A Cautionary Tale for Employers in Age-Sensitive Terminations

Post by Anna M. Pepelnjak

On October 10, 2013, the 7th Circuit Court of Appeals reversed a lower court’s grant of summary judgment in an instructive age discrimination case. In Mullin v. Temco Machinery, Inc., —7th Cir. — , No. 13-1338 (10/10/13), the appellate court issued a decision which includes several lessons for employers making age-sensitive terminations.

The case involved the discharge of a 56-year old fire truck salesman. Mullin did not have “smoking gun” evidence that age motivated his termination, but he was able to point to several company actions that left the Court of Appeals “puzzled”. Continue reading

The Role of Guarantees in Commercial Real Estate Leases

Post by Ann K. Chandler

Landlords often request the principal owners of the business entity personally guaranty the obligations of the tenant under the lease. However, before agreeing to sign a lease guaranty, guarantor should examine the specific reasons why the guaranty is being required in connection with the lease and whether the landlord’s concerns could be satisfied by providing alternative security. If the request for the guaranty is determined to be reasonable, the guarantor should investigate whether the amount and/or term of the guaranty can be reduced. Continue reading

Political Discussions in the Workplace

Post by Anna M. Pepelnjak

Once again, elections are fast approaching. Political discussions in the workplace are bound to occur. Divisive issues are at stake. The sides are profoundly separated and the “middle ground” looks to be disappearing.

So, what happens when folks having politically opposite views come to work? The disputes that are taking place in the media, on talk shows and on the internet have no place in the employment setting. Why? Because in this environment, even “water cooler” discussions can get out of hand.

Private employers are free to limit political dialogue during the workday because employees in private industry do not have “free speech” rights, as public employees do. Therefore, private sector employers are encouraged to adopt policies addressing political discourse. In addition, private employers should examine and modify existing policies, such as e-mail and internet use policies, to guard against unauthorized use for political purposes. Courts have even upheld private sector prohibitions against employees wearing campaign buttons to work.

However, even private sector employers lack unfettered authority to regulate workplace conversations. The NLRB has said that discussions relating to union activity are protected, whether or not the workplace is unionized. For example, a discussion regarding the Affordable Care Act might be protected, even if the participants become heated during the conversation.

In addition, private sector employers should avoid dictating to employees how to vote. Rather, employers should adopt policies that encourage employees to exercise their best judgment to vote for the candidate of their choice, while maintaining respect for one another’s differing views in the workplace.

Estate Tax Portability – Finally a “Permanent” Estate Planning Tool

Post by Nancy M. Bonniwell

There has been much discussion of estate tax portability since the beginning of 2013, and there is good reason. “Estate Tax Portability” is a surviving spouse’s ability to use a predeceased spouse’s unused estate and gift tax exclusion. During our lifetime and on death each of us currently has a $5.25 Million gift and estate tax exclusion. Simply said, we can gift during life and/or leave at death up to $5.25 Million of assets without having to pay any gift or estate tax. Before Congress passed the law allowing portability, if married couples wanted to take advantage of both spouse’s exclusion, they would normally establish a trust to hold the deceased spouse’s assets and allocate the estate tax exclusion to that trust. The new law is intended to make estate planning simpler.

One important rule to keep in mind is that a surviving spouse may only use the unused exclusion of the last spouse to die. The one exception is if the surviving spouse uses that exclusion before her second spouse dies. Thus, if a surviving spouse elected to take $4 Million of her first deceased husband’s unused exclusion, then remarried and her second spouse died with only $1 Million of unused exclusion, she would lose the $4 Million of exclusion from her first husband and only be able to elect the second husband’s $1 Million of unused estate tax exclusion, unless she made large gifts to use that $4 Milllion exclusion during her lifetime and before her second husband died. Continue reading

Is Lowering the Judgment Interest Rate a Help or Hindrance for Collection?

Judgments entered after December 2, 2011, accrue interest at a much lower rate. Now judgments accrue interest at the rate of 1% plus prime. From now on, if the judgment is entered on or before June 30 of any given year, you use the prime rate as of January 1 of that year. If the judgment is entered on or after July 1, you use the prime rate as of July 1. Even though the prime rate may fluctuate over time, the rate of post-judgment interest is fixed and does not change until the judgment is paid. The prime rate is presently 3.25% (and has been since 2008). So that means all judgments entered after December 2, 2011 accrue interest at 4.25% and that rate is locked in. That is also the rate that will apply to new judgments until the prime rate changes. Obviously 4.25% is not as good as 12% if you are a judgment-creditor, but it may more fairly represent the time-value of money right now.

Court Rejects Mutual Mistake In Failure To Disclose Case

Post by Barry R. White

I regularly represent home sellers in lawsuits brought by buyers claiming the seller failed to disclose a defect in the home. A recent Court of Appeals case in this area caught my attention. In most failure-to-disclose cases, the buyer must prove the seller was actually aware of the defect. In the recent case, the buyer claimed that the home had a defect in its ventilation system. However, the buyer claimed that neither the seller nor the buyer was aware of the defect and, therefore, the buyer tried to invoke the doctrine of “mutual mistake” (which says that if both parties to a contract are mistaken as to a material fact, the court can rescind the contract).

If this argument had succeeded, it would have given buyers a powerful weapon in claims against sellers: Either the seller knew about the defect and failed to disclose it, or the seller did not know about the defect and the contract has to be rescinded. However, the Court of Appeals did not buy the buyer’s argument. The Court of Appeals said the buyers failed to show that a defect free house was material to the transaction, since the sales documents merely said the seller was not aware of any defects. Thus, for now, based on standard offer to purchase documents and real estate condition reports, buyers still need to show the seller actually knew about the defect. You can read the case here.

Disclaimer

The comments and opinions expressed in this blog are intended for informational purposes only and do not constitute legal advice. Reading or using the information in this blog does not create the existence of an attorney-client privilege. Due to the changing nature of the law, the blog posts may contain dated material. For an update on the current law and the application of the law to your particular facts and circumstances, consult a legal advisor. The information contained herein is not a substitute for obtaining legal advice from a qualified attorney licensed in your state.