Author Archives: Strang Scott

About Strang Scott

Strang Scott is a dynamic business and litigation firm, dedicated to serving the needs of businesses of all sizes.

“Culture of Profanity” or a Hostile Work Environment? Massachusetts Court Issues Ruling on Permissible Use of Expletives in the Workplace

By Strang Scott on August 22, 2016

Hostile work environments exist when an employer’s statements, actions, and behavior make it impossible for an employee to perform their job. Massachusetts law protects employees against discrimination and hostile work environments by prohibiting an employer, or its agents, from refusing to hire an individual, discharging an employee, or discriminating on the basis of a protected class status. Protected class status exists based on an individual’s “race, color, religious creed, national origin, sex, gender identity, sexual orientation, genetic information, or ancestry.”

Recently, in Griffin v. Adams & Assoc. of Nevada, et al., the United States District Court for the District of Massachusetts determined that a former employee sufficiently presented evidence to bring a hostile work environment claim based on sexually derogative terms directed at him by his former supervisor and others.

In Griffin, a former employee filed suit for discrimination based on his sexual orientation, harassment, and retaliation against his former employer and his former supervisor. In defense, the employer argued that the employee failed to establish a hostile work environment claim because the conduct directed at him was not “of a sexual nature” and was not a comment on the employee’s gender or sexual orientation. In making this argument, the employer relied on a prior Massachusetts Appeals Court case, Prader v. Leading Edge Products, Inc., which held that use of “crass garden-variety expletives” in a workplace, which are not sexual commands or lurid innuendos, may only evidence a “culture of profanity” in the workplace and would be insufficient to establish a sexually hostile work environment.

The District Court’s summary judgment decision in Griffin, dismissed the employer’s Prader argument. The Court determined that the comments directed at Mr. Griffin went beyond “garden-variety expletives” (such as those commonly used with or without meaning or reference to a sexual connotation), making it reasonably possible to construe the statements as sexual innuendo that “could suggest discriminatory animus.” The District Court held that the specific nature of the statements, when viewed with consideration to previous statements (derogatory comments about the former employee’s attire and mannerisms being “feminine,” describing his office décor as “flamboyant,” and using derogatory terms based on his sexual orientation), went beyond statements “tinged with offensive sexual connotations” and could be reasonably viewed as discrimination based on sexual orientation and gender stereotypes.

The Griffin decision allowed the employee’s hostile work environment and retaliation claims to survive summary judgment, permitting the employee to proceed with those claims against the defendants toward trial. While the Griffin decision did not determine whether the employer’s actions actually violated Chapter 151B, it should serve as a stern reminder to employers that protected-class discrimination and hostile work environments are not tolerated under Massachusetts law. While the use of common profanity may be a recognized element of a work environment, that may not excuse the employer from liability where profanity with offensive connotations is targeted toward particular employees. Employers must work with their human resources staff and employment counsel to create and maintain policies that promote healthy work environments and prohibit discriminatory conduct. Should you have questions or concerns regarding Massachusetts’ anti-discrimination laws, hostile work environments, or your company’s practices, consult a Massachusetts employment attorney.

Strang Scott is Hiring — Office Manager

By Strang Scott on August 8, 2016

Strang, Scott, Giroux & Young, LLP, is seeking an experienced full-time office manager. We are an up and coming business law and litigation firm with offices located Boston’s Kenmore Square and New London, New Hampshire. The candidate should be detail oriented and able to balance multiple assignments. Strong communication, administrative, organizational and computer skills are required.

Responsibilities include:

Managing attorneys’ schedules
Organizing and tracking client files
Communicating with clients, opposing counsel and court personnel
Drafting, formatting, and editing legal documents including correspondence, subpoenas, pleadings and financial statements
Office management
Managing client billing and payments
Managing office supplies
Vendor purchases and payments
Mail distribution
Answering phones
Managing client database

Qualifications/Experience:

Ability to work independently and as part of a team
Proficiency with Microsoft Office
Experience with QuickBooks or willingness to learn
Self starting

Must have prior experience working in a law office. This position is located in the Firm’s Boston, Massachusetts office. For further information regarding the Firm, please visit www.strangscott.com and please direct inquiries and correspondence to esantos@www.strangscott.com

