McNair RSS Feed May 2018 00:00:00 -0800firmwise Weaver Elected President of South Carolina Bankruptcy Law Association16 May 2018 00:00:00 -0800 <p>McNair is pleased to announce that Michael Weaver has been elected President of the South Carolina Bankruptcy Law Association (SCBLA), which has more than 200 members across the state. Michael will serve a one year term.</p> <p>The South Carolina Bankruptcy Law Association (SCBLA) is a not-for-profit South Carolina corporation whose primary purpose is to promote bankruptcy legal education for attorneys practicing before the United States Bankruptcy Court for the District of South Carolina. The Supreme Court of South Carolina Commission on CLE has approved the association as a continuing legal education provider for bankruptcy attorneys. The&nbsp; association serves as a liaison between the bankruptcy bar and the Bankruptcy Court and the Office of the United States Trustee.</p> Early thoughts on this Supreme Court term11 May 2018 00:00:00 -0800 <div><em>We are about midway through the 2017-18 term of the U.S. Supreme Court. One case the Court has already decided and another it refused to take up provide some insight on how the Court has handled employment cases it has been asked to review. While the justices can always surprise us, here&rsquo;s an assessment of how the high court seems to be interpreting employment law at this point in the current term.</em></div> <div>&nbsp;</div> <div><strong>Court backs fair interpretation of FLSA exemption</strong></div> <div>&nbsp;</div> <div><em>Encino Motorcars v. Navarro</em> involved a dispute between a Mercedes-Benz dealership in California and its current and former service advisers, whose job duties include meeting customers to hear concerns about their cars, suggesting repair and maintenance services, and selling new or replacement parts. In 2012, the service advisers sued Encino Motors for back pay, alleging it violated the Fair Labor Standards Act (FLSA) by failing to pay them overtime.</div> <div>&nbsp;</div> <div>As our readers know, the FLSA generally requires you to pay overtime to employees who work more than 40 hours in a workweek. The statute provides for some exemptions, but those exemptions are usually construed very strictly by the courts. One of the exemptions covers &ldquo;any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.&rdquo;</div> <div>&nbsp;</div> <div>From its enactment in 1974 until 2011, the exemption was understood by several courts and the U.S. Department of Labor (DOL) to cover service advisers at auto dealerships. However, in 2011, the DOL issued a rule that interpreted &ldquo;salesman&rdquo; to exclude service advisers. The 2012 lawsuit filed against Encino Motorcars was based on that 2011 rule.</div> <div>&nbsp;</div> <div>The California federal district court dismissed the service advisers&rsquo; case, agreeing with Encino Motorcars&rsquo; position that they fall under the auto dealers exemption. Not unsurprisingly the U.S 9th Circuit Court of Appeals reversed, finding the legislative history of the FLSA requires deference to the DOL&rsquo;s 2011 rule. Encino Motorcars asked the Supreme Court to review the case.</div> <div>&nbsp;</div> <div>The high court disagreed with the 9th Circuit and sent the case back to the court of appeals with instructions that it reconsider the exemption without giving weight to the DOL rule, which the Court deemed procedurally defective. The 9th Circuit, purportedly following those instructions, again found that the auto dealers exemption doesn&rsquo;t include service advisers. Another appeal followed.</div> <div>&nbsp;</div> <div>The Supreme Court again rejected the 9th Circuit&rsquo;s analysis and held that service advisers are in fact salesman within the meaning of the FLSA exemption. A key part of the Court&rsquo;s decision was its conclusion that service advisers are integral to servicing automobiles. According to the Court, the statutory language isn&rsquo;t constrained to include only employees who spend time physically repairing automobiles, and the exemption covers a salesperson primarily involved in either servicing or repairing cars and doesn&rsquo;t require the employee to be engaged in both activities.</div> <div>&nbsp;</div> <div>In addition, the Court rejected the arguments against the exemption based on legislative history. The Court observed that silence in the legislative history cannot defeat a better reading of the text of the statute.</div> <div>&nbsp;</div> <div> <div>The broader importance of this decision for all employers is the majority&rsquo;s rejection of the principle that exemptions to the FLSA should be narrowly construed. The Court noted the narrow construction principle relies on the flawed premise that the FLSA&rsquo;s remedial purpose should be pursued at all costs. Instead, the Court found that exemptions should be construed under a &ldquo;fair&rdquo; interpretation. While employers still have the burden of proving that an exemption from overtime applies, a fair, rather than a narrow, interpretation of the exemption may make it easier to meet that burden.</div> <div>&nbsp;</div> <div><strong>Leave as an ADA reasonable accommodation</strong></div> <div>&nbsp;</div> <div>The Supreme Court chose not to review the 7th Circuit&rsquo;s decision in <em>Severson v. Heartland Woodcraft, Inc.</em>, a case involving the availability of extended leaves of absence as a reasonable accommodation under the Americans with Disabilities Act (ADA). The 7th Circuit held that a two- to three-month leave of absence following an employee&rsquo;s exhaustion of his leave entitlement under the Family and Medical Leave Act (FMLA) isn&rsquo;t a reasonable accommodation under the ADA.</div> <div>&nbsp;</div> <div>The court of appeals made it clear that leave may still be an appropriate reasonable accommodation under the ADA in certain circumstances, but there is no mandate or per se requirement that leave is always a reasonable accommodation. Significantly, the court characterized the ADA as an &ldquo;antidiscrimination&rdquo; statute as opposed to a &ldquo;leave entitlement&rdquo; statute.</div> <div>&nbsp;</div> <div>The case shows how framing the issue on appeal may be important. In his petition to the Supreme Court, the employee posed the question as whether there is a per se rule that a finite leave of absence cannot be a reasonable accommodation under the ADA. The employer framed the issue as whether an individual who requires a multimonth leave following three months of FMLA leave can be considered a qualified individual under the ADA if the extended leave wouldn&rsquo;t enable him to perform the essential functions of his job.