May, 2025 | Fraser Blog

NLRB Establishes New Standard for Workplace Rules – What Employers Need to Know

The National Labor Relations Board (NLRB) has issued a ruling in Stericycle Inc., adopting a new legal standard for evaluating the lawfulness of employer work rules. This decision overturns the previous standard set by Boeing Co. (2017), later refined in LA Specialty Produce Co. (2019).

Case Background

In Stericycle, the NLRB explained that the primary problem with the Boeing and LA Specialty Produce standard was that it permitted employers to adopt overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act. Under that standard, an employer was not required to narrowly tailor its rules to promote its legitimate and substantial business interests without unnecessarily burdening employee rights. The NLRB also rejected Boeing’s categorical approach to work rules, under which certain types of rules were held to be always lawful, regardless of how they were drafted or what interests a particular employer cited in defense of the rule.

Key Changes

- - A workplace rule is now presumptively unlawful if it has a reasonable tendency to chill employees from exercising their rights.
  - Employers may counter the presumption by proving the rule advances a legitimate and substantial business interest and that they’re unable to advance that interest with a more narrowly tailored rule.

What This Means for Employers

Following this, the NLRB is in favor of case-specific consideration of work rules. Employers may need to review existing policies to their employee handbooks to ensure compliance, and tailor their workplace rules to service legitimate business interests.

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

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.

Five Stories That Matter in Michigan This Week – May 16, 2025

Federal Government Sues to Block Michigan’s Climate Lawsuits Against Fossil Fuel Companies

The federal government has filed a preemptive lawsuit against Michigan to prevent the state from pursuing litigation against fossil fuel companies for climate change damages. Michigan had announced plans to join approximately similar lawsuits already pending in courts nationwide but was sued by the federal government before it could file.

Why it Matters: This unusual procedural move specifically references President Trump’s recent executive order on American energy production that criticizes climate-focused state actions.

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Governor Whitmer Signs Two Bills Into Law Revolving Around Financial Transparency for Public Officers and Candidates

Michigan Governor Gretchen Whitmer signed Senate Bills 99 and 100 into law this week, which focused on increasing transparency within the Michigan legislature, requiring public officers and candidates to report and specify any unearned income and/or securities they receive.

Why it Matters: Senate Bill 99 amends the Public Officers Financial Disclosure Act, including specifying that reporting requirements for unearned income and securities would have to include the origin and address of the sources and securities, and require the public officer to include the name of the lobbyist or lobbyist agent that made the gift payment. Senate Bill 100 amends the Candidate for Office Financial Disclosure Act, including specifying the reporting requirements for unearned income and securities would have to include the origin and address of the sources and securities.

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Organizing Your Business: A Step-by-Step Guide for Michigan LLCs

Starting a business involves critical choices that shape your success and safeguard your financial future. In Michigan, forming an LLC offers entrepreneurs a powerful way to protect personal assets, simplify taxation, and maintain management flexibility.

Why it Matters: Forming and maintaining an LLC in Michigan provides valuable liability protection and flexibility for your business. By maintaining proper governance, your LLC can serve as a solid foundation for your business ventures. Read more from your Fraser Trebilcock attorney.

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Navigating Bad Faith Claims: What Defense Attorneys Need to Know

Under the Michigan Uniform Trade Practices Act, an insurer is liable for penalty interest if it fails to timely pay a claim. “The purpose of the penalty is to penalize insurers for dilatory practices in settling meritorious claims, not to compensate a plaintiff for delay in recovering benefits to which he or she is ultimately determined to be entitled.”

Why it Matters: While it is important for insurers to train their claims professionals in background knowledge regarding bad faith law, including the factors above, there is no need to lead with fear. The biggest takeaway is that the opposite of “bad faith” is “good faith.” Therefore, claims professionals should be encouraged to utilize their best judgment with the information at the given time. Read more from your Fraser Trebilcock attorney.

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NLRB Establishes Standard for Workplace Rules

The National Labor Relations Board (NLRB) has issued a ruling in Stericycle Inc., adopting a new legal standard for evaluating the lawfulness of employer work rules. Under the previous standard, an employer was not required to narrowly tailor its rules to promote its legitimate and substantial business interests without unnecessarily burdening employee rights.

