y o u r s o u r c e f o r l e g a l n e w s a n d g o v e r n m e n t u p d a t e s WINTER 2013 / ISSUE 13.1

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1 GAVELTOGAVEL y o u r s o u r c e f o r l e g a l n e w s a n d g o v e r n m e n t u p d a t e s WINTER 2013 / ISSUE 13.1 PRESENTED BY JBJB Overtime Wages Under the Fair Labor Standards Act Duke R. Groover p a r t n e r dgroover@jamesbatesllp.com Carol L. Underwood a s s o c i a t e cunderwood@jamesbatesllp.com The Fair Labor Standards Act ( FLSA ) was originally enacted in 1938 and is the main federal law regulating wages and hours of employment including the payment of minimum wage, overtime pay, an employer s record-keeping requirements, and youth employment standards. Over the last several years the Department of Labor ( DOL ) has implemented a strategic plan to get tough on employers who misclassify employees exemption status and withhold the payment of overtime wages. As part of this plan, significant resources are being committed by the DOL to identify noncompliant employers and correct misclassification. Thus, it is vital that employers take affirmative steps to ensure compliance with the FLSA as violations can impose hefty monetary penalties and reduce company morale. the many pitfalls in determining exempt status An employee is entitled to payment of overtime wages unless the employer proves the employee s job duties fall within an exemption allowed under the FLSA. Classifying employees as either exempt or non-exempt is neither exact nor easy. The most common exempt classifications set by the DOL are the white collar employee exemptions, which include professional, computer professional, executive, and administrative. 1 The classification cannot be made based solely on the employee s job title or on the way the employee is paid (i.e., hourly vs. salary). The analysis and inquiry is extremely fact sensitive and courts will analyze each particular employee s actual work activities as opposed to an employer s job description or job title. Even if two employees hold the same job title, the FLSA may require payment of overtime to one employee and not the other, if the job duties and salary differ for the exempt employee and satisfy the elements for an exemption. continued on page 2 Terri K. Benton a s s o c i a t e tbenton@jamesbatesllp.com inside this issue page 3 PITFALLS OF FORECLOSURE ADVERTISEMENTS page 4 WHAT IS MEDIATION AND HOW DOES IT WORK? page 5 NEW PROMOTIONS AND S AT JAMES BATES page 6 SUBROGATION: HOLDING THE SOURCE ACCOUNTABLE

2 Overtime Wages continued from page 1 Each white collar employee exemption has several elements which must be met in order for an employee to be classified as non-exempt and legally denied payment of overtime wages. Fundamentally, the elements for each exemption center on the employee s duties and responsibilities. Each exemption requires an employee to earn weekly wages above a certain dollar amount. The type of work performed and what portion of the work constituted compensable work to accomplish the principal duties of the employee s job are factors. The employee s supervision or management exercised over other employees as well as the amount of discretion and independent judgment allowed by the employer are also factors. An employee s primary duties as compared to collateral duties will be considered. Finally, inquiry will be made into whether the employer had knowledge of overtime having been worked and knowledge of lack of overtime payment. The exemption provisions are arguably the most heavily litigated provisions of the FLSA. Understandably, it is quite easy for an employer to run afoul of the FLSA regulations and is therefore imperative the employer have a compliance system in place in an effort to prevent violations. compliance: a reason for employers to care Employers are expected to develop self-audit programs, compliance action plans, and follow-up analyses as part of an on-going system of compliance with the FLSA. It is important that employers schedule follow-up and ongoing compliance audits so that complacency, turnover, or the perceived inconvenience of performing ongoing audits does not lead to noncompliance. If the potential for violation does not provide ample motivation, an employer has an additional economic incentive to proactively check for compliance. If an employer finds itself in the unfortunate position of having violated the FLSA then evidence which shows efforts to learn and comply with the FLSA may allow a judge to reduce or eliminate a category of damages assessed against the employer. 