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  • By Philip R. Voluck, Esq., Keith Gutstein, Esq. and Meg Theranger, Esq.

    On May 18, 2016, the U.S. Department of Labor (DOL) issued its Final Rule drastically modifying the regulations used to determine whether white collar employees qualify for exemptions from overtime pay under the Fair Labor Standard Act (“FLSA”).  The new rule could potentially affect as many as 4.2 million white collar workers currently classified as exempt from receiving overtime based upon the current federal thresholds.

    In order for an employee to qualify for an FLSA white collar exemption, the employee must satisfy: (a) the “salary basis test”, which requires the employee to be paid a fixed weekly salary; (b) the “salary level test”, which sets a minimum mandatory salary threshold; and (c) the “duties test”, which requires that the employee primarily perform executive, administrative, or professional duties as defined by the FLSA. Under the existing rule, the required annual salary level is $23,660.

    The new rule significantly changes the salary level test by increasing it from $23,660.00 to $47,476.00 annually. As a result, wages for white collar workers, whether through overtime compensation or higher salaries, could increase by an estimated 12 billion dollars over the next ten years. The new rule additionally provides for automatic updates to the salary level test every 3 years to prevent it from becoming outdated and ineffective as it had in the past.

    There are also some new “protections” for employers. For the first time, employers may also use incentive payments to satisfy up to 10% of the required salary level for the overtime exemption (if they are provided to employees on at least a quarterly basis). This allows employers to play “catch up” at the end of each financial quarter. Significantly, the DOL did not alter the “duties test” as it considered concerns from employers during the comment period that changes to the duties test would be too disruptive.

    In response to these significant changes, which go into effect on December 1, 2016, employers must consider their options, which include: increasing salaries for exempt employees that already meet the duties test, reclassifying employees as non-exempt and paying overtime premiums when employees work in excess of forty (40) hours in a week, or reducing or eliminating hours worked by employees to prevent overtime hours.  Employers should use the time before the new rule goes into effect to consult employment counsel and analyze the best options available.

    While the national attention focused on the increasing salary threshold will undoubtedly convince some employers to simply raise the salary of employees they deem to be exempt, employers must not lose sight of the fact that in order for an exemption to apply, the employee must also satisfy the duties test.  Accordingly, employers are cautioned that the decision to increase an employee’s salary, but avoid a thorough analysis of the duties test, may not only potentially nullify the exemption, but the increased pay to employees already misclassified as exempt may also lead to an increase in potential damages against the employer.

  • Jun 1, 2016

    Join Kaufman Dolowich & Voluck (KDV) attendees at the ALADN Conference 2016.

    About: What is ALADN? Founded in 1995, ALADN is the Academic Library Advancement and Development Network — a professional network of academic library fundraising professionals, university librarians, and deans who practice in North America who work to raise money from individuals, corporations, and foundations to fund library resources, products, programs, and initiatives. Attendees from academic libraries across the United States and Canada gather annually to share innovations, best practices, and organizational successes related to fundraising for libraries, including communication and marketing strategies.

    For more information, click here.

  • May 24, 2016

    By Philip R. Voluck, Esq., Keith Gutstein, Esq. and Meg Theranger, Esq.

    On May 18, 2016, the U.S. Department of Labor (DOL) issued its Final Rule drastically modifying the regulations used to determine whether white collar employees qualify for exemptions from overtime pay under the Fair Labor Standard Act (“FLSA”).  The new rule could potentially affect as many as 4.2 million white collar workers currently classified as exempt from receiving overtime based upon the current federal thresholds.

    In order for an employee to qualify for an FLSA white collar exemption, the employee must satisfy: (a) the “salary basis test”, which requires the employee to be paid a fixed weekly salary; (b) the “salary level test”, which sets a minimum mandatory salary threshold; and (c) the “duties test”, which requires that the employee primarily perform executive, administrative, or professional duties as defined by the FLSA. Under the existing rule, the required annual salary level is $23,660.

    The new rule significantly changes the salary level test by increasing it from $23,660.00 to $47,476.00 annually. As a result, wages for white collar workers, whether through overtime compensation or higher salaries, could increase by an estimated 12 billion dollars over the next ten years. The new rule additionally provides for automatic updates to the salary level test every 3 years to prevent it from becoming outdated and ineffective as it had in the past.

    There are also some new “protections” for employers. For the first time, employers may also use incentive payments to satisfy up to 10% of the required salary level for the overtime exemption (if they are provided to employees on at least a quarterly basis). This allows employers to play “catch up” at the end of each financial quarter. Significantly, the DOL did not alter the “duties test” as it considered concerns from employers during the comment period that changes to the duties test would be too disruptive.

