Perspectives

The holiday season is a time for joy, celebration, and bonding with colleagues, but it can also be a potential legal minefield if not handled thoughtfully. At Wagner, Falconer & Judd, we believe in celebrating responsibly-because nothing dampens holiday cheer like a post-party HR nightmare. Here’s how to host a holiday party that’s festive, fun, and free from liability concerns.

Why Holiday Parties Pose Legal Risks

Holiday parties are an extension of the workplace, meaning employers can still be held liable for incidents that occur. Common risks include:

• Harassment claims stemming from inappropriate jokes, comments, or behaviors
• Alcohol-related incidents that lead to poor decision-making or accidents.
• Discrimination issues if the event feels exclusionary to certain groups.

With a few protective steps, you can minimize these risks while still throwing a memorable event.

Set Expectations in Advance

Clear communication is key. Send an email or memo before the party reminding employees of expected behavior. Consider including:

• A brief refresher on your company’s harassment and conduct policies.
• A friendly reminder that the event is a work-sponsored function. “Let’s celebrate responsibly!”

By setting expectations early, you reduce the likelihood of incidents occurring.

Manage Alcohol Consumption

Alcohol often loosens inhibitions, which can lead to unprofessional behavior. To minimize risk:

• Limit drinks by using drink tickets or offering a cash bar after a certain point.
• Hire professional bartenders trained to recognize when someone’s had too much.
• Offer non-alcoholic options prominently, showing inclusivity and encouraging moderation.
• Provide transportation such as rideshares, shuttles, or designated drivers to prevent impaired driving.

These steps demonstrate your commitment to employee safety and reduce the chance of alcohol-fueled accidents.

Foster and Inclusive Atmosphere

Holiday parties should be welcoming to all employees, regardless of religious beliefs or personal preferences. To ensure inclusivity:

• Choose neutral themes like “Winter Wonderland” or “Festive Celebration”.
• Offer a variety of food and drink options to accommodate dietary restrictions.
• Plan activities that encourage everyone to participate, such as games, raffles, or contests that don’t revolve around alcohol.

Creating an inclusive environment reduces the risk of employees feeling excluded or uncomfortable.

Train Managers to Lead by Example

Your leadership team should understand their role in setting the tone. Provide guidance to managers on:

• Maintaining professionalism during the event.
• Recognizing and addressing issues before they escalate.
• Supporting employees who may feel uncomfortable or need assistance.
• Understanding reporting requirements should an incident occur.

When managers lead by example, employees are more likely to follow suit, reducing the risk of misconduct.

Reinforce and Review Your Harassment Policy

Ahead of the event, take the opportunity to review and reinforce your harassment policy. This can be done through a short refresher training or written reminder. Be sure to clarify:

• What constitutes inappropriate behavior.
• How employees can report concerns.
• The steps management will take to address any issues.

Reinforcing your policies demonstrates your commitment to a respectful workplace and can help prevent potential legal claims.

Address Post-Party Feedback

Following the event, encourage employees to share feedback. Create an open channel for reporting concerns and take action promptly if any incidents arise. Document any complaints and follow your company’s standard procedures for handling workplace issues.

WFJ: Your Trusted Partner in Employment Law

Even with the best planning, unexpected issues can arise. Having a legal partner like WFJ can help you navigate challenges, from policy reviews to handling harassment claims. We’re here to support you in creating a safe, inclusive, and legally sound work environment. With these tips, your company holiday party can be a time for celebration without the legal headaches. Here’s to making your holiday season merry, bright, and liability light! 

On December 3, 2024, a federal court in Texas issued a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act (CTA). The court ruled that the CTA is unconstitutional, meaning businesses are not currently required to comply with the reporting deadlines.

For now, this ruling means that:

• Companies formed before January 1,2024, are not required to file their beneficial ownership information by the general deadline of January 1, 2025.
• Companies formed on or after January 1, 2024, are not required to meet the 90-day reporting deadline after their formation date.

It’s important to note that this is a preliminary injunction. The decision could be appealed to a higher court, and the injunction may be lifted or overruled. At the time of this post, FinCEN-the agency responsible for enforcing the CTA-has not publicly addressed its plans following the court’s decision.

