North America

EEOC Suit Alleges Luxury Hotel Discriminated Against Haitian Employees and Used Staffing Agency as a Conduit to Discriminate

On April 18, 2017, the Equal Employment Opportunity Commission (“EEOC”) filed a putative class action against the SLS Hotel South Beach in Miami, Florida (“Hotel”), alleging that the Hotel violated Title VII by firing black Haitian dishwashers who worked in the kitchen and serviced several restaurants in the Hotel – including the Bazaar by Jose Andres, Katsuya and Hyde Beach – and replacing them with white and Hispanic workers, who were supplied by a staffing agency, National Service Group (“NSG”).

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North Carolina: Tax Foundation characterizes the state as a model for tax reform

The Tax Foundation, whose singular vision is “a world where the tax code doesn’t stand in the way of success,” has become bullish on North Carolina’s tax reform success, going so far as to characterize it as a “model for tax reform” in a speech last week at an event.

In its 2017 State Business Tax Climate Index the Tax Foundation swooned over the Tar Heel State’s “most dramatic improvement in the Index’s history—from 41st to 11th in one year.” The index considers how well states structure their tax systems relative to each other, rather than how much state governments collect in taxes, in part because “even in our global economy, states’ stiffest competition often comes from other states.” Indeed, tax competition is an “effective restraint on state and local taxes…states with more competitive tax systems score well in the Index, because they are best suited to generate economic growth.”

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Ohio: Challenge to imposition of the CAT on out-of-state retailers settles

The Buckeye State imposes a commercial activity tax (CAT) for the privilege of doing business in the state, as measured by a company’s gross receipts from Ohio consumers. All businesses with $500,000 or more in annual sales to Ohio consumers are subject to the CAT.

In the case Crutchfield Corp. v. Testa, internet retailers Crutchfield, Newegg, and Mason Companies all challenged the CAT under the dormant Commerce Clause doctrine and Due Process Clause of the U.S. Constitution; at issue was the collective sum of more than $200,000 in taxes, interest and penalties. Their position was that they should not be subject to the CAT because they have no physical presence in Ohio.

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California District Court Rules That Student Athletes Are Not Employees

A federal district court in California has weighed in on the question of whether student-athletes are employees for the purposes of minimum wage and overtime laws. And, like the courts before it, it has rejected that notion.

In Dawson v. National Collegiate Athletic Association, No. 16-cv-05487-RS (N.D. Ca. April 25, 2017), the United States District Court for the Northern District of California has joined the Seventh Circuit Court of Appeals and other courts in holding that athletes are not employees entitled to minimum wage and overtime time pay.

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Second Circuit Finds That Employee’s Obscene Facebook Post Is Protected Activity, Reminding Employers of the Importance of Uniformly Enforcing Employee Conduct Policies

In NLRB v. Pier Sixty, LLC, the Second Circuit held that an employee’s expletive-laden Facebook post – which hurled vulgar attacks at his manager, his manager’s mother and his family – did not result in the employee losing the protection of the National Labor Relations Act (“Act”).  But even though the Second Circuit conferred protected status on this unquestionably obscene post, it did not create a protected right to level profane verbal assaults on management when discussing union business.  Such conduct has been, and will continue to be, unprotected in most circumstances.  Nevertheless, this case acts as an important reminder for employers:  if they choose to allow vulgar conduct in the workplace when it does not pertain to union activity, they must also allow it when it does.

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High Time to Enter the Cannabis Industry: Canadian Federal Government Introduces Legislation to Legalize Recreational Cannabis

By: Rick Moscone, Partner and Daniel Levin, Articling Student

On April 13, 2017, the federal government introduced the highly anticipated Bill C-45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (the “Act”). The proposed Act creates a strict legal framework for controlling the production, distribution, sale and possession of recreational cannabis in Canada. The policy rationale behind this proposed legislation is to set national standards that will more effectively protect youth and reduce the role of the illegal market and organized crime.

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Suit Challenges Jos. A. Bank Clothiers’ “Up to” Percent Off Advertising

A proposed class action lawsuit has been filed in New Jersey asserting that Jos. A. Bank Clothiers, Inc. violated state law by improperly promoting sales with “up-to-a-specific-percentage-off” advertisements.

The Complaint
A New Jersey resident has filed a class complaint against Jos. A. Bank Clothiers asserting that the retailer violated New Jersey law by, among other things, advertising sales of merchandise discounted “UP TO” a specified percentage, such as “UP TO 70% OFF All Outerwear,” in mailings, emails, in-store displays and on the company’s website.

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NAD Decision on Challenge to Wegmans’ In-Store Point of Sale Displays Offers Guidance on Grocery Store Price Advertising

A decision by the National Advertising Division (NAD) on a challenge by Costco Wholesale Corporation to in-store point of sale display advertising by Wegmans Food Markets, Inc. offers important lessons for grocery stores and other retailers interested in making comparative pricing claims.

Costco’s Challenge
Costco challenged Wegmans’ in-store point of sale displays, which compared Wegmans’ prices for certain food products to Costco’s prices for the same or similar products.

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Trade Secrets Injunction Spawns Intrigue, Alleged Threats, And Malicious Prosecution Actions

NuScience Corporation is a California corporation that researches, develops and distributes health and beauty products, including nutritional supplements. In 2009, NuScience obtained by default a permanent injunction in a California federal court against Robert and Michael Henkel, the nephew of a woman from whom NuScience purchased the formula for a nutritional supplement, prohibiting them from selling or marketing NuScience’s trade secrets.  Before the federal court injunction was entered, NuScience terminated the employment of David McKinney, NuScience Vice President of sales and marketing.  McKinney signed a separation agreement wherein he agreed to maintain the confidentiality of certain NuScience-related matters.  What followed might be good book material.

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President Designates Philip Miscimarra Chairman of National Labor Relations Board – What Changes Can We Expect?

On April 24, 2017 President Trump designated Philip Miscimarra as Chairman of the National Labor Relations Board (NLRB or Board). The move follows the President’s late January designation of Board Member Miscimarra as Acting Chairman.

A Republican Chair

Miscimarra, a management-side labor lawyer and a Republican, was nominated to serve on the Board by then President Obama in 2013 and was confirmed by the Senate for a four year term that continues through December 16, 2017.  President Trump can nominate Chairman Miscimarra for another term if he should wish to do so. While Board Members are subject to Senate confirmation, the President may, in his discretion, designate a Member of the NLRB to serve as Chair at his pleasure.

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