Category Archives: Business

Show Me the (Same Amount of) Money!

By on June 21, 2018

The state’s new pay equity law, which amends the Massachusetts Equal Pay Act (“MEPA”), will take effect on July 1, 2018.  It is one of the strongest pay equity laws in the country, and subjects employers to double damages and attorneys’ fees in the event of a violation.  Moreover, it is a “strict liability” statute.  Thus, whether or not an employer intends to discriminate against employees of one gender is “irrelevant” to the analysis.

The amendments prohibit employers from, among other things:

• Paying different wages to people of different genders who perform “comparable work,” unless the difference in salary is attributable to one (or more) of six enumerated statutory factors;

• Asking job applicants about their wage or salary history;

• Decreasing the wages of an employee solely to close the wage gap;

• Retaliating against employees for exercising their rights under MEPA.

The revisions also establish a safe harbor provision for employers who perform self-evaluations of their pay practices.

What Does “Comparable Work” Mean?

MEPA defines “comparable work” as work that “requires substantially similar skill, effort, and responsibility” that is performed under similar working conditions.  Employers should not assume that a job title, or even a job description, necessarily determines comparability.  In fact, employees need not even be in the same business unit or department in order have “comparable” jobs.  Notably, this is a broader definition than the “equal work” standard under federal law.

Even if employees are in comparable roles, however, employers are permitted to pay them different salaries if the difference is based on of one (or more) of the following factors:

• A seniority system (as long as seniority is not affected by pregnancy, parental or family leave);
• A merit system;
• A system that measures earnings by quantity or quality of production, sales, or revenue;
• The geographic location in which a job is performed;
• Education, training, or experience, as long as these factors are reasonably related to the job in question; and
• Travel that is a regular and necessary part of the job.

What Employers Should Know About the Safe Harbor Provision

In order to trigger the safe harbor provision, which establishes an affirmative defense against liability for claims of pay discrimination, an employer must have conducted a “reasonable and good faith” pay audit within the previous three years (and before an employee files an action), and must demonstrate that it is making “reasonable progress” towards eliminating wage differentials across genders.

Self-evaluations not only help employers identify and rectify wage gaps, they guard against liquidated damages in the event of a judgment against the employer, even if the evaluation was not “reasonable” in detail and scope.

Guidance for Employers

The Massachusetts Attorney General’s Office has issued a Guidance that addresses the amendments.  While the Guidance does not have legal force, it is a useful compliance tool and a good place to start if you have basic questions about how to ensure you are compensating your employees equally across genders for “comparable work.”  However, employers should bear in mind that “the complexity of the analysis required will vary significantly depending on the size, make-up, and resources of each employer”; the Guidance does not, and cannot, address the many fact-specific situations that may arise at any given place of employment.

In addition to the Guidance, the AG’s Office has generated a “Pay Calculation Tool” to help employers identify and evaluate gender-based pay gaps.  Smaller employers with clearly defined groupings of comparable jobs and relatively simply pay structures may benefit from using the tool, at least as a first step; it is not appropriate for large pay groups or complicated pay structures.  Furthermore, the data the tool generates may be discoverable in litigation or government investigations, so employers should consult with counsel before conducting any self-evaluation.

Massachusetts Pregnant Workers Fairness Act Takes Effect

By on April 25, 2018

As of April 1, 2018, all Massachusetts employers with six (6) or more employees are subject to the state’s new Pregnant Workers Fairness Act (the “Act”).

In light of the pre-existing federal law in this area, what is most notable about the Act is that it requires covered employers to provide:

• non-exempt and exempt employees with reasonable breaks and an appropriately private place to express breast milk;
• written notice to their employees regarding the rights provided under the Act; and
• reasonable accommodation(s) to employees on the basis of pregnancy and pregnancy-related conditions.

Reasonable accommodations may include thing like frequent or longer breaks, light duty, or a modified work schedule.

It is unlawful to retaliate against employees for requesting such an accommodation. Likewise, employers cannot deny an employment opportunity to an employee if the denial is based on the employer’s knowledge that it would have to provide the employee a reasonable accommodation, nor can an employer refuse to hire someone on the basis of pregnancy or a pregnancy-related condition, provided that person can perform the job (with a reasonable accommodation, if necessary).