Ongoing Legal Challenges

The Texas case isn’t the only one questioning the constitutionality of the CTA. In Alabama, another federal court also ruled the law unconstitutional but limited the ruling to the plaintiffs in that case. The government has appealed this decision to the Eleventh Circuit Court of Appeals.

The outcome of these cases is uncertain. The Eleventh Circuit could affirm or reverse the Alabama court’s ruling, or it could send the case back to the lower court without deciding on the constitutionality of the law. Whether this happens before the January 1, 2025 deadline is unknown, as is whether any ruling would apply nationally or only to specific parties.

What Should Businesses Do?

Given the legal uncertainty, WFJ recommends that businesses continue preparing to comply with the CTA’s reporting requirements:

• If your company was formed before January 1, 2024, be ready to file your beneficial ownership information by the January 1, 2025, deadline.
• Companies that fail to comply-if the law is ultimately enforced-could face serious penalties, including criminal and civil consequences.

Our team is closely monitoring developments in these cases and any updates from FinCEN. If you have questions about your compliance obligations or how this ruling might impact your business, WFJ is here to help.

Stay informed and protected-reach out to us today for guidance.

The Corporate Transparency Act (CTA) is quickly approaching its critical deadline, and it’s essential for all LLC owners to take action now. Starting January 1st, 2025, certain business entities will be required to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN) or face steep penalties. If your business is subject to the CTA, now is the time to ensure you’re compliant.

Why the Deadline Matters

The January 1 deadline isn’t just a suggestion-it’s a hard cutoff. Businesses that fail to comply with the CTA could face severe penalties, including fines up to $10,0000 or imprisonment for up to two years. Missing this deadline could put your business at significant risk, and the consequences of non-compliance are steep.

Preparing now to meet the CTA requirements ensures that your business stays on the right side of the law and avoids unnecessary complications. Don’t wait until the last minute-act today to stay compliant and protect your business.

Is Your Business Ready?

Under the CTA, many businesses, including LLCs, corporations, and other entities formed under state law, must report their beneficial owners. These are the individuals who own or control at least 25% of the company or have substantial control over its operations. If you’re unsure whether your business needs to report, it’s crucial to seek legal advice to determine your compliance obligations.

The CTA’s requirements apply to a wide range of businesses, so even if you think your business might be exempt, it’s worth confirming your obligations. Compliance isn’t optional, and getting it right can save you from future headaches.

How Can WFJ Help?

At Wagner, Falconer & Judd, we’re here to help you through the complexities of the CTA and ensure your business is prepared for the upcoming deadline. Here’s how we can help:

• Assessment and Planning: We’ll help you assess whether your business needs to report under the CTA and create a plan to gather the necessary information.
• Accurate Reporting: We’ll guide you in accurately identifying and documenting your beneficial owners to meet FinCEN’s strict filing standards.
• Ongoing Support: The CTA’s reporting obligations are not a one-time event. As your business evolves, we can provide ongoing support to ensure continued compliance beyond January 1, 2025.

Don’t Wait-Act Now

The January 1, 2025 deadline is fast approaching, and it’s crucial to prepare early. By partnering with WFJ, you can ensure your business is ready to meet its obligations and avoid costly penalties. Our experienced legal team is ready to help you navigate the CTA’s requirements so you can focus on running your business with confidence.

Contact us today to schedule a consultation and take the first step toward compliance. Time is running out-don’t let this deadline sneak up on you!

A recent ruling from a federal judge in Texas has blocked the Department of Labor’s attempt to raise the salary threshold for employees to qualify for exemption from overtime pay under the Fair Labor Standards Act (FLSA). This decision has significant implications for businesses and worker alike, particularly regarding how exempt status is determined for employees in executive, administrative, and professional (EAP) roles.

The FLSA and the EAP Exemption 

The FLSA mandates that covered employers pay employees at least the federal minimum wage and provide overtime pay for hours worked over 40 hours in a week. However, the law includes an important exception for EAP employees, meaning those in executive, administrative, or professional roles may be exempt from these requirements.