    In response to these significant changes, which go into effect on December 1, 2016, employers must consider their options, which include: increasing salaries for exempt employees that already meet the duties test, reclassifying employees as non-exempt and paying overtime premiums when employees work in excess of forty (40) hours in a week, or reducing or eliminating hours worked by employees to prevent overtime hours.  Employers should use the time before the new rule goes into effect to consult employment counsel and analyze the best options available.

    While the national attention focused on the increasing salary threshold will undoubtedly convince some employers to simply raise the salary of employees they deem to be exempt, employers must not lose sight of the fact that in order for an exemption to apply, the employee must also satisfy the duties test.  Accordingly, employers are cautioned that the decision to increase an employee’s salary, but avoid a thorough analysis of the duties test, may not only potentially nullify the exemption, but the increased pay to employees already misclassified as exempt may also lead to an increase in potential damages against the employer.

  • May 10, 2016

    By Michael Zigelman, Eric Stern , Andrew Lipkowitz and Courtney Klapper

    Recently, the New York Court of Appeals in Matter of Viking Pump, Inc., __ NY3d __ 2016 NY Slip Op 03413 (2016), addressed the law on insurance coverage for multi-year claims, ruling that each insurer that issued a policy to the insureds, Viking Pump and Warren Pumps (the “Insureds”), during the impacted period, can be held liable for the entire continuing loss resulting from asbestos claims, subject to their respective policy limits.  In other words, based on the language of the polices at issue, the Court applied an “all sums” allocation of indemnity among successive policy years.  Importantly, the Court also rejected the insurers’ argument that all of the available primary and umbrella policies over multiple years must be exhausted before higher-level excess policies can be triggered.

    In Matter of Viking Pump, the Insureds were exposed to significant potential liability from asbestos exposure claims.  Liberty Mutual Insurance Company (“Liberty”) issued primary insurance and umbrella excess coverage (the “Liberty Policies”) to the Insureds through successive annual policies.  The Insureds also obtained additional layers of excess insurance from multiple excess insurers (the “Excess Insurers”).  As such, the Insureds were covered for the losses under multiple layers of excess insurance spanning thirteen (13) policy years.

    As the Liberty Policies’ limits were approaching exhaustion through payment of claims, litigation ensued in Delaware state court as to whether the Insureds were entitled to coverage under the policies issued by the Excess Insurers.  Moreover, the litigation delved into the issue of allocation of insurance across the implicated policy periods.  The Delaware Court, applying New York law, determined as a threshold matter that the Insureds were entitled to coverage under the excess policies.  The Court then looked to the Liberty Policies to determine the issue of allocation.  The policies issued by the Excess Insurers either incorporated the Liberty Policies’ “all sums,”[1] “non-cumulation”[2] and anti-stacking provisions, or included substantially similar provisions.[3]

    The dispute eventually reached the Delaware Supreme Court, which certified the following two questions to the New York Court of Appeals:

    “1. Under New York law, is the proper method of allocation to be used all sums or pro rata when there are non-cumulation and prior insurance provisions?

    1. Given the Court’s answer to Question # 1, under New York law and based on the policy language at issue here, when the underlying primary and umbrella insurance in the same policy period has been exhausted, does vertical or horizontal exhaustion apply to determine when a policyholder may access its excess insurance?”

    Considering the first question, the New York Court of Appeals determined that under the provisions of the Liberty Policies, an “all sums” allocation was appropriate. The Court explained that under the “all sums” method of allocation, an insured can collect the total amount of its liability (subject to the policy limits) under any policy triggered by the loss, so long as the loss occurred during a covered policy period.

    In the prior decision of Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208 (2002), the Court of Appeals applied the “pro rata” method to a claim involving environmental contamination which occurred over a number of policy periods.  Under a “pro rata” method of allocation, indemnity would be allocated among multiple policy periods based on the amount of insurance and years on the risk for each insurer.

    In the present case, the Court distinguished Consolidated Edison, stating that the “non-cumulation” clause in the controlling polices mandated a different result.  Specifically, the Court noted that “the policy language at issue here, by inclusion of the non-cumulation clauses . . . is substantively distinguishable from the language that we interpreted in Consolidated Edison.”  Indeed, in the Consolidated Edison case, the Court of Appeals relied on the more general policy language, which provided that the insurers agreed to indemnify the insured for “all sums” for which the insured was liable and which occurred during the policy period, not outside that period.

