PLDO Law Blog

PROTECT YOUR WORKPLACE AGAINST SPOOFING

We read about companies and individuals being scammed by hacking or spoofing routinely. No business or individual is immune. Spoofing is a technique in which the spoofer goes to great lengths to secure access to user systems and the information behind protective fire walls. This type of scam artist tracks email communication in an attempt to trick the recipient of an email to release sensitive information or even gain access to bank accounts and confidential information. Email spoofing is also referred to as "phishing," and is employed to make the recipient of an email believe that the sender is a known source. Always beware of "From" when you do not recognize the sender because what appears to be real, may turn out to be a phishing attempt. And anytime a sender is asking for a password or personal information, delete the email immediately.

WHAT IS DISGORGEMENT'S FUTURE AS A REMEDY FOR S.E.C. VIOLATIONS?

The Securities and Exchange Commission (S.E.C.) has authority to investigate violations of federal securities laws and commence enforcement actions if its investigations uncover evidence of wrongdoing. Initially, the S.E.C.'s statutory authority was limited to seeking an injunction barring any future violations. Beginning in the 1970's, however, courts be­gan granting the S.E.C.'s requests for disgorgement in enforcement proceedings. Disgorgement is a remedy which requires defendants to repay any unlawful monetary gains. Alt­hough Congress has since authorized the S.E.C. to seek mone­tary civil penalties, the S.E.C. has continued to seek disgorgement.

FIRED EMPLOYEE WHO DISPARAGED BOSS ON FACEBOOK CAN COLLECT UNEMPLOYMENT

The Rhode Island Supreme Court recently awarded unemployment benefits to an employee who was fired for posting disparaging comments about his boss on Facebook. Although the worker was already on thin ice due to a host of issues, the employer ultimately fired him after his boss saw the Facebook post. The post was not defamatory or terribly inflammatory, but it was apparently the last straw leading to the employee's termination.

New Regulations Bring Changes To Issue Price Determinations For Tax-Exempt Bonds

The IRS has promulgated new regulations governing the "issue price" of tax-exempt bonds, which will apply to bonds sold on or after June 7, 2017. The regulations were finalized after two earlier versions were proposed and significant feedback was received by the IRS.

Massachusetts Supreme Judicial Court Provides Long-Awaited Guidance on the Use of Irrevocable Trusts in Medicaid Planning

More and more Americans are faced with the prospect of outliving their resources and rely on Medicaid to bridge the gap between expensive long-term health care and dwindling personal assets. Eligibility for Medicaid assistance, however, requires that an applicant's assets not exceed certain minimal levels. These low thresholds can make it extremely difficult for Medicaid applicants to avoid having to sacrifice a lifetime of savings before qualifying for Medicaid.

Hashtag Your Ads: FTC Warns Instagram Influencers

Businesses know that their young customers aren't reading newspapers, listening to the radio, or even watching cable television anymore. Instead, they're consuming information and content through their smartphones and the Internet, and streaming their favorite shows from providers like Netflix and Hulu. Companies are adapting, creating Instagram profiles and Snapchat accounts that enable them to reach new age groups. Some enlist social media "influencers," particularly on Instagram, to hawk their products. Those influencers run the gamut from big-time athletes and actors to small-time reality television stars. But whatever the reason for their star power, influencers offer businesses the allure of seemingly organic exposure: candid moments of a household name using a company's perfume or herbal tea, shared with thousands or millions of followers.

RI General Assembly Seeks to Restrict Employers in Their Hiring and Pay Practices

The Rhode Island General Assembly is poised to consider a new law that would prohibit prospective employers from asking candidates about their wage and salary history before making an offer of employment to them. The bill seeks to level the playing field between potential employees and employers so that employees would be free to negotiate and agree upon a wage or salary without their prior compensation setting an arbitrarily low basis for their new salary. On the flip side, however, the bill expressly permits potential employees to disclose their wage and salary history during negotiations. Therefore, if employees believe that their prior wage or salary will help them in negotiations, they are free to disclose that information to the prospective employer.

This bill provides candidates with substantial bargaining power because it allows them to use their wage and salary history to their advantage if they so choose. It also would outlaw a longstanding practice by many employers, which is contacting references or prior employers to verify a candidate's salary and dates of employment. If this bill passes, Rhode Island employers will have to immediately adjust their vetting and hiring practices to avoid violating this new law.

The same bill also addresses an important issue involving unequal pay claims between men and women. Under Rhode Island law, seniority is one factor employers can consider when setting wages or salaries. However, this bill would prohibit employers from deducting pregnancy-related or family or medical leave from the seniority calculation. Employers will have to make sure that their seniority calculations are carefully made and do not penalize workers who may have been out of work for those legitimate reasons.

