HPSS Recognized by Construction Executive in The Top 50 Construction Law Firms™

We are proud to announce that we have been recognized by Construction Executive in The Top 50 Construction Law Firms! You can access the Construction Executive article highlighting the Top 50 Construction Law Firms by clicking here.

FTC Publishes Rule Banning Non-Compete Agreements

On Tuesday, April 23, 2024, the five member Federal Trade Commission (FTC) voted 3-2 along party lines to approve a new rule regarding non-competition agreements. The new rule, which takes effect on September 4, seeks to ban all non-competition agreements, deeming such agreements an unfair method of competition violating Section 5 of the FTC Act. True non-solicitation of customer provisions are not affected by the rule, unless these provisions function to prevent someone from seeking work or operating a business.

Under the FTC’s rule, unless the employee bound to the non-competition agreement is a “senior executive”, as defined by the rule, attempting to enforce an existing non-competition agreement or enter into a new non-competition agreement constitutes unfair competition. 

The rule does allow employers to enforce existing non-competition agreements against senior executives, but senior executives cannot be asked to enter into a new non-competition agreement after the effective date of the new rule. 

A “senior executive” is defined under the rule as a worker who was in a “policy-making position” and received total annual compensation of at least $151,164 in the preceding year. A “policy-making position” is defined as having final authority to make policy decisions that control significant aspects of a business entity or common enterprise and does not include authority limited to advising or exerting influence over such policy decisions or having final authority to make policy decisions for only a subsidiary of or affiliate of a common enterprise. Think of presidents and CEOs when you consider the term “senior executive” under the rule.

For those workers who are bound to existing non-competition agreements and do not fall within the definition of a “senior executive”, the new rule requires employers to provide written notice to these workers (both current and former workers) that the existing non-compete clauses will not and cannot be legally enforced against them. Indeed, the rule provides a sample notice for employers.

The new rule is already subject to legal challenge. Plaintiffs are seeking to halt the rule’s effective date. It is anticipated that the Northern District of Texas, where one of the lawsuits challenging the rule was filed, will decide by July 3 whether to halt, or stay, the effective date of the rule pending the outcome of the lawsuits on the merits. We will keep you informed, when the court issues its initial decision.

New Salary Level Test Applies for Employees to be Classified as Exempt From Overtime Pay under the Fair Labor Standards Act

On April 23, 2024, the U.S. Department of Labor announced a final rule concerning overtime exemptions that takes effect on July 1, 2024. The new rule is already subject to legal challenge, with litigation seeking to pause the effective date of the rule pending.

The Fair Labor Standards Act (“FLSA”) requires that when most workers work more than 40 hours in a week, they get paid an overtime premium at 1.5x or “time and a half” their base rate of pay. Some workers are exempt from the FLSA’s overtime requirement, such as, Executive, Administrative, and Professional employees, or “EAP” employees. In addition to primarily performing certain types of duties, these employees must also be paid on a salary basis at a certain level of pay to be exempt from overtime requirements.

The U.S. Department of Labor’s new rule increases the standard salary level required to trigger overtime exemption for these employees as follows:

·      Currently, the standard salary level required for exemption is $684 per week, or equivalent to $35,568.00 per year.

·      On July 1, 2024, the standard salary level required for exemption will be $844 per week, or equivalent to $43,888.00 per year.

·      On January 1, 2025, the standard salary level required for exemption will be $1,128 per week, or equivalent to $58,656.00 per year.

The plain meaning of the new rule is this: Starting on July 1, 2024, salaried employees paid less than $43,888.00 must be paid 1.5x for all overtime hours worked after that date. It then increases to $58,656.00 on January 1, 2025.

Consistent with the current regulations, up to 10 percent of the standard salary level can be satisfied with nondiscretionary bonuses and incentive payments, including commissions.

The circumstances of each affected employee will likely impact how employers respond to this final rule. Employers have several options for adjusting to the updated salary thresholds. According to the U.S. Department of Labor, an employer may:

·      increase the salary of the employee to at least the new salary level to retain exempt status;

·      pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked;

·      reduce or eliminate overtime hours;

·      reduce the amount of pay allocated to the employee’s base salary (provided that the employee still earns at least the applicable hourly minimum wage) to offset new overtime pay; or

·      use some combination of these responses.

The new rule also includes an automatic updating mechanism. On July 1, 2027, and every three (3) years thereafter, the minimum salary level will be updated using the methodology in effect at the time using current earnings data. The updated salary level will be issued with a 150-day notice.

The U.S. Department of Labor provides a number of helpful resources for navigating the new rule for those seeking additional information.

