Home Sections Archive by category Law

Law

Law

Time to Make a Strong Case

Ken Albano, managing partner at Bacon Wilson.

For years now, it’s been the common refrain among those charged with hiring at companies across a number of industry sectors: good help is hard — or at least harder — to find and retain.

Increasingly, words to that effect are being heard in a sector where they’ve traditionally not been heard as much — the legal community.

Indeed, representatives of several area firms told BusinessWest that, while they can still recruit and hire talent — for the most part — it’s a more challenging assignment in many cases and often takes longer.

“It’s certainly more challenging now than it has been in the past,” said John Gannon, a partner and employment-law specialist at Springfield-based Skoler, Abbott & Presser, who penned an article for this issue on the many questions employers have about dealing with coronavirus. “But this is not unique to law firms — this is economy-wide, nationwide; it’s just hard to find people because everyone’s working.”

Indeed, this is, by and large, a buyer’s, or job seeker’s, market. Given these conditions, where law firms — like other employers in virtually every sector — are upping the ante with wages and benefits, it becomes more difficult for Springfield-area firms to compete. It’s a completely different playing field than the one that existed during and just after the Great Recession, he went on, when jobs were scarce and law firms saturated with lawyers were very much in the driver’s seat.

Ken Albano, managing partner at Bacon Wilson, which is based in Springfield and also has offices in Northampton and Westfield, agreed.

“It’s certainly more challenging now than it has been in the past. But this is not unique to law firms — this is economy-wide, nationwide; it’s just hard to find people because everyone’s working.”

“It’s challenging, but then it’s always been somewhat challenging in this market,” he told BusinessWest, adding that many factors are contributing to the current environment, including everything from the smaller classes at many law schools, which resulted from that depressed job market after the Great Recession, among other factors, to the lower pay scales in the 413 compared to markets like Boston, New York, and even Hartford (more on that later), to what appears to be fewer people moving into certain areas of the law.

To emphasize that last point, he reached for the Feb. 24 issue of Massachusetts Lawyers Weekly, specifically the ‘Employment’ page. Using a blue sharpie, he had circled the ads seeking litigators with varying levels of experience — and there were quite a few of them.

John Gannon says recruiting lawyers to this market has always been somewhat challenging, and with the current job climate, it is even more so.

‘Associate — Civil Litigation’ read one ad, while another was headlined ‘Senior Litigation Associate,’ and several read simply ‘Litigation Associate.’ One, for a firm in Charlestown, was more specific: ‘Trusts & Estates & Probate Litigation Associate — Must Love Dogs.’

Albano’s interest in those ads was understandable.

“Our firm’s biggest frustration has been in that one particular practice area, litigation,” he said, noting that the firm lost two of its best litigators, Bob Murphy and Kevin Maltby, to the bench in recent years, and has struggled to fill the void. “And I’m not sure why that is; maybe it’s the anxiety, maybe people don’t like to speak in public. It’s not just us — people are struggling to find people who want to go to court.”

Putting aside the need for litigators, and even litigators who love dogs, hiring has, overall, become more challenging for law firms in Greater Springfield, and this is prompting a response similar to that given by those in other sectors. Specifically, it’s one focused on being imaginative and resourceful, and employing tactics designed to familiarize law-school students with opportunities in this area and also sell this region both to those just starting their careers and those looking at a lateral move.

“We made a decision at a partners’ retreat to put a very targeted and strategic approach to hiring in place,” said Betsey Quick, executive director at Bulkley Richardson, which has offices in Springfield and Hadley, adding that part of this strategy is to focus primarily on area law schools, bring in summer associates and interns, and make them familiar with the firm and the region. And it’s a strategy that’s working.

“These are people who have a connection to the area, and our client community is out our windows,” she explained. “It’s a challenge to find someone who wants to be in the area, but there are so many law schools within 50 miles, and these students have a connection to the community, and if you have a connection to the community, you’re going to know people who need legal services.”

For this issue and its focus on law, BusinessWest takes a look at the job market and the challenges facing firms seeking to hire. As in the courtroom itself, this assignment requires making a very strong case in order to prevail in the end.

Hire Power

As this issue went to press, those managing area law firms certainly had a lot more on their minds than finding new associates.

Indeed, as the number of coronavirus cases climbed steadily upward through last week, every firm in the region was developing contingency plans, making preparations for employees to work at home if necessary, checking corporate insurance policies to see if they’re covered (probably not) in the event that the virus seriously disrupts business, and monitoring the situation at the various law schools — some, including Western New England University, were weighing whether to shut things down for the rest of the spring, and some had already decided to do so.

“Our firm’s biggest frustration has been in that one particular practice area, litigation. And I’m not sure why that is; maybe it’s the anxiety, maybe people don’t like to speak in public. It’s not just us — people are struggling to find people who want to go to court.”

But the matter of hiring is an all-important one in this sector, and it is an issue for the long term as firms look to do everything from filling specific vacancies in departments to ensuring a healthy mix of young and mid-career lawyers to ensure sustainability and inevitable transition to a younger generation, said Quick, adding that Bulkey Richardson recognized a need for such a mix and is aggressively pursuing one.

“We have a commitment to hire, or attempt to hire, at least three young people per year,” she said, adding that this number could go higher if the firm sees good talent and doesn’t want to pass it up. “And that’s part of our strategy; if we don’t keep a targeted and strategic approach to hiring young lawyers, we’re going to be top-heavy.

“Every firm faces succession issues,” she went on. “It’s a difficult, challenging problem to face, and part of it is just bringing up young lawyers behind them, especially while they’re here to talk to them and train them and take them to meet clients; it’s important to tap that wealth of knowledge.”

But when it comes to hiring lawyers, the Springfield market has always been somewhat unique — and challenging, said those we spoke with.

Betsey Quick

Betsey Quick says Bulkley Richardson’s hiring strategy has focused on seeking out law-school students who can make local connections and, overall, a commitment to this market.

In some ways, it competes with firms in New York, Boston, Hartford, Providence, and Worcester for talent, but its wage scale has always been significantly below New York and Boston and also well below those in those other cities. So, in some respects, this region doesn’t compete against those markets.

“What comes with practicing in this market is a lower salary — it’s a fact of life,” said Albano. “And a lot of times, when we do make offers to potential new associates, we can’t compete with the Boston and Hartford markets because, on average, a new associate can make a lot more money working in those arenas than they can in Springfield or Amherst or wherever.

“We’ve lost associates in the commercial practice group to Hartford,” he went on, estimating that salaries there are perhaps 20% higher than in Springfield. “And we don’t chase people — we say, ‘this is the offer, and it’s the same offer we’ve made to people that have been in your shoes, and they’re working here now.’ That’s one of the reasons why it’s hard to compete with those markets.”

Overall, the strategy has been to sell this market as a great place to live — and practice law — and to target (and in some respects recruit) candidates who want to be in this market and can commit to being here.

“We’re always looking for people who want to put down roots in Springfield,” said Gannon. “That’s a very important characteristic in all of the applicants we look at.”

Albano agreed.

