Author: joshdherman

Miller Hall & Triggs closes on two RAD Low Income Housing Tax Credit Transactions in June 2018

Richard M. Joseph with Miller, Hall & Triggs, LLC closed on two RAD Low Income Housing Tax Credit Transactions resulting in the conversion of all 390 public housing units of the Housing Authority of the City of Texarkana, Arkansas.

The RAD program,  administered by HUD,  was established in order to give public housing authorities a powerful tool to preserve and improve public housing projects and address issues of deferred maintenance by providing for the voluntary conversion of public housing and other HUD-assisted properties to long-term, project-based Section 8 rental assistance, utilizing either project-based vouchers or project-based rental assistance contracts. RAD allows public housing agencies to leverage public and private debt and equity to help ensure that the units remain affordable to low income households.

The Texarkana RAD Conversion project made possible the conversion and rehabilitation of 335 units in eight separate apartment complexes through the use of 4% low income housing tax credits generating $6,356,897 in equity, $13,100,000 Multi-family Housing Revenue Bonds issued through the Arkansas Development Finance Authority, $10,000,000 non-recourse loan through the HUD 221(d)(4) program, and use of Public Housing Operating Reserve Funds.

The Housing Alliance 2 project made possible the conversion and substantial rehabilitation of 55 units in two separate apartment complexes and five single-family homes through the use of 4% low income housing tax credits generating $1,234,370 in equity, $2,900,000 Multi-family Housing Revenue Bonds issued through the Arkansas Development Finance Authority and use of Public Housing Operating Reserve Funds and Public Housing Capital Funds.

Illinois FOIA prohibits disclosure of disciplinary records older than 4 years

Disciplinary Records Older Than 4 Years Prohibited from Disclosure in Response to FOIA Request

By:  Robert B. McCoy

robert.mccoy@mhtlaw.com

Public employers have sometimes attempted to prevent the disclosure of an employee’s disciplinary records in response to Freedom of Information Act (FOIA) request under the theory that a request for such records is an unwarranted invasion of the employee’s privacy.  However, it is now settled law in Illinois that disciplinary records of a public employee, where discipline was actually imposed and which bear on the employee’s ability or fitness to do his or her work, are public records that must be released in response to a FOIA request.   But, must a public employer disclose every past reprimand or suspension of an employee, no matter how long ago the discipline was imposed?

The answer is “no.”  The Illinois Appellate Court, in the case Johnson v. Joliet Police Department, decided on June 19, 2018, ruled that, when a public employer received a FOIA request for an employee’s disciplinary records, the Personnel Record Review Act (Review Act) mandates that the employer delete those records which are more than four years old.

In the Johnson case, the Joliet Police Department denied a plaintiff’s FOIA request for records relating to the discipline of one of its employees.    This employee had been disciplined twice, but that discipline had been imposed more than four years prior to the FOIA request.

In ruling that the Joliet Police Department justifiably denied the FOIA request, the Appellate Court noted that Section 8 of the Review Act provides that “An employer shall review a personnel record before releasing information to a third party and, except when the release is ordered to a party in a legal action or arbitration, delete disciplinary reports, letters of reprimand, or other records of disciplinary action which are more than 4 years old.” (820 ILCS 40/8.)

Section 8 of the Review Act appears straightforward, but the plaintiff making the FOIA request in the Johnson case argued that Section 11 of the Review Act, which states that the Review Act is not to be construed as to diminish a right to access records already otherwise provided at law, meant that the Joliet Police Department could not limit his FOIA rights. (820 ILCS 40/11.) The Appellate Court disagreed, finding that the plaintiff’s interpretation of the Review Act rendered meaningless Section 7.5(q) of FOIA, which exempts from FOIA information prohibited from being disclosed by the Review Act.  (5 ILCS 140/7.5(q).)

