Attn. Louisville Landlords, New Registration Requirement

The Louisville Metro Council passed an ordinance last year that requires all rental properties to be registered with the city by March 1st of this year.  Similar requirements exist in Indianapolis, Austin, Memphis and Pittsburgh.

Registration requires an account with Develop Louisville and owners must provide the rental unit's street address along with current contact information of the owner and managing operator. If property is transferred, new owners must register with 30 days of obtaining ownership. 

Here is an easy to follow registration guide and more information about the registry. 

Injunction Stalls Overtime Rule: 42 Million Hurry Up & Wait

By: Rachel Dickey & Darryl Durham 

As most Louisville businesses are aware by now, the Department of Labor added a new rule to the Fair Labor Standards Act, doubling the salary threshold for overtime pay from $23,660 to $47,476. Under the proposed rule, employees who are paid $47,476 or less must be paid time and a half for any overtime, unless they come within a special exception to the rule.  That gives employers a couple of options: 1) pay time and half for overtime hours; 2) raise the employee’s pay to an amount over the threshold to avoid paying overtime; 3) limit the employee’s hours to 40 hours per week; or 5) some combination of the above.

This proposed change, which was to go into effect December 1, 2016, impacts over 4.2 million employees across the United States.  

However, the rule was recently challenged in State of Nevada et al v. U.S. Department of Labor, and an emergency preliminary injunction was granted in the case on November 22, 2016, by Judge Amos Mazzant of the Eastern District of Texas.

This injunction hits the pause button on the rule's roll out in all fifty states, even those who were not among the 21 states who joined as plaintiffs.  The Department of Labor’s website indicates that they “strongly disagree with the decision by the court” and insist that the “Overtime Final Rule is the result of a comprehensive, inclusive rule making process.” 

On December 1st, the Department of Justice, on behalf of the Department of Labor, filed a notice to appeal the preliminary injunction and made a motion to expedite the appeal, which was granted.    

For now, employers and employees across Kentucky can well… hurry up and wait.  However, your Louisville business should still be putting a plan in place, should the injunction be lifted.  

Don't let your employees text and drive!

By: Rachel Dickey 

Insurance companies have been paying attention to the accident statistics involving cell phone use.  As a business owner, you can expect for your carrier to start asking if you have a transportation policy in place that covers cell phone use by employees while driving.  This doesn’t just apply to large corporate businesses. Even small businesses should have these policies in place if their employees are driving on the job.

Why do insurance companies care? Because of the increased risk for liability.  There is a 1 in 4 probability that a motor vehicle crash will involve a cell phone and  341,000 accidents involved texting in 2013. 

While every business is different and may require customized policies to reasonably fit their needs, as a business owner or manager, you should make sure that your cell phone driving policy (or broader transportation policy that includes the company policy on cell phone use while driving) is formalized and signed by your employees.  This policy should extend to any employees that drive during the work day, even if they are using their own car and cell phone to perform company business.   

In general, the safest approach is to ban the use of cellphones while driving all together. This includes texting, emailing, using apps, and talking on the phone via a hands free device.  The business’s policy should be included in new hire orientation, sent out regularly via email to employees as a reminder, and should be posted in high traffic employee areas.

Weber Rose Attorney Spotlight: Brittany Griffin Smith

Brittany Griffin Smith joined the firm in the Fall of 2014.  In addition to her J.D., she also has a M.A. in Communications with an emphasis in Media Law and Public Policy.  It was her love for the media that ultimately made her decide to go to law school.  Working in media, she saw the pervasive impact the law had and enjoyed observing how important media related policy issues were decided in the courtroom.  Ultimately, she knew she wanted to be a part of that process and she set her eyes on becoming a litigator.  Brittany now practices litigation and media law. 

Brittany also just had a baby!  So when she isn’t practicing law she is busy being a new mom.  Her favorite things are making her baby smile, taking his picture, and anxiously awaiting the many milestone moments that are to come.  

Weber Rose Attorney Spotlight: Brittany Bailey McKenna

Brittany joined Weber Rose as an associate in the Spring of 2016.  Prior to joining the firm, Brittany was staff attorney to the Honorable Justice Lisabeth T. Hughes of the Kentucky Supreme Court.  Brittany is very active in the Louisville Community and currently sits on the board of directors for YouthBuild Louisville, an organization that helps young people rebuild their communities and their lives. 

When she isn't working as a business attorney and litigator, she spends most of her time with her husband and two daughters.  Her oldest daughter, Savannah is 5 years old and her younger daughter Harper is 2 years old. They are avid zoogoers and major park enthusiasts.

You can also find Brittany teaching classes at The Barre Code Louisville, practicing yoga, or searching for her next favorite podcast.  

