April, 2024 | Fraser Blog

Five Stories That Matter in Michigan This Week – April 26, 2024

FTC Issues Final Rule Banning Non-Compete Agreements Nationwide

On April 23, 2024, in a 3-2 vote, the Federal Trade Commission (FTC) issued a final rule banning non-compete clauses in most employment agreements nationwide. The rule is scheduled to go into effect 120 days after it is published in the Federal Register.

Why it Matters: Under the final rule, “Non-compete clause” is defined as “a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: (i) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) operating a business in the United States after the conclusion of the employment that includes the term or condition.” Read more from your Fraser Trebilcock attorneys.

———

State and Local Governments Subject to ADA Website Rules

Why it Matters: While staffing at many schools has grown due to pandemic relief funding, student enrollment has dwindled. This report comes on the heels of another report – this one from the Michigan Center for Data and Analytics – projecting the state population could decline by nearly 700,000 residents by 2050.

———

Michigan 04/20 Sales Hits All-Time High

Per data from Michigan Cannabis Regulatory Agency, sales of cannabis topped $28.5 million on April 20, 2024, an increase from the reported $21.6 million in sales from the year prior.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market oversaturation that the industry is contending with. Contact our cannabis law attorneys if you have any questions.

———

The Limitations of Federal Bankruptcy Law for Marijuana Businesses

Under the federal Controlled Substances Act, marijuana remains classified as a Schedule I drug, making it illegal at the federal level. This creates a unique challenge for marijuana businesses operating legally within their state’s framework, as they are unable to avail themselves of federal bankruptcy protection.

Why it Matters: Federal bankruptcy courts have been reluctant to provide relief to debtors engaged in activities that are illegal under federal law, even if those activities are legal under state law. As a result, marijuana businesses are often left without the benefits of bankruptcy protection, such as the automatic stay, discharge of debts, and court-supervised reorganization.

———

Fraser Trebilcock Attorney Secures Victory for Firm Client

Fraser Trebilcock attorney Andrew J. Moore was successful in obtaining summary disposition on behalf of the firm’s client. Plaintiff and their spouse applied for credit life insurance from the firm’s client, a prominent independent insurance company, in conjunction with an RV they purchased.

Why it Matters: The spouse misrepresented their medical history and was in fact diagnosed with and treating for a disqualifying medical condition. The spouse died of heart attack two months after purchase. The firm’s client rescinded the credit certificate, then was sued. Plaintiff claimed RV salesman misrepresented application, eligibility, insurability, and coverage limits, while simultaneously claiming RV salesman was an “agent” of the firm’s client such that they should be held liable for their misrepresentation. After discovery and at summary disposition, the Judge ruled in favor of the firm’s client and dismissed all counts. Learn more.

Related Practice Groups and Professionals

FTC Issues Final Rule Banning Non-Compete Agreements Nationwide

Under the final rule, “Non-compete clause” is defined as “a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: (i) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) operating a business in the United States after the conclusion of the employment that includes the term or condition.”

The final rule covers all entities subject to the FTC Act (generally, most for-profit entities, but not non-profit organizations).

Some of the key elements of the final rule include:

- Starting from the effective date, the ban prohibits all new post-employment non-compete agreements between employers and employees across all industries and worker types, including both senior executives and lower-level employees. It does not apply to agreements prohibiting an employee from competing against an employer while employed.
- Post-employment non-compete agreements that are already in place may continue to be enforced, but only for senior executives. The definition of a senior executive is generally an employee who holds a policy-making position and earns an annual salary exceeding $151,164.
  - Policy-making position is defined in part as “a business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority, or any other natural person who has policy-making authority for the business entity similar to an officer with policy-making authority.”
- While employers are not obligated to formally rescind existing non-compete agreements, they are required to notify employees that post-employment non-compete agreements are no longer enforceable.
- The ban makes an exception for non-compete agreements related to the sale of a business, regardless of the ownership percentage involved in the transaction.
- The ban does not apply to contracts between franchisees and franchisors. However, it does apply to employees working for either a franchisee or a franchisor.

While the rulemaking may be a new step for the FTC, its purpose is in step with the Agency’s recent decisions; an example of which was included in the press release announcing the proposed rule, “This [rulemaking] aligns with the FTC’s recent statement to reinvigorate Section 5 of the FTC Act, which bans unfair methods of competition. The FTC recently used its Section 5 authority to ban companies from imposing onerous noncompetes on their workers. In one complaint, the FTC took action against a Michigan-based security guard company and its key executives for using coercive noncompetes on low-wage employees.”