    Here, the Court of Appeals found that under the language of the Liberty Policies, an “all sums” allocation method was appropriate. To reach its “all sums” conclusion, the Court relied on the language of the controlling provision stating, “if the same occurrence gives rise to personal injury . . . which occurs partly before and partly within any annual period of this policy” then “multiple successive insurance policies can indemnify the insured for the same loss.” Id. Therefore, the Court concluded that “non-cumulation” clauses “cannot logically be applied in a pro rata allocation.”  As the Court noted, insurance policies should be construed so as to avoid any provision of the policy becoming superfluous, or without force and effect. Accordingly, the Court held that an “all sums” method of allocation must apply in order to avoid having the “non-cumulation” clause rendered “surplusage.”

    Next, the Court turned to the question of whether horizontal or vertical exhaustion applied to trigger excess coverage. Under horizontal exhaustion, an insured must exhaust all triggered primary and lower-level excess layers of coverage for all applicable policy periods before being able to collect under higher-level excess insurance policies.  By contrast, under a vertical exhaustion approach, an insured can recover under an excess policy once the immediately-underlying policies’ limits are depleted, even if “other lower-level policies during different policy periods remain unexhausted.” Id.

    In the instant matter, the Court held that a vertical exhaustion approach should be utilized, reasoning that vertical exhaustion is consistent with the excess policies’ specific references to underlying policies with the same policy period by name, policy number or policy limit. Moreover, the Court stated that vertical exhaustion is “conceptually consistent” with an “all sums” allocation, so that an insured can seek coverage from all layers for a particular policy period.

    It is important to note that the Court of Appeals limited its holding to the language of the policies at issue. Notwithstanding, insurers need to be aware that New York has now recognized that the “all sums” approach to allocation may be appropriate depending on the specific policy language at issue.  As a result of the foregoing, insurers should decide which method of allocation is preferable and adjust the language of their policies, using the more general Consolidated Edison language for “pro rata” allocation, and using the Viking Pump language, incorporating “non-cumulation” language, for “all sums,” to reflect the method of allocation the insurer deems preferable.  In addition, excess insurers must be aware that New York courts may force a triggered excess insurer to pay an insured prior to the exhaustion of all primary and lower-level excess insurance and thus consider how this impacts loss reserves and underwriting.

    [1] In pertinent part, the Liberty umbrella policy contained the following provision: “[Liberty] will pay on behalf of the insured all sums in excess of the retained limit which the insured shall become legally obligated to pay . . . .” (emphasis in original).  The Liberty Policies also stated that “all personal injury . . . arising out of continuous or repeated exposure to substantially the same general conditions . . . shall be considered as the result of one and the same occurrence.” Matter of Viking Pump, Inc., __ NY3d  __, 2016 NY Slip Op 03413 (2016).

    2 The provision in the Liberty umbrella policy provides that: “[i]f the same occurrence gives rise to personal injury . . . or damage which occurs partly before and partly within any annual period of this policy, the each occurrence limit and the applicable aggregate limit or limits of this policy shall be reduced by the amount of each payment made by [Liberty Mutual] with respect to such occurrence, either under a previous policy or policies of which this is a replacement, or under this policy with respect to previous annual periods thereof.” (alterations in original). Matter of Viking Pump, Inc., __ NY3d  __, 2016 NY Slip Op 03413 (2016).

    3 One such provision stated that “if any loss covered hereunder is also covered in whole or in part under any other excess Policy issued to the [Insured] prior to the inception date hereof[,] the limit of liability hereon . . . shall be reduced by any amounts due to the [Insured] on account of such loss under such prior insurance. Subject to the foregoing paragraph and to all the other terms and conditions of this Policy in the event that personal injury or property damage arising out of an occurrence covered hereunder is continuing at the time of termination of this Policy the Company will continue to protect the [Insured] for liability in respect of such personal injury or property damage without payment of additional premium.” (alterations in original). Matter of Viking Pump, Inc., __ NY3d  __, 2016 NY Slip Op 03413 (2016).

  • Apr 27, 2016

    (April 27, 2016, Los Angeles, CA) — Kaufman Dolowich & Voluck (KDV) today announced that it is doubling the size of its Los Angeles office with the addition of nine-lawyer, LA-based Waxler Carner Brodsky LLP (WCB), which was founded in 2000 and has extensive professional liability defense, insurance coverage and employment litigation experience. With this move, KDV bolsters its national professional liability coverage capabilities and expands in the area of legal and insurance malpractice and employment practices liability.