Practice Tips

 If your public body receives a FOIA request for employee disciplinary records, the first step is to determine what records are responsive to the request, and whether the records are actually disciplinary records.  Not all records regarding an employee’s poor performance are disciplinary records.  For example, in the Johnson case, the Appellate Court noted that citizen complaint registers were not disciplinary records.  Records of an investigation or adjudication, to determine whether discipline should be imposed against a specific employee, are not disciplinary records.  Neither are performance evaluations.  But, letters of reprimand or notices of suspension (with or without pay) are disciplinary records.  These records must usually be disclosed, but pursuant to Section 8 of the Review Act, disciplinary records more than 4 years old must be deleted from the response to a FOIA request.  Whenever records are withheld in response to a FOIA request, the requester must be informed of the reason for the denial, while also being informed of his or her right to appeal to the Illinois Attorney General’s Public Access Counselor or file a lawsuit seeking review of the denial.

If any disciplinary records are being released to a third party, Section 7 of the Review Act requires that the employee receive prior notice before the records are released. (820 ILCS 40/7.)  When disciplinary records are being released to a third party pursuant to a FOIA request, notice to the employee can be by email; otherwise, the notice must be by first-class mail. Employees have the right to supplement their personnel file with their side of the story, and any written explanations should be released along with the disciplinary records being divulged, but employees do not have the right to veto or delay the release of their disciplinary records.

 

The Illinois Small Wireless Facilities Deployment Act

Implementing the Small Wireless Facilities Deployment Act

By Scott Brunton

email: scott.brunton@mhtlaw.com

In April 2018, Public Act 100‑585 – the Small Wireless Facilities Deployment Act (the “Act”) – was signed into law.  This Act became effective on June 1, 2018, and impacts all municipalities in the State of Illinois with the exception of Chicago.  Small wireless facilities – being antennas and other similar devices – are telecommunications hardware that can be attached to existing utility poles, light poles, or other structures  often found in the public right-of-way.  These small wireless facilities will allow wireless carriers to enhance cellular transmissions in hard to reach areas, while also allowing implementation of the next generation 5G wireless technology.  Illinois municipalities will need to act promptly to ensure that these small wireless facilities are not being installed and operated in municipal rights-of-way without permissible oversight by the municipality as provided under the Act – including the collection of permit fees.

In passing the Act, the Illinois Legislature noted that small wireless facilities are critical for delivering wireless access to advanced technology, broadband, and 9-1-1 services to homes, businesses, and schools in Illinois.  The Illinois Legislature further noted that this access to wireless technology is integral to the economic vitality of the State and to the lives of all Illinois citizens.  But, in making these proclamations and passing this Act, the State has significantly limited a municipality’s ability to regulate the placement and installation of small wireless facilities on any right-of-way under the control of the municipality.  The Act also requires that if a municipality grants access to other telecommunication carriers to municipal property outside of the public right-of-way, the municipality must provide the same access these small wireless facilities.

Specifically, the Act addresses the installation, mounting, maintenance, modification, operation, or replacement of small wireless facilities on any support structure or utility poles in a municipality’s right-of-way (this is defined as “collocation of small wireless facilities”).  Small wireless facilities are no more than six cubic feet in volume and “collocated” atop an existing utility or light pole or a new similarly styled support structure.  Basically, a municipality cannot regulate the installation or placement of small wireless facilities in a municipal right-of-way that do not exceed 10 feet in additional height on an existing pole or that do not exceed 45 feet in height for any new support structure.  As such, small wireless facilities are permitted uses and not subject to zoning review or approval if they are collocated in the right-of-way in any zoning district or outside of the right-of-way on property zoned exclusively for commercial or industrial use.  Further, a municipality cannot limit the number of wireless carriers installing small wireless facilities in the municipality.

The Act does allow a municipality to require a wireless carrier to submit an application for the installation of small wireless facilities with the municipality issuing a permit.  The application can require submission of certain information for each small wireless facility, including siting and mounting information (with a photograph), specifications and drawings, along with structural integrity analysis, prepared by a structural engineer, and  an installation schedule.  Furthermore, a municipality can propose alternate placements within 100 feet of the requested site to help ensure the integrity of the public right-of-way.  But, it is important to note that the Act provides a specific application review period, and if a municipality does not respond to an application within 30 days after the application is submitted, the application is deemed complete and approved.