Why it Matters: Workplaces may need to review existing policies to their employee handbooks to ensure compliance, and tailor their workplace rules to service legitimate business interests. Read more from your Fraser Trebilcock attorney.

Related Practice Groups and Professionals

Insurance | Dakota Larson
Business & Tax | Andrew Martin
Labor, Employment & Civil Rights | David Houston

Navigating Bad Faith Claims: What Defense Attorneys Need to Know

Under the Michigan Uniform Trade Practices Act, MCL 500.2001 et seq., an insurer is liable for penalty interest if it fails to timely pay a claim, MCL 500.2006(1). “The purpose of the penalty is to penalize insurers for dilatory practices in settling meritorious claims, not to compensate a plaintiff for delay in recovering benefits to which he or she is ultimately determined to be entitled.” Jones v Jackson Nat Life Ins Co, 819 F Supp 1372, 1379 (WD Mich, 1993). MCL 500.2006(1) states:

A person must pay on a timely basis to its insured, a person directly entitled to benefits under its insured’s insurance contract, or a third party tort claimant the benefits provided under the terms of its policy, or, in the alternative, the person must pay to its insured, a person directly entitled to benefits under its insured’s insurance contract, or a third party tort claimant 12% interest, as provided in subsection (4), on claims not paid on a timely basis. Failure to pay claims on a timely basis or to pay interest on claims as provided in subsection (4) is an unfair trade practice unless the claim is reasonably in dispute.

For first-party claims, a 12% penalty interest is owed when the insurer fails to pay benefits within 60 days after receiving a satisfactory proof of loss. MCL 500.2006(4). “If the claimant is a third party tort claimant, the benefits paid bear interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum if the liability of the insurer for the claim is not reasonably in dispute, the insurer has refused payment in bad faith, and the bad faith was determined by a court of law.” Id. “The interest must be paid in addition to and at the time of payment of the loss.” Id. If the loss exceeds the available coverage limits, the interest payable is based on the coverage limits rather than the amount of the loss. Id. If the insurer offers payment which is rejected by the claimant, and the claimant does not recover an amount above the amount offered, interest is not due. Id. “Interest paid as provided in this section must be offset by any award of interest that is payable by the insurer as provided in the award.” Id.

The Michigan Supreme Court has clarified that the 12% interest applies to all claimants but that the “reasonably in dispute” language only applies to third-party tort claimants. Nickola v MIC Gen Ins Co, 500 Mich 115, 131-132; 894 NW2d 552 (2017). An “insured” who makes an underinsured motorist (UIM) claim under their own insurance policy is not considered a third-party tort claimant. Id. at 118 “Insured” means “‘[s]omeone who is covered or protected by an insurance policy[.]’ Id. at 128 n. 31, quoting Black’s Law Dictionary (10th ed.).

Regarding the “reasonably in dispute” language, the Sixth Circuit Court of Appeals has stated:

Whether a claim is “reasonably in dispute” is a question of law for the court to decide…. [A] plainly invalid contract clause or a plainly erroneous interpretation of law may be sufficient basis for the court to determine that a policy is not “reasonably in dispute.” However, when there is no indication that the insurer acted unreasonably or with dilatory motive in denying the claim, the court should find that the claim is “reasonably in dispute.” A policy also might be “reasonably in dispute” when the insurer—in good faith—disputes its obligation, contests legitimate issues, and makes no effort to delay recovery of benefits. [Fed Ins Co v Hartford Steam Boiler Inspection & Ins Co, 415 F3d 487, 499-500 (CA 6, 2005) (citations omitted.]

Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich 127; 393 NW2d 161 (1986), provides guidance on what can constitute bad faith. “Bad faith” generally means “as arbitrary, reckless, indifferent, or intentional disregard of the interests of the person owed a duty.” Id. at 137. In contrast,

[g]ood-faith denials, offers of compromise, or other honest errors of judgment are not sufficient to establish bad faith. Further, claims of bad faith cannot be based upon negligence or bad judgment, so long as the actions were made honestly and without concealment. However, because bad faith is a state of mind, there can be bad faith without actual dishonesty or fraud. If the insurer is motivated by selfish purpose or by a desire to protect its own interests at the expense of its insured’s interest, bad faith exists, even though the insurer’s actions were not actually dishonest or fraudulent. [Id. at 136-137.]

