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July 8, 2015 - Proposed Changes to Department of Labor’s Overtime Rules Would Entitle 160,000 Georgia Workers to Increased Pay for Overtime Work

On June 30, 2015, the White House announced proposed changes to the Department of Labor’s current overtime payment rules. If enacted, the changes would mean that approximately 160,000 Georgia employees would become entitled to 1.5 times their hourly rate of pay for all hours worked in a given week in excess of forty hours.

Under the current system, certain employees who work more than forty (40) hours per week are entitled to overtime pay at a rate of 1.5 times their normal salary for all hours worked in excess of forty (40) hours in a given work week. Whether a particular employee is exempt from overtime pay requirements is determined on the basis of two primary factors.

1. First, the employee’s job duties must fall into one of the pre-defined categories of exemptions to the Fair Labor Standard Act’s (“FLSA”) minimum wage and overtime payment requirements, such as the executive, administrative or professional.
2. Second, even where an employee’s job duties satisfy the requirements of one of the exemptions, the employee must also be paid a minimum salary of at least $455.00 per week to qualify for an exemption.

Employees paid less than $455.00 per week will generally not be exempt from the rule requiring overtime payment for hours worked in excess of 40 hours per week, regardless of the employee’s job duties.

The Department of Labor’s proposed changes would increase the salary floor for qualification for exemption from overtime payment from $455.00 per week to $970 .00 per week. This change would extend overtime pay (and, though not addressed in this post, the FLSA’s minimum wage requirements) to approximately 160,000 Georgia workers.

The potential effects of the proposed changes to the Department of Labor’s overtime payment and minimum wage requirements are far-reaching, both for employers and for employees. Please do not hesitate to contact MBW Law for a free consultation if you have questions about overtime payment, minimum wage requirements, or the newly proposed Department of Labor regulations.

June 25, 2015 - Landlord Options After Tenant Abandons Premises Prior To Lease Expiration

All too frequently, a commercial tenant will abandon its leased premises prior to the expiration of the lease term. When this happens, the landlord has four primary options.

1. Because Georgia does not require mitigation of damages in lease contracts, the landlord’s first option is to leave the premises vacant and attempt to collect rent from the tenant as if the tenant had never abandoned. From a practical perspective, however, this option is unlikely to be effective, as tenants are generally reluctant to pay rent for a space they are not occupying, despite their legal obligation to do so.
2. The landlord’s second option is to reclaim the premises and re-let the space to a new tenant. The landlord may then hold the original tenant liable for any deficiency in rent income.
3. Third, the landlord may terminate the lease, although doing so would trigger the landlord’s duty to mitigate damages, requiring the Landlord to make reasonable efforts to re-let the premises.
4. Finally, in certain circumstances the landlord may terminate the tenant’s right to possess the property without terminating the lease agreement. Presumably, doing so would circumvent the landlord’s duty to mitigate damages.

Future Rent:
One of the most common questions our landlord-clients ask us is whether they can recover future rent due following the tenant’s abandonment. The answer is yes, and landlord’s have two primary methods for doing so.

1. First, the landlord may accept the abandonment and file suit for the difference between the rent due under the lease agreement and the reasonable rental value of the premises at the time of the breach.
2. Second, the landlord can refuse to accept the abandonment and treat the lease as remaining in full force and effect. Under this scenario, the landlord may to attempt to collect rent from the abandoned-tenant while leaving the premises vacant or the landlord may re-let the premises to a new tenant and hold the original tenant liable for any deficiency in rent collected.

Rent Acceleration Clauses:
Commercial lease agreements often contain rent acceleration clauses, which allow the landlord to collect future rent due at the time the tenant defaults on the lease. Georgia courts treat these clauses as liquidated damages, and they are generally enforceable, assuming they satisfy the three-part test articulated in Southeastern Land Fund, Inc. v. Real Estate World, Inc., 237 Ga. 227 (1976):

1. First, the injury caused by the breach must be difficult or impossible to accurately estimate;
2. Second, the parties must intend to provide for damages rather than for a penalty; and
3. Third, the sum stipulated must be a reasonable pre-estimate of the probable loss.

The key to this three-part assessment is the reasonableness of the acceleration clause. Thus, a provision that reduced the accelerated rent due to present value and deducted from that amount the reasonable rental value of the premises at the time of the breach would be more likely to be enforced than a provision that failed to account for such considerations.

Georgia landlord/tenant law is complicated. Please do not hesitate to contact our firm if you have a question or are interested in representation.  We are here to help.