</div> </div> <div>&nbsp;</div> <div> <div>Because the appellate court&rsquo;s decision was allowed to stand, employers in the 7th Circuit have some concrete guidance that a two- to three-month leave of absence after an employee&rsquo;s FMLA leave expires is likely not a reasonable accommodation under the ADA absent other considerations. South Carolina employers must still look to what the 4th Circuit says, but the 7th Circuit joins the 10th and 11th Circuits in deeming extended leave unreasonable under the ADA.</div> <div>&nbsp;</div> <div><strong>Lessons for employers</strong></div> <div>&nbsp;</div> <div>These two cases should provide some comfort that the Supreme Court, as it is now configured, is making an effort in employment cases to look at the statutory language and reach a conclusion that&rsquo;s true to the words used in the law in the context in which they are used. HR professionals at your organization should ask, in close consultation with your employment counsel, what does a particular employment law say, and what is the context of the statutory language? For now, it appears that kind of analysis will find a receptive audience at the Supreme Court.<br /> <br /> For more information on the BLR, click <a href="" target="_blank">here</a>. For more information on the South Carolina Employment Law Letter, click <a href="" target="_blank">here</a>.&nbsp;</div> </div> 7 Most Frequently Asked Questions About Opportunity Zones10 May 2018 00:00:00 -0800 <p align="left">Qualified Opportunity Zones were included as part of the Tax Cuts and Jobs Act which became law in December 2017. The zones were originally introduced as the Investing in Opportunity Act sponsored by South Carolina Senator Tim Scott and are meant to encourage investment in economically distressed communities.</p> <p align="left">Opportunity Zones have generated a lot of interest and even more questions. This alert attempts to answer the most frequently asked questions we are hearing from clients.</p> <p align="left"><b>1.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>What is the opportunity?</b></p> <p align="left">The opportunity is for investors with long-term capital gains to defer paying tax on those gains for a period of time while also investing in underserved communities that need capital.</p> <p align="left"><b>2.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>Where are we in the process? What has happened so far?</b></p> <p align="left">Legislation creating the Opportunity Zones and setting forth the associated tax benefits has been passed. The deadline for state governors to propose the census tracts to be designated as Opportunity Zones was March 21, 2018. On April 9, the U.S. Treasury Department and the IRS <a href="">validated census tracts in 18 states and territories</a>.</p> <p align="left"><b>3.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>What&rsquo;s next in establishing Opportunity Zones and Opportunity Funds?</b></p> <p align="left">The U.S. Treasury Department is tasked with promulgating regulations defining and refining certain requirements set forth in the legislation. Those regulations are expected this summer and are anxiously awaited as the deferred tax arising out of the Opportunity Zone investments will come due no later than the tax year ending December 31, 2026. Thus the earlier an investment is made, the longer the tax can be deferred.</p> <p align="left"><b>4.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>Who should be most interested in Opportunity Zones?</b></p> <p align="left">Anyone with long-term capital gains they want to defer should be interested in Opportunity Zones. Investments in Opportunity Zones are made through Qualified Opportunity Funds. When the legislation was passed, most analysts believed the certification of Opportunity Funds would be performed through a structured process, perhaps administered by the Treasury Department&rsquo;s Community Development Financial Institutions (CDFI) Fund.</p> <p align="left">However, in a series of <a href="">frequently asked questions published by the IRS on April 24, 2018</a>, the Service said a Qualified Opportunity Fund can self-certify and &ldquo;no approval or action by the IRS is required.&rdquo;</p> <p align="left">If this holds true, individuals with smaller gains may be able to reinvest them without having to worry about potential costs associated with investing in a larger, institutionally-managed fund. This process could make Opportunity Zone investing more efficient than similar incentives directed at low-income communities, such as the New Markets Tax Credit program or the Low-Income Housing Tax Credit (LIHTC).</p> <p align="left">The Tax Cuts and Jobs Act restricted the availability of tax-deferred exchanges under Section 1031 of the Internal Revenue Code to exchanges of real property, which may increase the attractiveness of Opportunity Zone investing to taxpayers holding personal property that would have been eligible for Section 1031 treatment prior to the passage of the Act.</p> <p align="left"><b>5.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>How is this program not just a vehicle for gentrification?</b></p> <p align="left">The challenge facing Opportunity Zones is there is not necessarily a carrot and a stick in the statute for the investments to benefit anyone other than the investor. Unlike many state-level incentives, there are no requirements included regarding number of jobs, amounts of wages, or a certain percentage of hires of residents within the designated zone. Institutional funds from larger banks do pay attention to local outcomes.</p> <p align="left">The investments could serve as the seed for transforming these communities but might not, in and of themselves, effect the desired outcomes without additional requirements imposed on the success of such investments.</p> <p align="left"><b>6.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>How can the impact of Opportunity Zones be maximized for the investor?</b></p> <p align="left">Assuming the investor has the liquidity to pay the tax when it comes due in 2026, the longer she holds the investment, the greater the benefit. Under the Opportunity Zone legislation, if the investor holds her Opportunity Zone investment for at least ten years, she will have a step-up in basis to the fair market value of the investment when it is eventually sold. In other words, while tax will always come due on her initial deferred gain (at least under the statute as currently in effect), the taxpayer could potentially avoid any tax on future appreciation in the investment.</p> <p align="left"><b>7.