Moreover, a municipality can assess a permit fee of up to $650 for the first collocated facility and $350 for each additional facility and up to $1,000 for a facility on a new pole.  Permits are to be issued for a five-year period.  With regard to small wireless facilities on municipal property, the annual permit fee is capped at $200.  However, a municipality cannot collect any permit fees without first adopting either an ordinance or a written fee schedule. Most importantly, a municipality has effectively until August 1, 2018, to adopt this small wireless facility fee schedule, or thereafter a wireless carrier can begin installing small wireless facilities in a municipality’s right-of-way without having to submit an application or pay any permit fees to the municipality.  If a municipality does wait until after August 1, 2018, to adopt an ordinance or permit fee schedule, the municipality will only be able to collect permit fees for any small wireless facilities installed after the municipality does adopt an ordinance or fee schedule.

The Act includes several other important provisions as well.  For instance, a municipality may impose design standards for decorative utility poles or other reasonable stealth, concealment, or aesthetic requirements for small wireless facilities – which may be very significant for certain areas within a municipality where appearance is important, such as a town square or a residential area.  Any ground-mounted equipment associated with the small wireless facility that is not attached to the pole or support structure can also be required to comply with the municipality’s undergrounding requirements or right-of-way permitting  requirements.  Additionally, wireless carriers can be required to meet indemnification and specified insurance requirements before undertaking work to install any small wireless facilities.  Last, municipalities can remove abandoned facilities that have not been operated for a 12-month period.  But, similar to the permit fees, these additional provisions must be enacted by the municipality through an ordinance in order to be enforceable.

This Act has been a couple years in the making as wireless technology is moving to the next generation 5G wireless technology.  Interesting, the Illinois Legislature established a sunset date of June 1, 2021, for this Act.  As a result, we can expect to see revisions or updates to this Act as we approach the sunset date in 2021.  Nevertheless, municipalities need to take the time to understand this new Act, while timely establishing a permit fee schedule to ensure that a municipality can capture the revenue from issuing permits for these small wireless facilities.

Janus vs. AFSCME: Unions Lose Fair Share and Agency Fees

What must public employers do after Janus?

By Joshua Herman

email: joshua.herman@mhtlaw.com

Janus v. AFSCME, a 5-4 decision by the Supreme Court of the United States (“SCOTUS”) issued June 27, 2018, reversed 40 years of law allowing governments and unions to withhold “fair share” deductions from non-union public employees without their consent to subsidize union activity – regardless of whether the employee agreed with the union, its positions, or the activity.

Following Janus, no public body or union can require or deduct an employee’s “fair share” without his free and voluntary consent.  “Fair share,” also referred to as “agency” or “shop” fees, are the costs and expenses unions claim non-union members owe for the benefit of the union’s services and representation.

Fair share deductions were previously lawful pursuant to the Supreme Court’s 1977 decision, Abood v. Detroit Bd. Of Ed. In Abood, fair share deductions (referred to then as “agency fees”) were allowed because they helped to obtain and maintain “labor peace” and avoided “free riders.”  However, Janus held that fair share unnecessarily infringes on First Amendment rights of non-union employees.

Contradicting the “free rider” argument, the plaintiff argued that he was not getting a free ride” on a bus headed somewhere he wanted to go; instead, he was being “shanghaied for an unwanted voyage.” Thus, even assuming the union secures non-union members valuable benefits, Janus opined that this is no different than other private speech that often benefits non-speakers; however, that benefit does not allow the government to require non-speakers pay for such speech.

The true benefits and costs from this decision will not be clear for years to come. As the majority stated “[i]t is hard to estimate how many billions of dollars have been taken from non-members and transferred to public sector unions in violation of the First Amendment.” However, such a “victory” comes at a cost because, as the Janus dissent notes, this decision “undoes bargains reached all over the country.” Twenty states have statutory schemes allowing or mandating fair share and it is a substantive portion of “thousands of current contracts covering millions of workers” requiring affected parties across the country to begin negotiating anew.

Next steps:  What must Public Employers do after Janus?

By its terms, the Court’s decision in Janus took effect immediately, requiring that parties should prepare for the fall out. After Janus, governments, school districts and other public bodies must take immediate action to comply with the new law and continue to meet their obligations under the existing labor law.

Stop Non-consensual Deductions. Public employers should immediately review all employees for whom they make deductions – whether for union dues or fair share – and immediately cease any such deduction that is not supported by the employee’s written consent to such deduction.