For employees to qualify for this exemption, they must meet certain criteria, which the Department of Labor (DOL) defines through regulations. One of these criteria is the salary level. The DOL periodically updates this salary threshold, and in its 2024 Rule, the Department aimed to raise the minimum salary for exempt employees to a higher level.

The 2024 Rule and the Court’s Decision

On November 15, 2024, a Federal Judge in Texas ruled against the DOL’s 2024 Rule, which had raised the salary threshold for EAP employees. The first phase of the rule, which took effect on July 1, 2024, increased the salary level from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). This change would have made approximately one million employees who were previously considered exempt eligible for overtime pay.

The court ruled that the DO exceeded its authority under the FLSA by using a “salary -only” approach to determine whether an employee is exempt. According to the ruling, the FLSA requires the DOL to consider the duties of employees, not just their salary level, when applying the EAP exemption. The judge found that the department’s rule did not properly account for the role and responsibilities of the employee, violating the scope of authority granted by Congress.

What About the Other Phases of the 2024 Rule? 

The 2024 rule included additional phases that had not yet taken effect. The second phase was set to raise the salary threshold to $1,128 per week starting January 1, 2025. The third phase would have implemented automatic increases to the salary threshold starting in 2027 without requiring notice or public comment. The court also found the provisions to be beyond the DOL’s authority, finding that the Department lacked the power to make these changes unilaterally.

What Does This Mean for Employers?

If your company had already raised employee salaries outlined in the 2024 rule, you are not in violation of the law by rolling back those increase. However, it’s important to note that you cannot ask employees to return the additional pay they received, as that could lead to legal and reputational issues.

It’s also worth considering the impact that lowering salaries might have on employee morale. While the legal ruling may allow businesses to revert to the previous salary levels, doing so could cause dissatisfaction and erode trust within the workforce.

Could the Biden Administration Appeal?

While the decision may seem final, the Biden Administration could still choose to appeal the ruling, although a reversal seems unlikely. The court’s decision was notably supported by the Supreme Court’s ruling earlier this year in Loper Bright Enterprises v. Raimondo. In that case, the Supreme Court overturned decades of precedent by overturning what is known as Chevron deference, which had previously allowed agencies like the DOL considerable discretion in interpreting the laws they enforce. Now, courts are required to exercise their own judgement in determining whether an agency has stayed within its statutory authority. Given the court’s reliance on Loper Bright, it seems highly unlikely that the ruling will be overturned.

Conclusion

The Texas federal judge’s decision to strike down the Department of Labor’s 2204 salary threshold increase is a significant development for businesses and employees affected by the FLSA’s overtime and minimum wage exemptions. While the ruling halts the planned increases, employers must be careful about reversing salary adjustments that were already made. moreover, the possibility of an appeal remains, but the likelihood of a reversal is slim in light of recent Supreme Court decisions. Employers should continue to monitor the situation and ensure their compensation practices align with current legal standards.

As artificial intelligence (AI) becomes more integrated into employment processes like screening and hiring, it offers potential efficiencies but introduces new legal challenges. Employer are now navigating complex anti-discrimination laws that apply equally, whether decisions are made by humans or AI tools. This post covers key concerns for employers and how to mitigate the risks of AI-driven employment decisions.

Discrimination Risks in AI-Driven Hiring

AI tools can unintentionally lead to discriminatory outcomes, even when used with the best intentions. One concern is the potential for disparate impact-when seemingly neutral criteria disproportionately affects protected groups. For instance, if an AI system screens candidates based on years of experience, it may inadvertently discriminate against older applicants or recent graduates, violating federal or state anti-discrimination laws.

Moreover, the “black box” nature of AI means that decision-making processes are often opaque. When faced with claims of discrimination, employers may struggle to prove that their AI system made decisions for non-discriminatory reasons, posing a significant legal risk.

Privacy and Data Security Concerns

When using AI tools in recruitment, privacy issues must also be addressed. Employers should ensure compliance with data protection regulations like the EU’s General Data Protection Regulation (GDPR) and U.S. laws concerning password privacy and biometric data. Additionally, tools that analyze physical characteristics, such as eye movements or voice tone, could violate laws like the Employee Polygraph Protections Act, which restricts lie detection practices in employment.