2 To show that the employer made a good faith effort to comply with the FLSA, the employer must show that (i) it was acting with a good faith honest belief that it was in compliance with FLSA, and (ii) it had reasonable grounds to believe that it was in compliance with FLSA. 3 Knowledge is imputed to the employer; therefore, an employer s ignorance of the law is insufficient to constitute good faith and reasonable grounds. 4 In other words, I didn t know the law is not an excuse that will be accepted by the DOL or the courts. Thus, attending seminars and continuing education courses on the FLSA, seeking the advice of an attorney regarding compliance with the FLSA, and using the e-tools and other compliance assistance tools provided by the Department of Labor on its website are not only beneficial sources of information for an employer, but may also constitute evidence of an employer s good faith attempt to comply with the FLSA in an effort to reduce penalties should an employer find itself defending a lawsuit for unpaid overtime. the cost of misclassification An employee who successfully proves misclassification and denial of overtime wages will typically be entitled to the amount owed in actual unpaid overtime, liquidated damages, the employee s attorneys fees and costs, and interest. A final component to consider as an employer is the cost of hiring the employer s legal counsel to defend a lawsuit filed for unpaid overtime. 5 The legislature created a remedy for the employee who successfully wins a lawsuit against an employer for unpaid overtime. The legislature has not created a similar remedy for the successful employer who defeats an employee s lawsuit for unpaid overtime. Thus, an employer has very little chance to recover its attorneys fees and litigation costs even if the employer should win on every element of the employee s lawsuit. Lawsuits filed in federal court under the FLSA can cost upwards of $50,000 to defend as an employer. To avoid bearing this costly burden, check with your company s insurance agent to determine whether the employer maintains existing policies which provide coverage for a lawsuit filed under the FLSA. If you do not have insurance coverage, serious consideration should be given to obtaining such a policy in light of the increasing trend of litigation, the DOL s proactive strategic plan to identify non-compliance, the many pitfalls which can easily lead an employer down the path of misclassification, and the costly consequences of misclassification. This article was written by attorneys Duke Groover, Carol Underwood and Terri Benton. Should you have questions regarding FLSA or any other employment related issues, please contact Duke Groover at (478) or dgroover@jamesbatesllp.com, Carol Underwood at (478) or cunderwood@jamesbatesllp.com, or Terri Benton at (478) or tbenton@jamesbatesllp.com U.S.C. 213; 29 U.S.C. 213 contains the industry specific exemptions such as newspaper employees, air transportation employees, and taxicab drivers U.S.C.A U.S.C.A Leonard v. Carmichael Properties & Mgmt. Co., 614 F. Supp. 1182, 1188 (S.D. Fla. 1985) U.S.C.A. 216(b). 2GAVEL TO GAVEL WINTER 2013

3 Foreclosure Advertisements: Preventing Wrongful Foreclosure Claims Before Publication The foreclosure process is straight-forward, but if you are not hyper-vigilant, it is not difficult to complicate the process and create unnecessary exposure for the foreclosing lender. In fact, lenders and their attorneys may easily take a misstep right out of the gate, by failing to exercise precision in drafting and publishing the advertisement. Michael Dunn o f c o u n s e l mdunn@jamesbatesllp.com Georgia courts have long held that a foreclosure advertisement that fails to mention an existing senior lien, or that references a senior lien that has been cancelled, is not defective as a matter of law. 1 But, as recently highlighted by the Georgia Court of Appeals, the lender is not necessarily shielded from a wrongful foreclosure claim simply because the advertisement is not defective. In Racette v. Bank of America, N.A., 2 the lender s foreclosure advertisement included a reference to a senior lien on the property that was, in fact, cancelled. 3 After the foreclosure sale, the borrowers sued for wrongful foreclosure and sought to set aside the foreclosure sale and recover damages. 4 The trial court dismissed the borrower s lawsuit, holding that, because the foreclosure advertisement was not defective as a matter of law, the borrowers could not prevail on their wrongful foreclosure claim. 5 As recently highlighted by the Georgia Court of Appeals, the lender is not necessarily shielded from a wrongful foreclosure claim simply because the advertisement is not defective. The Court of Appeals agreed that the advertisement was not defective as a matter of law, but its analysis did not end there. Instead, the court held that the reference in the advertisement to the cancelled lien may support a wrongful foreclosure claim if the borrowers can produce evidence that the reference chilled the bid at the foreclosure sale, resulting in a grossly inadequate sales price. 