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Paul Zimmerman

Showing 12 posts from August 2015.

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Seminal NLRB Decision Redefines Joint Employer Liability

In a highly anticipated decision, the National Labor Relations Board (NLRB) handed down a ruling today that companies can be held responsible for violations of labor standards committed by their contractors. At issue was whether a waste management firm (Browning-Ferris) could be held responsible for treatment of its contract employees (provided by staffing company Leadpoint Business Services). In stark contrast to its previous labor law decisions of the past 35 years, the NLRB held that Browing-Ferris should be treated as a joint employer. (Read more)

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Revisions to California Franchise Relations Act to Provide Greater Protections for Franchisees

The California Senate is putting the final touches on revisions to the California Franchise Relations Act. The law, when enacted, will increase franchisee protections against unilateral termination, provide more notice in the event of non-renewal of their franchise agreement, and require the franchisor to purchase the inventory, supplies, equipment, fixtures and furnishings from the franchisee. Under the revised statute, a franchisor will be required to provide a minimum of 60 days’ notice to a franchisee of intent to terminate the franchise agreement for failure to substantially comply with the agreement terms. In addition, the franchisee will be provided a reasonable opportunity to cure for up to 75 days before a termination may proceed. In the event that a franchisor elects not to renew a franchise agreement at the end of its contract term, the franchisor will be required to provide a minimum of 180 days’ notice to the franchisee of that decision. Finally, the proposed new language will provide that: (Read more)

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Timur Arbaev ©

Alert: Third Circuit Affirms FTC’s Authority to Regulate Companies’ Data Security

On Monday, August 24, 2015, the Third Circuit upheld the U.S. District Court’s opinion that the Federal Trade Commission (FTC) has the authority to regulate companies’ data security. Under the unfairness prong of Section 5 of the FTC Act, the agency may bring lawsuits against companies with arguably negligent data security practices, without a duty to publish regulations defining exactly what it considers “reasonable” security measures. (Read more)

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Li Xuejun ©

Hotels Troubled over Potential Expedia-Orbitz Merger

Expedia, Inc. (“Expedia”) is in the works to acquire Orbitz Worldwide, Inc. (“Orbitz”) for $1.6 billion dollars. This news arrives on the heels of Expedia’s purchase of Travelocity for $280 million in January, 2015. The potential acquisition has caused independent hotel owners to go into a state of panic. The American Hotel & Lodging Association (AH& LA) has publicly denounced the agreement, urging the Department of Justice to stop the deal from coming to fruition. (Read more)

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Maxim Kazmin ©

Regulation A+ deserves a “D” for Disappointment

Ordinary investors have largely been excluded from opportunities to invest in tech startups due to federal securities laws. Under the Securities Act of 1933, issuers could sell their securities without burdensome disclosure requirements by selling exclusively to “accredited” investors: entities with over $5 million in assets or wealthy individuals with annual income exceeding $200,000 (or $300,000 combined with spousal income) or has a net worth over $1 million (excluding primary residence). If issuers wished to sell to non-accredited investors, they would need to file a registration statement with the SEC or, alternatively, distribute a lengthy financial disclosure document to investors.  As a result, startups raised equity capital generally from accredited investors. The masses were excluded. (Read more)

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David Crockett ©

OTAs and the Back-Tax Parade

On Wednesday, August 13, 2015, the Montana Supreme Court issued a ruling in Department of Revenue v. Priceline, holding that online travel agencies (“OTAs”)—including Priceline, Expedia, Travelocity, Orbitz, and others—are responsible for paying the state’s sales tax on any fees collected from customers. The court agreed with the OTAs arguments, however, that they are not responsible for paying the state’s 4% lodging tax. The court came to this conclusion because the OTAs are not owners or operators of a facility and, as such, the OTA fees are not taxable accommodation charges. More troubling for the OTAs, the court’s ruling is retroactive and requires payment of back taxes to November 2010. While the OTAs argued that applying the ruling retroactively was unfair, the court reasoned that they were officially on notice of the Department’s intent to collect such taxes beginning on November 8, 2010, the official date the lawsuit was filed. (Read more)

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Senate Passes NOTICE Act Regarding Observation Care

On July 29, 2015, the Notice of Observation Treatment and Implication of Care Eligibility (NOTICE Act) was approved by the U.S. Senate. The law will require hospitals to provide written notification to patients within 24 hours of receiving observation care—laying out the reasons the patient has not been admitted to the hospital, and the potential financial implications of the decision. Hospitals will have one year to comply with the NOTICE Act once it becomes law, or face penalties.  (Read more)

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Kheng Ho Toh ©

FDA is “Keeping up with the Kardashians’” Social Media Posts

On August 7, 2015, the FDA sent a warning letter to drug maker, Duchesnay, over Kim Kardashian’s endorsement of its pills for morning-sickness. Kardashian had made an Instagram and Facebook post which vouched for the medication called Diclegis. (Read more)

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Provisions in Contest Rules are Held Enforceable

In 2012, the Federal Trade Commission (FTC) sponsored the “Robocall Challenge,” a contest whereby the agency invited contestants to develop a solution to the consumer problem of automated “robocalls.” One contestant submitted an entry, subsequently claiming that his proposed solution was superior to the two winning submissions. He filed suit based upon a breach of contract theory, and he sought recovery of the $50,000 prize offered in the contest. The contestant alleged that the FTC’s designated judges failed to comply with The Official Rules of the Challenge for evaluating and ranking submissions. (Read more)

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Proposed Overtime Rules Could Significantly Impact Hospitality Businesses

The U.S. Department of Labor has proposed changes to the Fair Labor Standards Act’s (“FLSA”) overtime exemptions, and President Obama recently announced plans that will extend overtime under the FLSA for salaried “white collar” employees who earn an annual salary less than $55,440. These regulations, if finalized, will likely have a major impact on hotels and restaurants. (Read more)