The Inbox – Trick-or-Treat?

| Zuckerman Spaeder Team

In the corporate world, the treats offered to executives can be as sweet as stock incentives and cash bonuses. But the tricks can be as sour as individual liability for wrongdoing and salary disgorgement.

NJ Supreme Court Makes It Easier For Employers To Take Back Executive Salaries
Lately, we’ve been discussing the Yates Memo and the alarms it must be sounding in corporate board rooms across the country. In a similar vein, the New Jersey Supreme Court offered little comfort to spooked executives when it recently decided to broaden the remedies available to employers who seek disgorgement of former high-level employees’ salaries.

According to Law360, time-share businessman Bruce Kaye sued his former general counsel over allegations of malpractice, fraud, and breach of fiduciary duty. Mr. Kaye sought disgorgement of the former general counsel’s salary, but the lower court ruled against a large punitive award, asserting that Kaye failed to show actual damages.

On review of this limited issue, the New Jersey Supreme Court decided that employers do not have to show economic damages in order to win back the disloyal employee’s salary. In its decision, the Court acknowledged that employers often face difficulty in proving the extent of damages resulting from the disloyal acts of employees.

Joel Kreizman of Scarinci Hollenbeck LLC explained, “There are a lot of cases where by the time you learn what’s happened, it’s too late for an injunction and you’re just not capable of proving damages. What the court did is give an additional basis for damages.”

Helpful Reminder: Imaginary Occupants Don’t Count Toward Lease Requirements
Some kids have imaginary friends, and some executives have imaginary clients.

The former might conjure fond childhood memories (or perhaps Bing Bong from Inside Out), while the latter can be just plain illegal.

According to The Milwaukee Business Journal, one CEO’s “fairy tale” customers recently led to a harsh dose of reality. The SEC accused Laurie Bebo, the former CEO of Assisted Living Concepts Inc., of creating an “elaborate fiction” by conjuring a list of fake occupants at senior assisted living facilities in order to meet the requirements of its leases. Administrative law judge Cameron Elliott ordered Ms. Bebo to pay $4.2 million in civil penalties. In addition to the fine, Ms. Bebo is barred from serving as an officer or director of any public company.

UPS Settles Pregnancy Dispute and Delivers New Employee Policies
An update to our post discussing Peggy Young’s pregnancy discrimination suit against UPS: it appears the parties have reached a settlement.

Back in March, the Supreme Court remanded Ms. Young’s case back to the Fourth Circuit, thereby giving her argument renewed life in the lower court.

But Ms. Young’s case has led to other big changes.

According to NBC News, Maryland enacted the Reasonable Accommodations for Disabilities Due to Pregnancy Law in 2013 and the EEOC enacted measures that expanded protections for workers.

UPS, in an apparent effort to update its own internal policy accordingly, now makes temporary light work duty available to all pregnant employees, one of the major points of contention in Ms. Young’s suit.

UPS stated that the policy “reflects pregnancy-specific laws recently enacted in a number of states where UPS conducts business, and is consistent with new guidance on pregnancy-related accommodations issued by the Equal Employment Opportunity Commission last year.”

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.