“It’s tough to have someone from the Boston area come here knowing that the salary is going to be less,” he said, referring in this case to lateral hires. “But you try to impress upon these people that the cost of living is much less here. And we’ve seen both sides of the fence; we’ve had people that have worked in Boston come here and say, ‘I’d love to have a place where my dog can walk on real grass, have a fence around my yard, and not have to go to a skyscraper to go to work.’”

Quick, who handled aspects of recruiting for firms in Boston and Washington, D.C. before coming to Bulkley Richardson, acknowledged that the Springfield market is somewhat unique because of the lower salary ranges, underscoring the need, when it comes to entry-level hiring, to focus on law students who have or can create local connections.

“Anyone can look at the GPA [grade point average] and see how these students are doing on paper,” she told BusinessWest. “But are they going to fit culturally? Are they going to stay in the area? Do they have a tie to the area? Do they have a reason to want to be here? These are the things we look for.”

As for those already in the profession, in this tight job market, the task of recruiting and hiring becomes more difficult because most people are working, said Gannon, and also because the companies they’re working for want to keep them. And it’s the same in the legal profession.

“Most of the people who want to be working are working, and because unemployment rates are so low, what employers have been doing for the past couple of years is doing whatever they can to retain good people,” he said, adding that this means law-firm managers as well. “This means higher compensation, trying to pay more of the lion’s share of employee benefits, offering more generous PTO [paid time off] policies, and letting people work at home, which is a big one for many people. People are happy where they’re working — most of them, anyway.”

As for those coming right out of law school, they certainly want to be happy where they work, and, given the current climate, they have a good chance of succeeding with that mission. One strategy for Western Mass. firms — again, one that businesses in other sectors employ as well — is to familiarize young people with the region and create a familiarity and comfort level that may help sway decisions when it comes time to find a job.

“We’ve been fortunate in that we’ve been able to hire bright, qualified individuals in law school, both at Western New England and UConn, to become law clerks at Bacon Wilson,” he said. “They work for us for a couple of years, and we can see the progress and the value, and quite often they’ll say, ‘I like this place, it’s like family; is there a job opening for us?’ And more often than not, we make one for them because we want to keep that type of talent on our page.”

Final Arguments

Looking down the road is always difficult — especially when there is an unprecedented wildcard like the coronavirus. Indeed, law firms might soon be in less of a growth mode than they currently are.

But for now, and for the foreseeable future, the outlook is promising for business — if not for recruiting lawyers to the 413, necessarily. Whether the task is filling a vacancy in the estate planning or real estate department or finding a litigator — one who loves dogs or not — the assignment is becoming increasingly challenging.

And, like employers across the broad spectrum of business, law firms must respond proactively to this changing environment.

George O’Brien can be reached at [email protected]

Law

Fresh Start

By John Greaney and Sarah Morgan

John Greaney

Sarah Morgan

Cannabis is a controlled substance under federal law. Massachusetts, however, has shifted from total prohibition to limited legalization. Despite this change, for many individuals, prior convictions for possession of marijuana may still cause major consequences. This raises the question: what can now be done about prior convictions for minor marijuana offenses that are no longer considered crimes under Massachusetts law?

Cannabis (marijuana) is made criminal as a Schedule I narcotic under the federal Controlled Substances Act. Notwithstanding the federal prohibition, Massachusetts and several other states have passed laws loosening the restrictions on small amounts of marijuana for personal use. In 2008, voters in Massachusetts approved a ballot question decriminalizing marijuana possession of up to one ounce per person. Massachusetts enacted an additional measure in 2012, allowing the purchase and use of marijuana for therapeutic uses from registered marijuana dispensaries.

Moving further away from prohibition, in 2016 Massachusetts enacted a law permitting individuals over the age of 21 to possess up to one ounce on their person and up to 10 ounces in their homes. The Cannabis Control Commission, the state agency which now regulates the recreational and medical marijuana industry, is considering social consumption of marijuana at sites designated as licensed marijuana establishments, such as cannabis cafés.

Despite the significant progress made, convictions for marijuana possession under the former criminalization scheme may continue to have lasting effects on individuals. Even minor convictions for possession appear on a person’s criminal offender record information (CORI) report and may disqualify him or her from employment or housing opportunities or possibly lead to other adverse consequences.

The impact of prior criminal convictions for possession also may disproportionately affect people of color. A study conducted by the Cannabis Control Commission found that African-American and Hispanic people — in particular, men — had been disproportionately convicted for cannabis possession between 2000 and 2013 as compared to white people during the same period.

“Despite the significant progress made, convictions for marijuana possession under the former criminalization scheme may continue to have lasting effects on individuals.”

Although the 2016 legalization bill permitted individuals to possess up to one ounce of marijuana, it did nothing to erase past convictions and their lasting impacts.

In 2018, our Legislature addressed the retroactivity problem when it enacted the Massachusetts Criminal Justice Reform Law, comprehensive legislation that allows individuals to seal or expunge their criminal records for offenses that are no longer a crime. This permits individuals who have been convicted for possession of one ounce or less of cannabis to seal or expunge their record. The law does not allow for sealing or expungement of more significant marijuana offenses.

The Criminal Justice Reform bill reflects the Commonwealth’s new views on marijuana use and a progressive intent to address the effects and disparate impacts of marijuana criminalization.

Under our revised laws, sealing and expungement are the two mechanisms available to limit, or remove, minor marijuana convictions from criminal records. Sealing records restricts who can access them and involves a relatively simple process — a petitioner must complete a petition to seal and mail it to the Office of the Commissioner of Probation in Boston. Once sealed, a person may answer, “I have no record,” when asked about criminal records concerning possession of marijuana by an employment or housing screener. However, state law-enforcement agencies and offices responsible for administering foster care, adoption, and childcare programs may still access sealed records.

Expungement permanently destroys a criminal record and allows a person to claim, without limitation, “I have no record,” when asked about their criminal history for any purpose. Expunging records requires a petitioner to file a petition for expungement in court and may require a hearing if either the petitioner or the district attorney, who must be notified of the petition, requests one. A judge hearing a petition for expungement has discretion to approve or deny it. Importantly, individuals who are not citizens, or whose immigration status may be impacted by the process, should not seal, or attempt to expunge, their records without consulting an immigration attorney.

Once a criminal conviction has been sealed or expunged, an individual is no longer obligated to report these convictions on an application for employment or housing. The Massachusetts Ban the Box Law prohibits employers from asking applicants in an initial employment application about their criminal records except in limited circumstances. The changes to the law also require employers to include specific informative language related to criminal-record disclosures in any requests provided to applicants. Applicants whose records have been expunged may answer ‘no record’ on an application for employment or housing.

Once a criminal conviction has been sealed or expunged, an individual is no longer obligated to report these convictions on an application for employment or housing.

At all stages of the hiring process, employers are absolutely prohibited from inquiring about criminal records — or anything related to criminal records — that have been sealed or expunged. In other words, once an employer learns that the applicant either has no record or that the records have been sealed or expunged, the employer cannot inquire further. In view of these changes, employers should review their hiring practices and applications and adjust them, and the interview process, accordingly.