June 25, 2015 - Georgia Landlord Tenant Law: Dealing with the Bankrupt Tenant

When a commercial tenant files for bankruptcy a landlord is often faced with numerous challenges. First, if a tenant enters bankruptcy it is likely that they owe an outstanding balance. Second, the bankruptcy filing may make the tenant’s obligation to pay rent as it comes due unclear. Third, the bankruptcy proceeding creates obstacles to evicting the tenant.

Pursuant to Section 362(a) of the Bankruptcy Code (the “Code”), the filing of a bankruptcy initiates what is called the “automatic stay.”[1] The automatic stay acts as a bar requiring the landlord to cease any efforts to collect rent or evict the tenant. After the tenant files for bankruptcy, the landlord’s sole remedy is effective navigation of the bankruptcy court proceeding. A prudent landlord must carefully consider any activities related to the tenant which could be viewed as violating the automatic stay.[2]

After the initiation of a bankruptcy proceeding, all past-due rents are viewed as pre-petition obligations. As such, the landlord is essentially an involuntary creditor and the outstanding balance is treated as unsecured debt.[3] Nevertheless, the landlord should pursue all rights it has to payment as an unsecured creditor in the bankruptcy case.

Although the prospects of payment for pre-petition rent are marginal, a tenant in bankruptcy is responsible for payment of all post-petition obligations pursuant to Section 365(d)(2) of the Code. Therefore, a tenant that remains in possession of the leased premises after filing for bankruptcy is required to pay rent as it becomes due. If the tenant fails to pay rent, the landlord may petition the bankruptcy court for permission to commence state court eviction proceedings or move to compel payment of post-petition rent.

Tenant bankruptcies complicate what are often already frayed landlord-tenant relationships. Prompt and diligent compliance with the bankruptcy court’s rules is essential to securing a landlord’s rights. Please do not hesitate to contact an attorney at MBW Law, LLC for assistance in navigating the complexities of tenant bankruptcy.

[1] 11 U.S.C. § 362.

[2] Even if the landlord has already received a writ of possession, if the landlord executes the writ it risks violation of the automatic stay.

[3] Unsecured creditors are the last parties in line to receive payment in a bankruptcy proceeding.

February 27, 2015 - Put Your Tenant on Notice: Landlord Notice Requirements Prior to Eviction in Georgia

In Georgia, if a landlord wishes to evict a tenant because of failure to pay rent, the landlord is required to file a dispossessory action with the court. However, prior to filing the dispossessory action, the law requires the landlord to take certain steps. One requirement is that the landlord must “demand possession” of the premises prior to filing a dispossessory proceeding with the court. See O.C.G.A. § 44-7-50. While the demand may be made orally, and there are no “magic” words required by law, it is generally good practice to make the demand in writing so that subsequently the landlord can easily prove to the court that proper demand was made. Additionally, if the landlord’s lease provides for the payment of attorney’s fees by the tenant in the event the landlord is forced to resort to the court system, the law provides for special notice requirements that must be followed in order for a court to award attorney’s fees. See O.C.G.A. § 13-1-11. Finally, the landlord should pay close attention to the terms of the lease as its terms control and may dictate additional requirements with regard to notice.

January 28, 2015 - You Mean Insurance Companies Don’t Always Pay?

When starting my law practice in 2008, I was introduced to both individual and corporate clients that were having trouble getting their insurance companies to pay property damage claims. Whether it was a fire to a family’s home, theft of copper wiring in a commercial building, or a restaurant’s parking lot collapse, insurance companies such as Allstate, State Farm, Travelers, and Auto Owners were either attempting to not pay claims or to pay claims on the cheap. And helping them do this were well-trained and experienced adjusters, investigators, and lawyers.

Now, I am of the firm belief that if you submit a false or fraudulent claim, the insurance company has the right to deny your claim. In insurance company and legal lingo, the operative words are “material misrepresentation.” If you materially misrepresent your claim, the insurance company has the right to deny it. However, I am also of the firm belief that if you do not materially misrepresent your claim, and there is otherwise coverage under your policy, the claim should be paid and the amount paid should be commensurate with the damage suffered.

In future posts I will go into specific issues that arise with property insurance claims, such as residency, coverages, arson, flood, and what constitutes material misrepresentation. In the meantime, if you are having, or know of anyone having, an issue in getting a property insurance claim covered, tell them not to give up and that an experienced lawyer may be able to help.

For more information on this topic or other related topics, feel free to call me at (404) 228-2629.