Massachusetts Noncompete Reform Legislation Fails

By Strang Scott on August 1, 2016

As a follow up to our recent post on the subject, the Massachusetts legislature failed to enact reform to noncompete agreements by the July 31, 2016 legislative deadline, despite both the House and the Senate passing versions of the bill. The primary point of disagreement between the two legislative houses concerned the “garden leave” provision that would require employers to compensate employees during the restrictive period. State legislators involved in the negotiations reported that the House wanted employers and employees to negotiate the monetary value of the “garden leave” clause when the agreement was initially signed, while the Senate wanted employees to be able to negotiate when leaving the employer in order to provide greater bargaining power to the employees. Although noncompete reform will not happen this year, legislators will likely revive the bill in the next session.

Massachusetts Commercial Lease: The Security Deposit and Letter of Credit

By Strang Scott on August 1, 2016

When negotiating the security deposit for a commercial lease, the parties often simply focus on the dollar amount required. While this is important, and can vary wildly depending on several factors, the language of the security deposit provision is often overlooked. This seemingly standard language, however, is important for both landlords and tenants. Unlike residential landlord/tenant law, commercial security deposits are not governed by statute. Thus, it is up to the parties to negotiate specific terms dictating the amount and process for using the security deposit.

Security Deposit Amount

Security deposit requirements in the greater Boston area are sometimes as low as one month’s rent and as high as a full year’s rent. Typically, the amount of the security deposit is based upon (1) the creditworthiness of the tenant; (2) the type of space being rented (a high-end laboratory will command a higher security deposit than a warehouse space); and (3) whether the lease is personally guaranteed. Once the amount is determined, the parties next need to determine how the security deposit may be used, whether the security deposit may be reduced at a certain point, and whether the parties wish to use something in addition to, or in lieu of, the security deposit (e.g. letter of credit or Uniform Commercial Code lien).

How the Security Deposit can be Used

Landlords often seek language stating that the security deposit can be upon any breach of the lease. Written broadly, this would include the tenant’s failure to pay rent/utilities, damage to the leased premises, failure to open for business and, in some instances, penalties, costs and attorney fees. Tenants usually push back on such provisions and look to limit the use of a security deposit for material breaches of the lease (e.g. failure to pay rent). As a corollary, the landlord will also want language requiring the tenant to replenish any portion of the security deposit used by the landlord for the tenant’s default. Regardless of the perspective, both tenants and landlords should also include language stating what happens to the security deposit at the end of the lease: tenants obviously want the security deposit back as quickly as possible (typically within 30 days of the termination of the lease) and landlords want to make sure there is language allowing the landlord to hold onto the security deposit until any and all remaining obligations have been fulfilled.

Burndown Provisions

With larger security deposits, landlords will sometimes agree that after a certain period of time – say one year – the security deposit will decrease so long as the tenant is not in default. While this can be helpful for a tenant’s cash flow, it is also usually dependent on whether a tenant has an uncured material default. Thus, the tenant needs to ensure that a “default” under the terms of the lease is not so broad as to preclude a drop-down for a de minimis violation. Although there is no set rule, security deposit burndown provisions usually allow for a reduction in the security deposit halfway through a lease (e.g. a ten-year lease may allow a burndown after five years of the lease).

Uniform Commercial Code: An Alternative to a Security Deposit

As a bargaining option for both landlords and tenants, landlords may be willing to decrease or eliminate the security deposit amount, or change the burndown provision, if the tenant gives the landlord a Uniform Commercial Code (“UCC”) lien against the tenant’s property. A UCC lien works much like a mortgage: the landlord effectively has a lien against the tenant’s personal property. In office settings, this is often of little use to the landlord. After all, desks, chairs and the like generally do not have large commercial value. In higher-end uses, like restaurants, factories and laboratories, the onsite personal property likely has significant commercial value. If the tenant defaults, the landlord can seek court-intervention to obtain and potentially sell the tenant’s property. From a tenant’s perspective, this may help cash-flow by lowering the security deposit or incentivizing the landlord to provide a burndown provision. One pitfall, however, is that, like a mortgage, a UCC lien acts as an encumbrance on the tenant’s property. Meaning, it may be difficult to sell the equipment and/or use the equipment to obtain a loan from another source. If the tenant is comfortable with this, the tenant can agree to a UCC lien but should ensure that the lease contains language requiring the landlord to remove the lien upon the termination of the lease. This is simply an administrative process, but is critical for the tenant going forward.

