Category: Business Law Blog

Dispute resolution: litigation v. mediation

Litigation vs. Mediation

In business, it’s common for disputes to arise. Developing cost effective strategies for dispute resolution is critical for achieving a healthy bottom line. Because employers and business owners generally seek to avoid litigation (it is time consuming, expensive and emotionally draining), mediation has become more common.  The below summary compares the differences between mediation and litigation and provides insights as to why the popularity of mediation is on the rise.

Employers and Business Owners understand

Litigation – Refers to a formal process that uses either state or federal court to resolve the dispute. To determine the court, you must examine the claim(s) asserted, the amount at issue and where the parties reside. Though you filed your claim with the court, the judge may require the parties attempt to resolve the dispute through mediation.

Mediation – Refers to an informal and confidential process that uses a neutral third-party, the mediator, to help the parties discuss their differences and consider potential solutions to those differences. If the parties cannot reach an agreement “that both parties can live with,” you still have the right to file a claim with the appropriate court to have a judge or jury determine the outcome of your case.

Where is the process held?

Litigation – Hearings are held telephonically or in the court room.

Mediation – You and the other party determine if the mediation is held at your counsel’s office, opposing counsel’s office, the courthouse, the mediator’s office, or even virtually. Depending upon the mediator’s and/or the parties’ preferences, the parties may be placed in the same room or in separate rooms. If in separate rooms, the mediator will walk between the rooms and present each party’s positions, thoughts and arguments to the other party.

Are the conversations confidential?

Litigation – Correspondence is not confidential and can be used as evidence at a hearing unless the correspondence is related to negotiations between both parties’ counsel to resolve the dispute.

Mediation – Correspondence and evidence presented during a mediation session is confidential and cannot be used by the other party as evidence at a hearing.  The mediator cannot be called to testify and will maintain the confidentiality of everything learned through the mediation.

What is the length of the process?

Litigation – The litigation process typically takes 2-3 years to reach a court judgment. The case may extend beyond 3 years if multiple motions are filed and depending on how complicated the claims are.

Mediation – The mediation process typically takes less than a year, and can sometimes be resolved within weeks. It often depends on the mediator chosen and schedules of all involved. Sometimes, you may attend multiple mediation sessions if both parties are continuing to progress towards a resolution.

Who determines the outcome?

Litigation – Judge or Jury. Besides presenting your case, the outcome is completely out of your hands and in the hands of the judge or jury.

Mediation – You. The mediator does not tell you who is right or wrong. The mediator does not render a decision. The Mediator is there to guide the conversation between you and the other party. Ultimately, you are the one presenting, crafting and responding to potential solutions. You are the one making the decision to accept or decline a solution. The outcome of the mediation is in your hands.

What is the potential outcome?

Litigation – The judge or jury determines a winner and a loser. The judge or jury determines the damages owed to the winner based on claims presented, case law and statutes.

Mediation – Both parties are winners. The parties, of their own accord, mutually decide to end the dispute and accept an outcome that both can live with at the end of the day.

What will the process cost?

Litigation – Below are conservative estimates of costs expected to reach a court judgment in Wisconsin courts. The costs will vary depending on the complexity of your claims and/or the dispute itself. For instance, if your case requires expert witnesses, you will pay more than the estimated costs. Also, the opposing party and/or counsel may cause your counsel to have to submit motions and briefs, which will increase your costs above the estimated costs. Remember, though, that you and the opposing party may settle the dispute prior to receiving a court judgment.

Court Filed in Represented by Counsel Costs
Small Claims Yes Filing Fees plus $5,000
Small Claims No Filing Fees
Large Claims Yes Filing Fees plus $25,000 – $50,000
Large Claims No Filing Fees
Federal Claims Yes Filing Fees plus $30,000 – $60,000

**Wisconsin and Federal Courts require companies be represented by counsel in Large Claims.

Mediation – Mediators usually charge between $250 – $350 per hour. If your case requires knowledge of a unique field or industry, the mediator may charge more than $350 per hour.