    Five partners, two of counsel and two associates from Waxler Carner Brodsky LLP (WCB), will be joining the KDV Los Angeles office. WCB founders and named partners Andrew J. Waxler and Barry Z. Brodsky will be co-managing partners of KDV’s Los Angeles office. Gretchen S. Carner, also a founding partner, is joining as a partner, as are Jodi L. Girten and Danielle Sokol. Brian Peters and Julie Weber are joining as counsel and Christopher Wong and Scott Murch are joining as associates. WCB is bringing six support staff.

    “This is a transformative move for Kaufman Dolowich & Voluck,” said Michael A. Kaufman, co-managing partner of the firm. “With these distinguished attorneys from such a well-respected firm, we have greatly increased our stature throughout California and significantly enhanced three of our hallmark practices, professional liability, insurance coverage and employment practices liability defense, benefiting not only our California-based clients but those nationwide who do business in the state. Our intention is to continue to grow in California by recruiting high quality laterals and we are hoping to reach 25 attorneys in this office over the coming year.”  KDV has a second California office in San Francisco with 13 lawyers.

    Waxler will be director of KDV’s West Coast Professional Liability Practice Group. His practice focuses on defending professionals in malpractice actions with an emphasis on representing lawyers and insurance agents and brokers. He also represents insurers and professionals in professional liability coverage disputes and in bad faith litigation and has served as an expert witness or consultant in state and federal courts involving standard of care issues in professional liability and claims handling in insurance actions.

    Waxler earned his B.A. from the University of California, Los Angeles and his J.D. from Loyola School of Law, Los Angeles.

    Brodsky represents lawyers, accountants and others in professional liability disputes. He has tried more than a dozen professional liability cases to verdict in both state and federal courts. Brodsky also has significant experience handling business litigation and employment related matters including claims of discrimination, wrongful termination and sexual harassment/abuse. He frequently lectures on varied topics involving professional liability and ethical standards.

    Brodsky graduated Phi Beta Kappa from the University of California, Berkeley and earned his J.D. from Loyola School of Law in Los Angeles.

    “The synergy between our two firms, from the clients we share, the practice areas we work in and the firms’ cultures with an emphasis on collegiality and team work, makes this a natural combination,” said Waxler. ”We share a philosophy of total client involvement in every step of the legal process as we work with them to protect their businesses. Every client we have talked with about this combination has expressed total delight and continued support of the new firm.”

    Carner, who will be the co-leader of the Global Insurance Practice Group, practices in the areas of complex civil litigation, insurance coverage, bad faith law, general and professional liability, property and casualty, life and health, workers’ compensation, and employers’ liability coverage. In addition, she handles cases alleging errors and omissions by professionals such as directors, officers, insurance agents, insurance brokers and lawyers and employment cases involving issues of discrimination, wrongful termination and sexual harassment/abuse.

    Carner earned her B.A. from the University of California at Berkeley and her J.D. from the University of San Francisco School of Law.

    All attorneys will be located at the KDV Los Angeles office — 11755 Wilshire Blvd, Suite 2400, Los Angeles, CA, 310-775-6511.

    In addition to Waxler, Brodsky and Carner, the other attorneys’ joining are:

    • Jodi Girten, partner, represents professionals including attorneys, accountants and officers and directors in malpractice cases. She has significant litigation experience in handling a wide variety of professional liability claims for high profile attorneys and law firms, which involve personal injury, probate, bankruptcy, corporate, business, employment, and entertainment issues. Girten earned her B.A. from the University of Texas, El Paso, her M.A. from the University of California and her J.D. from the University of San Diego School of Law.
    • Danielle Sokol, partner, focuses her practice on professional liability, including the defense of attorneys and real estate professionals. She has also worked on breach of contract and insurance coverage. She received her B.A. from the University of California, Santa Barbara and her J.D. from UCLA School of Law.
    • Brian Peters, of counsel, represents employers in connection with various statutory and common law claims, including harassment, age, race, sex and disability discrimination, wrongful termination, trade secrets, and unpaid wage and hour class actions. He also provides consulting services to clients on various employment-related matters, such as legal compliance, investigations, terminations, wage and hour, and employment policies. He received his B.A. from California State University, Northridge and his J.D. from the University of California, Hastings College of the Law. While in law school, Brian served as a judicial extern for the late Judge Cecil F. Poole on the Ninth Circuit Court of Appeals and was also a recipient of the American Jurisprudence Award in Contracts. He is admitted to practice before the United States Supreme Court.
    • Julie Weber, of counsel, specializes in employment litigation, handling the defense of employment matters, including claims for harassment, discrimination and retaliation. She has also provided advice and counsel to clients on employment matters including hiring, terminating, counseling, policy making, and policy enforcement and has also defended matters involving professional liability, business, real estate, and bankruptcy issues. Weber received her B.A. from the University of California at Los Angeles and her J.D. from Southwestern University School of Law.
    • Christopher Wong, associate, focuses his practice on the defense of professionals. He also handles civil litigation and has represented both plaintiffs and defendants in various matters before state and federal courts and in arbitrations as well as appellate matters. Wong has a B.A. from Claremont McKenna College and his J.D. from the University of California, Hastings College of the Law where he was on the Editorial Board of the Hastings Constitutional Law Quarterly.
    • Scott Murch, associate, has a diversified practice, including professional liability defense, insurance coverage and bad faith defense, and intellectual property defense. He has substantial appellate experience, handling numerous appeals and writs. Murch has a B.A. from University of California San Diego and his J.D. cum laude from Hastings College of the Law where he was on the editorial board of the Hastings Constitutional Law Quarterly.