&nbsp;&nbsp;&nbsp;&nbsp;</b><b>How should investors begin planning for Opportunity Zones?</b></p> <p align="left">Investors have only 180 days within which to reinvest their deferred gain in a Qualified Opportunity Fund. Investors who are, or think they may be, in a position to have qualifying gains are encouraged to begin active due diligence on designated zones and businesses in which to invest. Opportunity Zone investments do not have to be made in the state where the investor lives. There are a number of states that have set up websites with information on the designated zones; e.g. <a href="">South Carolina Opportunity Zones</a>.</p> <p align="left">Opportunity Zones represent an exciting and potentially valuable economic and community development tool. Whether the potential impact comes to fruition remains to be seen. With respect to any individual taxpayer, careful analysis should be done to determine whether an Opportunity Zone investment is the right fit for their portfolio.&nbsp;</p> Chambers USA Recognizes McNair as Leading Firm in 2018 Edition03 May 2018 00:00:00 -0800 <p>For the fourteenth consecutive year, McNair Law Firm, P.A. has been ranked a &ldquo;Leading Firm&rdquo; in the 2018 edition of <a href="" target="_blank"><i>Chambers USA: America&rsquo;s Leading Lawyers for Business</i></a>.</p> <p>Seven of the firm&rsquo;s attorneys earned individual rankings, including:</p> <ul> <li><b>Jennifer Blumenthal</b> &ndash; Corporate/M&amp;A</li> <li><b>Sid Boone</b> &ndash; Real Estate</li> <li><b>John Currie</b> &ndash; Corporate/M&amp;A</li> <li><b>Joel Gottlieb &ndash;</b> Real Estate</li> <li><b>Celeste Jones</b> &ndash; Litigation: General Commercial</li> <li><b>Judith McInnis</b> &ndash; Real Estate</li> <li><b>Rick Morgan</b> &ndash; Labor &amp; Employment</li> </ul> <p>McNair also received practice rankings in the areas of Corporate/M&amp;A, Corporate/M&amp;A: Banking &amp; Finance, and Real Estate.&nbsp;</p> SC Supreme Court decides building official's public-policy case23 Apr 2018 00:00:00 -0800 <div><em>At-will employment is the normal employer-employee relationship in South Carolina. In 2004, the state legislature passed a law stating that handbooks that took certain reasonable steps did not create a contractual exception to at-will employment. An open question was, how broad was the public-policy exception to at-will employment? The South Carolina Supreme Court recently addressed that question. Read on to see what it decided.</em></div> <div>&nbsp;</div> <div><strong>Factual background</strong></div> <div>&nbsp;</div> <div>In 2005, the town of Surfside Beach hired Jacklyn Donevant as its building official. In that capacity, she served as the head of the building department and was the only town employee who could approve building permits or issue stop-work orders. (A stop-work order is an order given by the building official to stop work, completely shutting down the work.)</div> <div>&nbsp;</div> <div>In December 2010, the town hired Jim Duckett as its administrator. During Duckett&rsquo;s tenure, there was an ongoing controversy about the vacancy of the Pier Restaurant, which was located on a pier in Surfside Beach. The town acquired ownership of the restaurant in 2008. Shortly thereafter, the longtime tenant of the restaurant vacated the premises, leaving the space vacant and depriving the town of expected revenue. The town had trouble finding a new tenant. The vacancy of the restaurant became a prominent, public issue in the town, with several newspaper articles appearing. As the town administrator, Duckett worked to help find a new tenant. The record indicated that Duckett and Donevant did not get along.</div> <div>&nbsp;</div> <div>In December 2011, Donevant was diagnosed with breast cancer and took 12 weeks of medical leave. During her absence, the town was forced to contract with the city of Myrtle Beach to perform her building official duties because no other town employee was qualified to perform them. The city of Myrtle Beach assumed the responsibility of reviewing plans, issuing permits, conducting inspections, and issuing stop-work orders within Surfside Beach&rsquo;s jurisdiction.</div> <div>&nbsp;</div> <div>While Donevant was on leave, Duckett found a new tenant to occupy the vacant Pier Restaurant space. The new tenant wanted to remodel the interior of the restaurant. Because Donevant was on leave, Myrtle Beach issued the tenant a demolition permit allowing for &ldquo;demo interior of building only.&rdquo; The demolition permit was the only permit issued to the restaurant during Donevant&rsquo;s sick leave. However, the tenant applied for a construction permit that was pending under &ldquo;plan review.&rdquo; While Donevant was on leave, Duckett visited the restaurant frequently and remained in contact with Myrtle Beach about the construction plans.</div> <div>&nbsp;</div> <div>On March 13, 2012, Donevant returned from sick leave. Before allowing her to resume her duties as building official, Duckett required her to meet with him and requested that Debra Hermann, the town clerk, observe the meeting. During the meeting, Duckett informed Donevant that she would resume all her job duties, but he warned that if she &ldquo;change[d] anything that was done . . . in [her] absence,&rdquo; he would fire her. Duckett testified that the reason for the instruction was to prevent Donevant from revisiting any decisions made by Myrtle Beach during her absence. After the meeting, Hermann prepared a memorandum that stated:</div> <div>&nbsp;</div> <div>Duckett explained that [Donevant] was now officially returned to work; however, he gave her a direct order that she could not and would not change, ameliorate, or in any other manner amend any action that was taken during her absence. That if she did so, she would be fired.</div> <div>&nbsp;</div> <div>On March 19, Duckett instructed Micki Fellner, Surfside Beach&rsquo;s deputy administrator, to inform Donevant that she could no longer report to him and was required to report directly to Duckett. Duckett had previously informed all employees, including Donevant, that Fellner &ldquo;was in charge when [Duckett] wasn&rsquo;t there&rdquo; and &ldquo;had the same authority [Duckett] had when [he] was there.