What about receiving my legal fees?

Litigation – Whether you receive legal fees depends on statutes, contract language and the discretion of the judge. If statutory or contract language allows the winning party to receive legal fees, the judge will determine the reasonable legal fees that the losing party will pay. The table below shows what you will receive if the judge awards legal fees.

Court Filed in Legal Fees
Small Claims $150 if judgment in favor; $300 if represented at trial and judgment in favor
Large Claims Reasonable fees – depends on contract and/or statutory language
Federal Claims Reasonable fees – depends on contract and/or statutory language

Mediation – Whether you receive legal fees depends on the other party’s willingness to agree to pay your legal fees. Most likely, the other party will not explicitly agree to pay your legal fees.

How do I locate a mediator?

The state bar association has a list of mediators who can be contacted for an appointment. However, it is advisable to work with your attorney first to determine if mediation is right for your case.  Your attorney will spend time investigating and selecting the right mediator for your case.

Would you like to learn more about mediation? Contact us here. Epiphany Law Partner Heather Macklin is an accredited mediator with over 20 years of litigation and dispute resolution experience.

PPP loans; What Business Owners Need to Know

New PPP Updates: What Business Owners and Employers Need to Know

On June 5, 2020, the PPP Flexibility Act was signed into law. The Flexibility Act expanded on certain provisions of the original CARES Act regarding the Paycheck Protection Program (“PPP”). First, the term of PPP loan has been extended. Originally the loan term for the PPP was for one year and now it has been extended to 5 years. The extended repayment period applies only to PPP loans made after June 5, 2020, but lenders and borrowers can renegotiate the maturity of any previously existing PPP loans.

Secondly, the PPP was meant to cover 8 weeks of payroll and the funds needed to be used within 8 weeks after the date of the origination loan.  The time to use the loan proceeds has now been extended to 24 weeks from the date of the loan or until December 31, 2020, whichever occurs first. If a business received PPP funds as of June 5, 2020, they can now choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will automatically have a 24-week period, but not beyond December 31, 2020.

Additionally, a business now may not receive a reduction in forgiveness amount for having a reduced in the number of employees if the business in good faith can document an inability to rehire individuals who were employees on 2/15/2020 and an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.

OR

Can document an inability to return to the same level of business activity as such business was operating at before 2/15/2020 due to compliance with requirement established/guidance issued by CDC OSHA or Health and Human Services during period of March 1, 2020 and ending on 12/31/2020 related to maintenance of standards for sanitation, social distancing or other safety requirement.

Also, loan recipients now only have to use 60% of the loan for payroll costs and can use 40% for other approved expenses. Loan recipients will also now have their loans deferred for 10 months versus the original 6-month loan deferment.

Lastly, under the original CARES Act,  a business was allowed to delay payment of employer payroll taxes through December 31, 2020 and the payments payable over the next two years.  The caveat to this was that if a business took the PPP loan, they were ineligible for this benefit. The new law now allows for any PPP borrower to delay payment of its payroll taxes like other businesses.

Then it comes to the different COVID-19 Federal Stimulus Packages, there’s a lot for employers and business owners to know. It’s important to understand all your options and develop a strategy to maximize the benefits. Epiphany Law attorneys are able to partner with you and create a plan that will help your business achieve your desired results. You can call us at 920-996-1000 or contact us here. 

Does Your Company Have a Return to Work Strategy?

Article co-written and researched by attorneys Tracy Melvin and Alexis Merbach.

Many businesses are still figuring out how to manage HR issues in a pandemic. They are following the changes in every order and stimulus/relief package passed, and effectively rolling with the punches. Among the confusion and uncertainty, they have found ways to persevere. However, as states and cities now start to reopen—in turn allowing businesses to do the same—there is one question that remains…is the business prepared to get back to work?

