Time’s A Wastin’ – Get Ready for the New Overtime Rule

running-payroll

 

Each year the Texas Workforce Commission and the Wage and Hour Division of the U.S. Department of Labor investigate scores of Texas businesses for violating minimum wage and overtime laws. With the new federal overtime exemptions imminently taking effect, employers should review their payroll policies to ensure compliance. Beginning December 1, salaried employees who make less than $47,476 per year or $913 per week will be entitled to overtime pay for working more than 40 hours in a work week. Texas recognizes the federal minimum wage which is currently $7.25 an hour.

 

Plan now to be in compliance with the overtime rule on December 1. Salary alone is not the only factor for determining whether a salaried employee is entitled to overtime or is exempt:

 

  • Salaried employees are paid a salary not an hourly wage;
  • Full-time exempt employees’ salaries must be at least $47,476 annually; and
  • Exempt employees must have executive, administrative, or professional duties, e.g., management, exercise of discretion and independent judgment, or work that requires advanced knowledge.

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Nonexempt employees are entitled to overtime pay at time and a half for each hour worked beyond a 40 hour work week. The Department of Labor enumerated four options for employers to comply with the new rule:

 

  • Raise salaries to maintain the exemption;
  • Keep current salaries and pay overtime;
  • Adjust workloads and schedules so that employees work no more than 40 hours per week; or
  • Adjust wages by converting salaried employees to hourly.

 

Raising salaries and paying overtime is not financially feasible for many small businesses. Converting salaried workers to hourly pay could tank employee morale. Another way to comply with the new rule without undertaking additional financial burdens is to adopt a workplace policy forbidding non-exempt employees from working overtime without prior written approval from a supervisor. Enforce the policy consistently. This allows the business to predict and control labor costs while encouraging healthy work-life balance for employees.

The last minute has arrived. If you haven’t already adopted procedures to comply, consult a lawyer to help your business transition to the new rule. The Department of Labor has published this fact sheet for employers: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf

 

New Federal Law Protects Business Trade Secrets

Pres Obama Signs

On May 11, President Obama signed the Defend Trade Secrets Act of 2016 into law. The Act protects businesses from misappropriation of trade secrets and gives businesses the ability to litigate trade secret cases in the federal courts. The text of the new law can be found here:

https://www.congress.gov/bill/114th-congress/senate-bill/1890/text.

Texas adopted the Uniform Trade Secrets Act in 2013. The Texas law is codified in Chapter 134A of the Texas Civil Practice and Remedies Code. The text of the Texas statute may be found here:

http://www.statutes.legis.state.tx.us/Docs/CP/htm/CP.134A.htm.

There are a few differences between the Texas law and the new federal law. The definition of a trade secret is essentially the same under both the federal and state statutes. A trade secret is information that is valuable because it is specific to the business and that the business reasonably tries to protect. Trade secrets typically include a company’s financial data, policies and procedures, customer lists, supplier lists, intellectual property, and other proprietary information such as formulas, techniques, processes, drawings, and the like

The new law allows a business to file a federal lawsuit to protect trade secrets “related to a  product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). Courts traditionally interpret interstate commerce broadly, so many businesses will be able to litigate in federal court. One of the most interesting provisions of the new law is a pre-emptive strike: the law allows a party to obtain a court order for seizure of property to prevent the dissemination of trade secrets in “extraordinary circumstances.” The seizure order can be obtained without notice to the opposing party. A prevailing party may get an injunction to prevent dissemination of trade secrets, an order requiring the opposing party to pay a royalty, damages for actual business losses, damages for unjust enrichment, and attorneys fees. The law also allows an award of up to two times the amount of damages if the misappropriation was willful and malicious.

Protecting trade secrets is of paramount concern when a competitor hires a former employee. The Defend Trade Secrets Act allows a court to place conditions on the former employee’s employment when there is a threat of misappropriation.

There are some circumstances when employees or former employees have immunity from disclosing trade secrets. For example, an individual is immune from liability for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a violation of law. If trade secrets are disclosed in documents filed in a court, the statute requires the filing to be sealed to prevent public disclosure.

Important: The Defend Trade Secrets Act requires employers to notify employees of the immunity provisions in the law. If your business has incorporated non-disclosure language in your employee handbook, or if you require employees to sign non-disclosure agreements, you will need to revise your handbook or agreements to properly notify employees that they are protected from liability when disclosures of trade secrets are made to government agencies or attorneys solely for the purpose of reporting or investigation violations of the law. An employer that fails to provide the required notice loses the right to recover attorneys fees and exemplary damages.