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Dean Herman and Hee Young Lee Join Kaufman Dolowich & Voluck as Partners in Firm’s Los Angeles Office; Senior Counsel and Three Associates Also Join LA Office

(June 3, 2013, Los Angeles, CA) — Kaufman Dolowich & Voluck, LLP (KDV), a leading national law firm, today announced that Dean B. Herman, who has more than 30 years of experience in insurance industry and business litigation, and Hee Young Lee, who has represented insurers and policyholders for more than a decade, have joined the firm as partners in its Los Angeles office. They will be accompanied by Craig D. Aronson as senior counsel and Steven S. Son, Andrew C. Johnson and Mikhaile P. Savary as associates.

Dean Herman defends and advises insurers and professionals on liability, first and third party insurance coverage issues, bad faith, and errors and omissions issues. His experience also includes sophisticated business and commercial litigation in state and federal trial and appellate courts on issues across a broad range of industry sectors and a diversified array of issues, ranging from IP to employment and contract disputes, executive risk exposures,  entertainment, wine industry,  as well as professional liability claims involving lawyers, insurance agents and brokers, real estate agents and brokers, directors and officers, business managers, financial advisors among others. He has also served as an expert witness and consultant and acts as a mediator in complex insurance coverage and other disputes. He comes to Kaufman Dolowich & Voluck from Mendes & Mount where he was a partner in the firm’s Los Angeles office.

Hee Young Lee also joins from Mendes & Mount, where she was a partner and her practice is focused on advising and defending insurers and their insureds in federal and state courts in matters involving intellectual property, environmental, construction defect, agribusiness, privacy, and personal lines claims. She also defends insureds in professional liability claims.

“Dean and Hee Young are preeminent insurance attorneys who will enhance not only our West Coast but our national presence in this field, which has always been a core strength of the firm,” said Ivan J. Dolowich, co-managing partner of KDV.  “This group enhances our practice on the West Coast providing insurance coverage, business litigation, professional liability, labor & employment and financial services for our clients.”

Herman will also be working out of the KDV San Francisco office due to the considerable work he does in the Bay area for clients based there.  He earned his B.A.  from California State University at Fullerton, his J.D. from Loyola Law School and his Master of Laws from the University of California, Berkeley. He is admitted to practice in California, and regularly handles matters in many other states either on a pro hac vice basis or an advisory or national coordinating counsel basis.

Lee will have a leadership role in the Los Angeles office. She earned her B.A. from the University of California, Los Angeles and her J.D. from the University of California Hastings College of the Law. She is admitted to practice in California, and also handles insurance coverage matters in many other states.

“Hee Young and I are excited to be joining a firm whose key practice areas are so compatible with our strengths,” said Herman. “We look forward to the opportunity to helping to grow KDV’s already strong insurance, professional liability and litigation practices on the West Coast and nationally.”

Craig Aronson, who has been practicing law for 30 years and whose practice focuses on coverage and professional liability, joins KDV from Gaglione, Dolan & Kaplan (Los Angeles) where he was a partner. He is admitted to practice in California. Aronson graduated summa cum laude and Phi Beta Kappa from Dartmouth College and earned his law degree from the University of Chicago Law School.

Steven Son, Andrew Johnson and Mikhaile Savary are litigation attorneys joining KDV from Mendes & Mount where they were all associates. Son, admitted to practice in California, earned his B.A. from the University of California, Los Angeles and his J.D. from the University of Illinois College of Law.  Johnson, admitted to practice in California and Nevada, received his B.F.A. from the University of Kansas and his J.D. from St. John’s University School of Law. Savary, admitted to practice in California and New York, received his B. A. from Cornell University and his J.D. from Columbia Law School.

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