There are several policies to consider as a business reopens. Some policies may not be new to the organization and likely are already be in place. Regardless, now is a great time to dust them off. Having correct policy documentation in place is crucial to ensuring the organization is proactively approaching and appropriately responding to the impact of COVID-19.

Businesses should draft or update the following policies as they work to reopen their doors:
  • Telework – Have a clear policy that outlines expectations for remote workers.
  • Anti-harassment & discrimination – There have already been many stories of employees being treated differently because they have or suspect they may have contracted COVID-19. Ensuring anti-harassment and discrimination policies are in place can set expectations and help minimize any potential risk.
  • Reasonable accommodations – Have a policy in place detailing how you will engage in an interactive reasonable accommodation process.
  • Overtime – To combat any wage & hour issues, employers may want to consider a policy requiring overtime to be pre-approved.
  • “Off the Clock” Work – Considering some employees may still be furloughed, laid off, or on reduced-hour schedules, implementing an “off the clock” policy makes it clear that employees are prohibited from checking e-mail, making phone calls, etc. for free. Employees must be compensated for all time worked.
  • Safety – Document workplace safety measures, including policies for proper cleaning, protective equipment, and social distancing measures, that have been put in place to prevent spread of the virus.
  • Health & wellness – Draft policies related to any health questionnaire or temperature check process, including that any health information will be properly protected.
  • Leave – Consider implementing a temporary leave request policy related to the two paid leaves under Families First Coronavirus Response Act.

Drafting or updated workplace policies is a great first step; however, businesses need to ensure effective implementation of these new or updated policies.

There are a few ways to do so effectively:
  • Train supervisors and managers on current, updated, and new policies. This will ensure consistency across the management team and present a united front to employees.
  • Consider cross-training your workforce to accommodate employee absences.
  • Any new or updated policies should be communicated to employees to ensure compliance throughout the organization. Distribute current and updated policies, have employees sign an acknowledgement that they have reviewed, understand, and will adhere to the policies, and continue communication about policies regularly.

To learn more, make sure to watch the webinar below. If you have questions or would like assistance developing a strategy to reopen,  contact us here. 

Strategies for Maximizing the Value of Your Business

How will COVID-19 impact the M&A Market?

Whether you’re thinking about selling your business now or in the future, it’s critical to understand how a prospective acquirer might value your company, and how you can influence that valuation. Even if you’re not thinking of selling today, most business owners will receive one or more unsolicited offers at some point…and you should be prepared. Rob Macklin, Partner at Epiphany Law, and Corey Vanderpoel, Managing Director and Owner at Taureau Group, will discuss strategies you can use in order to maximize the value of your business from both legal and investment banking perspectives, and importantly, will discuss the impacts of COVID-19 on the M&A environment.

• Operational, financial and legal preparation for a business
• The transaction process
• Due diligence and legal imperatives
• Shareholder tax and estate preparation
• Assembling a team of advisors

You can watch the complete webinar here.

Attorney Mike Bendel

Epiphany Law is Proud to Welcome Michael Bendel

Epiphany Law, LLC, is pleased to announce that Attorney Michael Bendel has joined the firm. Mike is an experienced intellectual property attorney, bringing over 25 years of experience advising clients of all sizes on intellectual property matters including trademarks and service marks, copyrights, patents and trade secrets. Serving businesses and entrepreneurs, Mike is a registered patent attorney with the U.S. Patent and Trademark Office since 1996 and has secured hundreds of patents, trademarks and copyright registrations.

Mike’s passion for helping businesses and entrepreneurs aligns directly with Epiphany Law’s mission to “positively impact lives through education, empowerment and an innovative approach to solving problems.” Epiphany Law’s managing partner, Kevin Eismann said, “A strategic IP plan can help drive business success. Our clients can benefit from having all their business needs under one roof.”

Mike earned his J.D. from The John Marshall Law School, in Chicago, IL and his undergraduate from St. Norbert College, De Pere, WI.