Union Dues from Union Employees. Most unions provide forms their members sign to consent to the deduction of union dues and fees. Employers should immediately notify the union of those union members who have not provided written consent and that, if unresolved, the employer may be unable to make any further deduction until a consent is provided.

Notice to Union. Public employers should immediately notify any applicable union that they intend to comply with the decision and, effective immediately, will no longer be deducting any fees from employees who have not provided a signed, written consent to such a deduction.

Duty to Bargain. Despite the Supreme Court’s decision, public employers must still comply with their duty to bargain. If unions reach out to a public employer, the employer should agree to meet and hear their concerns. However, public employers have no obligation to agree to any accommodations or provisions other than those required by law, and the Janus decision imposes no greater obligation.

Memorandum of Understanding. A public employer should not wait until it has a signed memorandum of understanding before proceeding as outlined above. However, offering to enter into such an agreement with the union can help labor relations. We have prepared a draft template that can be used for this purpose. Employers wishing to pursue this course of action should consult legal counsel.

Duty of Fair Representation / Bargaining with Individual Non-union Employees. The Janus decision does not change the union’s duty of fair representation to non-union members (although non-union members may have to begin paying for certain services such as representation in the disciplinary process), nor does it alter the status of the union as all employees’ exclusive bargaining representative. Therefore, public employers are still prohibited from bargaining with non-union employees who are covered under any applicable bargaining agreement.

FOIA following Janus. Some public sector unions have also taken steps to limit bargaining and labor information available to the public, reaching out to public bodies ahead of Janus to request that FOIA requests for information related to union membership, dues, and fair share fees be withheld on the basis that such information is private or personal. Such requests appear to exceed FOIA’s exceptions; consequently, public bodies should continue to exercise their own scrutiny and judgment in responding to FOIA requests that may relate to such information.

Consult counsel: Janus has created new issues in collective bargaining. For further guidance, public bodies should consult their attorney.  

(Janus v. American Federation of State, County, and Municipal Employees, Council 31, Case No. 16-1466, decided June 27, 2018).

Image of cannabis leaves

Ashley’s Law: What Does It Mean for Medical Marijuana in Schools?

Illinois lawmakers pass Ashley’s Law to allow students to use medical marijuana on school grounds.

By:  Kateah M. McMasters

kateah.mcmasters@mhtlaw.com

On May 17, 2018, the Illinois Senate overwhelmingly passed House Bill 4870 (HB 4870) which, if signed by Governor Rauner, will allow students with a valid prescription for medical marijuana to administer, consume or use it on school grounds and on school buses.

HB 4870, which has been named “Ashley’s Law,” was initiated by the parents of a 12-year old student who, after exhausting all traditional medications, was prescribed medical marijuana to treat epileptic seizures caused by treatments for leukemia.  In January 2018, Ashley’s parents filed suit in federal court against the State of Illinois and Schaumburg School District No. 54, alleging that state laws and school policies prohibiting qualifying students from possessing, using, or consuming medical marijuana on school grounds and school buses failed to accommodate students with disabilities in violation of the Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA).

While HB 4870 provides families and school districts some relief to accommodate students with disabilities, Ashley’s Law does not provide the wide-sweeping relief many would like to believe.

The Compassionate Use of Medical Cannabis Pilot Program Act (“Act”) currently allows qualifying patients under the age of 18, with the consent of a parent or guardian, to receive a registry identification card from the Illinois Department of Public Health in order to obtain a prescription of medical cannabis, commonly referred to as medical marijuana.  However, minors are prohibited from consuming medical marijuana in any form other than medical marijuana-infused consumable products.  In other words, qualifying patients under 18 years of age cannot smoke medical marijuana, but instead are limited to using marijuana in the form of edible or topical products.  While the Act does allow qualifying patients under 18 to use medical marijuana generally, it currently prohibits the possession and consumption of any form of medical marijuana on a school bus and on the grounds of any preschool, primary school, or secondary school.  If a student has a disability that qualifies for the issuance of a registry identification card and medical marijuana prescription, the same disability will more than likely qualify the student for an IEP or 504 plan.