We anticipate that a number of legal challenges to the FTC’s authority to ban non-compete agreements will be mounted. The US Chamber of Commerce already announced that it will be filing a lawsuit. We will continue to keep you informed of new developments.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Andrew G. Martin is an experienced registered patent attorney with history working in the automotive, electrical, and agricultural industries. He regularly advises startups and small businesses on the patent and trademark prosecution process, assisting clients from start to finish. You can reach him at 517.377.0834 or at amartin@fraserlawfirm.com.

Five Stories That Matter in Michigan This Week – April 19, 2024

Michigan Schools Face Budget Shortfalls, Many May Have to Cut Staff

A new report by the Citizens Research Council of Michigan suggests that Michigan schools may have to cut more than 5,000 teacher jobs over the next several years to balance budgets as pandemic-related funding comes to an end.

———

Fraser Trebilcock Attorney Secures Victory for Firm Client

———

Michigan CRA Publishes March ’24 Data: Average Price Decreases

Per data released by the Cannabis Regulatory Agency (CRA), the average retail price for adult-use sales of an ounce of cannabis in March was $90.70, a decrease from $91.94 in February. This is an increase from March 2023, where the average price was $86.87.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions.

———

April Business Education Series

In the dynamic landscape of business, where adaptability is key, the importance of having robust Standard Operating Procedures (SOPs) cannot be overstated. SOPs serve as the backbone of organizational efficiency, ensuring consistency, compliance, and continuous improvement.

Why it Matters: The April Business Education Series, “Optimizing Operations: The Crucial Role of Standard Operating Procedures (SOPs),” led by Brittany Parks, founder and principal Consultant, Brittany Parks Process Consulting, is designed to equip participants with the knowledge, skills, and tools to harness the transformative power of SOPs in their respective organizations. Learn more and to register.

———

Ten Reasons Why You May Want to Consider a Family Cottage Succession Plan

The goal of cottage succession planning is to set up legal ground rules that provide the best chance to keep a cottage in the family for future generations.

Why it Matters: A cottage plan usually addresses concerns through the creative use of a limited liability company (LLC), or a trust (typically used for more favorable treatment associated with the uncapping of taxable value), to own the property. Learn more from cottage law attorney Mark Kellogg.

Related Practice Groups and Professionals

Insurance Law | Andrew Moore
Cannabis Law | Sean Gallagher
Cottage Law | Mark Kellogg

Five Stories That Matter in Michigan This Week – April 12, 2024

U of M Economists Project Michigan Economic Growth for Year Ahead

Economists from the University of Michigan recently released the annual Michigan Economic Outlook for 2024-25. The Outlook projects economic growth for the year ahead, including approximately 38,000 new jobs in 2024.

Why it Matters: This year’s expected job growth comes on the heels of a slowdown in employment in Michigan during the second half of last year, according to the report.

———

April Business Education Series

Why it Matters: The April Business Education Series, “Optimizing Operations: The Crucial Role of Standard Operating Procedures (SOPs),” led by Brittany Parks, founder and principal Consultant, Brittany Parks Process Consulting, is designed to equip participants with the knowledge, skills, and tools to harness the transformative power of SOPs in their respective organizations. Learn more and to register.

———

Michigan Cannabis Exceeds $288 Million in March ‘24

Cannabis sales surpassed $288 million in March, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $286,790,258.52, while medical sales came in at $2,053,021.25, totaling $288,843,279.77.

———

The Uniform Power of Attorney Act

The Uniform Power of Attorney Act (UPOAA or Act), 2023 PA 187, was signed into law in November 2023 and goes into effect July 1, 2024. It repeals Michigan’s current statutory law on durable powers of attorney, specifically Sections 700.5501-700.5505 of the Estates and Protected Individuals Code (EPIC). The UPOAA is not part of EPIC, instead, it is a stand-alone statute located at MCL 556.201 et. seq.

Why it Matters: The UPOAA will apply to all powers of attorney in Michigan beginning July 1, 2024, with certain exceptions. Read more from attorney Melisa M.W. Mysliwiec.

———

Ten Reasons Why You May Want to Consider a Family Cottage Succession Plan

The goal of cottage succession planning is to set up legal ground rules that provide the best chance to keep a cottage in the family for future generations.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Trusts & Estates | Melisa M.W. Mysliwiec
Cottage Law | Mark Kellogg

Five Stories That Matter in Michigan This Week – April 5, 2024

New Michigan House Map Approved

A panel of three federal judges recently approved new voting districts for the Michigan House of Representatives after previously invalidating several districts within Detroit.

Why it Matters: The districts were revised because the panel previously found the Michigan redistricting commission’s redrawn districts were based predominantly on race in violation of the U.S. Constitution.