The following factors may also be taken into account when deciding whether a defendant acted in bad faith:

1. 1. Failure to keep the insured fully informed of all developments in the claim or suit that could reasonably affect the interests of the insured,
  2. Failure to inform the insured of all settlement offers that do not fall within the policy limits,
  3. Failure to solicit a settlement offer or initiate settlement negotiations when warranted under the circumstances,
  4. Failure to accept a reasonable compromise offer of settlement when the facts of the case or claim indicate obvious liability and serious injury,
  5. Rejection of a reasonable offer of settlement within the policy limits,
  6. Undue delay in accepting a reasonable offer to settle a potentially dangerous case within the policy limits where the verdict potential is high,
  7. An attempt by the insurer to coerce or obtain an involuntary contribution from the insured in order to settle within the policy limits,
  8. Failure to make a proper investigation of the claim prior to refusing an offer of settlement within the policy limits,
  9. Disregarding the advice or recommendations of an adjuster or attorney,
  10. Serious and recurrent negligence by the insurer,
  11. Refusal to settle a case within the policy limits following an excessive verdict when the chances of reversal on appeal are slight or doubtful, and
  12. Failure to take an appeal following a verdict in excess of the policy limits where there are reasonable grounds for such an appeal, especially where trial counsel so recommended. [Id. at 137-139.]

Because the facts of each case are different, the trial court can use its discretion in determining which factors, if any, should be included in the jury instructions. Id. at 137. In addition, these factors are not exclusive and “[n]o single factor shall be decisive.” Id. It is inappropriate to review conduct using a “‘20–20 hindsight vision.’’” Id. at 139. Instead, conduct must be reviewed “in light of the circumstances existing at the time.” Id.

What This Means

While the content above is intended to provide a background of what may constitute “bad faith,” each case presents unique factual considerations. We suggest that while it is important for insurers to train their claims professionals in background knowledge regarding bad faith law, including the factors above, there is no need to lead with fear. The biggest takeaway is that the opposite of “bad faith” is “good faith.” Therefore, claims professionals should be encouraged to utilize their best judgment with the information at the given time.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions. When it matters in Michigan, we are the trusted legal advisors for businesses and individuals.

Dakota A. Larson is an experienced attorney handling complex liability, coverage, and bad faith claims in multiple lines of insurance and in multiple jurisdictions. You can reach her at 517.377.0872 or at dlarson@fraserlawfirm.com.

Organizing Your Business: A Step-by-Step Guide for Michigan LLCs

1. Liability Protection: An LLC creates a separation between business and personal assets, protecting members’ personal property from business liabilities. This means creditors generally cannot seize your personal assets to satisfy business debts.
2. Tax Flexibility: By default, LLCs – considered “pass through” entities – don’t pay federal taxes directly. Instead, LLC members pay taxes for the LLC on their personal tax returns.
3. Management Flexibility: LLCs can be either member-managed (all owners participate in operations) or manager-managed (designated managers handle day-to-day operations).

This guide breaks down the steps needed to organize and manage an LLC effectively, helping you establish a solid foundation for long-term business growth and security.

What Distinguishes an LLC from Other Structures?

When choosing a business structure in Michigan, many entrepreneurs opt for LLCs due to their unique blend of protection and flexibility. Unlike sole proprietorships that offer no separation between personal and business assets, an LLC creates a legal shield that protects your personal property from business liabilities while maintaining the same pass-through taxation benefits. Compared to corporations, LLCs free you from many formalities like mandatory board meetings and minutes, while avoiding the double taxation issue that impacts traditional corporations.