You can learn more about Brittany by visiting her bio page. 

Real Estate Law Practice Tips

Tips from Jim Lobb
An Excerpt from BAR briefs MAGAZINE

Shareholder James T. Lobb (better known as Jim), was recently named Best Lawyers'® 2017 Louisville Real Estate "Lawyer of the Year."   Jim recently contributed real estate practice tips for the Louisville Bar Association's October 2016 BARbriefs Magazine.  In case you missed it, here is the excerpt:

Urge your client to let you review all surveyor and environmental consultant work contracts before your client signs them.

Most consultant work contracts limit the consultant's malpractice liability to the lessor of (i) a small, arbitrarily determined dollar amount or (ii) the amount that your client actually pays the consultant for the work. 

Reputable consultants should carry errors and omissions insurance.  If they don't, then your client shouldn't use them.  If they do, they should be willing to increase their potential malpractice liability to the lessor of (i) the actual harm caused by their negligent acts or (ii) the full amount of their errors and omissions policy (or at least a much higher, arbitrarily determined dollar amount).  Most consultants will make this change to their work contract if you ask.  If they won't, again, your client shouldn't use them.

Make sure the contract requires the consultant to give third-party reliance letters at a reasonable rate.

And make sure your client owns or has a license in the work product that requires the consultant to produce the most current completed version of its work product, and allows the client to use that version of the work product to finish the job, if the consultant and the client have a falling out. 

OMG! Are You Pregnant? Innocent Interview Questions Gone Wrong

What not to ask.

By: Rachel Dickey

If you’re a Kentucky or Louisville business owner, you know there are a lot of topics that come up during a job interview, and most of them are innocent enough.   But sometimes, even the most innocent questions can have serious employment law implications.  A perfect example, and subject of part one of this series, are the questions, “how many kids do you have and how old are they?”  Questions like this one, particularly when systematically asked to only female applicants, are risky.  Even when posed to both male and female applicants, the EEOC states that it will consider questions like this, and the ones listed below, when determining if a company is violating Title VII of the Civil Rights Act, which prohibits sex-based discrimination. 

Sometimes this information comes out in an interview without solicitation, but remember whether you ask, or they tell, you should not use the information to make your hiring decisions.  Questions like the one posed above, should only be asked after an offer of employment is made and accepted, and only for legitimate business reasons such as insurance.    If, for example, your business is thinking about not hiring someone because they have small kids and you’re concerned that it will take away from their hours, think again.  

FYI the EEOC instructs that the following inquires may be regarded as evidence of intent to discriminate when asked in the pre-employment context:

• Whether the applicant is pregnant.
• Marital status of applicant or whether applicant plans to marry.
• Number and age of children or future child bearing plans.
• Child care arrangements.
• Employment status of spouse.
• Name of spouse.

Consumer Financial Protection Bureau Announces New Rules Governing Debt Collection

Get to Know the New Rules 

By: James McDonough

On July 28, 2016 the CFPB (Consumer Financial Protection Bureau) announced its new debt collection rules which focus on additional requirements for debt collectors to prove their debt, especially in the context of requesting a default judgment. 

The CFPB is a supervisory regulatory enforcement authority over various consumer financial services and laws including: 

1. debt collection
2. credit reporting 
3. mortgage services
4. private student loan lender and servicers
5. pay-day lenders and others

One of the problems that is meant to be addressed by the new rules is the large volume of default judgments issued against consumers. It is thought many consumers may not understand their rights and fail to file a responsive pleading to a lawsuit. The new CFPB rules force debt-collectors to provide consumers with better information about the debt in question, substantiate their claim before filing suit, disclose the possibility of litigation, and the implication of the default judgment. 

Many of these rules are directed at so called ‘debt buyers’ who file large volume of lawsuits often based on incomplete information regarding the debt in question, and then obtain a default judgment against the consumer. Over the past decade, the court system and government regulators have seen a huge increase in so-called “junk debt”, meaning unsubstantiated debt claims that are sold and resold by multiple players in the collection industry. 

The concern is that many of these default judgments are being obtained for unsubstantiated or unproven amounts, and some of them are even obtained against the incorrect person or on debts for which the enforcement period has already expired. The goal is to require the debt-collector to provide more information to the consumer, and provide higher evidentiary standards for proof of the amount and validity of the debt. 

Although the specifics have not yet been promulgated, the following are the fundamental changes that are being addressed: 

1. Debt collectors would be forced to substantiate debts prior to any communication with consumers;
2. Collectors would be required to provide a “litigation” disclosure explaining that a court could enter a default judgment against the consumer if he/she fails to respond in court;
3. Collectors would be prohibited from filing suit or threating litigation involving time barred debts; 
4. Limitations would be placed on state “revival statutes” which allow the collect or to reset and extend the statute of limitations where borrowers make a payment or acknowledge their debt in writing;
5. These changes only apply at this time the consumer debt and not commercial debt.  