Letter of Credit: An Alternative to a Security Deposit

A letter of credit is typically only used when the security deposit is a large dollar figure. Instead of the tenant giving the landlord a cash security deposit, the tenant obtains a letter of credit from a financial institution that essentially says the institution promises to pay the security deposit in the event of a default. Like a loan or line of credit, the issuer will charge a fee, which is often a percentage of the dollar amount of the line of credit. From the tenant’s perspective, this would free up cash flow; from a landlord’s perspective, if the letter of credit is issued by a reputable institution (e.g. a large bank), the landlord has a deep pocket from which to collect funds if need-be. The problem for landlords, however, is that letters of credit and security deposits are treated differently in bankruptcy. Meaning, if a tenant files for bankruptcy protection during the lease, courts will treat letters of credit and security deposits differently and thus a landlord may lose its protection. The implications of bankruptcy in the commercial lease context is quite complex and really deserves its own article. This article provides a great summary explaining the potential implications..

The above is a simplified summary of different approaches to security deposits and letters of credit for a commercial lease. Each situation is different, and often different locations will have differing “standards” for how leases are structure. For example, in the Boston area, the standard provisions for commercial leases in Cambridge often differ from those in the City of Boston. In fact, the standards in different neighborhoods in Cambridge (e.g., Kendall Square) often deviate from other neighborhoods (e.g., Harvard Square). As such, it is critical that both landlords and tenants speak with a commercial real estate lawyer before executing a commercial lease.

Massachusetts Enacts New Transgender Rights Law

By Strang Scott on July 11, 2016

On July 8, 2016, Massachusetts governor Charlie Baker signed a bill that provides new protections for transgender people. The new law bars discrimination against transgender people in public accommodations, defined as any place open to the public including public rest rooms and locker rooms. The Attorney General’s office has been tasked with issuing regulations or guidance for legal action against any person who asserts gender identity for an “improper purpose,” and the Massachusetts Commission Against Discrimination will also develop guidelines to aid compliance with the law. The law goes into effect on October 1, 2016.

Massachusetts House of Representatives Passes Non-Compete Reform

By Strang Scott on June 30, 2016

On June 29, 2016, the Massachusetts House of Representatives passed House bill 4434, An Act Relative to the Enforcement of Noncompetition Agreements. Non-compete reform has been brewing in the Massachusetts legislature for several years, but the reform sought by many may finally be here, if the bill is enacted. This bill contains two key provisions: an adoption of a version of the Uniform Trade Secrets Act, and substantial reform of Massachusetts non-competition law, which thus far has been only addressed by the courts. The Uniform Trade Secrets Act section provides for injunctive relief and reasonable attorney’s fees to protect trade secrets, and supersedes any conflicting laws providing for civil remedies for trade secret misappropriation.

The non-compete reform represents significant changes to existing law. The bill provides that a non-compete agreement must comply with seven criteria to be valid and enforceable: (i) if entered into in connection with the commencement of employment, it must be in writing and signed by employer and employee, and state that employees have the right to consult with a lawyer; (ii) if entered into after commencement of employment, it must be supported by fair consideration independent from continued employment; (iii) it must be no broader than necessary to protect trade secrets, other confidential information, or the employer’s goodwill; (iv) it may not exceed a duration of 12 months unless the employee has misappropriated employee property, in which case it may be extended to 2 years; (v) it must be reasonable in geographic scope, defined as where the employee provided services or had a material presence; (vi) it must be reasonable in scope of proscribed activities in relation to the interests it protects; and (vii) it must be supported by a “garden leave clause” or something similar, defined as a payment from the employer to the employee during the restricted period.

Finally, the bill provides that non-competition agreements shall not be enforceable against certain categories of employees, including those classified as nonexempt under the Fair Labor Standards Act, and those terminated without cause or laid off.

While the Uniform Trade Secrets Act provision of the bill is unlikely to draw controversy, as it is generally consistent with current law in the Commonwealth, the House bill 4434 contains significant changes to non-competition law. Should this bill be enacted into law, employers will need to update their non-competition agreements to ensure enforceability.

