Tag Archives: LLC

Sixth Circuit Adopts “Cat’s Paw” Theory for FMLA Retaliation Cases

On April 20, 2017, in Marshall v. The Rawlings Company LLC, No. 16-5614, slip op., (6th Cir. April 20, 2017) the Sixth Circuit Court of Appeals, which covers federal courts in Kentucky, Michigan, Ohio and Tennessee, for the first time adopted the cat’s paw theory of liability in the context of a retaliation claim brought under the Family Medical Leave Act (FMLA), 29 U.S.C. § 2601 et seq.  The term “cat’s paw” was coined by Judge Richard Posner of the Seventh Circuit and introduced in Shager v. Upjohn Co., 913 F.2d 398 (7th Cir. 1990) as a standard by which liability may be imputed to an employer for the discriminatory animus of a biased low-level supervisor.

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Dish Network, LLC: Important Lessons and Reminders for Employers Under a Trump Board

In recent years, the Obama Board has adopted some extreme views on Section 7 rights, which has pushed its jurisdiction into uncharted territories and left non-unionized employers vulnerable to attack. Two of the most notable examples are (1) Murphy Oil U.S.A., Inc. and D.R. Horton, Inc., in which the Board invalidated arbitration agreements with class action waivers and effectively ignored a mountain of legal precedent to the contrary, including the Supreme Court’s repeated affirmations of such agreements and the Board’s own longstanding jurisprudence and (2) Banner Health System, in which the Board deemed routine confidentiality admonishments given in workplace investigations unlawful, brushing aside employer concerns about protecting the integrity of such investigations. These decisions left both unionized and non-unionized employers reeling from the Board’s unprecedented expansion of Section 7 rights.

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Where Federal Expectations Are Low Governor Cuomo Introduces Employee Protective Mandates in New York

Earlier this week New York Governor Andrew D. Cuomo (D) signed two executive orders and announced a series of legislative proposals specifically aimed at eliminating the wage gap in gender, among other workers and strengthening equal pay protection in New York State. The Governor’s actions are seen by many as an alternative to employer-focused federal policies anticipated once President-elect Donald J. Trump (R) takes office.

Legislative Proposals

According to the Governor’s Press Release, the Governor will seek to amend State law to hold the top 10 members of out-of-state limited liability companies (“LLC”) personally financially liable for unsatisfied judgments for unpaid wages. This law already exists with respect to in-state and out-of-state corporations, as well as in-state LLCs. The Governor is also seeking to empower the Labor Commissioner to pursue judgments against the top 10 owners of any corporations or domestic or foreign LLCs for wage liabilities on behalf of workers with unpaid wage claims.

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Appeals Court Divided On Bad Faith Under Illinois Trade Secrets Act

In a question of first impression, the Illinois Appellate Court recently addressed what constitutes “bad faith” for purposes of awarding attorneys’ fees to the prevailing party under §5 of the Illinois Trade Secret Act (ITSA). That section provides, in pertinent part, that if “a claim of [trade secret] misappropriation is made in bad faith” or “a motion to terminate an injunction is made or resisted in bad faith,” “the court may award reasonable attorney’s fees to the prevailing party.” The Illinois Appellate Court delivered a split decision on the legal standards for assessing whether a “bad faith” fee award is warranted under the statute.

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Greenlight: IRS lets LLCs adopt ESOPs

A recent IRS ruling creates opportunities for Limited Liability Companies (LLCs) that want to utilize an Employee Stock Ownership Plan (ESOP). Here’s why: For many years the LLC has been the business entity of choice. It offers liability protection, design flexibility, and certain tax advantages to the owners. One of the disadvantages, when compared to a corporation, was that the LLC and its owners could not adopt an ESOP as a technique for sharing ownership with employees, for succession planning purposes, or ownership liquidation. However, that is about to change.

The rules under the Internal Revenue Code have so far limited the use of ESOPs to C- or S-Corporations. One of the requirements for an ESOP is that it invests predominantly in qualifying employer securities. LLCs were not permitted to have ESOPs because the membership units were not considered qualifying employer securities.

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