Wage and Hour Considerations

AI tools that monitor work activities, track employee time, or auto-populate time records could lead to wage and hour violations under the Fair Labor Standards Act (FLSA). For example, AI that tracks keystrokes may miss compensable work activities, or it may not accurately track break times that must be compensated under the FLSA. Employers must oversee AI’s’ wage calculations to ensure compliance with regular and overtime pay rates.

AI and Disability Discrimination

Employers should also be aware of the risk of unintentional disability discrimination. AI systems that assess speech patterns, facial expressions, or physical movements may misinterpret characteristics associated with disabilities. For example, an AI system could penalize a candidate with a speech impediment or a disability that affects facial expression, even though they are fully qualified for the job.

States like Illinois are taking steps to regulate AI in employment through legislation such as the Artificial Intelligence Video Interview Act, which requires employers to notify candidates and obtain consent before using AI in video interviews.

Layoffs and Worker Protections

When automation leads to layoffs, employers must ensure compliance with the Worker Adjustment and Retraining Notification (WARN) Act and state-specific laws that require advance notice before mass layoffs. Employers should also take care to avoid age discrimination in layoffs, as older workers may be disproportionately affected by automation and must be offered the same retraining opportunities as other workers.

Staying Ahead of State and Local AI Regulations

Several states and cities are leading the charge in regulating AI in employment. In New York City, for example, the Automated Employment Decision Tools Law requires bias audits for AI hiring tools and mandates that employers notify candidates when AI is being used. Similarly, Colorado’s Senate Bill 24-205, effective in 2026, will require “reasonable care” from employers deploying high-risk AI systems to prevent algorithm discriminatory outcomes.

As AI continues to transform hiring and employment practices, staying compliant with evolving laws is essential to protect your organization. Working with experienced legal counsel can help you navigate complex AI-related employment regulations, keep your policies up to date, and ensure your hiring practices are fair and legally sound. Don’t wait for compliance issues to arise-proactively safeguard your company and foster a workplace that values equity and transparency. Contact our team to review your current practices and build a robust compliance strategy that supports your organization’s growth. 

Strong contracts are the foundation of every successful business relationship. Without proper protections, businesses can face significant financial risk, disputes, and the possibility of non-payment. To minimize these risks, it’s essential to include specific provisions in every contract. Here are the key clauses that should be present in your contracts:

Payment Terms

What: Defines payment schedules, methods, penalties and consequences for late payment.

Why: 

• Ensures Cash Flow
• Reduces Financial Risk Against Late or Missed Payments
• Sets Clear Expectations

Key Elements:

• Payment Terms
• Late Payment Penalties
• Security Interests
• Dispute Resolution

Limitation of Liability

What:

• A contract provision that caps the amount and types of damages one party can recover from the other.
• Protects businesses from excessive claims and financial exposure in the event of disputes or equipment failure.
• Sets a maximum financial responsibility for the business.

Why: 

• Avoid exposure to excessive damages from customer claims.
• Help dealers estimate and manage their potential liability in worst-case scenarios.
• Protects businesses from liability from unseen circumstances.

Examples:

• Monetary Cap
• Exclusion of Certain Damages
• Time-based Limits

Indemnity Clauses

What: Contract provision where one party agrees to compensate the other for certain damages or losses.

Why:

• Mitigates Financial Risks
• Avoids Liability from Damages Caused by Misuse
• Coverage for 3rd Party Claims

Key Elements:

• Scope of Indemnity
• Types of Claims
• Geographical & Temporal Limits

Insurance

What: Contract provision requiring one or both parties to maintain specified insurance coverage.

Why:

• Transfers Risk from the dealer to an Insurance Company
• Ensures Financial Protection for Both Parties in Case of Loss or Liability

Key Types: 

• General Liability
• Property
• Product Liability
• Worker’s Compensation

Price

What: Cost for goods/services-protects against misunderstandings, unauthorized discounts and potential financial losses.

Why:

• Avoids Disputes
• Adjustment Clauses (Price Adjustment Mechanisms for Raw Material Price Changes or Fuel Surcharges.)
• Escalation Clauses (Allows for Gradual Price Increases.)