Michigan recognizes both single-member and multi-member LLCs, treating them virtually identically for formation purposes. Whether you’re a solo entrepreneur seeking control and simplicity or a team dividing ownership and responsibilities among multiple members, the LLC structure adapts to your needs. Single-member LLCs enjoy sole decision-making authority and straightforward sole proprietorship-like taxation, while multi-member LLCs distribute ownership, split profits according to agreed terms, and are taxed like partnerships by default.

The management structure you choose further tailors your LLC to your specific business needs. In the default member-managed structure, all owners actively participate in day-to-day operations and can legally bind the company in contracts and agreements. For businesses preferring separation between ownership and management, the manager-managed option allows designated individuals (whether members or not) to handle operations. This flexibility makes LLCs particularly attractive for entrepreneurs who want protection without excessive corporate formality.

Although Michigan doesn’t legally require an operating agreement, working with your attorney to create one strengthens your liability protection and clarifies how your business will function – from ownership percentages and capital contributions to profit distribution and decision-making protocols. This internal document becomes especially crucial for multi-member LLCs to prevent misunderstandings and establish clear procedures for everything from routine operations to member changes and potential dissolution.

Step-by-Step Process for Creating a Michigan LLC

Step 1: Choose a Name for Your LLC

Michigan requires that your business name be “distinguishable” from other businesses in the state. Your Michigan LLC name must include “limited liability company,” “limited company,” “LC,” or “LLC.” You cannot use words like “corporation” that suggest another type of entity.

To check name availability, you can search the Michigan business name database through the Department of Licensing and Regulatory Affairs (LARA) website.

Step 2: Designate a Registered Agent

A registered agent is the person or business you appoint to receive and forward important legal and tax documents. Michigan requires your registered agent to have a physical address (no P.O. boxes) in Michigan and be available during normal business hours.

Step 3: File Articles of Organization

The document required to form an LLC in Michigan is called the Articles of Organization. You can file online, by mail, or in person with the Michigan Department of Licensing and Regulatory Affairs. The filing fee is $50 (as of April 2025).

Your Articles of Organization must include:

- LLC name
- Purpose of the LLC
- Registered agent information
- Whether the LLC will be member-managed or manager-managed (if manager-managed)
- Name and signature of the organizer

Step 4: Create an Operating Agreement

Again, while Michigan doesn’t legally require an operating agreement, it’s strongly recommended to create one to establish how you’ll run your LLC. This is especially important for single-member LLCs to help prove the LLC is being operated as a separate legal entity in court, and for multi-member LLCs to define rights and obligations among business owners.

Step 5: Obtain an EIN (Employer Identification Number)

An EIN is also called a Federal Tax ID Number or Federal Employer Identification Number. If your LLC has more than one member, it must obtain an EIN from the IRS, even if it has no employees. Single-member LLCs may use the owner’s Social Security Number instead, but an EIN is recommended for privacy.

Step 6: Open a Business Bank Account

Keep your personal and business finances separate by opening a dedicated business bank account. This helps maintain the liability protection of your LLC by showing it’s truly a separate entity.

Managing Your Michigan LLC

All LLCs doing business in Michigan must file an annual statement with LARA by February 15th each year. The filing fee is $25 (as of April 2025). If you form your LLC after September 30, you don’t need to file a statement the following February.

Here are a few best practices for managing your LLC, mitigating risks, and remaining compliant on an ongoing basis:

1. Maintain Separation: Keep business and personal finances strictly separate with dedicated accounts and records.
2. Document Decisions: Record major business decisions, especially for multi-member LLCs.
3. Update Your Operating Agreement: Review and update your operating agreement as your business evolves.
4. Keep Good Records: Maintain detailed financial records, meeting minutes, and membership changes.
5. Stay Compliant: File annual statements on time and keep your registered agent information current.
6. Consider Professional Help: Consult with an attorney periodically to ensure ongoing compliance.

Conclusion

Forming and maintaining an LLC in Michigan provides valuable liability protection and flexibility for your business. By following the steps outlined in this guide and maintaining proper governance, your LLC can serve as a solid foundation for your business ventures.

Remember that while this guide provides a comprehensive overview, consulting with a Michigan business attorney for your specific situation is always recommended, especially for complex ownership structures or specialized industries.