January 28, 2015 - Fulton County Magistrate Court: Navigating the Small Claims Process

If you have filed a small claims case in the Magistrate Court of Fulton County and have shown up to have your day in court, you may quickly learn that you will actually have a full day in court. That means you may show up before 9:00 AM and not leave until 4:00 PM. Also, there may be times where the judge tells you that she does not have time for your case and you will be re-scheduled for another court date. In an attempt to prevent this from happening, Fulton County courts, along with most courts, encourage the parties to engage in mediation prior to coming to court. In fact, many courts require the parties to participate in mediation prior to coming to court.

Mediation is a non-binding process where both parties sit down with an impartial mediator in an attempt to find a resolution to their case. Each side, beginning with the plaintiff, may make an opening statement, and then the mediator will sit down with each party individually to discuss the case. A good mediator will not just point out the strong elements of your case, but, more importantly, will point out the weak elements of your case. Furthermore, when assessing your case, a good mediator will help inform you of what you will need to prove in court to win your case. Often times, knowing you are right and being able to prove it are two different things. And if you do not have the information or ability to prove your case in court, it does not matter how right you may be.

A benefit of mediation is it provides an opportunity to reach a resolution that is agreeable to both parties. That is in contrast with going to court, where one party will most likely win and one party will most likely lose. That being said, if you choose to participate in mediation, you should go in with an open mind. If you are not going to be willing to listen to what the other party has to say, or are not going to be willing to reach a compromise whether in terms of value or time, you are better off not participating in mediation.

Michael Weinstein is an attorney with MBW Law, LLC in midtown Atlanta. He specializes in litigation, insurance coverage, landlord/tenant and employment law. Contact Mike at (404) 228-2629.

January 28, 2015 - What Are Severance Agreements, And Can I Get One?

If you work as a W-2 employee in Georgia your employment is most likely employment at will. The largest exception is if you were able to enter into an employment agreement either at the beginning of your employment or at some point during your employment that states otherwise. However, unless you are an executive of a large company, the odds are that you do not have an employment agreement that changes your at will status.

Employment at will means that you can quit your job at any time and for any reason and your employer can fire you at any time and for any reason, so long as it’s not illegal. If you are fired and your employment is at will, you are not entitled to any severance. Severance is basically a sum of money your employer may choose to give you in order to help cover some of your expenses while you look for another job.

However, it must be kept in mind that your employer is not required to pay any severance. As a result, you may ask why would they ever pay severance? Well, there are different reasons, including some employers think it’s the right thing to do as a token of appreciation of the job you have done for them, some may think it is the morally right thing to do to pay you for a certain period of time while you look for other employment, and sometimes employers know they have done something wrong and want to shield themselves from potential liability.

If your employer offers you severance, there is a 99.9% chance that in order to receive the severance, you will have to sign a severance agreement. In very simplistic terms, a severance agreement is a contract between you and your employer that says in exchange for you receiving severance pay, you agree to release any and all claims you may have against them and also agree to assist them if needed. So while severance can be seen as a company trying to do the right thing, they are also trying to protect themselves from any potential liability.

With respect to how much severance you should expect to receive, a general rule of thumb is that if the company is willing to pay you severance, and the termination is through no fault of your own, it can be one month’s pay for each year worked for the company. However, each company is different and sometimes it also depends upon the type of position you held and your salary at the time of your termination. Now, if you were fired because of some kind of misconduct, do not expect to receive any severance pay. On the other hand, if the company has acted in a way that can be deemed questionable, if not downright illegal, it is certainly possible to get more severance.

And with most things in life, you can always try to negotiate. My experience has been, and this is certainly no guarantee, that the initial amount of severance offered is the company’s floor, which means that while you may ask for more and not get it, it is highly unlikely a company would take severance away so long as you have been professional in trying to negotiate.

January 28, 2015 - What Is An Operating Agreement?

Many small business owners are choosing to form their companies as limited liability companies. If you are operating as a limited liability company, and there are partners who own the business with you, called members, it is imperative that you have an operating agreement for the company. The operating agreement, also sometimes referred to as a partnership agreement, sets the framework for how the company is going to operate, decides who is in charge of making decisions, and covers how money is going to be distributed, in addition to a host of other issues.

Unlike a corporation with chief executives and a board of directors, the person in charge of a limited liability company is called a Manager. Depending upon the language used in the operating agreement, the Manager may have sole discretion to run the company as he/she sees fit, including making decisions that can bind the company. If there are multiple members and they have agreed they all want to play a part in operating the business, the operating agreement needs to state that.