 

Epiphany Law, LLC represents Security Door & Hardware Co. and Security Builder’s Supply Co. on their sale to CIH

Epiphany Law LLC is pleased to announce the successful sale of its client, Security Door & Hardware Co. and Security Builders Supply Co. to Central Indiana Hardware, Inc. (CIH).

Security Door & Hardware (SDH) and Security Builders Supply (SBS) provide full Division 8 commercial door and hardware products through four IL locations. The companies will continue to operate under the Security Door & Hardware and Security Builders Supply names as divisions of CIH.

Russ Benson, a member of the founding family said, “We are proud of our accomplishments and feel that CIH will only expand on the legacy our family began.”  Tim Johnson, VP and General Manager of SBS added, “Being part of the Security family has been a fulfilling and educational part of my career and I am proud of what our team has accomplished. I now look forward to a new family team at CIH to grow and expand services to our longtime customers.”

“I have been a part of a great team of individuals and am very proud of what we have been able to accomplish together. We welcome the opportunity to provide additional offerings to our clients over time and are confident that we will improve on the excellent service they have come to expect. Becoming a part of CIH will allow us to better serve our customers in all aspects of the business,” said Greg Rolnicki, VP and General Manager of SDH.

“We are excited to welcome Security Door & Hardware and Security Builders Supply to the CIH family,” said Ron Couch, President & CEO of CIH. “As a company focused on delivering exceptional customer service through innovative programs, we are excited to support the SDH & SBS teams with resources to expand opportunities and accelerate growth in their market.”

“We were thrilled to be able to help the companies transition to new ownership while maintaining their core values,” said Rob Macklin, a Partner at Epiphany Law.  He added, “We think that Epiphany has one of the best track records – and best legal teams – in the country for helping small to mid-sized family businesses maximize their value in a sale or recapitalization, while maintaining the culture that they’ve worked so hard to achieve.”

Epiphany Law, LLC, served as legal counsel to Security Door & Hardware and Security Builders Supply. WCF Advisors, LLC, acted as exclusive financial advisor in connection with the sale.

 

Understanding Recent Guidance from the EEOC

As you know, public health guidelines designed to help communities and employers navigate the COVID-19 pandemic have been changing almost daily. New guidance issued from the Equal Employment Opportunity Commission (EEOC) addresses some of the issues that employers are facing. Here are answers from the EEOC on a few common questions employers may have:

If an employee calls in sick, how much information may an employer ask request from that employee?

Employers may ask employees is they are experiencing COVID-19 symptoms, such as fever, chills, cough, shortness of breath, or sore throat. Employers must remember that all information about the employee illness needs to be kept confidential.

May an employee take body temperatures of employees during this pandemic?

Generally, this would be considered a medical examination; however, because health authorities want to control the spread of COVID-19, employers may measure employees’ body temperature. Employers should ensure they are consistent in this practice across the workforce.

May an employer to require employees to stay home if they have COVID-19 symptoms?

Yes. The CDC states that employees who with symptoms of COVID-19 should leave the workplace.

Once an employee returns to work, may an employer require a doctor’s note certifying fitness for duty?

Yes. Employers may need to get creative in what they accept for documentation, as doctors and other health care professionals may be too busy during a pandemic outbreak to provide fitness-for-duty documentation.

As always, we will continue to provide you with factual updates on a regular basis throughout this pandemic. We will be hosting another webinar on Monday, March 23, 2020.

 

About the Author:

Tracy Melvin serves as a human resources business consultant with Epiphany Law. Tracy is an experienced professional having spent over ten years helping a variety of companies implement and manage complex HR strategies. In her current role, Tracy provides HR consultation to business executives and owners that drive results. Tracy drafts employee handbooks, policies, procedures, employment contracts, executive compensation plans and agreements to protect the company’s interests. She also assists business leaders by conducting HR audits to ensure compliance with local, state and federal employment and labor laws.

