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In In re McDonald’s Corp. Stockholder Derivative Litigation, No. 2021-0324 (Del. Ch. Jan. 26, 2023), the Delaware Court of Chancery (Laster, V.C.) held that officers of a Delaware corporation are subject to a fiduciary duty of oversight as articulated in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996). In doing so, the Court allowed stockholder derivative plaintiffs to proceed with oversight claims against the company’s former Global Chief People Officer, who allegedly presided over a corporate culture that condoned sexual harassment. The decision builds on Delaware jurisprudence to extend the duty of oversight to officers, not just directors, who will in most instances form part of the vanguard with respect to company efforts to implement effective reporting systems and/or to report on and respond to red flags regarding potential misfeasance at the company.…

Continue Reading Delaware Court of Chancery Holds that Officers of a Delaware Corporation Are Subject to Fiduciary Duty of Oversight

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a broad proposed rule that would ban employers from imposing noncompete clauses on their workers. The FTC press release announcing the proposed rule states that noncompete clauses—which apply to about one in five American workers—suppress wages, hamper innovation, block entrepreneurs from starting new businesses and reduce American workers’ earnings between $250 billion and $296 billion per year.[1] The proposed rule would prohibit employers from: (1) entering into or attempting to enter into a noncompete with a worker; (2) maintaining a noncompete with a worker; or (3) representing to a worker, under certain circumstances, that the worker is subject to a noncompete. The term “worker” covers paid staff in addition to independent contractors and unpaid staff. The proposed rule does not apply to noncompete provisions imposed upon 25% owners of a business in transaction documents related to the sale of the business. The proposal is subject to a 60-day public comment period commencing when the Federal Register publishes the proposed rule.…

Continue Reading FTC Seeks to Ban Noncompete Agreements in Employment Contracts

In Fowler v. Golden Pacific Bancorp, Inc., 2022 Cal. App. LEXIS 548 (Cal. App. June 23, 2022), the California Court of Appeal, Third Appellate District (Krause, J.), reinforced the near absolute right of directors of a California corporation to inspect their company’s books and records pursuant to Section 1602 of the California Corporations Code. The Court clarified that these rights hold even when the director has a conflict of interest or is involved in litigation with the corporation. Generally, directors may be denied access to books and records only in the most extreme cases, such as when evidence shows the director intends to abuse his or her rights under Section 1602 to violate fiduciary duties or commit a tort against the company.…

Continue Reading California Court of Appeal Reaffirms Broad Inspection Rights Accorded to Directors Under Section 1602 of the California Corporations Code

Presidential Proclamation

On June 22, 2020, the White House announced an extension and expansion of Proclamation 10014, which was originally announced on April 22, 2020 and restricted the issuance of and entry on immigrant visas.  The new visa ban expands the restrictions to certain non-immigrant categories.
Continue Reading How the New Presidential Proclamation Regarding Non-Immigrant Visas Affects Your Company

In the wake of the COVID-19 pandemic, reductions in hours, furloughs and temporary closures are becoming an increasingly common and unavoidable occurrence.  Employers can expect to encounter questions with respect to employee benefits offered to affected employees.  While the facts and circumstances of each case will vary, common themes exist, a few of which are mentioned below.

Coronavirus, employers…
Continue Reading Critical Employee Benefit Issues in a Pandemic – Can Employees Take Their Money out of Plans?

In Wadler v. Bio-Rad Laboratories, Inc., No. 17-16193, 2019 WL 924827 (9th Cir. Feb. 26, 2019), the United States Court of Appeals for the Ninth Circuit held that statutes, including the Foreign Corrupt Practices Act (“FCPA”), do not constitute “rule[s] or regulation[s] of the Securities and Exchange Commission” (“SEC”) for purposes of determining whether an employee engaged in protected activity in a whistleblower claim under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”).  This decision clarifies the proper application of the express statutory language of Section 806.
Continue Reading Ninth Circuit Holds That Statutes Do Not Constitute “Rules or Regulations of the SEC” for Purposes of Sarbanes-Oxley Act Whistleblower Claims