6 The Court of Appeals reversed the trial court s dismissal of the borrower s complaint, and a jury will ultimately decide if the reference to the cancelled deed chilled the bidding at the foreclosure sale. 6 The Racette decision is yet another reminder to lenders and their attorneys that the accuracy of the foreclosure advertisement is of the utmost importance. Lenders should confirm the accuracy of every document referenced in the foreclosure advertisement, including but not limited to the lender s security deed and any other recorded instrument referenced in the advertisement. If even the slightest error exists in any of these documents, the lender should correct the error before it publishes the foreclosure advertisement. By so doing, the lender can avoid the expense and uncertainty in having to convince a jury it acted properly in recovering its collateral. If you have questions regarding the prevention of wrongful foreclosure claims or other related concerns, please contact Mike Dunn at (404) or mdunn@jamesbatesllp.com. 1 Smith v. Citizens & Southern Fin. Corp. 245 Ga. 850, (3)(b) (1980); Walker v. Northeast Production Credit Assn., 148 Ga. App. 121, 122(2) (1978). 2 Id. at Case No. A12A1499, 2012 WL (October 23, 2012). 3 Id. at *2. 4 Id. 5 Id. 6 Id. at *3 -*4. 3 GAVEL TO GAVEL JAMESBATESLLP.COM

4 What is Mediation and Why Do I Need To Know How it Works? Since the beginning of civilization people have had disputes with each other. The Romans, Greeks, and other ancient cultures often found that having a neutral third party intervene between the two angry parties would get the disagreement resolved. The intervention, now known as mediation, would have been quickly arranged by the local tribal chief, wise men, or other authority. The disputing parties would have been allowed to present their evidence and to have their say before a settlement of the issues would have been agreed upon by both sides and peace would be restored within the community. Bryant Culpepper o f c o u n s e l bculpepper@jamesbatesllp.com As our society developed, so did our methods of resolving disputes. We became more and more adversarial and dependent on courts and juries to rule on questions of fact and law. The filing of lawsuits as a method of dispute resolution became much more complicated, costly, and inefficient. The old way of sitting down together and working out our problems with the aid of a wise and experienced person was for a very long time largely discarded by the modern world. In the past twenty years or so, our society has rediscovered the old way and has begun to return to some of the ancient concepts of dispute resolution. We have rediscovered mediation as an effective and cost efficient alternative to using the courts to resolve our legal problems.the mediation processes we use today are often ordered by the court as an effort to encourage settlement of a matter and to avoid a costly trial. Mediators are usually lawyers who will facilitate a discussion of the strengths and weaknesses of each side of the case. The process is private and confidential. The mediator cannot be called to court later to divulge what transpired at the mediation and no record is made of any evidence presented. Only the parties and their counsel will know what happened. Ancient cultures often found that having a neutral third party intervene between two angry parties would get the disagreement resolved. Mediation increases the amount of control that the parties have in reaching an agreement. Mediation often allows the opposite party to hear directly from the other side and consider their opinions, often for the first time. Parties and their counsel then have a better understanding of the strengths of their positions and can reassess the value of their case. Solutions to the conflict often will include solutions that could not be awarded by a judge or a jury. The idea of winner takes all is replaced by the possibility that each side may win on some things and yield on others in order to conclude the matter by settlement. Mediation can be appropriate at any stage of the development of the litigation and often occurs before a lawsuit is even filed. It can even occur on the day before the trial is to begin. The use of a trained and experienced mediator will more often than not result in the parties crafting their own fair settlement and ending the conflict on terms they choose and not the whim of twelve strangers. During his seven terms as Superior Court Judge for the Macon Judicial Circuit, Bryant Culpepper presided over hundreds of cases involving numerous types of civil litigation, including contracts, domestic relations, real estate, personal injury, malpractice and products liability to name just a few. After retiring from the bench in 2007, Judge Culpepper returned to the practice of law. Since then, he has devoted a significant portion of his practice to dispute resolution, as both as an arbitrator and mediator, and has been successful in obtaining resolution in numerous cases. Judge Culpepper can be reached at (478) or bculpepper@jamesbatesllp.com. 4GAVEL TO GAVEL WINTER 2013