Tracy Melvin

Understanding COVID-19 Laws: Go to the Source

The situation with COVID-19 is ever changing.  Some of the hardest hit are small businesses.  I am, like my partners at the firm, a small business owner as well as an attorney.  We know there is no playbook for the handling of this virus.  However, when making decisions for your business, such as whether to close or what you need to provide employees, it is very important to go “directly to the source” when new laws or orders are passed.  Do not rely on the news or Facebook.  For example, on Tuesday, Governor Evers issued Emergency Order #5.  This is the law that changed the game for bars and restaurants and prohibits public or private  “mass gatherings” in the State of Wisconsin.  You can find a copy of that Order here:  https://evers.wi.gov/Documents/COVID19/UPDATEDOrder10People.pdf

If you read the Order, “mass gatherings” are defined as “any planned or spontaneous, public or private event or convening that will bring together or is likely to bring together 10 or more people in a single room or single confined or enclosed space at the same time.”  There is a lot of information in that statement that wasn’t reported on the news.  This even precludes gatherings of ten or more in your own home.  Note also that the order is punishable by imprisonment (yikes!) and/or fines.  Fortunately, we have not heard of anyone receiving fines, but we do know police are enforcing this Order in some communities.

As with any good law, there are many gray areas, but those gray areas are where you can decide what is best for your business, as long as you are complying with the portions of the law that are clear (like the closure of indoor shopping malls!). Reading the Order in its entirety also helps to understand why certain businesses are closed and others are not.  Please also remember that laws are made at Federal, State, and local levels, so when you hear something, it is also important to pay attention to what level of government is making that mandate.

It probably won’t be long before our current situation changes again.  When it does, don’t rely on the news when making important decisions for your business and employees.  Go to the source and educate yourself (as best you can), think through your situation within the confines of the law, and then ask questions.  We are always here to help you with questions or thinking through the next steps.

 

Katie Blom

 

About the Author – Kathryn M. Blom is an attorney with Epiphany Law and a business owner.  Her practice focuses on complex business law, contracts, exit planning, securities, mergers and acquisitions. She advises her clients on how to identify effective solutions and achieve their business goals.

Labor Law: What You Need to Know About the Latest Changes

On January 12, 2020 the U.S. Department of Labor (“DOL”) released its long-awaited final rule  updating its regulations regarding joint-employer status under the Fair Labor Standards Act (“FLSA”). The FLSA’s joint-employer regulations had not been substantively amended in over sixty years. This new rule becomes effective March 16, 2020.

The final rule gives employers greater guidance and clarity when determining if a joint-employer relationship exists. The DOL has now adopted a four-factor balancing test to evaluate whether the purported is a joint employer. This test assesses whether the employer:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

It is important to note, that no single factor is dispositive in determining joint-employer status, but instead the factors are weighted based on the facts of each case. The final rule states that to be a joint employer under the FLSA, the other actor must actually exercise – directly or indirectly – one or more of the four factors.

The final rule includes a number of examples illustrating the application of the four-factor test, providing for practical guidance to employers who may have joint employment concerns based on their company structure and business relationships with other companies.

In addition to the DOL issuing its final rule on this topic, the National Labor Relations Board (“NLRB”) released a final rule on February 26, 2020 setting forth standards for joint-employer status under the National Labor Relations Act. The NLRB’s final rule will be effective April 27, 2020.

In light of these final rules, it is important for employers to seek counsel in any situation where joint employment is possible.

All employers need to make sure their payroll practices are compliant. Doing so will protect your business from costly lawsuits. If you would like help reviewing your employee classifications, or if you have any other employment law questions, you can contact us here. 

Avoiding Constructions Lawsuits

3 Tips for Avoiding Lawsuits in the Construction Industry

The construction industry faces unique challenges. Disputes over quality, timing and non-payment are common between project owners and contractors. But, the good news is there are several strategies your company can use to avoid costly lawsuits. Review the list below to learn how you can protect your construction company.