The availability of both state and federal court actions to protect businesses from misappropriation of trade secrets is a welcome development; however, most businesses need to revise their non-disclosure agreements, handbooks, or policies and procedure manuals as soon as possible to avoid losing valuable rights under the new law.

Hijacking on the Information Highway: Ransomware and How to Avoid it

Ransomeware scams have been around for several years.

However, they are on the rise.

Every business needs to train staff who have access to computers how to avoid this kind of scam. Ransomware is one of the many kinds of malware — that is, malicious code that can infect a computer.

Ransomware enters a network, computer, or other device in the same way as other malware. Usually, a user clicks something they shouldn’t —  like an icon, a link, or a file attachment in an email or text message. Increasingly, criminals are inserting malware links in social media posts as traps for the unwary.

Click and thieves are in the door.

Once ransomware finds its way into a device or network, the device will freeze or appear to crash. Initially, ransomware scams were perpetrated by cybergangs who encrypted the infected device. The only way for the victim to regain control was to pay the required ransom. Now, less skilled copycats generate a pop-up message on the infected device that says the device is frozen or encrypted, but the warning may be a ruse.

Some scammers generate a pop-up warning that purports to be from law enforcement. The warning states the victim has broken a law and that the agency has locked the victim’s device pending payment of a fine.

Other versions of the scam simply notify the victim that the device has been encrypted, and a ransom must be paid to regain control of the device. Either way, the criminal’s endgame is the same: to force the victim to pay to remove the malware. The size of the ransom plus the damage to a business if the situation lingers prompts most victims to pay up.

The FBI has just released a public warning that includes a helpful list of steps to take to avoid ransomeware scams. You can find the full press release here: https://www.fbi.gov/sanjuan/press-releases/2016/fbi-warns-the-public-about-ransomware-internet-scam.

In a nutshell, the FBI suggests:

  • Keep your data backed up, and store the backup file in a remote location.
  • In addition, we suggest using at least a two-step backup system. Use a backup service that stores a copy of your files in a remote location either in the cloud or in a remote server, and perform regular backups on a portable storage device such as an external hard drive. Keep the external hard drive in a safe place.
  • Update your settings to show hidden file extensions. The FBI warns that malware may contain double file extensions, e.g., *.pdf.exe.
  • Don’t open *.exe files attached to emails.
  • Use antivirus and firewall protection, keep it up-to-date, and make sure you install operating system updates and security patches as they become available.
  • Use strong passwords, and avoid using the same password for everything.
  • We suggest changing passwords regularly as well.
  • Use a pop-up blocker.
  • Download software only from trustworthy sources. Be especially careful when downloading freeware.
  • Don’t open attachments in unsolicited emails.
  • We suggest treating all unsolicited communications as if they are scams. In other words, if you did not initiate a conversation, be extra careful even if the communication purports to be from someone you trust. Scammers can hijack or spoof email addresses.

    When in doubt, contact the alleged sender. Don’t use contact information from an email, text, or pop-up message. Go to your contacts list, address book, or an official source such as an agency’s website to get the email address or telephone number. Ask whether they sent the suspicious message before opening anything attached to it.

Train your staff to use internet-connected devices safely. If you become a victim, report the crime at www.ic3.gov. Do not jump to pay a ransom. First, turn off file sharing. Then, check to see whether any of your files have been compromised by running your antivirus program. Remove any infected files, and restore them from your backup. This may resolve the problem. If not, contact an IT expert for assistance. 

Writing it Down: 4 A Recipe for Writing Simple & Personal Agreements

Contract

My last post explored common problems with handshake agreements.

Now that you’re convinced to write stuff down, what do you write?

A contract is no good if it isn’t enforceable. To be enforceable, a contract must be made by people who are legally able to make a contract (generally, adults who understand what they are doing), must have a lawful purpose, and must have an offer, acceptance, and consideration.

An offer is exactly what it sounds like – a promise to do something if the other person will do something else. Acceptance means both parties agree to hold up their end of the bargain. Consideration is payment. Consideration can be money, a promise, an action.

The Texas Comptroller’s Office has a handout that describes the legal elements of a binding contract: 

http://comptroller.texas.gov/procurement/pub/contractguide/LegalElementsofaContract.pdf.

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Five Things That Will Save Your Start-Up Money In The Long Run

It’s a fact that many small business ventures fail in their first year. There are tons of resources on the web about why so many new businesses fail, and I won’t attempt to recreate them here. However, I’ve noticed five things that many failed businesses have in common. The purpose of this post is to help you avoid these shortcomings when starting your business. Here they are in a nutshell:

  1. Write a business plan.
  2. Set goals.
  3. Get professional help early.
  4. Understand the difference between employees and contractors.
  5. Write everything down.

Show me How!