Ashley’s Law amends the Act and the Illinois School Code to allow the possession and consumption of medical marijuana on a school bus and on the grounds of any school district, public school, charter school, or non-public school.  More specifically, the law  adds a new Section 22-23 to the Illinois School Code, requiring schools to authorize a parent, guardian, or designated caregiver to administer a medical marijuana-infused product to a student on school grounds or a school bus as long as the student (as a registered qualifying patient) and the parent, guardian or designated caregiver (as a registered designated caregiver) have been issued a registry identification card by the State of Illinois.  After administration, the parent, guardian, or designated caregiver must remove the marijuana product from school grounds or the school bus.

School districts dealing with medical marijuana

If passed, Ashley’s Law will require schools to allow the administration of medical marijuana to students on school grounds; however, it also provides schools with two broad exceptions.  First, a school can prohibit the parent, guardian, or designated caregiver from administering the medical marijuana to the student in any manner that would create a disruption to the educational environment or cause exposure of the product to other students.  Ashley’s Law does not define what constitutes a “disruption to the educational environment” or “exposure,” and without further guidance would appear to grant the school district substantial discretion.

Second, a school district can prohibit the administration of medical marijuana if it would cause the district to lose federal funding.  Federal law still lists marijuana as a Schedule 1 drug, making it illegal to grow or use any marijuana product, including medical marijuana (even if it is authorized by Illinois law).  Therefore, if a school district receives any form of federal funding that is contingent upon compliance with federal law, it could be at risk for having those funds withheld by the federal agency that administers the funding.

Ashley’s Law permits the administration of medical marijuana to a student in the education setting rather than forcing the removal of a student from school in order to provide appropriate care.  At the same time, Ashley’s Law also ensures that school districts will not be prosecuted by the State of Illinois for allowing qualifying students to use medical marijuana on school grounds.  However, Ashley’s Law does not authorize any medical marijuana to be kept on school grounds as it does other student medications.  Nor does Ashley’s Law require school personnel, including school nurses, to administer medical marijuana to students as it does with other student medications.  Finally, Ashley’s Law does not provide school districts with any protection against an action by the federal government related to the use of medical marijuana on school grounds or school buses.  While several other states have passed laws similar to Ashley’s Law, it is not yet clear how the federal government intends to treat such laws.

Next steps

Ashley’s Law was sent to the Governor’s desk on June 15th and is currently awaiting his signature.  If signed, Ashley’s Law will take effect immediately.  If the Governor takes no action on the bill, it will take effect 60 days after it was sent to him for signature.  If passed into law, school districts will be required to adopt a policy implementing Ashley’s Law.  School districts are encouraged to contact legal counsel to discuss the impact of Ashley’s Law and formulate a policy regarding the use of medical marijuana by qualifying students on school buses and school grounds.

Additionally, to avoid any disruption or exposure to other students, the procedure and manner of administering medical marijuana to a particular student should be discussed by the school district, the parents, and the IEP Team or 504 Team as applicable.  Such procedures should be included in the student’s IEP or 504 plan prior to the administration of medical marijuana at the school.

Joshua Herman presents small business cyber security seminar

Small Business Cyber Security Seminar Presented By MHT

Joshua Herman, of Miller, Hall & Triggs, presented a Small Business Cyber Security seminar to local business owners. The presentation was held on May 23, 2017, in association with the Illinois Small Business Development Center (the “SBDC”) at Bradley University’s Turner Center for Entrepreneurship.

The presentation was part of an ongoing cyber security certificate series by the SBDC. Herman provided local businesses the legal information they need to operate their business in spite of today’s technological and legal risks and pitfalls. The presentation addressed issues important to small businesses.

State and Federal Cyber Security Laws Impacting Small Businesses

Herman gave practical advice regarding small business cyber security legal obligations. He explained what information small businesses must protect and the repercussions in the event of a cyber security breach. Some of his remarks addressed the following:

  • Illinois Personal Information Protection Act, Right to Privacy in the Workplace Act, Use of Social Security Numbers, Illinois Trade Secrets Act, Illinois Personnel Records Review Act, HIPAA, FMLA, Fair and Accurate Credit Transactions Act, and the Gramm-Leach Bliley Act
  • Legal requirements to protect consumer and employee information and prevent cyber security breaches
  • Legal notice requirements in the event of a cyber security breach
  • Potential liabilities and penalties for failing to protect information or suffering a breach

 Protecting Against Common Cyber Security Vulnerabilities

Herman identified common cyber security vulnerabilities:

  • Third Party Contractors
  • Software and service providers, click-wrap agreements, browse-wrap agreements, Terms of Service Agreements, End-User License Agreements (EULAs)
  • Employees
  • Customers
  • Competition/Corporate Espionage
  • Hackers, etc.