Sealing and expunging prior convictions opens many new doors of opportunity for those impacted by the decades-long criminalization of marijuana in Massachusetts.

Anyone interested in exploring their options for addressing their qualifying Massachusetts cannabis convictions should contact the Hampden County Bar Assoc. regarding “Off the Record: A Clinic on Removing Past Marijuana Convictions from Your Record,” a free event to review individual circumstances and receive assistance on preparing the necessary documents. The clinic is co-sponsored by the Hampden County Bar Assoc., INSA, Sigma Pi Phi, and the Western New England University School of Law Center for Social Justice. 

Justice John Greaney is a former justice of the Supreme Judicial Court and senior counsel at Bulkley Richardson.  Sarah Morgan is an associate in the litigation and cannabis practices at Bulkley Richardson.

Law

LLCs in the Bay State

By Benjamin M. Coyle, Esq.

Benjamin M. Coyle

Benjamin M. Coyle

Many families have homes or other real estate that parents hope to pass along to the next generation. In the world of estate planning, there are a variety of ways to achieve the movement of a family home from parents to children — sometimes through a trust, sometimes through a will after death, or even sometimes by outright gift.

While all these methods have their place, another option that should be considered is the formation of a limited-liability company (LLC) to hold title to real estate.

In Massachusetts, a limited-liability company is a business entity, formed with the secretary of the Commonwealth, and offering great flexibility in its management. This flexibility is very appealing, particularly when a home or other real estate is to be owned, used, and managed by a group.

For example, parents may want their four children to inherit a property equally. By using an LLC, rather than deeding each child a 25% interest in the property outright, parents would be able to transfer shares in the LLC to their children. Doing things this way is beneficial for several reasons.

One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed. The operating agreement can also allocate profits and losses to various members (which can be different than their ownership interest). Most importantly, the operating agreement also clearly states rules for use of the property by the members, and allocation of expenses.

“One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed.”

This gives everyone involved a crystal-clear understanding of their privileges and responsibilities relative to the property.

Once an LLC is formed and an operating agreement established, the real estate in question would be transferred into the LLC by deed, and the LLC would then be the owner of the property. By transferring the property to the LLC, the grantor has essentially converted real estate into tangible personal property, thereby avoiding many of the probate complexities of real estate.

Additionally, an LLC offers continuity in the property’s title, while still providing for the flexibility of changing ownership interests and membership shares (in contrast to multiple deeds divvying up the property, which could cause significant title confusion).

In the event the property is rented, the LLC provides limited-liability protection for its members, either short term or long term. Further, LLCs often offer tax advantages (over outright ownership) with respect to rental income, repair costs, renovations, and other expenses associated with the property. Additionally, since the LLC is a recognized business entity, it may often be easier for the LLC to obtain insurance or borrow money from a bank, in contrast with the banking difficulties that can be experienced by individuals with a shared interest via deed, or if the property were held in a trust.

Although there are significant advantages to the LLC, there are also startup costs and recurring annual expenses associated with the formation and continued maintenance of the LLC. Initial formation costs include a filing fee of $500 with the secretary of the Commonwealth, and any legal fees associated with the completion of articles of organization and the operating agreement.

Massachusetts requires that LLCs file an annual report with the secretary of the Commonwealth. For LLCs formed outside of Massachusetts, the Commonwealth requires a foreign LLC to register in Massachusetts and comply with the state’s annual filing requirements.

It is good practice (and may even be required by the operating agreement) for the members of an LLC to hold regular meetings, at least annually, where they discuss the business of the prior year and the upcoming year as it pertains to the LLC and the operation of the property. The LLC should maintain a corporate book that includes the minutes of each membership meeting, as well as minutes for any special meetings that may occur throughout the year. Since the LLC is a business entity, it will require its own tax-identification number and annual tax return. Depending upon the tax election chosen by the LLC, if there is any associated tax liability, those costs can potentially be passed on to each member to be addressed on their individual tax returns, and the expenses associated with annual fees and costs can be deducted from any LLC income.

An LLC is an excellent option to consider when determining the best way to address transferring real estate from one generation to the next. The transfer can occur during the lifetime of the current owners with relative ease and can be added to many existing estate plans, thereby providing families with effective ownership transitions and limited liability for the members of the LLC.

Benjamin M. Coyle is a shareholder with Bacon Wilson, P.C. He specializes in matters of estate planning and administration, and also has extensive experience with real estate, business, corporate, and municipal law; (413) 781-0560; [email protected]

Law

2019 Employment Law Year in Review

This past year was one that saw a number of landscape-changing developments in the broad realm of employment law. From paid family leave to cannabis to overtime-threshold changes, there were a number of changes to existing laws, new measures to keep track of, and new challenges for employers.

By Maureen James, Esq.

2019 … it’s been real.

Much like politics this year, employment law has experienced quite the roller-coaster ride. So what has this year taught us? Where will we go next? Has anyone really gotten over the Game of Thrones finale? Will 2020 include more Baby Yoda? You know … the important stuff.

This year saw many changes, most of which will really be felt during 2020 and beyond. Even so, those changes have opened dialogue to new and progressive topics that are changing the landscape of employment law. Here is a summary of the new developments, both here in the Commonwealth and nationally.

Paid Family Medical Leave

We cannot write a ‘year in review’ without starting with the Massachusetts Paid Family Medical Leave law (PFML). A lot of attention was given to PFML last year, and rightfully so. This is an institutional change, and all involved have been nervous about its rollout.

As readers are likely aware, PFML is a state-offered benefit that, come 2021, will entitle most Massachusetts workers to take up to 26 weeks of paid leave for medical or family reasons. PFML is funded through a Massachusetts wage tax that is shared by employees and businesses with 25 or more employees.

Last summer, the Department of Paid Leave issued final regulations and rolled out an updated timeline for employers, which included the deadline for notification to employees of Sept. 30, 2019, the commencement of payroll withholdings on Oct. 1, 2019, and information on the application process for private-plan exemptions.

It is clear this will be a hot topic throughout 2020 as employers will start making their quarterly PFML tax contributions and begin preparing for the first round of claims beginning in January 2021.

Marijuana

Medicinal and recreational marijuana went from nowhere to everywhere this year. Commissions, taxes, licensing … there are lots of complicated issues. For employers, many have been trying to balance state and federal law, as well as existing policies and changing culture. Unfortunately, we are not yet at a place were clear policies and practices exist. Over the next year, this will likely be a hot topic as its effects continue to grow — pun intended.

National Labor Relations Board

Last summer, the National Labor Relations Board made some drastic policy shifts in three swift steps. In May, it was announced that it intended to set standards for union activity on employer property. It followed up in June 2019 with a ruling in UPMC Presbyterian Shadyside, where it overturned decades of precedent and determined that employers can ban union organizers from public areas of their private property.

In August 2019, it held in Bexar County Performing Arts Center Foundation that property owners can bar labor protests by off-duty contractor workers unless they work “regularly and exclusively” on the property and there is no “reasonable non-trespassory alternative” for communicating their message. With these large shifts, it will be interesting to see what other areas NLRB reviews and possibly enacts changes to next year.