&rdquo;</div> <div>&nbsp;</div> <div>Donevant testified that shortly after returning to work, she discovered that new construction was underway at the Pier Restaurant by reading a local newspaper article. After reading the article, she contacted Myrtle Beach and learned that no construction permit had been issued. Thereafter, she drove to the restaurant to inspect the premises. She testified that new construction had started at the restaurant. According to Donevant, the contractors had cut openings for doors and windows, studded a new wall, and installed plumbing, electrical components, and subflooring. In her opinion, the work constituted &ldquo;construction&rdquo; and therefore required a construction permit before it could be lawfully performed. She testified that allowing unpermitted construction to continue in the town&rsquo;s jurisdiction posed a significant safety risk to the public:</div> <div>&nbsp;</div> <div>It was unsafe and it was dangerous. They had openings that anybody could step in and fall. There [were] loose wires and plumbing. There was stuff that had [not] been inspected, how do you know whether it [was] safe or not. We have to protect the public. The pier is a busy place. A lot of kids go [out] there.</div> <div>&nbsp;</div> <div>Donevant issued a stop-work order to halt construction at the restaurant and taped the order to the door. After issuing the order, she called Fellner on her way back to the office. She testified that she called to discuss an unrelated matter and was not &ldquo;reporting&rdquo; that she had issued the stop-work order. During the conversation, however, she told Fellner about the stop-work order for the unpermitted construction at the restaurant.</div> <div>&nbsp;</div> <div>The next day, Duckett called Donevant into his office for a meeting. During the meeting, he said he could not believe she stopped work at the restaurant after all the effort he had put into the project. Duckett turned his attention to three papers lying face-down on his desk. He turned over the first paper, which was a written reprimand stating Donevant had disobeyed his order to report all matters to him, not Fellner. Donevant refused to sign the reprimand, claiming it was untrue because she had not &ldquo;reported&rdquo; the stop-work order to Fellner. She further stated that Duckett never told her she was required to report that she issued a stop-work order.</div> <div>&nbsp;</div> <div>After Donevant refused to sign the reprimand, Duckett turned over the second paper, which was an order of suspension. Donevant testified that although she disagreed with the suspension, she signed the document and served a three-day suspension because she &ldquo;needed to work&rdquo; and suspected the third document on Duckett&rsquo;s desk was a termination notice. According to her, Duckett suspended her &ldquo;for putting a stop-work order, for doing [her] job.&rdquo;</div> <div>&nbsp;</div> <div>On March 25, Donevant returned to work following her suspension. On that date, she delivered a letter to Duckett:</div> <div>&nbsp;</div> <div>My suspension was not right. All I did was follow the law, which you did [not] want me to follow. Like I told you the other day, I will follow the law even if that means not following your instructions. You have been picking on me and treating me badly for a long time even though I do my work by the book and I am dedicated to the town.</div> <div>&nbsp;</div> <div>On April 4, Duckett terminated Donevant. She testified that he did not provide a reason for her termination. He later informed the South Carolina Department of Employment and Workforce that her termination was due to &ldquo;operational changes.&rdquo; Donevant asserted that Duckett fired her in retaliation for issuing the stop-work order for unpermitted construction at the restaurant.</div> <div>&nbsp;</div> <div><strong>The lawsuit</strong></div> <div>&nbsp;</div> <div>Donevant sued the town for wrongful termination under the public-policy exception to at-will employment. A jury decided against the town, and the town appealed the trial court&rsquo;s denial of its motion for a directed verdict&mdash;i.e., the judge should have entered an order that no reasonable jury could reach a decision other than to dismiss the case.</div> <div>&nbsp;</div> <div>The town argued to the court of appeals that by denying its motion for a directed verdict, the trial court erred in expanding the public-policy exception to at-will employment beyond situations where the employer requires the employee to violate a criminal law or the reason for the employee&rsquo;s termination is a violation of a criminal law. The town further asserted that the trial court&rsquo;s denial of its motion was in error because the public-policy exception does not apply to terminations of government employees who insist on performing an act that is discretionary.</div> <div>&nbsp;</div> <div><strong>Court of appeals&rsquo; decision</strong></div> <div>&nbsp;</div> <div>The court of appeals determined that based on its review of the building code, the building official&mdash;Donevant&mdash;was the only party authorized to issue a stop-work order for code violations. In the appeals court&rsquo;s view, Donevant had the sole discretion to determine whether to issue a stop-work order. The court wrote that the law required her to take action to enforce compliance with the building code when she saw unpermitted construction at the restaurant. Because the construction at the restaurant violated the building code, the law required her to take action to enforce compliance with the code.</div> <div>&nbsp;</div> <div>To carry out her legal duty to &ldquo;enforce compliance&rdquo; with the building code, Donevant issued a stop-work order as required by law. The statutory and building code provisions at issue required her action of enforcing compliance with the building code. The appeals court agreed with the trial court that Donevant&rsquo;s claim fell &ldquo;clearly within what our courts have already articulated what the law is&rdquo;&mdash;that &ldquo;she was required by her employer to violate the law.&rdquo; By suspending Donevant and ultimately terminating her for issuing the stop-work order at the restaurant, Duckett effectively discharged her for refusing to violate the law.</div> <div>&nbsp;</div> <div>The appeals court found that Donevant&rsquo;s claim for retaliatory discharge fell within a recognized exception to the at-will-employment doctrine in South Carolina because she was required by her employer, &ldquo;as a condition of continued employment, to break the law.&rdquo; In addition, the appeals court noted that although she was fired for refusing to violate the law, she presented a cognizable claim that she was terminated in violation of a clear mandate of public policy. An at-will employee has a tort (wrongful act) claim for wrongful termination if she suffers a retaliatory termination in violation of a clear mandate of public policy. In this case, the public-policy violation was the town requiring Donevant to violate the law&mdash;i.e., not issue stop-work orders when she was required to do so by statute.