He also provided helpful suggestions to protect against such risks and mitigate potential liability, including:

  • Conducting a needs, risks and vulnerabilities assessment
  • Preventative actions, such as hiring changes, training, and personnel manual changes
  • Technology upgrades and defenses
  • Obtaining cyber liability insurance against cyber security risks
  • Obtaining professional advice and legal counsel

Attendees appreciated Herman’s straightforward advice, giving positive reviews of the experience:

“Very informative and engaging with a difficult topic.” – Small business owner

“Very interesting, gave pertinent examples. He made content that would have normally been dry, very interesting and captivating. Very good.” – Small business owner

Small Business Cyber Security Information Available

Although the seminar is over, business owners with questions on cyber security can still receive a complimentary copy of the seminar materials by calling Joshua Herman at (309) 671-9600 or contacting us here.

MHT Partners discuss municipal law with elected and appointed officals

MHT Holds Free Seminar For Elected And Appointed Officials

On May 13, 2017, MHT attorneys enjoyed spending a morning with newly-elected and current government officials and appointees for its Eleventh Biennial Elected and Appointed Officials Municipal Law Seminar.

Officials from municipalities across Illinois attended this free seminar held at the Illinois Central College campus in East Peoria, Illinois.

Keynote Speaker: Illinois Senator Chuck Weaver

Chuck Weaver, Illinois State Senator of the 37th District , keynote speaker to elected and appointed officals.
Chuck Weaver, Illinois State Senator of the 37th District

Illinois State Senator Chuck Weaver’s was our keynote speaker. Senator Weaver’s candid and pragmatic remarks regarding attendees’ roles in interacting with state government were warmly received.

As a former City councilman, Senator Weaver’s insights were particularly instructive.

Elected And Appointed Officials Learned About Laws Effecting Them

Attendees were also presented with the practical information newly elected and sitting municipal officials would want to do know:

  • How to make meetings productive and professional
  • Practical methods to address property issues and code enforcement
  • Recent developments in the Open Meetings Act (OMA) and the Freedom of Information Act (FOIA)
  • Negotiations and labor relations
  • Police and Fire
  • Employee discipline
  • Municipal development: opportunities and tools
  • Avoiding personal liability as a municipal official
  • Saving the municipality money – financing and refinancing opportunities
  • Restrictions of the first amendment on municipalities, public parks and public areas
  • Healthcare and employee benefits
  • Choosing professional, such as municipal managers, engineers, and attorneys

Held every two years to coincide with Illinois municipal elections, the next Elected and Appointed Officials Municipal Law Seminar will be held in 2019, but you do not have to wait until then. We regularly provide advice on these topics and more to our municipal clients. If you have questions about municipal law, or would simply like a complimentary copy of our seminar materials, please call (309) 671-9600 or contact us here.

Court Orders New Overtime Rules Delayed

Employers Question How To Pay Overtime Now That New Overtime Rules Delayed

By Joshua Herman

email: joshua.herman@mhtlaw.com

For now, implementation of new federal overtime regulations has been delayed. A federal court halted the December 1, 2016, implementation of the Department of Labor’s (“DOL’s”) new regulations doubling the minimum annual salary from $23,660 ($455 weekly) to $47,476 ($913 weekly) in order for an executive, administrative or professional employee to be exempt from overtime requirements. Following the court’s ruling in State of Nevada v. U.S. Dep’t of Labor, No. 16-00731 (E.D. Tex. Nov. 22, 2016), employees exempt from overtime requirements will continue – for now – to be those receiving $23,660 annually ($455 weekly).

How this change impacts Illinois employers is less than clear.

The underlying opinion (available at http://src.bna.com/kgs) is the product of a coalition of states and businesses seeking to overturn the new rule. The coalition argued the DOL overstepped its authority because the Fair Labor Standards Act (“FLSA”) enacted by Congress provides that “any employee employed in a bona fide executive, administrative, or professional capacity… as such terms are defined and delimited from time to time by regulations of the Secretary” shall be exempt from minimum wage and overtime requirements. 29 U.S.C. § 213(a)(1). The FLSA overtime exemptions do not refer to any salary requirement.  In analyzing Congress’ actual language, the court found that Congress intended to exempt employees based on their executive, administrative, or professional (“EAP”) duties, not their salaries.

