Health Law Pointers - Volume VI, No. 1
MAKE SURE YOUR PRACTICE AGREEMENTS ARE SIGNED
Our clients regularly seek advice concerning the enforceability of their written agreements. It is surprising how often we find agreements that have not been signed by one or more of the parties, or that are otherwise incomplete because the agreements include blank spaces that have not been filled in or reference schedules or exhibits that are not attached. It is extremely important that your agreements contain the signatures of all parties. If an agreement involves a corporation or other entity, the agreement should identify the person’s title (for example, “President” or “Managing Partner”) in the signature line. Also, be sure that all blanks are filled in and that any exhibits or schedules referenced in the agreement are attached at the time the agreement is signed by the parties. This will ensure that you have a complete agreement and help avoid any potential ambiguity regarding (i) an interpretation of the document or, more fundamentally, (ii) whether the parties actually intended to enter into the agreement in the first place.
If you discover that an agreement is not fully signed, you should seek the advice of counsel on your options to remedy the situation. The obvious solution is to simply have the non-signing party execute the agreement. However, there may be circumstances that make that option impractical. Another potential solution is to have the parties sign a successor agreement that replaces the unsigned agreement. Having the parties sign an amendment that incorporates all of the terms of the unsigned agreement can also serve as an appropriate remedy. In any event, consulting with legal counsel before proceeding is advised.
IMPORTANT NOTIFICATIONS TO TERMINATED EMPLOYEES
The termination of an employee triggers the employer’s obligation to provide information to the terminated employee concerning the cessation of certain employee benefits. Employers are advised to provide this information to the terminated employee in writing. In preparing such information, employers should keep in mind the following:
· The employer is required to provide notice to the terminated employee of the date on which the employee’s health insurance coverage will be terminated and the employee’s right to health insurance continuation coverage under COBRA (applicable if the employer has twenty or more employees) or any similar state law regarding health insurance continuation coverage.
· The employer should provide notice regarding the termination of any other employment benefits, including group life insurance, retirement plans and identify any conversion options available to the employee.
· The employer may wish to include information regarding the amount of vacation or sick pay that the employee is entitled to, if any, as of the date of termination.
· New York employers are required to provide terminated employees with information regarding the procedure for filing for unemployment.
· New York employers are required to provide a written notice identifying the effective date of the employee’s termination no later than five days after the date of termination.
· Employers should generally avoid providing any details regarding the reason for termination of employment.
PERIODICALLY REVIEW AND UPDATE YOUR
PRACTICE GOVERNANCE DOCUMENTS
Frequently overlooked by medical and dental practices is the need to periodically evaluate the governance documents of the practice. For professional service corporations, governance documents generally include the certificate of incorporation, bylaws, stock redemption, cross-purchase or shareholders agreement and employment agreements. The operative governance documents for partnerships and limited liability companies include the partnership agreement, operating agreement (for LLCs) and employment agreements.
Often, the occurrence of certain events affecting the professional practice triggers the need for the review and modification of governance documents. For example, a medical practice that offers an associate/employee an equity interest in the practice may need to modify its shareholders agreement or partnership agreement to reflect the addition of a new equity owner in the practice, and will likely need a new employment agreement with the new equity owner. The withdrawal or retirement of an equity owner also results in changes in the structure of the practice entity that may need to be reflected in revised governance documents. Of course, governance documents should be reviewed on a regular basis to ensure that the arrangements previously agreed to are being carried out and remain appropriate.
NEW OVERTIME RULES IMPACT PROFESSIONAL PRACTICES
Professional practices should be aware that revisions to the “white collar” exemptions to the overtime pay requirements of the Fair Labor Standards Act (“FLSA”) have been issued by the United States Department of Labor (“DOL”) and will go into effect on August 23, 2004.
Under FLSA, an employee is generally entitled to be paid at least the federal minimum wage for hours worked and overtime pay at a rate of time and one-half for all hours that the employee works over 40 hours in a single week. However, these requirements do not apply to employees working in “white collar” bona fide executive, administrative or professional capacities and these individuals are known as “exempt” employees.
The new regulations are an attempt to provide clearer guidance to employers regarding their obligations under FLSA and to update the regulations to reflect the modern workplace. The biggest change concerns the new salary level threshold. Under the existing regulations, a person employed in a white-collar position earning less than $8,060 per year automatically qualifies for overtime pay, irrespective of job duties or responsibilities. The new regulations increase that amount to $23,660 per year.
At the other end of the wage spectrum, the new regulations establish a new rule for “highly compensated” employees that make it easier for an employer to classify an employee earning $100,000 or more as an exempt employee.
The new regulations specifically address the exempt status of employees engaged in medical occupations. For example, the new regulations provide that registered or certified medical technologists are generally exempt from the minimum wage and overtime pay requirements because they are considered “learned professionals.”
The new regulations also make a distinction between registered nurses and licensed practical nurses. Registered nurses are generally exempt as learned professionals. On the other hand, licensed practical nurses are not exempt learned professionals because a specialized advanced academic degree is not required in order to become a licensed practical nurse.
The new regulations are extensive and complex, with several potential pitfalls. Professional employers should consult with counsel for advice on their specific situation, job duties and other requirements for proper exemptions.
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