</div> <div>&nbsp;</div> <div>However, the appeals court observed that based on its reading of previous court decisions, there could be situations where an employee is terminated in violation of public policy even if she was not required to violate the law by her employer or the reason for her termination was not a violation of a criminal law. The court pointed out that an exception to the doctrine of at-will employment, which is firmly rooted in South Carolina public policy, should emanate from the General Assembly and should come from a court only when the legislature has not spoken. In this case, the General Assembly enacted a law that the appeals court held was public policy. Therefore, the court found that the public-policy exception applied.</div> <div>&nbsp;</div> <div><strong>Supreme court&rsquo;s decision</strong></div> <div>&nbsp;</div> <div>The supreme court framed the issue as follows: &ldquo;Based on the record as it appears to us, the question on appeal is whether it is a violation of a clear mandate of public policy to fire a building official for enforcing the building code.&rdquo; Based on its framing of the question, the court found this case fit squarely within the long-established limits of the public-policy exception to the at-will-employment doctrine because firing Donevant for enforcing the building code violated a clear mandate of public policy.</div> <div>&nbsp;</div> <div>While the town made several arguments to support its contention that the court of appeals&rsquo; decision expanded the public-policy exception, the supreme court found that the court of appeals effectively refuted the arguments. However, the supreme court addressed one argument&mdash;that Donevant&rsquo;s claim did not fit within the public-policy exception because her decision to issue a stop-work order was discretionary.</div> <div>&nbsp;</div> <div>The supreme court noted that Donevant enforced the building code and that the law required her to take action to enforce compliance with the building code when she saw unpermitted construction. Therefore, she was enforcing a clear mandate of public policy when she issued the stop-work order. Firing her for carrying out her mandatory responsibility to enforce the building code violated public policy, and the public-policy exception applied to her claim because she was fired for enforcing the code.</div> <div>&nbsp;</div> <div><strong>Lessons for employers</strong></div> <div>&nbsp;</div> <div>Employers should expect to see more claims framed as public-policy exceptions to the at-will-employment doctrine. Both the court of appeals and the supreme court indicated that public policy can be created by either the legislature or the courts.</div> <div>&nbsp;</div> <div>The supreme court&rsquo;s framing of the issue&mdash;whether it is a violation of a clear mandate of public policy to fire a building official for enforcing the building code&mdash;needs to be looked at in light of its discussion of the mandatory language in the statute in question versus other statutes that may establish or create discretionary responsibilities. If a responsibility is truly discretionary, the employer may be able to argue that there is not a viable public-policy claim. A former employee will almost always argue that a statute is mandatory in nature, and the employer must be able to point to language that is discretionary, not mandatory. Failing to do so likely will lead to a jury deciding whether there is a violation.</div> <div>&nbsp;</div> <div>Always involve your counsel before making termination decisions. You are well advised to dive deep into any statute you intend to rely on or that may come into play when making a termination decision. Also, be aware that the public-policy exception to at-will employment may well be broader than you think it is.<br /> <br /> For more information on the BLR, click <a href="">here</a>. For more information on the South Carolina Employment Law Letter, click <a href="">here</a>.&nbsp;</div> Navigating Internal and External Investigations: The Common Sense Approach16 Apr 2018 00:00:00 -0800 In today&rsquo;s evolving landscape of employee relations, inevitably an investigation will take place. Conducting an effective investigation, and responding successfully to internal and external situations needing an investigation are critical for Human Resource professionals. This event series will focus on key tactics and best practices for HR professionals during an internal investigation, and how to respond when the Government comes knocking on your business&rsquo; door. Key topics include:<br /> <ul> <li>Policies and procedures when conducting an internal investigation</li> <li>Procedures when responding to an EEOC charge(s)</li> <li>Recent news worthy cases</li> <li>Scenarios of different types of investigations involving sexual harassment, gender pay and discrimination</li> <li>Best practices for internal and external investigations</li> </ul> <br /> Event schedule is as follows:<br /> <br /> April 16 - Charleston<br /> 8:00 - 8:15 am: Registration<br /> 8:15 - 9:30 am: Program<br /> McNair Law Firm<br /> 100 Calhoun Street, Suite 400<br /> Charleston, SC 29401<br /> Presenter: <a href="" target="_blank">Rick Morgan</a><br /> <a href="" target="_blank">REGISTER</a><br /> <br /> <br /> April 17 - Columbia<br /> 8:00 - 8:15 am: Registration<br /> 8:15 - 9:30 am: Program<br /> McNair Law Firm<br /> 1221 Main Street, Suite 1800<br /> Columbia, SC 29201<br /> Presenter: <a href="" target="_blank">Rick Morgan</a><br /> <a href="" target="_blank">REGISTER</a><br /> <br /> <br /> April 18 - Hilton Head<br /> 8:00 - 8:15 am: Registration<br /> 8:15 - 9:30 am: Program<br /> Hilton Head / Bluffton Chamber of Commerce<br /> 1 Chamber of Commerce Drive<br /> Hilton Head Island, SC 29938<br /> Presenters: <a href="" target="_blank">Melissa Azallion</a> and <a href="" target="_blank">Jon Eggert</a><br /> <a href="" target="_blank">REGISTER</a><br /> <br /> <br /> April 18 - Greenville<br /> 8:00 - 8:25 am: Registration<br /> 8:30 - 10:00 am: Program<br /> McNair Law Firm<br /> 104 S. Main Street, Suite 700<br /> Greenville, SC 29601<br /> Presenters: <a href="" target="_blank">Reggie Gay</a> and <a href="" target="_blank">Rita McKinney</a><br /> <a href="" target="_blank">REGISTER</a><br /> <br /> <br /> April 20 - Anderson<br /> 8:00 - 8:25 am: Registration<br /> 8:30 - 10:00 am: Program<br /> Hospice of the Upstate<br /> 1835 Rogers Road<br /> Anderson, SC 29621<br /> Presenters: <a href="" target="_blank">Reggie Gay</a> and <a href="" target="_blank">Rita McKinney</a><br /> <a href="" target="_blank">REGISTER</a> In Memoriam - Lynn Gatlin Stevens - 1959-201807 Apr 2018 00:00:00 -0800 On Saturday, April 7, McNair lost a truly good and special person, a superior lawyer, a mentor, and our friend, Lynn Stevens. Lynn was easy going and quick witted, and she had a gift of making the lawyers and professionals who worked with her better. She was loved by all of us, her clients, her community, her family and her friends.