“This year saw many changes, most of which will really be felt during 2020 and beyond. Even so, those changes have opened dialogue to new and progressive topics that are changing the landscape of employment law.”

Continuing this trend of pro-employer decisions, a few weeks ago the board released a decision overruling a prior case that held that employees have a presumptive right to use an employer’s e-mail system for non-work-related communications, which includes e-mail traffic related to forming a union. The recent decision reconfirmed that an employer has a right to restrict employee use of its e-mail system as long as it is done on a non-discriminatory basis.

Union Fees

In a recent case — Janus v. State, County, and Municipal Employees Council 31, 138 S. Ct. 2448 — the U.S. Supreme Court held that non-union workers cannot be forced to pay fees to public-sector unions. Throughout 2019, this has been a debated topic in Massachusetts. The Legislature passed a law providing Massachusetts’ public employee unions access to contact information for employees, as well as certain allowances to charge fees to non-members.

Gov. Charlie Baker vetoed the law, but in September, he was overridden. As we move into 2020, the effect this law has on union dues and relationships between members and non-members, if any, remains to be seen.

Department of Labor Overtime Threshold Changes

One of the many regulations taking effect at the inception of 2020 includes a boost to the salary threshold for the eligibility of workers to receive overtime under the Fair Labor Standards Act (FLSA). This change will extend overtime protections to currently exempt workers making less than $684 per week (or less than $35,568 per year) and highly compensated employees making less than $2,066 per week (or less than $107,432 per year). This means, before year’s end, employers who employ exempt workers will need to review their compensation (including any non-discretionary bonuses and commissions) to ensure they earn enough to qualify for exempt status as of Jan. 1, 2020.

Non-compete Law

Massachusetts’ new Noncompetition Agreement Act has changed how employers draft, use, and enforce non-compete agreements. The law makes certain types of non-competes flatly unenforceable, and restricts how long and for what reason an agreement can be used in other situations. It also requires consideration (i.e., some sort of payment) to the employee if an employer wants to enforce a non-compete provision. The law has only been in effect a year, so we have not seen the full ramifications of the statute yet.

U.S. Citizen and Immigration Services’ H-1B Visas

March 2020 will bring the official beginning of the spring season, but also the first round of electronic registration for H-1B visas under the fiscal year 2021 cap. H-1B sponsorship is offered by employers in ‘specialty occupations’ that require at least a bachelor’s degree (or the equivalent in education and experience). In this new electronic process, employers seeking H-1B workers subject to the 2021 FY cap will complete an electronic registration that requires only basic information about the company and each requested worker.

The H-1B random selection process will use those registrations, and then the selected registrations from that pool will be eligible to file more detailed petitions for the H-1B visa cap.

2020 … Bring It On

There are only a few things that are certain: death, taxes, and another terrible reality show. However, 2020 most certainly will be a year where many new laws stretch their legs and see their first moments of sun. There will undoubtedly be new issues to confront, but no matter what year it is, you can never be too prepared.

Maureen James is an attorney with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law; (413) 737-4753; [email protected]

Law

And to Keep It That Way, Businesses Can Make Use of the NDA

By Kenneth Albano, Esq.

Managing Partner Kenneth Albano

Kenneth Albano

In the legal world, we use the term ‘attorney-client privilege,’ while in the medical field, you may have heard the expression ‘doctor-patient confidentiality.’ Both terms are used in circumstances where a lawyer or doctor must maintain confidentiality to best protect a client or a patient.

In a business setting, the term ‘confidential’ can be used on many fronts, most notably in the context of a formal confidentiality/non-disclosure agreement, more commonly known as an NDA.

The use of an NDA can be seen in many different business scenarios, with the primary purpose being to protect confidential information from being revealed to the public or an unwanted third party, or from being used without the consent or knowledge of the first party.

Within the NDA document itself, the two parties are known as the ‘disclosing party’ and the ‘receiving party.’ The disclosing party is the person requesting that the receiving party sign the NDA, in order to protect the confidential information at stake.

For example, if an owner of a company were looking to retire and possibly sell the business to a competitor, he would not want to offer up proprietary information without protection. In a case like this, the retiring business owner might ask his purchaser or competitor to sign an NDA, which would protect the business owner while the two parties negotiated the terms for the sale of the business.

“You have worked long and hard to develop and grow your business, and without the protection of an NDA, loss of information could have very real financial repercussions.”

The content of an NDA can typically be broken down into five main components:

• Define the parties. This means laying out in clear terms who is the disclosing party and who is the receiving party. Typically the parties are individuals. Within the NDA document, the receiving party will be bound by numerous covenants or conditions associated with the protection of the confidential information being used or revealed.

• Describe the nature of the transaction the NDA is governing. For example, an NDA might be used to protect confidential information associated with the hiring of a new employee or executive, keeping business information private when working with independent contractors, preventing an idea or invention from being stolen or infringed upon, or protecting proprietary or secret company information that might be disclosed during a potential sale of a business.

• Include all the details. Within the NDA, it is important to specifically define, in great detail, exactly what constitutes the confidential information to be protected. In our prior example of the sale of a business, the NDA might prevent the receiving party from revealing any information about the business — whether it were oral or written information concerning the company, technical information, proprietary sales and financial data, software products, marketing strategies, customer lists, personnel records, or any information supplied by the business to the receiving party by the company or its representatives.

In another example, if the NDA were being used for the purpose of hiring a new employee or executive, the definition of the confidential information might include various proprietary information belonging to the company, about which the new employee would become aware during his or her employment. This type of protective covenant regarding confidential information can also be found in a written employment agreement or non-compete agreement as well.

• What information is allowed to be disclosed by the receiving party without violating the NDA? Under normal circumstances, confidential information does not include (a) information generally available or known to the public; (b) information that was already known by or available to the receiving party; (c) information subsequently disclosed to the receiving party by a third person, under no obligation of confidentiality to the disclosing party; or (d) information required to be disclosed as part of a judicial process, government investigation, or legal proceeding.

This type of information would normally be presented as a defense by the receiving party, if litigation alleging a violation or threatened violation of the NDA was commenced by the disclosing party.

• Define the consequences of a violation. If the receiving party breaches or violates the terms and covenants of the NDA, in most cases, the disclosing party can pursue a legal remedy via the court system. Remedies may include but not be limited to preventing further disclosure or use of the confidential information, award of damages, or other equitable relief as may be provided under the law.

Other important elements of an NDA include the length of time the agreement is to be in effect (the ‘term’), and also the governing law which would interpret the terms of the NDA should a conflict arise, and which is generally the state law for the state or commonwealth in which the disclosing party is doing business.

If your company is involved in a transaction where proprietary information could be disclosed to an independent third party, consider the use of an NDA. You have worked long and hard to develop and grow your business, and without the protection of an NDA, loss of information could have very real financial repercussions.