Employers must provide the required written notice in a handbook, pamphlet, or other appropriate form to:

• current employees on or before the effective date of the Act;
• a newly-hired employee at the time of his or her hire; and
• any employee who notifies the employer of a pregnancy or a pregnancy-related condition, within 10 days of such notice.

Employers may satisfy the written notice requirement using the two-page Pregnant Workers Fairness Act Guidance published in part for this purpose by the Massachusetts Commission Against Discrimination (MCAD). The MCAD has also published a helpful Q&A regarding the Act.  Should you have questions concerning compliance with the Act or other matters, speak with an experienced employment attorney.

UPDATE: Airbnb Hosts Beware: Boston Proposes Regulations on Short Term Rentals

By on April 16, 2018

Airbnb Hosts Beware, as the Massachusetts Legislature is now considering a bill to tax Airbnb and the short term rental industry.

Recently, the Massachusetts House of Representatives passed a bill (H 4327) that places a tax on short-term rental units as well as establishes a state registry of short-term rentals. The short-term rental tax established by the bill is imposed via a tired system depending on the amount of units any one host rents/owns. More specifically, and based on the short-term rental rent:
• Hosts that rent two or fewer units (“Residential Hosts”) are subject to a 4% tax;
• Hosts that rent three to five units (“Investor Hosts”) are subject to a 5.7% tax on the short-term rental rent; and,
• Hosts that rent more than six units (“Professionally Managed Hosts”) are subject to an 8% tax on the short-term rental rent.
The bill also allows city and towns to impose an additional tax on the same short-term rentals, however, such tax is limited to:
• 5% on Residential Hosts;
• 6% on Investor Hosts; and,
• 10% on Professionally Managed Hosts.

While the House bill still has a ways to go before becoming law, Massachusetts Governor Charlie Baker has indicated that he would like to sign a short-term rental bill this legislative session.
Boston residents who participate in the short-term-rental economy are well advised to understand, and keep an eye on, proposed changes in housing law as regulations begin to promulgate in response to a growing industry.

The White House Proposes $1.5 Trillion Infrastructure Development Program

By on February 12, 2018

The White House recently released its “Legislative Outline for Rebuilding Infrastructure in America.” 

In the preamble to the outline, The White House requested that Congress act to implement the infrastructure program in short order through new legislation.  In broad strokes, the outline calls for new spending to stimulate $1.5 trillion dollars in infrastructure investments, from federal and state governments, agencies and localities, to address American infrastructure projects.

Should the program be implemented by Congress in any meaningful way, it would mean a boon for public construction projects and contractors.  Contractors would be wise to keep a careful eye on this proposed legislation as it develops.     

 

Airbnb Hosts Beware: City of Boston Proposes Regulations on Short Term Rental Industry

By on February 5, 2018

Boston Mayor, Marty Walsh, recently proposed a citywide ordinance that will, if adopted by City Council, subject short-term rentals – such as those advertised through the popular home-sharing website, Airbnb – to regulations and reporting requirements.

The proposed ordinance requires that all short-term-rentals register with the city and pay an annual fee based on a tiered rental classification system. The classification system additionally dictates how many days per year various properties may be rented and the maximum number of guests per night. The ordinance also imposes a room occupancy excise tax on all short-term rentals. Short-term-rentals that are noncompliant with city codes will be ineligible for registration. Further, beyond requiring individual owner/host compliance, the ordinance also places reporting requirements on the booking companies themselves. 

Specifically, the ordinance classifies three types of short-term rental units:

  1. Limited Share Units
  2. Home Share Units; and
  3. Investor Units

Limited Share Units are rentals that are the host’s primary residence such that the host is present through the duration of the short-term rental. Limited Share Units may be offered for short-term rent 365 days of the year and will be subject to an annual $25.00 registration fee.

Home Share Units are also rentals that are the host’s primary residence that may be offered for short-term rent 365 days of the year. The host, however, need not be present through the duration of the short-term rentals, so long as the number of days booked for rental when the host is not present does not exceed 90 (consecutive or nonconsecutive) per year. Home Share Units will be subject to an annual $100.00 registration fee.

Investor Units are rentals that are not the host’s primary residence. Investor Units may be offered for short-term rental for up to 90 days (consecutive or nonconsecutive) per year and will be subject to an annual $500.00 registration fee.

Boston residents who participate in the short-term-rental economy are well advised to understand, and keep an eye on, proposed changes in housing law as regulations begin to promulgate in response to a growing industry.