<br /> <br /> Services will be held on Tuesday, April 10 at 2:00 p.m., with visitation from 12:00 noon to 1:45 p.m., at First United Methodist Church in Conway. Her full obituary can be <a href=";pid=188686536">found here</a>.<br /> Erik Doerring Named Top Tax Author by JD Supra19 Mar 2018 00:00:00 -0800 McNair is pleased to announce that Erik Doerring has been named a Top Author in the area of Tax by JD Supra, a premier news service for the legal industry. JD Supra&rsquo;s Readers Choice Awards acknowledge the published work of top authors from law firms throughout the world and are based on an in-depth analysis of reader data. Doerring was one of 252 authors selected from nearly 50,000 who publish articles on JD Supra.<br /> <br /> Doerring is the Tax Practice Group Leader at McNair. With over 30 years of experience, Doerring advises McNair&rsquo;s individual, corporate, and international clients on federal, state, and local tax issues. Prior to joining McNair, Doerring was an attorney with the IRS Office of Chief Counsel and the U.S. Department of Justice, Tax Division. You can find his and other McNair lawyers&rsquo; tax law insights on the firm&rsquo;s blog at <br /> Equal Pay Act case gets new life21 Feb 2018 00:00:00 -0800 <div><em>In 2-1 decision by a three-judge panel, the U.S. 4th Circuit Court of Appeals (whose rulings apply to all South Carolina employers) reversed a decision to grant summary judgment&mdash;meaning the trial court had found there was no case to move forward&mdash;in favor of a governmental entity. Instead, the appeals court sent the case back to the trial court for further proceedings based on the majority&rsquo;s assessment of the application of the Equal Pay Act (EPA) to wages being paid by a state agency. The dissenting judge wrote a detailed and scholarly response to the majority&rsquo;s opinion that bears some analysis. The case is published, so it can be cited by employees and their counsels as the standard applicable to an equal pay case in South Carolina.</em></div> <div>&nbsp;</div> <div><strong>Background</strong></div> <div>&nbsp;</div> <div>The Equal Employment Opportunity Commission (EEOC) filed suit on behalf of three female employees of the Maryland Insurance Administration (MIA), alleging salary discrimination under the EPA. The district court granted summary judgment in favor of the employer, and the EEOC appealed.</div> <div>&nbsp;</div> <div>MIA is an independent state agency that performs various functions related to the regulation of Maryland&rsquo;s insurance industry and the enforcement of its insurance laws. It is subject to the state personnel management system, a merit-based system that establishes job categories based on the general nature of required duties and sets corresponding levels of compensation. Although as an independent state agency MIA is given discretion to set its employees&rsquo; salaries, it follows the hiring and salary practices of Maryland&rsquo;s Department of Budget and Management, which sets forth a standard pay plan salary schedule.</div> <div>&nbsp;</div> <div> <div>In accordance with the standard salary schedule, when a new employee is hired, MIA assigns her to a grade level matching the position being filled. Each grade level carries an assigned base salary and a specific salary range consisting of 20 separate steps.</div> <div>&nbsp;</div> <div>After designating a new employee&rsquo;s particular grade level, MIA assigns her to an initial step placement based on previous work experience, relevant professional designations, and licenses or certifications. In selecting a particular step level, it also considers the difficulty of recruiting for the position, and&mdash;under Maryland law&mdash;awards a new employee credit for any previous years of service in state employment for the purposes of determining that employee&rsquo;s step in the applicable pay grade. Additionally, a Maryland government employee who transfers to a &ldquo;lateral&rdquo; position takes her assigned grade and step with her to the new position.</div> <div>&nbsp;</div> <div>MIA employees work within one of six units, each comprising a different area of insurance regulation. At issue in this case is the fraud investigation division. Fraud investigators are charged with investigating allegations of criminal insurance fraud perpetrated by individuals. Until July 2013, the fraud investigator position was classified at a grade 15 on the standard salary schedule. At that time, based on an internal job study conducted by MIA, the position was reclassified at grade 16. Under the standard salary plan, individuals hired as fraud investigators now are assigned to a step within the grade 16 classification according to their qualifications and work experience.</div> <div>&nbsp;</div> <div>MIA advertises minimum and preferred qualifications for the position of fraud investigator. To be minimally qualified for hire as a fraud investigator, an applicant must have five years of fraud investigatory experience in such areas as white-collar crime, financial fraud, insurance fraud, and investigations conducted under the supervision of prosecutors or other attorneys. Preferred or desired qualifications for the position include designation as a certified fraud examiner, as well as experience working with attorneys and participation in court or administrative hearings.</div> <div>&nbsp;</div> <div><strong>Female fraud investigators</strong></div> <div>&nbsp;</div> <div>The EEOC filed suit on behalf of three former MIA fraud investigators: Alexandra Cordaro, Marlene Green, and Mary Jo Rogers.</div> <div>&nbsp;</div> <div>MIA hired Cordaro in December 2009. She had worked as a fraud investigator for a federal credit union for over two years and as a criminal investigation and litigation paralegal for 12 years in the Baltimore County State&rsquo;s Attorney&rsquo;s Office. MIA assigned her to grade level 15, step four, with a starting salary of $43,495. By the time she resigned about five years later, she was earning $49,916.