And although all business owners hope there are never going to be any problems when it comes to their partners, this is unfortunately not the case. So when the time comes where a dispute has arisen and needs to be resolved and the owners cannot resolve it on their own, a judge is going to first look at whether the issue is covered by the operating agreement. If it is, this will play a large part in how a judge is going to rule.

At the end of the day, if you and your partners operate a limited liability company, it is imperative that you have an operating agreement in place.

January 28, 2015 - How Does Litigation Work?

If you have a legal matter where the amount in controversy is more than $15,000.00, you will need to file a lawsuit in either state or superior court.  Magistrate courts only have jurisdiction for matters where the amount of controversy is $15,000 or less.

All lawsuits begin with the filing of a complaint.  Your complaint will set forth the facts of your case and the cause of action for which you are looking to recover.  For example, if you entered into a contract whereby you provided consulting services for a fee of $20,000 and the other party failed to pay for those services, the complaint may set forth the terms and conditions of the contract and the cause of action may be for breach of contract.

After filing the complaint, it must be served on the defendant.  Service can be made by the sheriff’s office or through a private process server.  Once the defendant is served, he has 30 days in which to file his answer.  If the defendant does not file an answer within this time period, you can file for a default judgment, in which the court may grant you a judgment for $20,000.  If you are going to file for a default judgment, you should technically wait 45 days before filing.

Assuming the defendant files an answer, you will then have an automatic 6 months in which to conduct discovery.  Discovery may consist of filing interrogatories and requests for production, as well as taking depositions.  Interrogatories are questions you pose to the other party for which you want answers, and requests for production are requests for documents that the other party has in his possession.  You may also request documents from third parties.  Depositions are essentially question and answer sessions of an individual or corporate representative that are taken under oath by a court reporter.  The rationale for interrogatories, requests for production and depositions is to find out information which can both help and potentially hurt your case, and on which the other party is going to rely on to win the case.

If the parties do not reach a resolution to the case prior to the close of discovery, the matter will be placed on a trial calendar and will eventually be set for trial.

The information above does not contain every aspect of the litigation process, but rather gives you an overview.  Due to the number and complexity of laws involved with litigation, it is advisable to retain an attorney if you have to file a lawsuit in state or superior court.

Michael Weinstein is an attorney with MBW Law, LLC in Johns Creek. He specializes in labor and employment, corporate transactions, landlord/tenant and litigation. Contact Mike at (678) 387-3396

January 28, 2015 - What Is Employment At Will?

Employment at will, in its simplest form, means that your employer can terminate your employment with or without cause, and with any reason or no reason. Likewise, you can voluntarily resign from your employment with or without case and at any time.for any reason. In the State of Georgia, unless otherwise agreed to, your employment is at will, and thus, Georgia is a right to work state.

However, there are clear exceptions to employment at will, including federal laws that protect employees from suffering an adverse employment decision based on being in a protected class, which include, but are not limited to, the employee’s race, sex, age, religion, and national origin. For example, if Wendy works at a car dealership and her employment is terminated because a customer complained about having to buy a car from a woman, there most likely will be legal consequences for the car dealership if Wendy decides to pursue a claim for wrongful termination.  However, if Wendy’s employment is terminated because the sales manager comes in one day and decides he does not like her, there may not be any legal consequences.

The Equal Employment Opportunity Commission is responsible for enforcing the federal laws that protect employees from being discriminated against by their employers. If an employee believes they have suffered an adverse employment decision based on being in a protected class, they have 180 days from their date of termination to file a complaint with the EEOC. Once a complaint is filed, the EEOC will investigate the claim and make a finding as to whether the employee was discriminated against.  If the EEOC finds there was discrimination, they will attempt to find a resolution for the parties.  If they are not successful, they can either decide to file a lawsuit on behalf of the employee, or decide that if the employee desires to file a lawsuit, it must be done without their assistance.  In most instances, the EEOC will not file a lawsuit on behalf of the employee unless they believe the discrimination is quite clear.  At any stage in the EEOC’s investigation, the employee may request the EEOC stop its investigation.  If an employee makes this request, the employee will then have 90 days in which to file a lawsuit against the former employer alleging discrimination of laws covered by the EEOC.

Michael Weinstein is an attorney with MBW Law, LLC in midtown Atlanta. He specializes in litigation, insurance coverage, landlord/tenant and employment law. Contact Mike at (404) 228-2629.