Kenneth Albano is managing partner for Bacon Wilson, P.C., and a member of the firm’s corporate, commercial, and municipal law departments. He represents commercial banks in all aspects of lending and workout practices and represents closely held business entities in all aspects of operations. He serves as town counsel to several Massachusetts municipalities, including Monson, Southwick, and Holland; (413) 781-0560; [email protected]

Law

Understanding the Americans with Disabilities Act

By Sarah M. Ryzewski, Esq.

Sarah M. Ryzewski

A request for time off comes across your desk from an employee. The employee is requesting additional time off to accommodate a disability she has. The additional time requested is needed to be able to attend all of her appointments, necessary for her to complete her treatment.

How an employer goes about identifying an accommodation request, and either approving or denying the request, is important in staying compliant with the Americans with Disabilities Act (ADA) and other federal and state laws. Satisfying the obligations required by employers under such laws is necessary to prevent unlawful actions and prevent disability discrimination.

Under the ADA, it is unlawful for certain employers to discriminate against individuals with disabilities; the law further requires employers to provide reasonable accommodations to individuals with a qualified disability. A disability is an impairment that substantially limits one or more life activities. A qualified disabled individual is a person who is capable of performing the essential functions of the particular job or would be capable of performing the essential functions with a reasonable accommodation.

The ADA applies only to employers who have 15 or more employers, labor unions, and state and federal government.

Employers need to be able to recognize when a request for an accommodation for a qualified disability is being made. Employees seeking accommodations under the ADA are making the request to be able to perform the essential functions of the job which they have. When making a request for an accommodation, employees are not required to use specific words such as ‘accommodation’ or ‘disability,’ but, rather, only need to explain why a change or adjustment is needed because of a medical condition.

“Under the ADA, it is unlawful for certain employers to discriminate against individuals with disabilities; the law further requires employers to provide reasonable accommodations to individuals with a qualified disability.”

This medical condition can be either mental or physical. Since key words or phrases are not required under the ADA to make accommodation requests, employers need to educate themselves on how to spot a variety of different ccommodation requests, how requests are being made, and the words being used. Take, for instance, the employee cited above, requesting time off for her appointments. She would be successful in submitting her request for an accommodation by explaining to her employer she needs additional days off during the next few months to be able to complete her chemotherapy. She would not be required to say she needs an accommodation for her disability.

Once the accommodation request has been made, employers will need to determine whether or not the accommodation is reasonable and will need to enter into an interactive discussion. A reasonable accommodation is a change to a job that will allow an individual with a qualified disability to perform essential functions of a job. The accommodation must be related to the job the employee making the request has — otherwise, it is not reasonable. Moreover, employers are not required to approve a request for an accommodation if the request made would cause the employer an undue hardship.

Undue hardships occur when it would require an employer to undertake an unreasonable expense or it would cause significant difficulty to allow the request. Reasonable accommodations usually include modified work schedules, making workplaces easily accessible, leave, and modifying work equipment, among others.

An unreasonable accommodation request would include personal items such as paying for special eyewear or hearing aids. Whether or not an employer ultimately approves or denies an accommodation request, the employer should seek out alternative accommodations to present and negotiate to the employee making the request. Employers are strongly encouraged to fulfill their duty to be compliant by researching the accommodation request and providing alternative accommodations before flat-out denying the request. Determinative on whether an accommodation decision can be reached or not, employers can provide temporary accommodations until a final accommodation has been determined.

To complicate the obligations under the ADA, additional federal and state laws may be intertwined, forcing employers to stay informed. These laws can obligate employers to adhere to additional requirements or may prevent employers from being able to approve certain accommodations.

Frequent laws which come into play with the ADA include the Family Medical Leave Act (FMLA) and state-specific medical leave acts. Medical leave acts allow employees to take a specified amount of time off for medical or family-related reasons. Employers should inform employees whether or not the leave for a disability is within an existing leave policy with the employer, or whether it will be treated as an accommodation request, and should provide information as to whether the leave will be paid or not and the amount of time an employee is allowed to take.

Employers can request documentation for a leave request before approving it as an accommodation request. Employers should provide information on how the ADA’s reasonable-accommodation requirement could be affected by other federal and state laws. Based upon the example from above, the employer would need to explain how the employee’s request for leave as an accommodation would either be within the employer’s existing leave policy or treated as an accommodation request for her disability.

Furthermore, the employer would need to provide additional information to the employee on whether or not the leave, if approved, would be paid or unpaid, and the amount of time she could take.

Although the ADA has many complex components, it is crucial to be well-educated on obligations owed by employers. Employers who fail to adhere to the requirements risk possible claims of non-compliance and potential claims of disability discrimination.

Providing information to employees on the ADA is crucial. Employers should provide employees with the procedures on how to request accommodations, provide contact information for individuals who handle accommodation requests, and document every accommodation request. Having information relating to the ADA within an employee handbook, signage, and training and orientation material is essential. Finally, employers should have a procedure in place for how to successfully oblige the law.

For more information on the ADA and employer obligations, seek clarification from an attorney.

Sarah M. Ryzewski, Esq. is an associate attorney at Royal, P.C.; (413) 586-2288; [email protected]

Law

Breaking Up Is Hard to Do

By Amelia J. Holstrom

On Nov. 3, 2019, news broke that the McDonald’s board of directors voted to terminate CEO Steve Easterbrook for having a consensual relationship with an employee.

Early reports indicate that, after a three-week internal investigation, McDonald’s board found the relationship to be inappropriate and in violation of its policies, including its standards of business conduct, which prohibits employees with “a direct or indirect reporting relationship” from “dating or having a sexual relationship.” McDonald’s makes clear in its policy that “it is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company.”

Amelia J. Holstrom, Esq.

Amelia J. Holstrom, Esq.

McDonald’s is not the first large corporation to find itself in this type of predicament. Companies like Boeing, in 2005, and Best Buy, in 2012, have parted ways with chief executives based on alleged relationships with employees. The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.

You may be asking, can companies do that? Can they fire someone for a consensual relationship? Yes, they can — and so can you.

Love Hurts

It isn’t any secret that people spend most of their waking hours at work. Not surprisingly, office romances sometimes bloom. What better place to meet your soulmate, right?

From the employer’s point of view, dating in the workplace can spell trouble. Office romances create many problems. Because employers cannot prevent their employees from developing emotions, it is important to address workplace romances well in advance of any potential problems.

Workplace dating is a recipe for disaster in more ways than one. In addition to decreasing morale and productivity, when true love goes sour, employees often cannot work with each other anymore, or worse, workplace romances can ultimately lead to sexual harassment and/or discrimination and retaliation claims.

“The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.”

Assume, for example, that a superior and subordinate have been dating for some time. Their romance fizzles, and things end. What if the subordinate now claims to have felt pressured into the relationship? A supervisor’s relationship with a subordinate is most damaging to the company because of the legal consequences.

In Massachusetts, when a supervisor engages in harassment of a subordinate, even if there is no direct reporting relationship, a business is automatically liable for that harassment.

I Would Do Anything for Love, but I Won’t Let Supervisors Date Subordinates

How should you combat workplace romances? Employers can adopt policies on personal relationships in the workplace that specifically prohibit supervisors and managers from engaging in any romantic relationships with employees at the company, including direct and indirect subordinates.