If you have any questions regarding the new FLSA rule or related employment questions, please call or email either Philip Siegel or Jason Kamp. Philip’s email is pjs@hpsslaw.com and he can be reached directly at (404) 469-9197. Jason’s email is jak@hpsslaw.com and he can be reached directly at (404) 469-9193.

Urgent Trademark Action Required – Or Is It?

In the past several months, a number of clients have forwarded to us email solicitations that they received, which read something like this: “Urgent. Another company is in the process of filing a trademark registration for [the name of your company]. You must act now to avoid forfeiting your rights. Please email us right away so that you can preserve your rights in your trademark. If we do not hear from you, we will be forced to proceed with the other party’s registration.”

Sound familiar? These are not legitimate solicitations. They are either sophisticated phishing scams or they are unscrupulous marketing efforts, and in either case, they are designed to separate you from your money. Legitimate trademark servicing companies will not contact you with this kind of message. If you receive a message like this and would like to get our opinion, please feel free to forward it to us. 

But what should you do if you have legitimate questions about obtaining a trademark registration? A person or company which uses a particular mark (which might be a name brand, or a logo, or a catch phrase) in connection with their business may be able to obtain registration of the mark with the U.S. Patent and Trademark Office. The mark needs to meet certain qualifications (such as not being similar to other marks) and the owner needs to be using it in connection with its goods or services, but a registration of a mark can provide solid protection of the owner’s investment of the mark and the use of it to differentiate its products or services in the marketplace.

The trademark registration process takes some time and often requires some expert argument and presentation.  However, in proper circumstances, trademark registrations are not difficult to obtain. If you have further questions about a possible trademark scam or if you are interested in investigating whether a trademark registration will be a benefit for you and your business, please contact Scott Calhoun. You can e-mail Scott by clicking here, or you can reach him directly at (404) 469-9195.

Be Careful Not to Sign Away Your Rights!

Owners and general contractors often require contractors to sign broad waivers and releases in exchange for payment. Even in states, such as Georgia, which have statutory lien waiver forms, they may require contractors to sign both the statutory lien waiver and a separate form that includes a broad waiver and release of claims for additional time and money. Such broad waivers and releases may be found on various types of forms including, but not limited to, payment applications, change orders, partial waivers and releases, and final waivers and releases. By signing such forms, contractors may waive their rights to pursue claims for additional time and money, lien rights and claims of lien, bond claims, claims for retainage, claims for extra or changed work, claims for delay or damage to the contractor’s work, and claims for other disputed items.

Contractors should carefully review all forms before signing them to make sure they are waiving and releasing only those rights or claims that they intend to waive. Even if a waiver and release is conditioned upon receipt of payment, contractors could be waiving claims for items that are not included in the payment amount set forth in the waiver. For example, the form may state that the contractor waives all claims through a certain date upon receipt of payment of a certain amount. The payment amount set forth in the waiver may not include retainage withheld on work that the contractor performed prior to the date set forth in the waiver or a pending change order or other claim that arose before the date set forth in the waiver. Therefore, to avoid waiving those rights and claims, contractors will need to modify the form to except from the waiver any claims for retainage, claims for extra or additional work that have not yet been processed or paid, and unresolved claims for disputed items that the contractor previously identified in writing. This applies both to statutory lien waiver forms and forms prepared by owners and general contractors, but please keep in mind that state lien laws may limit or prohibit certain modifications to statutory lien waiver forms. Thus, before modifying any statutory lien waiver forms, it is important to understand the applicable lien statute and the extent to which the applicable law will permit additional language or other modifications to the statutory form.   

If you have any questions regarding forms you are asked to sign or what rights and claims you may be at risk of waiving and releasing by signing a particular form, please do not hesitate to call or email Leanne Prybylski or Elina Gutsaeva. You can e-mail Leanne by clicking here, and she can be reached directly at (404) 469-9187. You can email Elina by clicking here, and she can be reached directly at (404) 469-9183.

Firm News!

Hendrick Phillips Salzman & Siegel received Tier 1 recognition in the 2024 edition of the Best Law Firms® Awards. This award is bestowed to an entire legal practice at a firm by specialty and jurisdiction. These awards analyze six research initiatives collating feedback from clients, lawyers, firm leaders, and marketing teams. Our Tier 1 recognition in construction law and construction litigation for Metropolitan Atlanta is reserved for the highest scoring firms during the Best Lawyers annual review process!

We are very proud to announce that Stephen Phillips, Martin Salzman, and Philip Siegel have been named Super Lawyers in the 2024 edition of Georgia Super Lawyers. Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area.

Stephen, Martin, and Philip were also included among Georgia’s Best Lawyers in construction law by BL Rankings, LLC. For more than four decades, Best Lawyers lists have been compiled by conducting exhaustive peer-review surveys in which tens of thousands of leading lawyers confidentially evaluate their professional peers.