Chris Strang Appointed to Lawyers for Affordable Justice Advisory Board

By Strang Scott on June 21, 2016

Partner Chris Strang recently accepted an appointment to serve on the Advisory Board for Lawyers for Affordable Justice (LAJ). Founded in January, 2016, LAJ is a collection of independent lawyers joining forces to provide legal services to low and moderate income clients at rates they can afford.

The LAJ attorneys are able to provide services at reduced rates by sharing overhead and expenses in a new incubator facility located in Kenmore Square. The program was designed as a collaborative effort by Boston University School of Law, Boston College Law School, and Northeastern University School of Law. It was made possible in part by a grant from the American Bar Association.

Entrepreneurial-minded recent graduates from each of these three law schools will serve as LAJ attorneys for two-year periods. Several experienced attorneys and law professors provide mentoring and training. The Advisory Board will monitor the program’s progress and make periodic recommendations.

Despite being only a few months old, LAJ is already making headlines in the local press.

Strang Scott Selected to Join Construction Lawyers Alliance

By Strang Scott on June 15, 2016

Strang, Scott, Giroux & Young, LLP, was recently selected to join the Construction Lawyers Alliance, a group devoted to providing a comprehensive collection of construction law resources prepared by a select group of construction lawyers nationally. Strang Scott is proud to join the Alliance and will continue to offer timely advice and updates on construction trends, laws and matters of interest to the construction industry. Strang Scott looks forward to participating in the national dialogue regarding matters of interest to the construction industry along with its colleagues in the Construction Lawyers Alliance.

Federal Subcontractors – Understanding the Basics of Your Rights Under the Miller Act.

By Strang Scott on May 31, 2016

By Jennifer Lynn

Subcontractors commonly inquire as to what they can do to ensure they receive payment on a project. For federally-owned construction projects, subcontractors can look to the Miller Act as a source of security. The Miller Act, codified as 40 U.S.C. §§ 3131-3134, requires general contractors on federal projects to provide performance bonds and payment bonds to the awarding authority where the prime contract exceeds $100,000. The general contractor’s payment bond must list a “satisfactory” surety and cover the total amount of prime contract. 40 U.S.C. § 3131(b)(2).

The primary purpose behind the Miller Act is to provide security to subcontractors. Because federal projects are immune from lien claims, the Miller Act provides an alternative to a traditional lien, which instead calls for subcontractors to file claims against the general contractor and its surety under the payment bond. See U.S. ex rel. Metric Electric, Inc. v. Enviroserve, Inc., 301 F.Supp.2d 56, 66 (D.Mass. 2003). As with any claim for payment, the subcontractor must establish that it is owed payment in order to establish an enforceable claim under the bond. In addition to establishing a basic right to payment, subcontractors must meet other specific requirements to secure the benefits of the Act.

Who is Protected Under Miller Act Payment Bonds?

The Miller Act requires payment bonds to secure the claims of “all persons supplying labor and material in carrying out the work provided for in the contract.” 40 U.S.C. § 3131(b)(2). “All persons,” for purposes of the Miller Act, applies to (1) first-tier subcontractors, which are contractors who directly contract with the general contractor; (2) second-tier subcontractors, those contractors with a subcontract with a first-tier subcontractor; (3) first-tier suppliers, which are suppliers who contract with the general contractor; and (4) second-tier suppliers that have a contract with a first-tier subcontractor but not a first-tier supplier. See U.S. ex rel. Water Works Supply Corp. v. George Hyman Constr. Co., 131 F.3d 28, 31 (1st Cir. 1997).

Third-tier and more remote subcontractors and suppliers cannot recover under the Miller Act. Subcontractors and suppliers too remote to file a claim under the Miller Act can file ordinary claims for nonpayment for breach of contract or quasi-contract. The Miller Act does not alter contractors’ rights in connection with claims for nonpayment, but rather provides security for payment to the “persons” covered by the Act.

What Must a Subcontractor Do to Obtain Security Under the Miller Act?