5 New Year Brings Exciting News from James Bates, Including Two New Litigators As forward to exciting days ahead. It is with tremendous 2013 rolls in, it gives us a chance to reflect on the accomplishments and honors of the past, as well as look gratitude, the Firm recognizes the past four years of faithful service by Thomas Huyck as Managing Partner. As Thomas resumes leadership on the Litigation team, John Kennedy will succeed him taking on a combined role as CEO and Managing Partner. Brian Corrigan will now manage day-to-day operations as COO and Jeff Rutledge takes on new responsibilities as well with a promotion to Partner. The Firm is also pleased to announce the welcomed addition of Jo and Hal Meeks as Partners and a dynamic addition to the Litigation Practice Group. introducing r. harold meeks, jr., partner Roy Harold (Hal) Meeks, Jr. is a Waycross native who attended the University of Georgia, where he received his B.A. degree in English (cum laude) in 1976, and the UGA School of Law, where he served as Senior Editor of the Georgia Law Review until he graduated in Hal has practiced law in Atlanta since 1979 and has tried nearly 200 bench and jury trials and binding arbitrations in his career. His substantive practice areas include medical malpractice and health care industry disputes, securities defense, construction claims, and general commercial/contract disputes. He also has extensive experience representing securities firms and has often litigated employment covenant, trade secret, and other white-collar employment disputes. Hal has served on the Board of Directors of the Brain Tumor Foundation for Children, Inc. since 1996 and served as President from 2001 to 2008, and as Chairman of the Board from 2005 to He continues to serve on the BTFC Advisory Board. By his clients, peers and family, Hal is renowned for his strong character, integrity, and philanthropic efforts. With values parallel to those of the Firm, we are honored to welcome him to the James Bates team. introducing jo lanier meeks, partner A Georgia native, Jo Meeks attended the University of Georgia, earning a B.B.A. degree in accounting (summa cum laude) in 1976 and a Juris Doctor degree from the School of Law (cum laude) in She practices in areas of professional liability defense to the financial services industry, securities, commercial, and business litigation and also represents parties in civil disputes in state and federal courts. She also represents accountants and ERISA professionals in disputes alleging negligence and fraud. Jo is considered among her clients and peers as one of the most highly reputed lawyers in Georgia, further evidenced by her service as an arbitrator for the Financial Industry Regulatory Authority (FINRA) Dispute Resolution and the American Arbitration Association. In addition to local state courts, she is admitted to appear before all federal courts in Georgia, the U.S. Tax Court and the U.S. Supreme Court. Jo s breadth of experience and reputation for being one of Georgia s finest legal minds makes her a very welcomed addition to the Litigation Practice Group. If you have questions or would like more information about any of our attorneys or practice groups, we invite you to call one of our offices or visit our website at JamesBatesLLP.com. Left to Right: Brian Corrigan, Thomas Huyck, Hal Meeks, Jeff Rutledge, Jo Meeks, John Kennedy GAVEL TO GAVEL JAMESBATESLLP.COM

6 Subrogation: Holding the Source of the Problem Accountable Subrogation can be simply defined as the substitution of one party for another. The right of subrogation 3 arises when a third party inflicts or causes damage to another, and an unrelated person or entity ( subrogor ) pays the injured party ( subrogee ) for his damages. That subrogor then assumes any legal rights to a cause of action the injured subrogee may have against the third party, and may look to the third party for reimbursement of any payment the subrogor made to the injured subrogee. This substitution of parties the subrogor for the injured subrogee and assumption of a cause of action is subrogation. Conventional or contractual subrogation arises out of an agreement between the injured subrogee and the subrogor; for example, insurance companies often include in their insurance policies contractual terms reserving to the insurance company the right of