEOC charge and to initiate and respond to communication with the EEOC;
  • • Require CVS to provide its management with additional training regarding an employee's Title VII right to file charges and participate in EEOC investigations; and
  • • Provide a window of 300 days for any former employee who has signed the severance agreement to file a charge of discrimination with the EEOC.
Because employers typically enter into severance agreements and pay severance pay in order to get the peace of mind that they have made a clean break with an employee, the agreement provisions discussed above are rather common. This clean break is often essential to an employer’s willingness to provide non-mandatory severance benefits in the first place. However, the EEOC contends this lawsuit is part of its new emphasis on attacking systemic patterns of discrimination and the methods employers use to protect and hide them. This is consistent with the EEOC's practice of using investigation of an individual charge of discrimination as an opportunity to look for class or group claims, which would be difficult if all former employees are bound to silence. Employers are encouraged to have their current severance agreements reviewed by counsel and to keep an eye on this case as it progresses through the courts.

Winter 2013 Newsletter Features Super Lawyers, New Attorneys and an MLK Save-the-Date

2013 has been a tremendous year for Bone McAllester Norton, and we have you, our valued clients and friends, to thank. Our latest newsletter has important updates and announcements, including new attorneys and a save-the-date for our annual MLK Fellowship Breakfast.

Click here to read more.

Join Us for Blow Up! An Entrepreneur-Focused Panel Discussion

Bone McAllester Norton attorney Anne Sumpter Arney will serve as a panelist in the Nashville Business Journal's upcoming Entrepreneur Exchange discussion and speed mentoring, scheduled for Thursday, October 10.


If you are an entrepreneur--or have dreams of being one--we hope you can join us for this event!

Click here to read more.

 

September 23 HIPAA Omnibus Final Rule Compliance Date Nears

By Anne Sumpter Arney

Earlier this year, the government published the final regulations (the “Final Rule”) implementing modifications of the rules under the Health Insurance Portability and Accountability Act (HIPAA) and provisions which were enacted in the Health Information Technology for Economic and Clinical Heath Act (HITECH). With the September 23 Final Rule compliance date looming, medical professionals and institutions need to ensure they understand the modifications to their HIPAA obligations and take all necessary steps to review and update their compliance. The following areas are among those that have been modified by the Final Rule: the definition of business associate; the required terms in the business associate agreement; a patient’s right to access his protected health information (PHI); a patient’s right to restrict disclosures of PHI; the rules governing security breach notifications; required information in the notice of privacy practices; the disclosure and use of PHI in marketing, sales or fundraising activities; and enforcement.

The Final Rule expands the definition of business associate. A business associate now also includes personal health record vendors, patient safety organizations and certain subcontractors of a business associate and others who maintain and store PHI. The Final Rule also requires some modification of business associate agreements to include additional obligations.

The Final Rule expands individual rights in several important ways. Patients can now request their medical records in electronic format, which must be produced electronically within 30 days, if the records are readily producible. There are also new rights for a patient to restrict certain disclosures of PHI to a health plan where the individual, a family member or other person pays out of pocket in full for the healthcare service or item. The Final Rule also changes how PHI can be used and disclosed for marketing and fundraising purposes and now explicitly prohibits the sale of PHI without an authorization.

The rules governing breach notification obligations have been amended. Under the Final Rule, any unauthorized access, use or disclosure is now presumed to be a breach unless the covered entity determines there is a low probability the PHI has been compromised. The standard used for risk assessment has been changed from a risk of harm to risk of compromise standard. There are four specific factors that must be considered in making the risk assessment. Further, the limited data set exception has been abolished by the Final Rule.

In the area of enforcement, the Final Rule increases penalties for noncompliance based on a tiered level of negligence for violations occurring after February 18, 2009. The maximum potential penalty is $1.5 million per violation.

The Notice of Privacy Practices must be updated to reflect the changes in the Final Rule, including those related to breach notification, disclosures and marketing of PHI.

Although several of the changes required by September 23 have been briefly summarized here, this is just an overview of the Final Rule and should not be relied upon except as a reminder to review and update your compliance obligations under HIPAA. For assistance in implementing these changes or for additional information on how these changes may affect your practice, please contact one of the attorneys in the Healthcare Practice Group at Bone McAllester Norton.