Much like comparable statutes for state-owned construction projects, subcontractors must wait the requisite time to file a Miller Act bond claim and may need to provide initial notice to the general contractor. All subcontractors must wait 90 days after they last furnished labor or material to the project[1] before they may file a claim under a Miller Act payment bond. 40 U.S.C. § 3113(b)(2). The wait period serves the purpose of setting aside a reasonable amount of time for the subcontractor to receive payment for completed work. Bond claims filed before expiration of the notice period will be considered premature.

Second-tier contractors must comply with the 90 day wait period and must also provide written notice of its claim to the general contractor. The notice must be in writing; it must be received by the general contractor within the first 90 days after the second-tier subcontractor last furnished labor or material on the project; it must state “with substantial accuracy” the amount claimed unpaid and due and the name of the party to whom the material or labor was supplied or performed (i.e. the first-tier subcontractor); and it must be delivered by a method that provides verification of delivery (i.e. certified or registered mail) or served by a U.S. marshal. 40 U.S.C. § 3133(b)(2). The required notice must specifically demand payment from the general contractor. See U.S. ex rel. John D. Ahern Co., Inc. v. J.F. White Contracting Co., 649 F.2d 29, 31-32 (1st Cir. 1981). The notice requirement is strictly construed, and failure to fully comply will bar the subcontractor from raising a recoverable bond claim.

Subcontractors must file their claim on the bond within 1 year after the day of last furnishing labor or material on the project, 40 U.S.C. § 3133(b)(4), in the federal court in the district in which the project is located. 40 U.S.C. § 3133(b)(3)(B). Failure to file within the 1 year period will result in an absolute bar against the subcontractor’s bond claim. While a claim will be filed “in the name of the United States for the use of the person bringing the action,” 40 U.S.C. § 3133(b)(3)(A), the claim is a private one brought by the subcontractor and the federal government is explicitly exempt from liability to the subcontractor.

The above summary covers the general parameters for subcontractors to file a bond claim on federally-owned public construction projects. Because each project presents a different set of facts, the process and outcome to recover for nonpayment and filing under the Miller Act will vary. If you are uncertain regarding your company’s ability to recover payment for its work on a federal construction project, or if your company has complied with the regulations or process governing Miller Act claims, you should contact a Massachusetts construction attorney to achieve the best possible outcome.

[1] For more information about “last date of work” and how it is calculated, read Payment Bonds on Federal Construction Projects – Last Date of Work.

Massachusetts Commercial Leasing: The Premises

By Strang Scott on April 19, 2016

We recently posted articles about rental provisions and the interplay of the parties in a commercial lease setting. This week, we address common issues involving the description and usage of a commercial space.

Commonly overlooked, but critically important to both tenants and landlords, are commercial lease provisions pertaining to the description of the premises, the condition of the premises and who must maintain it, and how the premises may be used. Depending on the intended use and the size of the commercial space, these clauses often vary greatly depending on the location of the commercial property. For example, leases in downtown Boston may restrict the use of the premises more than leases on the perimeter of Cambridge. Regardless, the landlord and tenant should always consider how the tenant plans to operate within the premises to ensure that clauses relating to the premises carefully address any issues that may arise over time.

Contents of the Premises.

All commercial leases should contain a clause that, at a minimum, identifies the space the tenant will be occupying. This clause will commonly list the street address, property identification number and sometimes a legal description. If the tenant is occupying a particular portion of the premises, a precise description of the portion of the building the tenant is leasing will also be identified. The premises clause should also set forth how the parties intend to address access to storage areas, common areas, conference rooms, parking, utility facilities, or other areas of the building for which the tenant would need access.

Condition and Maintenance of the Premises.

Typically, commercial leases will provide a description of the current condition of the premises and outline which party is responsible for maintenance and repairs throughout the duration of the lease. Maintenance clauses will commonly place most of the responsibility for repairs and maintenance on the tenant, with exceptions for “reasonable wear and tear” and structural repairs. A “prudent” or “reasonable” tenant or landlord are commonly used standards for repair and maintenance obligations; “prudent” or “reasonable” meaning the tenant or landlord is obligated to operate in a way that would be sensibly expected in similar circumstances. Maintenance standards may also include references to industry standards (e.g. BOMA), to operation manuals, or direct the tenant to follow the recommendations of a qualified contractor. The lease may also set timelines for specific maintenance tasks, which can have dramatic implications if missed.