If you choose to adopt such a policy, it should state that such relationships raise ethical and fairness issues and problems with favoritism and morale, and that they will not be tolerated. Employers should also spell out what will happen if such a relationship is discovered.

Some employers confront the couple, indicate that, if they wish to continue the relationship, one must resign, and let the employees decide who will resign. Other employers confront the employees and terminate the employment of one or both of them effective immediately. It depends on the stance your business wants to take.

Love Rules

What if you don’t want to prohibit such relationships at your workplace? Another approach used by some employers is to have employees in a relationship enter into a ‘love contract.’

Such a document essentially memorializes, in writing, the consensual nature of the employees’ relationship. Be careful here, though. Love contracts are not prospective, as they will not limit the company’s liability for future sexual harassment and/or discrimination and retaliation claims. They may only be helpful to demonstrate that there was a consensual relationship between the employees before and at the time the employees signed the contract.

You Oughta Know

All employers can learn a valuable lesson from the situation involving McDonald’s. Each employer should consider how it wants to handle workplace romances before one becomes an issue for its business. Having a plan or policy in place could save you a lot of heartaches … I mean, headaches.

(The author wishes to thank Neil Sedaka, Nazareth, Meat Loaf, Don Henley, and Alanis Morissette for their wise lyrics about love.)

Amelia J. Holstrom is a partner with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law. Holstrom specializes in employment litigation, including defending employers against claims of discrimination, retaliation, harassment, and wrongful termination, as well as wage-and-hour lawsuits. She also frequently provides counsel to management on taking proactive steps to reduce the risk of legal liability; (413) 737-4753; [email protected]

Law

Cannabis, Marijuana, and Hemp

By Chris St. Martin and Sarah Morgan

Late last month, the U.S. Department of Agriculture published regulations on domestic hemp production. However, there remains significant confusion surrounding the legality of cannabis, marijuana, and hemp.

Chris St. Martin

Sarah Morgan

This confusion comes from state and federal governments’ shifting approaches to regulating these industries. It is even more difficult to understand the legal framework surrounding retail sales, which include hemp and CBD products, as well as marijuana products sold by state-licensed dispensaries. In this article, we hope to provide some clarity regarding what the laws say about cannabis and how they are being enforced.

What Is Cannabis?

Cannabis is a plant genus, or family, composed of three species: Cannabis sativa, Cannabis indica, and Cannabis ruderalis. The species have physical variations between them that allow them to grow in different environments, flower at different periods during the growth cycle, and contain different chemical properties (see discussion on cannabinoids below) that produce different sensations when ingested.

Strains (think, ‘flavors’) produced from the Cannabis sativa species tend to incite feelings of euphoria, boost energy and creativity, and lead to a more head-focused high. Cannabis indica, alternatively, primarily affects the body, and is often helpful in reducing muscle aches and pains and inducing sleep. For these reasons, strains cultivated from indica plants tend to be more useful for medicinal purposes.

“THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis.”

Cannabis ruderalis is somewhat between sativa and indica, and has lower yields, but can often be cross-bred with other species to create medicinal strains. The stems of this species can also be used to make clothing and textiles.

The flowering buds of the cannabis plant produce a resin that contains cannabinoids, which are unique chemical compounds found only in cannabis and interact with different receptors in the user’s central nervous system to produce the effects described above.

The ratio of the cannabinoids in a particular strain depends on the genetics of the plant from which it is derived — in other words, how the plant has been bred by selectively combining sativa and indica plants to emphasize particular cannabinoids over others and create a unique strain with individualized characteristics.

More than 100 cannabinoids have been identified, most notably THC and CBD.

THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis. Although THC is most notable for its psychoactive properties, it has also been purported to have medical benefits on the user and can be used to treat a variety of conditions, including seizures, inflammation, pain, nausea, depression, and anxiety.

CBD, or cannabidiol, has anti-anxiety effects on the user and is utilized primarily for its purported medicinal benefits. It does not produce psychoactive effects (in fact, it may lessen the psychoactive effects of THC), and, for this reason, although CBD and THC have similar medicinal benefits, some people may choose to ingest only CBD to avoid feeling the ‘high’ brought about by THC.

CBD can be extracted from the resin of the cannabis plant and can be processed into essential oils, tinctures, and other non-smokable forms. CBD can even be added to body-care products and applied topically.

Marijuana or Hemp?

The term ‘marijuana’ is generally used to identify cannabis that is cultivated for its intoxicating effect on a user. Marijuana was made effectively illegal under federal law with the passage of the Marijuana Tax Act of 1937.

The Legislature later classified, and criminalized, marijuana as a Schedule 1 narcotic under the Controlled Substance Act of 1970, during the nascent ‘war on drugs’ declared by President Nixon. Classification as Schedule 1 — alongside heroin, LSD, and ecstasy — means that marijuana is deemed to have no currently accepted medical use and a high potential of abuse.

Public sentiment has recently begun to reject this classification of marijuana and the total federal prohibition. Although, at this writing, marijuana remains illegal at the federal level, 11 states, including Massachusetts, and the District of Columbia, have passed laws legalizing marijuana for recreational use, and 23 others have legalized the use of medical marijuana. Since 2016 in Massachusetts, individuals age 21 or older may possess up to an ounce or more on their person and up to 10 ounces in their homes without violating Massachusetts law.

The Cannabis Control Commission (CCC), the agency tasked with regulating the state’s marijuana industry, provides further information regarding the Massachusetts law on its website.

Cannabis that is selectively bred for non-intoxicating properties is considered ‘hemp.’ Industrial hemp is one of the oldest cultivated crops in the world and is useful in formulating textiles, rope, paper, plastics, insulation, oil, and body-care products. Because of this selective breeding, hemp plants contain only trace amounts of THC, but their CBD levels are unchanged.

“State and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies.”

Hemp is cultivated to enhance its distinctively versatile qualities, such as longer, more fibrous stalks and shorter leaves, rather than for the leaves and flower buds for which marijuana plants are cultivated. Because of this, hemp cannot be consumed as an intoxicant. Nevertheless, the Controlled Substances Act did not distinguish between marijuana and hemp (since both are technically cannabis) in classifying marijuana as a Schedule I substance; therefore, hemp was swept up in the heyday of the war on drugs and made illegal.

Changing Legal Framework

Under the Farm Bill of 2018, the U.S. Congress, for the first time, legalized the production and sale of hemp at the federal level, eliminating its status as a Schedule I narcotic. The Farm Bill and regulations define hemp as cannabis containing not more than 0.3% THC. Cannabis plants containing any quantity of THC above that amount are classified as marijuana, and remain illegal under federal law. In late October, the USDA published interim regulations on hemp production, which means they are subject to change after a public comment period but were effective immediately.

These regulations also set forth licensing requirements, procedures for testing THC levels and disposal of non-compliant plants, and rules governing other aspects of the industry.

The FDA has taken a more cautious approach, citing concerns about whether CBD is safe to consume in food and supplements. In an April 2019 statement, the agency sought to clarify its position on hemp products. The statement indicated that enforcement resources are directed toward illegal sales of CBD products that claim to prevent, diagnose, treat, or cure serious diseases, such as cancer.