Understanding the Limitations of Chapter 93A: Pre-Litigation Attorneys’ Fees Not Recoverable

By on January 30, 2018

The Regulation of Business Practices for Consumer Protection Act, commonly referred to by its statutory chapter number, “Chapter 93A,” is a frequently utilized statute that provides individual consumers and businesses with a right to bring legal action and recover damages if they are harmed by an unfair business practice.  Under the statute, “unfair or deceptive acts or practices” or “unfair methods of competition” committed while conducting business in Massachusetts permit the harmed party to recover their actual damages, or a statutory minimum of $25 per offense (whichever is greater), and up to three times such damages for knowing and willful violations of the statute, plus an award for reasonable attorneys’ fees and the costs of the lawsuit.  Chapter 93A creates harsh penalties, with a wide-reaching scope, to deter unfair business acts, however, it does have limitations.

Previously, we explained the prohibition on Chapter 93A recovery with regard to a party’s decision to litigate a dispute, rather than settle with the opposing party.

A second limitation on recovery under Chapter 93A relates to the timing of when a party’s legal fees are incurred. Recently, the Suffolk County Superior Court considered the issue of whether pre-litigation attorneys’ fees are recoverable under Chapter 93A in Beninati, et al. v. Borghi, et al. The court awarded double damages to one of the plaintiffs under Chapter 93A. The defendants who were found liable under Chapter 93A then moved the court to reduce the attorneys’ fees award by $170,000 for fees incurred prior to the filing of the lawsuit, relating to “extensive settlement discussions.” The court agreed that pre-litigation fees are not recoverable under Chapter 93A, stating that it “is aware of no authority that permits the award of fees incurred before the litigation began and that do not bear directly on its preparation.”  Accordingly, the court excluded the pre-litigation attorneys’ fees from the award.

This case is just one example of the importance of understanding the process of litigating claims and the implications of dealing with an adverse party.  Depending on the circumstances of a dispute, it can be wise to initiate litigation sooner to ensure large portions of incurred attorneys’ fees are ultimately recoverable from the party causing the harm. To learn more about scope and application of Chapter 93A, contact an experienced Massachusetts litigation attorney.

Corporate Considerations: The Importance of Formal Dissolution

By on January 2, 2018

            As discussed in previous posts, the creation of a formal corporate entity and compliance with state prescribed formalities can offer business owners and members substantial protections from individual liability for business debts when acting by and through an entity. This compliance with formality can also offer substantial protections in the event the choice is made to close, or otherwise cease conducting business through, a formal entity.

            If the choice is made to dissolve an entity, members would be well advised to take the proper statutory steps in order to cease operations formally.  It is important to undertake the appropriate formalities in order to terminate the existence of the entity with State officially, and more importantly, to place the dissolved entity and any remaining assets (including final shareholder/member distributions) outside of the reach of third party claims. 

            The Massachusetts Business Corporations Act spells out all steps necessary to  dissolve a corporation formally.  Among other formalities, it is necessary to take a proper vote to initiate dissolution, file Articles of Dissolution with the Commonwealth, properly notice creditors and potential creditors of dissolution, and properly wind down corporate activity.  As previously noted, adherence to the prescribed steps is paramount to limiting future liabilities as they may relate to a dissolved corporation. If you have questions with regard to business formation and/or operations you should consult with a knowledgeable attorney to determine your best options. 

OSHA Injury Tracking Application Enforcement Delayed to December 15, 2017

By on December 8, 2017

The Occupational Safety and Health Administration (OSHA) recently extended, for the second time, the enforcement deadline for compliance with electronic reporting of injury and illness data through its Injury Tracking Application (ITA) until December 15, 2017.

The new rule took effect January 1, 2017, and required certain employers to submit injury and illness information electronically through the new tracking application.  The information required to be submitted to OSHA remains largely unchanged from the information already required to be kept under current regulations.  In other words, the primary difference is that it must be submitted through the ITA rather than through traditional methods.

In late November, the deadline was pushed back again to December 15, 2017.  Despite the second delay in enforcement it appears that the rule will eventually begin enforcement, even amid speculation that the rule might be scuttled entirely.  For the time being, construction employers should be prepared to submit their 300A and related forms electronically for years 2016 and forward electronically by December 15, 2017 to insure compliance with the new rule and avoid exposure to citations.