subrogation in the event that the insurance company pays its insured for damages caused by a third party. Statutory subrogation is a legal right of action created by statute, such as O.C.G.A , which permits an employer to subrogate against a third party Contractual, Statutory, after the employer has paid worker s compensation and Equitable. benefits to an employee injured by that third party. Finally, equitable subrogation employs the principles of equity, or fairness, and permits a subrogor to pay the injured subrogee s damages and bring a cause of action in equity against the third party. These three types of subrogation provide businesses and individuals multiple ways to potentially recover damages paid to an injured party, caused by a third party s actions. Three Types of subrogation: Corrie E. Holton a s s o c i a t e cholton@jamesbatesllp.com EXAMPLES where a right of subrogation may exist Worker s Compensation benefits paid to an employee Insurance Payments to an insured, for bodily injury or property damages Medicare Benefits paid to an injured party 6 GAVEL TO GAVEL WINTER 2013

7 JB the purpose behind subrogation is three-fold First, an injured party may be able to receive compensation for his damages faster as a result of presenting his claim to a subrogor party, and allow the subrogor to bear the burden of any legal action that may be brought. Secondly, subrogation provides a subrogor who may be legally obligated to pay its JBJB injured subrogee s damages (i.e. an insurance policy) an avenue of recovery for those funds. This may reduce the bottom line of businesses such as insurance corporations or worker s compensation groups. Finally, the party causing the injury is ultimately held accountable for his actions and any damages he may have caused. By placing ultimate responsibility on the third party, that party may be deterred from acting in a similar fashion and future injuries may be avoided. Should you have subrogation or related legal questions, please contact Corrie Holton at (478) or cholton@jamesbatesllp.com. Healthcare Subscription benefits paid to an injured subscriber Payment of Property Taxes owed by the real property owner to a tax authority by a party with a partial interest in the land Surety or Guarantor who has paid the debts of a principal Bank Payments made on behalf of customers to third parties, for customers debts 7 GAVEL TO GAVEL JAMESBATESLLP.COM

8 James-Bates-Brannan-Groover-LLP handles a wide variety of complex litigation matters in both federal and state courts throughout the State of Georgia. Our litigation attorneys are experienced in negotiation, mediation and arbitration, and also offer advice to help clients avoid or minimize litigation exposure. The Litigation Practice Group has a substantial amount of experience in a wide variety of complex litigation matters including but not limited to business torts, construction and contract disputes, civil RICO, employer-employee conflicts, and general business and healthcare disputes. We utilize a hands-on approach to each case. Our attorneys establish a personal relationship with each client to formulate a strategy toward obtaining the best possible result, while doing so in a pragmatic, cost-effective manner that promotes the client s objectives. Put your trust in our experience. Thomas C. James III (478) tjames@jamesbatesllp.com Duke R. Groover (478) dgroover@jamesbatesllp.com Thomas W. Huyck (478) thuyck@jamesbatesllp.com John Flanders Kennedy (478) jkennedy@jamesbatesllp.com William J. Sheppard (404) wsheppard@jamesbatesllp.com G. Grant Greenwood (478) ggreenwood@jamesbatesllp.com Jo Lanier Meeks (404) jmeeks@jamesbatesllp.com R. Harold Meeks, Jr. (404) hmeeks@jamesbatesllp.com G. Bryant Culpepper OF COUNSEL (478) bculpepper@jamesbatesllp.com Michael A. Dunn OF COUNSEL (404) mdunn@jamesbatesllp.com Alec N. Sedki OF COUNSEL (404) asedki@jamesbatesllp.com Kim H. Stroup OF COUNSEL (478) kstroup@jamesbatesllp.com Scott Eric Anderson (478) sanderson@jamesbatesllp.com Peter Edwin Bennion (478) pbennion@jamesbatesllp.com Terri K. Benton (478) tbenton@jamesbatesllp.com Ryan D. Dixon (478) rdixon@jamesbatesllp.com Vivian B. Fisher (404) vfisher@jamesbatesllp.com Lee M. Gillis, Jr. (478) lgillis@jamesbatesllp.com JBJB MACON 231 Riverside Drive Macon, Georgia TEL FAX JamesBatesLLP.com Corrie E. Holton (478) cholton@jamesbatesllp.com William P. Horkan (478) whorkan@jamesbatesllp.com Ronald E. Ronny Hulsey (478) rhulsey@jamesbatesllp.com John B. Jack Nichols (478) jnichols@jamesbatesllp.com Marty K. Senn (478) msenn@jamesbatesllp.com Carol L. Underwood (478) cunderwood@jamesbatesllp.com Amanda N. Wilson (404) awilson@jamesbatesllp.com Doroteya N. Wozniak (478) dwozniak@jamesbatesllp.com ATLANTA 3399 Peachtree Road NE Suite 1700 Atlanta, Georgia TEL FAX