This bill is not all bad news for employers, however. The bill also creates a defense that employers can rely upon if they are accused of violating the bill's restrictions. An employer will not be liable under this new law if it can show that within the last three years it "completed a self-evaluation of its pay practices in good faith and can demonstrate that reasonable progress has been made to eliminate wage differentials based on gender for equal work." Therefore, employers should immediately begin thinking about performing this self-evaluation in order to address pay inequalities and to set up a defense they can use if they are sued. Even if this bill does not become law this legislative session, it is always a good idea for employers to regularly self-assess its pay and hiring practices to minimize the chances of a lawsuit or a labor investigation. For more information on this issue or other employment law or business matters, contact PLDO Partner Brian J. Lamoureux at 401-824-5100 or email bjl@pldolaw.com. We welcome your comments, questions and suggestions.

Trust Beneficiary Lacks Standing to Sue for Breach of Contract Calling for Trust to be Funded

On April 20, 2017, the Supreme Court issued a decision in Glassie v. Doucette, No. 2014-108-Appeal (R.I. 2017), holding that a Trust beneficiary lacked standing to sue as a third party intended beneficiary of a contract which called for the creation and funding of the Trust. During divorce proceedings, Donelson and Marcia, husband and wife, entered into a property settlement agreement under which Donelson agreed to create a trust for their minor child, Jacquelin and to fund the Trust with $10,000 per year until it contained a principal amount equivalent to Trusts that were previously created for her older sisters, Alison and Georgia. One month later, Donelson established the Trust. However, the Trust did not contain language that it was created pursuant to the property settlement agreement, or that he was required to fund the Trust with the sum of $10,000 per year until the value equaled the value of the Trusts for Alison and Georgia. Donelson died on February 3, 2011, having contributed $123,336.82 to the Trust - an amount which did not equal the value of Jacquelin's sisters' trusts. Jacquelin filed a claim against her father's estate which was denied. On a petition for determination of the disallowed claim, the Probate Court ruled that the claim should be decided by the Superior Court. Thereafter Jacquelin filed a Superior Court action alleging that Donelson had breached the property settlement agreement. About five months later, Jacquelin died unexpectedly and the Executrix of her estate was substituted as plaintiff. Defendant moved for summary judgment on grounds of standing, arguing that only the trustee has the capacity to file suit on behalf of the beneficiaries of a trust, and the claim was not cognizable since the Trust terminated upon Jacquelin's death. The Executrix responded that she was not suing on behalf of the Trust, but as the intended third party beneficiary to the property settlement agreement. The Superior Court granted defendant's motion for summary judgment and the Executrix appealed. On appeal, the Rhode Island Supreme Court wrote that "[A]lthough the beneficiary of such a trust is the beneficiary of the promise [under the contract], his rights must be enforced in accordance with the law of [t]rusts." Finding it undisputed that Donelson created a Trust pursuant to the property settlement agreement, the Court turned to Plaintiff's claim that it was not properly funded in breach of the contract and held that the provision requiring Donelson to fund the Trust "relates to Jacquelin's status as a beneficiary of the Trust and not as a third-party beneficiary of the property settlement agreement." Under the law of trusts, trust beneficiaries may only maintain proceedings in limited circumstances such as where the beneficiary is entitled to an immediate distribution or the trustee is unable, unavailable, unsuitable, or improperly failing to protect the beneficiary's interest. Thus, neither Jacquelin nor the Executrix of her Estate, as Trust beneficiary, could maintain an action as a third party beneficiary of the property settlement agreement. For more information, please contact our trust and estate attorneys, Bernard A. Jackvony, Gene M. Carlino and Rebecca M. Murphy at 401-824-5100 or email bjackvony@pldolaw.com, gcarlino@pldolaw.com and rmurphy@pldolaw.com.

Wedding "Disasters": Are Negative Online Reviews Defamation?

Businesses depend on their good reputation, especially in the wedding industry. If customers have a bad experience, it's unlikely that they can simply switch to a different wedding vendor. Instead, customers take to online review platforms like Yelp to express their dissatisfaction. Scathing reviews can be especially damaging to wedding vendors, who often only work with customers once, and rely on their positive reviews to drum up future business.

Statute of Limitations versus Contractual Time Periods -- An Important Difference

In a recent Rhode Island Supreme Court decision, OSJ of Providence, LLC v. Aly T. Diene, No. 2016-14-A, the court determined that the expiration of a guaranty in a contract did not operate to shorten the applicable statute of limitations to recover for breach of that guaranty. The defendant was the corporate officer of a restaurant that entered into a five-year lease agreement with the plaintiff. As part of the lease, the defendant executed a personal guaranty that expired on the last day of the twelfth full month following the initial commencement of rent obligations.

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