However, it also stated that it is unlawful to introduce CBD-containing food into interstate commerce or to market CBD products as dietary supplements.

This means that effectively all CBD food products, including those derived from legally grown hemp, are unlawful, according to the FDA. The only hemp products that can be legally added to foods are hulled hemp seed, hemp-seed protein powder, and hemp-seed oil, because the seed of the hemp plant contains neither CBD nor THC.

The FDA has undertaken to develop CBD regulations, but despite repeated urging from the USDA and members of Congress, the former FDA commissioner indicated that that the rule-making process around CBD food products would be more complex than conventional products and could take years.

Massachusetts legalized hemp production as a component of the same 2016 law that legalized recreational cannabis. However, after the change of law at the federal level, both the state Department of Agricultural Resources and Department of Public Health issued policy statements on the same day imposing strict rules on hemp products. These two statements echo the FDA’s prohibitions on adding CBD to food products and making health claims about CBD.

What Can We Buy and Sell?

These state and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies. Consumers, retailers, growers, and other stakeholders are looking for information about what is legal, what is not, and why there is so much ambiguity.

CBD derived from marijuana remains illegal under federal law. However, the U.S. attorney in Massachusetts has indicated he will not direct his office’s resources to federally prosecute cannabis companies that are permitted under state law, a move that has allowed the cannabis industry in Massachusetts to flourish. Under this state’s regulatory regime, marijuana products containing CBD, as well as THC, can be bought and sold at cannabis dispensaries that are licensed by the CCC.

Retailers in Massachusetts sell cannabis flower, edibles, concentrates, and other forms of marijuana containing both THC and CBD. CCC regulations do not classify edible marijuana products as food, allowing dispensaries to sell CBD-infused edibles without contravening the state Department of Public Health’s policy.

In contrast, despite the federal and state legality of producing hemp, some of the most popular hemp-derived CBD products — food and supplements — cannot be sold under either state or federal law. Nevertheless, the CBD industry may avoid total extinction, since CBD can be added to topical lotions and other cosmetics without defying the laws.

Non-food CBD products, however, represent a small percentage of the potential uses of CBD, and the loss of a valuable opportunity for introducing additional, more profitable products containing CBD into the marketplace adds further demand for the FDA to promulgate its promised CBD rules. Furthermore, hemp can be legally sold for rope, clothing, building material, and other non-ingestible uses, but hemp farmers have stated that Massachusetts currently lacks the manufacturing infrastructure necessary to process the plant for these purposes.

Chris St. Martin and Sarah Morgan are both litigation associates at Bulkley Richardson; (413) 781-2820.

Law

A New Type of Relief

By Rebecca Mercieri Rivaux, Esq.

Rebecca Mercieri Rivaux

Small-business owners will soon have a more affordable option to reorganize their companies. In February 2020, the Small Business Reorganization Act (SBRA) will go into effect, providing a new type of relief to small-business debtors.

The SBRA creates a new subchapter within Chapter 11 of the U.S. Bankruptcy Code. While Chapter 11 bankruptcy generally provides for business reorganization (usually involving a corporation or partnership), it can be an unappealing option for many small-business debtors, due to complex procedural requirements and high legal and administrative costs. The SBRA will expedite reorganization for small-business debtors by streamlining the burdensome requirements of Chapter 11 bankruptcy.

The SBRA is, in fact, very comparable to a Chapter 13 bankruptcy, the kind used by individuals. Just as with Chapter 13 filings for individuals, an SBRA debtor can expect to have a trustee appointed by the bankruptcy court. The court-appointed trustee will aid the small business in developing a reorganization plan, but is not likely to be involved in any operational aspects of the business. This essentially allows the debtor to remain in possession and control of their own business during the bankruptcy process. The trustee is responsible for disbursing payments to creditors under the reorganization plan.

In order to take advantage of the new SBRA, a debtor must first qualify as a small business. To qualify, the debtor must be a person or entity engaged in a commercial or business activity. If such a business has secured and unsecured debt totaling less than $2,725,625, the business may propose a reorganization plan under the SBRA — so long as they use net income to repay creditors.

This is in keeping with the general practices of Chapter 11, where a debtor usually proposes a plan of reorganization to keep its business in existence and pay creditors over time.

SBRA debtors must produce a copy of the business’ most recent balance sheet, a statement of operations, a cash-flow statement, and a federal income — or file a sworn statement that such documents do not exist.

The SBRA allows the small-business debtor to repay its creditors within a payment plan of three to five years, as the bankruptcy court determines. The SBRA also allows small-business debtors a greater opportunity to retain their ownership interests in their business, even when claims have not been repaid in full (in contrast with a typical Chapter 11 bankruptcy, where a shareholder cannot retain equity in the business unless creditors are paid in full).

To qualify, the debtor must be a person or entity engaged in a commercial or business activity. If such a business has secured and unsecured debt totaling less than $2,725,625, the business may propose a reorganization plan under the SBRA — so long as they use net income to repay creditors.

Another significant benefit to the SBRA is a specialized restructuring strategy offered to individual debtors. An individual who qualifies as a small-business debtor can modify the mortgage on his or her principal residence, provided that the mortgage loan was not used to acquire the real property, but was used primarily in connection with the debtor’s business — such as an individual who is borrowing against the equity in their home for the purpose of supporting their business. This individual small-business debtor would then be able to reduce the loan to the value of the secured claim, propose a lower interest rate, or extend the maturity date of the loan. Once the small-business debtor has completed all payments to creditors, a discharge is granted.  

Under the SBRA, the only excluded activity for the small business debtor is operating “single-asset real estate,” a term that describes a debtor who receives substantially all of its gross income from the operation of a single real property.

Despite this restriction, for many small business debtors, the SBRA will offer relief and a realistic means to reorganize and restructure their businesses under the Bankruptcy Code.

Rebecca Mercieri Rivaux is an associate with Bacon Wilson, P.C., and a member of the firm’s bankruptcy and business/corporate practice groups; [email protected]

Law

The #MeToo Movement Has Vast Implications in This Sector

The #MeToo movement has brought about change and challenge — from a liability standpoint — in workplaces of all kinds. And this includes the broad spectrum of education. Indeed, recent cases indicate that courts may soon hold schools, colleges, and universities strictly liable for any sexual misconduct by their staff toward their students.

By Justice John Greaney, Jeffrey Poindexter, and Elizabeth Zuckerman

By now, we’ve all seen the #MeToo movement change how Massachusetts and the nation are talking about sexual harassment and other misconduct in the workplace, in schools, in social settings, on sports teams, in public places, and in our private lives.

Justice John Greaney

Jeffrey Poindexter

Elizabeth Zuckerman

The movement has ended careers, felled prominent figures, and made many newly aware of the great number of people — men and women — who face sexual harassment at some point in their lives. It has also reminded students, teachers, professors, administrators, and parents that schools and institutions of higher education are far from immune to this type of misconduct, and that students are sometimes victims of the very staff, faculty, and coaches expected to educate, guide, coach, and protect them.