</div> <div>&nbsp;</div> <div>Marlene Green was hired in November 2010. She held a bachelor&rsquo;s degree from Johns Hopkins University and had more than 20 years of experience working for the Baltimore City Police Department. During that time, she worked for approximately 13 years in an investigative capacity. In the year immediately before to joining MIA, she worked as an investigator for the U.S. Office of Personnel Management and the Office of the State&rsquo;s Attorney for Baltimore County. MIA assigned her to grade level 15, step four, with a starting salary of $43,759. By February 2013, when she resigned from MIA, her salary was $45,503.</div> <div>&nbsp;</div> <div>Mary Jo Rogers transferred to the fraud investigation division from another position within MIA in July 2011. She had earlier worked for eight years as a police officer and a detective with the Baltimore County Police Department. Immediately before being hired at MIA, she worked for an insurance company as a special investigator and an adjuster. MIA assigned her to grade level 15, step five, with a starting salary of $46,268. By November 2013, her salary was $50,300.</div> <div>&nbsp;</div> <div><strong>Male fraud investigators</strong></div> <div>&nbsp;</div> <div>The EEOC&rsquo;s lawsuit against MIA alleged gender-based salary discrimination in violation of the EPA. During the proceedings in the district court, the agency identified as comparators four male fraud investigators: Bruno Conticello, James Hurley, Donald Jacobs, and Homer Pennington.</div> <div>&nbsp;</div> <div>MIA hired Conticello in November 2010. He held both a bachelor&rsquo;s and a master&rsquo;s degree in criminal justice and had nearly 20 years of investigative experience working for various insurance companies and Maryland&rsquo;s Office of the Inspector General. He also had obtained a certified fraud examiner designation. MIA assigned him to grade level 15, step 10, with a starting salary of $49,842. By late 2012, his salary was $51,561.</div> <div>&nbsp;</div> <div>James Hurley was hired in November 2006. He most recently had worked as an investigator with an underwriting insurance organization. He also had worked previously with MIA for a total of three years as a fraud investigator and as an investigator in the property and casualty department. Altogether, he had about 10 years of insurance-related investigative experience when he was rehired at MIA in 2006. He also had worked previously as a claim adjuster for several insurance companies and had earned the designation of certified fraud examiner. At the time of his most recent hiring at MIA, he was assigned to grade 15, step six, with a starting salary of $45,298. By the time he left MIA in October 2012, his salary was $49,678.</div> <div>&nbsp;</div> <div>MIA hired Donald Jacobs in May 2007. He had 11 years of experience as a natural resources officer with the state of Maryland&mdash;primarily engaged in conducting marine patrols&mdash;and had worked for three years as an investigator in the Office of the Public Defender in Baltimore. This investigatory experience didn&rsquo;t relate to fraud or white-collar crime. His starting salary at MIA was $45,298, based on his assignment to grade level 15, step six. When he left in June 2010, his salary was $47,705.</div> <div>&nbsp;</div> <div>Homer Pennington was hired in August 2007. He had worked in the criminal investigation unit of the Baltimore Police Department for approximately 22 years before joining MIA. He earned the designation of certified arson investigator, but neither his resume nor the record specified the requirements for acquiring this certification. He was hired at grade level 15, step five, with a starting salary of $45,360. By May 2013, when he left, his salary was $47,194.</div> </div> <div>&nbsp;</div> <div> <div><strong>Courts&rsquo; decisions</strong></div> <div>&nbsp;</div> <div>MIA and the EEOC each requested that the district court rule in its favor without a trial. The court denied the EEOC&rsquo;s request and granted MIA&rsquo;s instead.</div> <div>&nbsp;</div> <div>In dismissing the EEOC&rsquo;s claim under the EPA, the district court effectively held that the three female fraud investigators had failed to meet their minimally sufficient burden of proof. The court concluded that the male fraud investigators identified by the EEOC weren&rsquo;t valid comparators because they were hired at higher steps than females were. Alternatively, the court held that MIA had shown that the disparity in pay was attributable to the relative experience and qualifications of the male investigators.</div> <div>&nbsp;</div> <div>The EEOC appealed the district court&rsquo;s grant of summary judgment to MIA.</div> <div>&nbsp;</div> <div>On appeal, the EEOC asserted that the district court erred in awarding summary judgment in favor of MIA. It didn&rsquo;t appeal the denial of its own request for summary judgment. Rather, it contended only that the district court erred in granting summary judgment to MIA.</div> <div>&nbsp;</div> <div>The EEOC argued that it made a minimally sufficient showing of an EPA violation by identifying four male fraud investigators who earned higher starting salaries than the three female investigators, who were assigned lower salaries despite performing identical work. In addition, it contended that MIA didn&rsquo;t establish as a matter of law that the disparity in pay was based on the comparators&rsquo; credentials and previous work experience.</div> <div>&nbsp;</div> <div>According to MIA, the identified males weren&rsquo;t valid comparators because it hired them at higher steps on its pay scale than the female investigators. Alternatively, it argued that even if the EEOC made a sufficient showing of an EPA violation, MIA established as a matter of law that any pay disparity was based on gender-neutral reasons involving the comparators&rsquo; prior experience and credentials that each female investigator lacked.</div> <div>&nbsp;</div> <div>Our readers likely know that the EPA prohibits gender-based discrimination by employers resulting in unequal pay for equal work. The 4th Circuit majority noted that it was reviewing whether the EEOC had made the required showing using a burden-shifting framework. That case of discrimination under the EPA is shown by demonstrating that (1) the employer paid different wages to an employee of the opposite sex (2) for equal work on jobs requiring equal skill, effort, and responsibility, which are (3) all performed under similar working conditions. Under the EPA, the proof standard doesn&rsquo;t require a showing that the employer acted with discriminatory intent.