Similar to the Fair Debt Collection Practice Act, a debt collector is defined as a Third-Party that is collecting the debt of another creditor. Currently, the new CFPB rules do not apply to creditors who are collecting their own debts. The new rules will apply to attorneys collecting their client’s debts. 

It is expected that these rules may eventually apply to the requirements for creditors collecting their own debts. This would include higher standards for demand letters, bankruptcy proofs of claims, and claims filed in descendant’s estates. It should also add requirements for the seller of the debt, not just the debt buyer, to take affirmative steps to check their records for accuracy.

Tips for creditors: 

1. Maintain detailed consumer billing records and full pay histories; 
2. Be prepared to furnish your attorney or often debt collector with additional documents to prove your balance due; 
3. If you sell a consumer claim to a debt buyer, be able to provide adequate documentation;
4. There may be additional collection delays while the consumer has more options to dispute the debt.  

The Do's and Don'ts of Background Checks.

Background Check 101

By: Darnell McCoy

Many, if not most, businesses, both small and large, view the use of criminal background checks as a vital tool when contemplating new employee hires or internal promotions. As with any employment related matter, there are laws in place which employers must be mindful of when utilizing background checks.

Having said that, businesses should be sure to adopt a careful approach to the use of criminal background checks, as although they can be a key asset in handling personnel matters, they can quickly turn into a liability if the proper procedures are not followed.

Specifically, employers should be mindful of the Fair Credit Reporting Act and Title VII of the Civil Rights Act of 1964.

The Fair Credit Reporting Act (FCRA)

As a reader, you’re probably wondering what a criminal background check has to do with fair credit reporting. The answer is that such a report falls under the broader category of “consumer report” under the FCRA, and therefore is subject to its provisions. Likewise, the agency that an employer engages to provide the report is known as a “consumer reporting agency” (CRA), under the FCRA

So what does the FCRA require of employers? Essentially, it covers the procedural component, with the goal of achieving transparency and clarity between the parties involved. Here are some key points, broken down into the respective stages in the process.

• Before Obtaining the Report, the employer must:
  • Provide the applicant/employee with notice in the form of an independent document which states that the information revealed by his/her criminal background report may be used in the decision-making process; and
  • Obtain written permission for to use the criminal background report from the applicant/employee.
• After Obtaining the Report, but Before Taking Adverse Action
  • Before the employer rejects an application, terminates an employee, or takes any other adverse employment action based on the information contained in the report, the employer must provide to the applicant/employee:
    • A copy of the report being relied upon
    • A copy of a document entitled “A Summary of Your Rights Under the Fair Credit Reporting Act”, which will be provided to the employer by the CRA.
• After Taking Adverse Action
  • The employer must give the applicant/employee additional notice. This “adverse action notice” must include:
    • The name and contact information of the CRA that provided the report.
    • A statement that the CRA was not the decision maker and cannot provide any reasons for the adverse action if contacted.
    • A notice of the applicant/employee’s right to dispute the accuracy or completeness of any information the CRA provided.

Employers must be aware that the use of an individual’s criminal history in making employment decisions may, if not done properly, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964.

The use of criminal background checks can be discriminatory in two ways. The first scenario involves intentional, direct discrimination where an employer holds an applicant of one race to a stricter standard than another with regard to a criminal history item. The second, and much more likely scenario, involves what the EEOC calls “disparate impact discrimination”, which means a policy is being applied across the board to all similar candidates, but it has the effect of disproportionately excluding a particular group. Fortunately, the EEOC has provided guidance which assists businesses in complying with the requirements.

In order to avoid this possibility, employers should develop a targeted screening plan when utilizing criminal records in employment decisions. At minimum, this targeted screening must consider the nature and gravity of the crime, the harm caused, the specific elements of the crime, the degree of the crime (felony or misdemeanor), how long ago the crime was committed, and the nature of the job for which the applicant being considered.

This targeted screening should be based on and consistent with a written policy which includes the following:

• Essential job requirements for each position for which a criminal background check will be utilized.
• Documentation for validating the policy.
• Training for individuals involved in hiring to ensure compliance with Title VII.
• Offenses that would not be acceptable for the job along with a timeframe for how long
• the offenses would be considered unacceptable for the position.

Employers that choose to utilize background checks on potential or current employees should follow these guidelines and develop their own policies to ensure that these practices serve as a valuable tool, and not a hindrance, to accomplishing the business’ goals.