“Repair” and “maintenance” are separate, but related, aspects of a commercial lease. “Maintenance” covers actions to avoid deterioration of the premises and its systems by taking preventative and corrective measures. Maintenance commonly includes painting, cleaning, servicing equipment, clearing drains and gutters, and replacing light bulbs. “Repair” work covers actions needed to fix a damaged portion of the premises. The tenant is commonly, and obviously, responsible to repair damage they or their agents cause, but a dispute may arise where equipment or portion of the premises wears out or is damaged without fault of any one party. It is important to carefully craft the lease provision addressing repair work in anticipation of such an event.

Landlords are commonly responsible for “reasonable wear and tear,” meaning the tenant is exempt from fixing components that wear out over the course of reasonable use, depending on the use of the premises. For example, reasonable wear and tear will vary greatly depending on whether the premises is leased for industrial use or for office use. Furthermore, coverage by the landlord is generally contingent on the tenant maintaining proper maintenance of that component. Regardless, if further damage is likely to result from the wear and tear, the tenant, and not the landlord, is responsible for repairs to prevent further damage. The landlord’s obligation to cover structural repairs will depend on the type of structure involved. Unless a structural element is specifically identified in the lease, it will commonly be considered an element which is necessary to hold the building together (e.g., walls, foundation, roof, and floor structures). Elements that are necessary only for use of the building (e.g., non-load-bearing walls, windows, and stairwells), “decorative” aspects (e.g., flooring and fixtures), and mechanical systems (e.g., HVAC and plumbing) are generally not structural and will be an obligation of the tenant to maintain or repair.

Description of Use.

Commercial leases often contain a clause setting forth the “permitted use” of the premises. Depending on the intended use, this description may be simple and straightforward, or it may involve a lengthy and detailed list of requirements and limitations.

Use descriptions may be as straightforward and simple as a clause for “general office use” where the tenant will be operating an office. Conversely, use descriptions for industrial or retail leases may need to be more detailed and commonly describe specifically how the tenant may or may not use the premises as it may be necessary to address specific issues, such as the maximum weight the floor can support, hours of operation, storage capacities, sprinkler requirements, and other stipulations that must be met to comply with local code requirements. In restaurant and other retail uses, the “permitted use” is often limited to the tenant’s business (e.g. if the tenant sells Italian food, it will only be permitted to use the premises as an Italian restaurant).

Landlords of multi-use or shopping centers commonly grant certain tenants exclusive rights to operate their particular kind of business or sell their specific product. For example, tenants who will operate a sandwich shop or a watch repair center would not want other tenants to operate a competing business. If the landlord wants to grant an exclusive right to the sandwich shop tenant or the watch repair tenant, the lease must contain a clause granting them the sole right to operate their type of business. Additionally, the leases of every other tenant in that shopping center must contain a provision prohibiting them from operating a sandwich shop or a watch repair center. As you can imagine, such provisions can become very lengthy and detailed depending on the size of the shopping center. Moreover, the landlord and tenant need to carefully consider and draft the scope of the use prohibitions. Would a jewelry store that offers repairs for its products, including watches, interfere with the watch repair shop? Could a restaurant that offers a full service menu be permitted to sell sandwiches?

Use restrictions may also exist where the Landlord has concerns over the kind of business conducted by the tenant or has an aversion to certain kinds of business activities. For example, commercial buildings owned by a college may permit tenants to open a convenience store but may want to prohibit that tenant from selling alcohol or cigarettes. Rules and regulations for how the premises may or may not be used are commonly non-negotiable for the tenant. Nevertheless, it is important to make sure the rules are attached as an exhibit to the lease to ensure the tenant is on notice of the restrictions.

The above is a simplified summary of different approaches to “premises” provisions for a commercial space. Each situation is different, and often different locations will have differing “standards” for how leases are structured. For example, in the Boston area, the standard provisions for commercial leases in Cambridge often differ from those in Boston. In fact, the standards in different neighborhoods in Cambridge (e.g. Kendall Square) often deviate from other neighborhoods (e.g. Harvard Square). As such, it is critical that both landlords and tenants speak with a Boston commercial real estate attorney before executing a commercial lease.