Corporate Considerations: Duties of LLC Members

By on November 10, 2017

            One of the first considerations to make when starting a business is whether to create a formal corporate entity.  The creation of a formal entity and compliance with state prescribed formalities can offer business owners and members substantial protections from individual liability for business debts when acting by and through an entity.  One particularly popular corporate form is the Limited Liability Company (LLC).  LLCs are governed by state law and, if established and maintained properly, LLCs can offer a flexible and relatively uncomplicated business form.

            While LLCs protect members from individual liability related to the claims of outside actors as against the LLC, members do owe certain duties in exchange for such protection.  In Massachusetts, as in other jurisdictions, members of corporate entities owe implicit duties of loyalty and care to the entity.  Unlike other jurisdictions, however, in Massachusetts heightened protection is given to shareholders in what are referred to as “close” corporations, or corporations where, there exists “(1) a small number of stockholders; (2) no ready market for the corporate stock; and (3) substantial majority stockholder participation in the management, direction and operations of the corporation.”  Donahue v. Rodd Electrotype Co. of New Eng., Inc., 328 N.E.2d 505, 511 (Mass. 1975).  Massachusetts views such entities as little more than incorporated partnerships, and thus, insists that shareholders in close corporations, “owe one another substantially the same fiduciary duty [loyalty and care] in the operation of the enterprise that partners owe to one another.” Brodie v. Jordan, 857 N.E.2d 1076, 1080 (Mass. 2006).

            Majority shareholders have been found to have violated their fiduciary duties toward minority shareholders in instances where, the “majority frustrates the minority’s reasonable expectations of benefit from their ownership of shares.” Id. Massachusetts refers to this tactic by a  majority as a “freeze out,” as it creates a dynamic where a disadvantaged minority party can be compelled  to come to inequitable terms with the majority party in order to leave the entity.  Thus, Massachussets provides additional protections to close corporations in an attempt to dissuade “freeze outs.” 

            While this heightened duty is explicitly applied to shareholders of close corporations, it is very likely that courts in Massachussets could apply the same to members of LLCs, where the definition of “close” corporation is easily applicable by analogy. Thus, members of LLCs need to be aware that they not only owe duties of loyalty and care to the entity itself, but may also owe the same to their contemporaries as well.  If you have questions with regard to business formation and/or operations you should consult with a knowledgeable attorney to determine your best options.

Online Business Defamation and Public Forum Websites — Part II

By on October 9, 2017

            Part I of this series on Online Business Defamation and Public Forum Websites briefly touched on Section 230 of the Communications Decency Act (“Section 230”), a federal law that limits whom businesses can hold legally responsible for defamatory postings.   As previously discussed, Courts have consistently interpreted Section 230 as providing close to blanket immunity to public forum websites where the content in question is generated by a third party.  Thus, as a practical matter, claims against the Googles, Yelps and Facebooks of the world face significant legal barriers and businesses are currently better served by focusing on claims against the actual author of the posted defamatory comments, rather than the forum on which the comments were published.

            Section 230 was codified as law in 1996, right as the modern Internet came into being. It has not faced significant alteration since, even though the Internet landscape of today bears little, if any, resemblance to the landscape of 1996.  In no uncertain terms, Section 230 states, “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”  It is that language that has afforded modern websites (and their affiliated companies) enormous legal protections- legal protections that many of those same websites  (and affiliated companies) have lobbied extensively to keep in place as they have allowed the companies to flourish and have fostered an Internet environment where free speech is clearly protected.

            Section 230, however, has recently come under intense public scrutiny due to its rigid application creating harsh legal realities and unintended consequences, specifically with regard to the cover Section 230 has provided websites that host user-generated content that promotes and facilitates illegal activity.  Public pressure is currently mounting in favor of lessening the protection Section 230 provides to such websites (and companies) and a hotly contested bill has been introduced in Congress that would accomplish just that.  Thus, there is real potential that the momentum exists to shift the Section 230 paradigm away from the historically stringent protections afforded to companies and websites and toward allowing some form of recourse against pubic forum websites for offending hosted-content.  Regardless of the merits of such potential shift, such reform stands to have a significant impact on the potential viability of future online defamation claims.  Accordingly, business owners are well-advised to monitor the changing landscape carefully.  Should you find your business interests harmed by false or misleading statements on the Internet, consult with an attorney concerning the potential rights and remedies available to you.