Key Components:

• Fixed vs Variable Pricing
• Payment Terms
• Currency & Exchange Rates

Performance Dates

What: Deadlines for:

• Delivery of Equipment
• Completion of Service
• Payment Milestones

Why:

• Establishes clear timelines to avoid misunderstandings
• Holds parties responsible for meeting their contractual obligations
• Prevents delays that can lead to operational disruptions or financial losses

Key Protections:

• Delay Clauses
• Extension Provisions
• Force Majeure

Security Agreement & Repossession

What: Legal document that grants a lender a security interest in the equipment sold, ensuring the right to repossess the equipment if the buyer defaults.

Why:

• Reduce risk if buyers fail to meet obligations
• Provides strong negotiation power if a customer defaults or requests an extension
• Outlines precise legal remedies available to the dealer, ensuring smoother enforcement

Key Components:

• Collateral Identification
• Obligations of the Buyer
• Default Conditions
• Right to Repossession

Warranty

What: 

• Contractual promise by the seller regarding the condition, performance, or lifespan of the equipment sold
• Express Warranties: Assurances made about the product
• Implied Warranties: Automatically applied under the law

Why:

• Limits Disputes

Strategies:

• Define Terms Clearly-specify duration, coverage limits, and conditions for repair
• Exclude Certain Warranties-use disclaimers to avoid unintended implied warranties
• Set reasonable limitations

Force Majeure

What: 

• Contract provision that frees parties from liability or obligation for events beyond their control
• Natural disasters
• Government actions or regulations
• Labor strikes or civil unrest
• Pandemics or public health emergencies

Why:

• Mitigates risk
• Provides contract flexibility
• Avoids breach of contract

In Practice:

• Supply chain disruptions
• Service interruption

By including these key provisions in every contract, your business can reduce financial risk, avoid disputes, and protect itself from non-payment. Ensuring that contracts are thorough and well-structured is essential for long-term business success. If you need assistance drafting or reviewing contracts, working with experienced legal counsel is a proactive way to safeguard your business interests.

If you have questions about contract provisions or need legal support, contact WFJ today. Our team of experienced attorneys can help you create robust contracts that help protect your business from risk and ensure your financial stability.

Jean-Paul Sartre put it best: “Nothing has changed, and yet everything is different.”

As you may know, the FTC proposed a nationwide ban on non-compete agreements which was set to go into effect on September 4, 2024. Now, the Northern District of Texas has struck down the rule nationally. This decision is a major blow to the FTC’s rule, but not its end.

What happened?

In July of 2024, the Texas court issued a preliminary injunction that only extended to the parties of the present lawsuit and chose not to address whether a national injunction was necessary. On August 20, 2024, the Texas court held that the FTC did not have the statutory authority to issue such a rule and that doing so was arbitrary and capricious. The court further explained that the rule needed to be set aside at the national level because of the Administrative Procedures Act (APA). We anticipate that the FTC will file an appeal to the 5^th Circuit in short order.

What’s changed?

As Mr. Sartre put it, nothing. However, this does not mean that non-compete agreements are back on the menu for everyone. Many states have banned non-competes, and this ruling does not affect those state laws. It is up to you as an employer to make sure that you are still complying with your state’s laws while the FTC rule is in limbo. You should reach out to employment counsel if you have concerns or questions about whether you are properly complying with your state’s applicable laws.

What’s different?

With the Supreme Court of the United States’ recent decision regarding “Chevron deference” and the FTC’s likely appeal of this ruling down in Texas, there is a good chance that this case could be headed to the Supreme Court. As a result, we may see further changes to the agency state and executive powers in the near future. The legal landscape is different.

What now?

If you have not taken any steps to come into compliance with the FTC’s rule, you’re in luck! You can keep doing what you’ve been doing for a little while longer as the FTC pursues its appeal.

If you decided to take early action and issue FTC compliant notices to your employees and former employees, you should consult your employment counsel to determine how best to resolve the situation. Unwinding the clock may be impossible, but there are other ameliorative steps that you can take depending on the specific circumstances.

Regardless of how you have prepared for the FTC rule, this is a great time to review your restrictive covenants and focus your attention on the things you aim to protect: business information and relationships.