————-

Ten Reasons Why You May Want to Consider a Family Cottage Succession Plan

The goal of cottage succession planning is to set up legal ground rules that provide the best chance to keep a cottage in the family for future generations.

————-

Snack Food Brand Sues Michigan Cannabis Companies Over Trademark Infringement

Better Made Snack Foods Inc, a Detroit based snack food company, is suing multiple Michigan cannabis companies over trademark infringement alleging that the companies knowingly and willingly sold cannabis products under the brand Better Smoke.

Why it Matters: Better Made is seeking monetary damages as well as an injunction to halt the sales of Better Smoke products.

————-

A Health Professional’s Guide to Navigating the Disciplinary Process: What to Expect if You Are Facing a Professional Licensing Investigation or Administrative Complaint

Health professionals are committed to caring for patients with expertise, compassion, and integrity. However, in the heavily regulated healthcare field, those professionals can sometimes find themselves navigating not just the medical challenges of their patients but licensing issues of their own as well. Licensing issues can arise unexpectedly, and, when they do, they can cause tremendous stress and uncertainty.

Why it Matters: As an attorney with years of experience handling professional licensing matters for health professionals, Robert J. Andretz has witnessed firsthand how professional licensing investigations and Administrative Complaints can disrupt health professionals’ careers and their ability to provide patient care. He will explore how to navigate the disciplinary process in Michigan so that you can know what to expect if you are ever faced with a threat to your license. Learn more.

————-

Corporate Transparency Act Update

As anticipated, the finding by a federal judge in Alabama that the Corporate Transparency Act is unconstitutional has prompted (or at least been echoed by) challenges elsewhere, including in federal courts in Maine and in Michigan. FinCEN filed its appeal notice in the Alabama suit earlier this month, meaning that a decision by the 11^th Circuit Court of Appeals may be forthcoming. The suits in Maine and Michigan were brought in courts covered by the 5^th and 6^th Circuit Courts of Appeals, which could be the beginning of a series of events that brings the question of the CTA’s constitutionality before the United States Supreme Court as a result of a possible Circuit split.

Why it Matters: Reporting companies that were formed prior to January 1, 2024, may find it advantageous to continue collecting their beneficial owner information but postpone filing the report until some of these matters have worked through their respective processes. Entities created on or after January 1, 2024, however, will still need to file their reports within 90 days of filing their organizing documents, as their reporting obligations have not been excused. Learn more from attorney Bob Burgee.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Cottage Law | Mark Kellogg
Health Care Law | Robert Andretz
Business & Tax | Robert Burgee

Ten Reasons Why You May Want to Consider a Family Cottage Succession Plan

The goal of cottage succession planning is to set up legal ground rules that provide the best chance to keep a cottage in the family for future generations. A cottage plan usually addresses concerns through the creative use of a limited liability company (LLC), or a trust (typically used for more favorable treatment associated with the uncapping of taxable value), to own the property. Here are ten reasons why you and/or your family may want to consider a family cottage succession plan.

1. Prevent a joint owner from forcing the sale of the cottage through an action for partition.
2. An alternative to allowing common law rules dictate how the cottage operates.
3. Prevent transfer of an interest in the cottage outside the family.
4. Protect owners from creditor claims.
5. Establish a framework for making decisions affecting the cottage.
6. Provide sanctions for nonpayment of cottage expenses.
7. A vehicle for an “endowment” (money set aside to fund cottage expenses).
8. To require mediation or arbitration of family disputes.
9. Allocate control of the cottage between or among generations of owners.
10. May help delay (or avoid) the uncapping of Michigan property taxes.

These are the basics, but just as each family is different, each agreement can be tailored to fit specific needs.

Mark E. Kellogg’s breadth of knowledge and experience gives his clients unique insight into the special considerations associated with the cottage law practice. If you have any questions, you can reach out to Mark at mkellogg@fraserlawfirm.com or (517) 377.0890 for assistance.

Corporate Transparency Act Update

FinCEN filed its appeal notice in the Alabama suit earlier this month, meaning that a decision by the 11th Circuit Court of Appeals may be forthcoming. The suits in Maine and Michigan were brought in courts covered by the 5th and 6th Circuit Courts of Appeals, which could be the beginning of a series of events that brings the question of the CTA’s constitutionality before the United States Supreme Court as a result of a possible Circuit split. The matter could also make its way to the high Court in response to an injunction issued in one or more of these matters.

Therefore, reporting companies that were formed prior to January 1, 2024, may find it advantageous to continue collecting their beneficial owner information but postpone filing the report until some of these matters have worked through their respective processes. Entities created on or after January 1, 2024, however, will still need to file their reports within 90 days of filing their organizing documents, as their reporting obligations have not been excused.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.