Against this backdrop, administrators of Massachusetts schools, colleges, and universities have a special reason to take note of the rising tide of complaints about sexual harassment and other gender-based discrimination. The sea change in how sexual harassment is viewed, along with the development of Massachusetts law surrounding sexual harassment in schools, colleges, and universities, suggest that Massachusetts courts may soon hold these institutions strictly liable for any sexual misconduct by their staff toward their students.

That means, whether or not the school, college, or university knew about the conduct, whether or not the institution was negligent in any way, it could be on the hook for substantial damages if a staff member commits sexual harassment. In other words, even without doing anything wrong, or knowing anything wrong was happening, an educational institution could be liable for the entirety of the harm that befalls a student.

As a result, schools, colleges, and universities need to act now to implement policies which provide the best defense if a claim of sexual harassment is made.

In Massachusetts, Chapter 151C of the General Laws, the Massachusetts Fair Educational Practices Act (MFEPA), provides students who have been subjected to sexual harassment by a teacher, coach, guidance counselor, or other school personnel with a cause of action against the educational institution. MFEPA declares that “it shall be an unfair educational practice for an educational institution … to sexually harass students in any program or course of study in any educational institution.” In conjunction with General Laws c. 214, § 1C, the right for students to be free of harassment can be enforced through the Massachusetts Commission Against Discrimination (MCAD) or through the Superior Court.

“Administrators of Massachusetts schools, colleges, and universities have a special reason to take note of the rising tide of complaints about sexual harassment and other gender-based discrimination.”

The statutes also define sexual harassment broadly, including “any sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when: (i) submission to or rejection of such advances, requests, or conduct is made either explicitly or implicitly a term or condition of the provision of the benefits, privileges, or placement services or as a basis for the evaluation of academic achievement; or (ii) such advances, requests, or conduct have the purpose or effect of unreasonably interfering with an individual’s education by creating an intimidating, hostile, humiliating, or sexually offensive educational environment.”

Chapter 151C has been interpreted several times in the courts in Massachusetts, including when:

• A male athletic director of a Massachusetts community college was reported to have provided alcohol to female students in exchange for sexual favors. Several years later, more complaints about his behavior led the college to implement a policy to prevent sexual harassment.

Reports of further inappropriate conduct led to an investigation and agreement that he would no longer coach female athletic teams. However, he continued to work at the school and, eventually, resumed coaching a women’s basketball team. Students who had been coached by the athletic director brought claims against both him and the school.

• During the investigation into a rape of a student by a teacher at a Massachusetts high school, it was disclosed that a male guidance counselor had been involved in sexual misconduct with students. The superintendent of the school district acknowledged that he was aware of continuing reports about the guidance counselor’s inappropriate relationships with students after a female student alleged that the counselor had brought her to his home on two occasions and attempted to coerce her into having sex.

• Parents reported the inappropriate conduct of a male middle-school science teacher to the vice principal and a guidance counselor. The teacher had made inappropriate comments and touched female students, and had been told by school officials to stop on three occasions. The teacher was fired after an internal investigation, but not before he allegedly molested an 11-year-old student.

Despite occasions to consider the applications of Chapter 151C, Massachusetts courts have not yet decided whether schools, colleges, and universities will be held strictly vicariously liable for sexual harassment. In the cases referenced above, it appears the schools or colleges knew about the misconduct and, at least passively, allowed it to continue.

That means that the schools or colleges could be considered negligent, because they knew, or should have known, an employee’s behavior was problematic, but they failed to act, or failed to take adequate measures to remedy the situation. However, if Massachusetts courts rule for strict liability under Chapter 151C, it will mean that it is no defense that the institution did not know what its employee was doing, or even that it took reasonable measures to screen that employee before hiring.

Instead, the mere occurrence of sexual harassment by an employee will be enough to make the institution liable to the victim.

There are indications this may be the direction in which the courts go, because a closely related statute, Chapter 151B, which governs sexual harassment in the workplace, does impose strict liability. It seems entirely possible that the courts will conclude that liability under Chapter 151C should be no different, given that the two statutes relate to the same subject matter and share a common purpose.

Furthermore, because the operative statute is clearly intended to protect vulnerable students from abuses of power by those entrusted with their well-being, it seems likely that the courts may conclude that a strict standard of liability is consistent with the underlying purposes of the statute.

“The rising awareness of the problem of sexual harassment and assault appears to make it more likely that courts will conclude that the only way to stem the tide of abuse is to put the burden on those in the best position to protect vulnerable students — the schools they attend.”

This argument seems strengthened by the popular mood regarding sexual harassment. The rising awareness of the problem of sexual harassment and assault appears to make it more likely that courts will conclude that the only way to stem the tide of abuse is to put the burden on those in the best position to protect vulnerable students — the schools they attend.

Two recent decisions suggest this result may be coming. In a 2016 federal court case, Doe v. Brashaw, Judge Douglas Woodlock gave the first indication that the courts may come down on the side of strict liability under Chapter 151C. He noted there was no clear guidance in the text of the law on whether negligence was required to hold the school, college, or university liable.

Weighing the arguments on each side, he concluded it made sense, at least at the early stage in the case at which he was reviewing the matter, to apply a strict vicarious liability standard.

More recently, in 2017, another federal judge again noted that the standard was unsettled and deferred considering the argument, made by the Massachusetts Institute of Technology as defendant, that it was entitled to a more favorable standard than strict liability.

Given the significant risk that Massachusetts schools, colleges, and universities will be considered liable for their employees’ misconduct, regardless of what they knew, or didn’t know, about it, how can these institutions respond? The answer is that schools, colleges, and universities need to ensure their sexual-harassment, disciplinary, and hiring policies are up to date.

This will allow these institutions to avoid hiring or retaining employees who show any indication that they will engage in sexually harassing behavior, and also allow the institutions to respond rapidly and effectively if any employee does. In addition, schools, colleges, and universities need to appropriately train and supervise all employees.

For many institutions, this will mean implementing new requirements for training and new policies for ensuring sexual harassment cannot go on in a school, college, or university without rapid detection. In addition to in-house training, the institutions should consider learning sessions taught by outside consultants, particularly law firms, with experience in handling sexual misconduct in the educational environment.

Outside investigations by impartial law firms will, when appropriate, removed the inference of bias on the part of the educational institution when considering possible misconduct by a teacher, administrator, or staff member. In sum, educational institutions need to be prepared to act quickly and decisively when faced with a complaint of sexual harassment in order to remediate any misconduct.

Justice John Greaney is a former justice of the Supreme Judicial Court and senior counsel at Bulkley Richardson. Jeffrey Poindexter is a partner and co-chair of the Litigation Department at Bulkley Richardson. Elizabeth Zuckerman is an associate in the Litigation Department at Bulkley Richardson.

In these times, many people will be working remotely. In addition to accessing BusinessWest online, readers may wish to add their home address. To do this, e-mail [email protected], visit  https://businesswest.com/contact-us/subscribe/, or call 413.781.8600.