</div> <div>&nbsp;</div> <div>Once the required showing has been made, the burdens of production and persuasion shift to the employer to show that the wage differential was justified by one of four affirmative defenses listed in the statute. These affirmative defenses are: (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; or (4) a disparity based on any factor other than gender. To avoid liability, the employer must prove only one of these four affirmative defenses.</div> <div>&nbsp;</div> <div>In the majority&rsquo;s view, the employer in an EPA case bears the burden of ultimate persuasion, and once a claim has been established, it won&rsquo;t prevail at the summary judgment stage unless it proves its affirmative defense so convincingly that a rational jury couldn&rsquo;t have reached a contrary conclusion.</div> <div>&nbsp;</div> <div>In its analysis of the comparators, the majority didn&rsquo;t discuss males who were hired at the same time as the employees suing MIA, but it instead allowed the EEOC to reach back to persons who had been in the job for a number of years. It was the majority&rsquo;s view that the employees get to pick their comparators. Once those comparators were selected, though hired earlier than the employees in question, it was an easy jump to state that all performed substantially equal work, but the longer-employed men were paid more money. In fact, the 4th Circuit majority rejected MIA&rsquo;s argument that other men were paid less than the women.</div> <div>&nbsp;</div> <div>The majority also rejected MIA&rsquo;s use of the state&rsquo;s standard salary schedule and its argument that the comparator&rsquo;s experience and qualifications were appropriate differentiating factors. The majority held that a jury should decide whether MIA in fact objectively weighed the comparators&rsquo; qualifications as being more significant than the female investigators&rsquo; qualifications. Its decision overturned the lower court and sent the case back to trial.</div> <div>&nbsp;</div> <div><strong>Lone dissent</strong></div> <div>&nbsp;</div> <div>4th Circuit Judge J. Harvie Wilkinson III disagreed with his colleagues. In his dissent, he forcefully articulated that the majority ignored or glossed over the state&rsquo;s Tenth Amendment Constitutional right to allow state law rather than federal law to provide remedies for gender discrimination in all forms, including the pay of a public-sector employer. He observed that by filing suit, the EEOC consigned the state&rsquo;s sovereign interest in its own workforce wholly to the hands of federal authority.</div> <div>&nbsp;</div> <div>Judge Wilkinson believes that this assertion of federal authority diminished the proper role of states in our constitutional system to an unacceptable extent. This federal control could be pardoned if this were a lawsuit of substance, but he noted this is a thin, slight action. With some clarity, he noted that we have a federal system of government carefully designed to strike a balance between the need for enumerated federal authority and respect for the residual sovereignty of the states. He wrote, &ldquo;One half of that balance the majority now leaves wholly in shadow. In fact, the majority does not even hint that this suit raises the question of the extent to which Congress&rsquo;s power may constitutionally extend over state civil service systems.&rdquo; The bottom line is that the dissent provides a succinct dissertation of federalism and the state and federal roles under our constitution.</div> <div>&nbsp;</div> <div>In his dissent, Judge Wilkinson notes that the majority gets wound up in the question of a minimally sufficient case and misses the question whether there&rsquo;s an issue of triable fact regarding the state&rsquo;s alleged pay inequity. According to Wilkinson, the majority overlooked the fact that a state&rsquo;s interest comes in by way of a Tenth Amendment defense, which it doesn&rsquo;t surrender even in those instances where a statute may be constitutionally applied to it. He agreed with the district court that summary judgment was appropriate in these circumstances and would have affirmed its decision.</div> </div> <div>&nbsp;</div> <div> <div><strong>Lessons for employers</strong></div> <div>&nbsp;</div> <div>Although the decision in this case has more immediate effect on public-sector employers, this is another case in which the 4th Circuit has issued an opinion that favors employees over employers&mdash;in this writer&rsquo;s mind by failing to address the constitutional discussion set forth in the dissent. You simply need to be aware that the 4th Circuit has changed in its make-up, and there are judges who now sit who appear to be very amenable to finding cases in which the court can write opinions highly favorable to employees.<br /> <br /> <div>For more information on the BLR, click <a href="">here</a>. For more information on the South Carolina Employment Law Letter, click <a href="">here</a>.&nbsp;</div> </div> </div> Reggie Gay Receives 15 Over 50 Award12 Feb 2018 00:00:00 -0800 <p><a href="">McNair</a> is pleased to announce <i>Anderson Independent Mail</i> has honored shareholder Reggie Gay with the 15 Over 50 Award.</p> <p>The award recognizes leaders who have made a long-term impact on the community through career success, philanthropic and community service, and mentoring of youth and young professionals. Reggie will be honored with 14 others at an awards dinner on February 21 at the Bleckley Station Event Center in Anderson.</p> <p>&ldquo;Reggie has dedicated himself to the people and businesses of South Carolina for more than 25 years,&rdquo; says friend and colleague Adam Artigliere. &ldquo;The 15 Over 50 Award is a testament to his service in the community and legal profession, and we are pleased to see his efforts recognized.&rdquo;</p> <p>Reggie is the Managing Shareholder of McNair&rsquo;s Upstate Unit. He advises and represents companies, manufacturers, governmental entities, educational institutions, health care providers, nonprofits, and insurance companies in employment matters, litigation, and general business matters. He frequently lectures on employment topics such as FMLA, FLSA, ADA, harassment, discrimination, and Workers' Compensation. Reggie is active in numerous professional and community organizations and is a graduate of Leadership Anderson. Reggie is a long time member of St. John&rsquo;s Methodist Church and has served on numerous boards and committees; a board member of Upstate SC Alliance; a former board member of the Anderson Rotary Club; a former board member of the Foothills Alliance; a former advisory council member of the Anderson Salvation Army Boys and Girls Club; former Chairperson for the Board of Directors for the Anderson Area Chamber of Commerce;&nbsp; and a member of the SC Chamber of Commerce Human Resources Committee.&nbsp;</p>