1 – Clear Communication is Key 

If you want to avoid disputes with clients, employees and competitors, good communication is essential. You should always take time to clarify expectations and make a habit of doing the following.

  • Never over promise.
  • Keep the promises that you make. However, if you cannot keep your promise for some reason, let the person know. Offer a plan on how you will resolve the issue and make it right. Call first, then follow up with an email detailing the agreed-upon terms to resolve the issues.
  • Don’t avoid difficult situations or conversations. Avoidance is more likely to cause the problem to escalate.
  • Evaluate how your tone may be perceived. And remember that email or text messages can make it difficult to effectively convey your desired tone.
  • Don’t be afraid to swallow your pride. Doing so could help you resolve an issue before it becomes a legal matter.
  • Evaluate and enforce best practices regarding how your employees should communicate.

2 – Make Documentation a Priority – especially when it comes to change orders

To help protect yourself and your business, take time to document important communications and commitments. A few best practice tips for keeping appropriate documentation:

  • Don’t do handshake deals. All contracts should be committed to writing – even if it’s a simply one-page agreement setting forth the most basic terms, like price, scope and timing.  In particular, when dealing with change orders, it is especially important to get everyone’s approval in writing.
  • Be sure to have key customer contracts reviewed by counsel, in order to help you understand the relevant provisions. It is also best to hire legal counsel for, at a minimum, reviewing and/or drafting of custom deal contracts, settlement agreements, employee handbooks, document retention policies, sexual harassment policies, and non-compete agreements.
  • Be sure to have counsel review your company’s standard contracts every 2 to 3 years.
  • Save only what is important, such as contracts, loan documents, key documents underlying contracts and relevant negotiations, proof of payment, calendars, and tax information.

Important note – If you are anticipating business litigation, you must implement a litigation hold (also known as a preservation order or hold order).  Once you know of the existence of a dispute or even a potential dispute, save all information. The loss of relevant evidence because of failure to institute a litigation hold can result in negative sanctions against you by the Court in any related litigation.

3 – Protect Yourself: Review your insurance, business formation and employee classifications regularly. 

Insurance isn’t a popular topic of conversation, but it is an important aspect of risk mitigation especially in the construction industry. Review the following points to help ensure your business is accurately covered.

  • Make sure that all current policies are correct and appropriate for your organization.
  • Investigate your options with multiple brokers.
  • Determine if the insurance company you are working with focuses on your niche business needs. Are they industry-specific to you?
  • Understand your potential need for multiple types of policies, including general commercial liability, errors and omissions, auto, property, workers comp, product liability, and other riders/endorsements.
  • Understand the obligations you owe to your insurance company, such as notice requirements, providing documents and cooperating fully in any investigation. Don’t settle with the other side without first getting your insurance company involved if you expect your insurance company to contribute funds toward the settlement.

Business Formation – Occasionally, business owners are surprised to learn their business structure is not aligned with their type of work. To help minimize liability, you should engage counsel to help determine the appropriate corporate entity for your business. You will also want to keep corporate records, annual reports and minutes if your business formation requires it. Make sure to follow all the formalities of your business structure in order to ensure protection from personal liability. And don’t commingle funds or use the company bank accounts as your personal piggy bank!

Employee classifications and wage issues – The Fair Labor Standards Act and the US Department of Labor (DOL) have established strict criteria for determining how your employees must be paid. On January 1, 2020 the DOL announced an updated overtime and salary level threshold. It’s important your company stays up-to-date and adheres to all labor laws.  Unfortunately, many employers (especially in the construction industry) haven’t correctly classified their independent contractors and employees or are engaging in “banking” of hours that directly violates the overtime laws. Often employees are thought to be exempt from receiving overtime pay when they actually should have non-exempt status and be paid 1.5 times for any overtime hours earned each week. Payroll errors can lead to potential lawsuits (including class actions) from either past or present employees.

To learn more about business litigation and how you can proactively protect your construction business, you can contact us here or call us at 920-996-000.