The court’s preliminary injunction states the new regulations are unlawful because the DOL “exceeds its delegated authority and ignores Congress’ intent by raising the minimum salary level such that it supplants the duties test.” The court explains that “[i]f Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

Despite the fact that the DOL has stated it cannot evaluate overtime exemption based on salary alone, the court found that the new rules would essentially create a de facto salary-only test. The court further held that the new regulations would cause irreparable damage due to the significant expense of compliance if they were allowed to go into effect.

The court held that public interest is best-served by an injunction, stating that:

If the Department lacks the authority to promulgate the Final Rule, then the Final Rule will be rendered invalid and the public will not be harmed by its enforcement. However, if the Final Rule is valid, then an injunction will only delay the regulation’s implementation. Due to the approaching effective date of the Final Rule, the Court’s ability to render a meaningful decision on the merits is in jeopardy. A preliminary injunction preserves the status quo while the Court determines the Department’s authority to make the Final Rule as well as the Final Rule’s validity.

Consequently, the court imposed a nationwide injunction because the DOL’s regulations are applicable to all states, extending the scope of alleged irreparable injury nationwide.

The injunction prevents the DOL from implementing and enforcing the new overtime regulations; however, the impact of this ruling on Illinois employers is less than clear. The injunction is only temporary, pending further action by that court. The court can lift the injunction at any time, or if the court makes it permanent, the injunction can be reversed upon appeal. If lifted or reversed, courts dispute whether the regulations would retroactively apply to employers who delayed implementation.

Should I implement overtime changes now that new overtime rules have been delayed?

Employers have significantly invested in preparing for the new regulations, but they are now faced with the crucial question: “Should I delay implementing changes to comply with the new regulations to avoid significant and possibly unnecessary costs, or should I proceed?” If the regulations eventually become effective, employers who violate them may be fined up to twice the unpaid overtime, civil penalties, and be responsible for employees’ attorneys’ fees.

Employers should consider the risks of further action and proceed on a case by case basis, seeking legal advice where necessary.

Generally, employers who have prepared no-cost solutions (such as limiting employees to 40 hours a week, or converting a salaried employee to hourly compensation at a rate that will not incur additional costs after considering overtime), should implement those solutions. Costly changes (such as raising an employee’s salary to the new threshold) can be delayed while the temporary injunction is in effect; however, employers should immediately begin to track impacted employee hours. If the injunction is lifted, or applied retroactively, these records should allow employers to adequately compensate employees in compliance with the new laws while minimizing potential risks associated with their delay.

Employers that have already implemented costly changes should exercise extreme caution before reverting to earlier practices. Not only will such actions have practical effects on current employee morale, they may also be prohibited based on collective bargaining requirements or other property rights employees may have in their new salaries.

It is uncertain whether the current exempt salary threshold will remain, increase as a compromise, or be completely eradicated. Further, it is unclear whether the incoming Trump administration will continue to push for these regulations, which were created at the Obama administration’s request. Only time will tell. Wise employers will pay close attention to developments on this matter.

For more information or to receive fact-specific advice, contact Joshua Herman and our Labor and Employment team.

Krumpe Wins 2016 Pro Bono Service Award

In connection with National Celebrate Pro Bono week, the 10th Judicial Circuit has awarded Jeffrey E. Krumpe the 2016 Pro Bono Service Award in recognition of his selfless service.  Krumpe has accepted cases from Prairie State Legal Services since 1995.  In that time he has handled 25 cases and provided more than 420 hours of free legal services to clients.  Over the years, Jeff has successfully represented numerous clients with unlawful garnishments,  divorces, lien foreclosures and fraud cases.

Coins stacked in front of clock

Park Districts & Governments Must Know the New Overtime Rules and Other Legal Developments

We invite elected officials, officers, and administrative employees of local governments or park districts, and other interested parties to review how new Fair Labor Standards Act (FLSA) overtime rules will automatically extend overtime pay to over 4 million newly eligible employees. This focused seminar will also address new travel and expense reimbursement rules, as well as practical advice on implementing email and cell phone policies following recent Illinois Attorney General’s decisions subjecting private employee emails to the Freedom of Information Act (FOIA).

The seminar will include materials and educate attendees as to the following:

New FLSA Overtime Rules Impact  Local Governments & Park Districts and as of December 1, 2016

  • What will change and how the new rules apply to your employees.
  • How to identify employees exempt from the overtime requirements after the changes.
  • How to evaluate exemptions for employees who do not work year-round.
  • Whether you can still offer compensatory time instead of paying overtime.
  • Special considerations for local governments and park districts.
  • How to prepare for and minimize the impact of the new regulations.
  • Penalties for failure to comply with the new rules.

Illinois Travel and Expense Reimbursement Requirements (P.A. 99-604)

  • New prohibitions on reimbursement for “entertainment” expenses.
  • Required policies that must be adopted before employees, officers and officials may be reimbursed for travel, meal and lodging expenses.
  • How FOIA impacts records related to reimbursement under the new law.
  • The regularly “misunderstood deadline” for implementing the new travel expense reimbursement requirements.

Employee Emails and Text Messages Subject to FOIA

  • What issues and pitfalls email and text messages pose with respect to FOIA and the Open Meetings Act (OMA).
  • Important FOIA and OMA considerations that email and text-message policies should address.
  • Impacts of recent decisions regarding electronic messages, including the recent August, 2016 decision finding that employees’ private emails can be subject to FOIA.

OUR SPEAKERS

Herman presents seminar on New Overtime Rules
Joshua Herman presents seminar on New Overtime Rules to area business leaders.

Joshua HermanJoshua concentrates in advising schools and educational institutions, focusing on labor and employment, commercial law, and related litigation. He has previously been interviewed regarding the impact of the new overtime regulations by WMBD, WYZZ, and the Peoria Journal Star. In August, Joshua also lectured on the impact of the new overtime regulations in cooperation with the Small Business Development Center at Bradley University to local Small Business Leaders (pictured above). Joshua has focused on educational and local government law since 2008. He received his Bachelor’s degree in 2003 from Bradley University in Peoria, Illinois. After his deployment to Iraq as an Army Reservist 2003-2005, Joshua attended the Chicago-Kent and the University of Illinois Colleges of Law, graduating Summa Cum Laude.  Joshua was selected by the Illinois State Bar Association as Young Lawyer of the Year in 2011 and he is one of the 2014 Peoria 40 Leaders Under Forty.

Richard M. Joseph
Richard M. Joseph

Richard JosephRick has authored on the subject of the new Illinois Local Government Travel Expense Control Act and regularly advises units of local government on related matters. Rick has over 30 years’ experience in representing public bodies in all areas of practice, including experience with acquisition and sale of real estate, procurement, construction matters, public and bond financing, taxation, open meetings and public records laws, review and revision of policies and assisting public officials and employees with understanding their roles and duties, including legal  and ethical standards and assisting key staff members in fulfillment of their responsibilities.  Rick received his Bachelor’s degree in 1982 from the University of Notre Dame and his Juris Doctor from Marquette University, Cum Laude, in 1985.

Christopher Oswald
Christopher Oswald

Christopher OswaldChris has 14 years of experience counseling public bodies, and those interacting with public bodies with respect to FOIA and the Open Meetings Act.  Chris’ practice is focused on assisting local governments and private clients as general counsel and in structuring transactions relating to real estate, development incentives, construction, taxation, finance, acquisitions, and special matters unique to public bodies.   Chris received his Bachelor of Science degree in Agricultural Economics with honors from the University of Illinois at Urbana-Champaign and his Juris Doctor, Cum Laude, from Northern Illinois University College of Law.

Join us for this informative lunch and learn on October 26, 2016

5:00 p.m.  – 6:30 p.m.
Jump Trading & Simulation Center, OSF
1306 N. Berkeley Avenue • Peoria, Illinois 61603

Cost: $35 (includes handouts and Hors d’Oeuvres)
4:30 p.m. – 5:00 p.m.:    Registration and Hors d’Oeuvres
5:00 p.m. –  6:30 p.m.: Presentation, Q & A