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 – May 9, 2025

Michigan Proposes Ban on Noncompete Agreements

Earlier this year, Michigan legislators introduced House Bill 4040, which aims to prohibit employers from implementing or enforcing noncompete clauses in employment contracts. The proposed legislation contains narrow exceptions only for situations involving the sale of business ownership interests or when an employee is responsible for selling the majority of a company’s assets.

Why it Matters: The proposed legislation comes amid significant national attention on noncompete agreements following the FTC’s attempted ban and the subsequent nationwide injunction blocking its enforcement. This has prompted many states to reconsider their noncompete policies. If passed, Michigan would join a select group of states including California, Minnesota, North Dakota, and Oklahoma. We will continue to monitor for new developments regarding this legislation.

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Navigating Through Life’s Toughest Obstacles

When facing charges of any kind, criminal law experience matters most. You need someone on your side with inside knowledge to provide guidance for a solid defense. We have extensive experience representing individuals and businesses in all stages of criminal proceedings.

Why it Matters: Helping clients for more than two decades, Rob is an experienced criminal defense and professional licensing attorney who has successfully represented clients in both state and federal courts in felony and misdemeanor cases in more than 50 counties across the state of Michigan. He is passionate about what he does, and, understanding the direct and collateral consequences that a criminal conviction or professional licensing sanction can bring, he compassionately works with his clients to focus on what matters most to them. Learn more.

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Michigan’s First Quarter Cannabis Sales in 2025 Hits $766 Million

In Michigan, total first quarter sales in 2025 for adult-use and medical cannabis totaled $766,198,323.48.

Why it Matters: Though there are reports of declining sales of cannabis starting in 2025, the prices of cannabis and cannabis-related products continue to decrease and make consumers happy. Growers on the other hand are seeing profits decrease.

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NLRB Establishes Standard for Workplace Rules

Why it Matters: Workplaces may need to review existing policies to their employee handbooks to ensure compliance, and tailor their workplace rules to service legitimate business interests.

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Ensuring Your Business is Secure Through Patent Protection

Whether it is a symbol that you use for branding or a formula that makes your product unique, your intellectual property assets need to be protected. Some of the most recognizable forms of intellectual property fall under copyrights, patents, and trademarks.

Why it Matters: A patent is a legal monopoly for protecting a utilitarian device, system, machine, composition or process. When should you file? Timing is of the essence to prevent a competitor from winning the race to the Patent Office. Our patent law attorneys can help you think through the issues and take the actions necessary to ensure your work and business are protected. Learn more.

Related Practice Groups and Professionals

Labor, Employment & Civil Rights | David Houston
Criminal Law | Robert Andretz
Cannabis Law | Sean Gallagher
Intellectual Property | Andrew Martin

Five Stories That Matter in Michigan This Week – May 2, 2025

CRA Files Formal Complaint Against Adult-Use Marijuana Processor

This week, the Michigan Cannabis Regulatory Agency filed a formal complaint against Pure Roots LLC, alleging the adult-use marijuana processor purchased marijuana from a non-licensed marijuana establishment, and that they failed to properly transport the marijuana in a secure transporter.

Why it Matters: The CRA is intending on imposing fines and/or other sanctions against Pure Roots LLC license, which may include the suspension, revocation, restriction, and/or refusal to renew their license.

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Ensuring Your Business is Secure Through Patent Protection

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Senate Labor Committee Hears Testimony Over Independent Contractor Proposal

The Senate Labor Committee heard testimony this week regarding proposed legislation over independent contractors.

Why it Matters: A few changes SB 6–7 would make include implementing an ABC test, and requiring three years of wage information for similar roles. Additionally, fines and penalties for misclassification would increase, and in some cases, may lead to prison sentences for business owners.

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Gain Peace of Mind Through Life’s Toughest Obstacles

Why it Matters: Helping clients for more than two decades, Rob is an experienced criminal defense and professional licensing attorney who has successfully represented clients in both state and federal courts in felony and misdemeanor cases in more than 50 counties across the state of Michigan. He is passionate about what he does, and, understanding the direct and collateral consequences that a criminal conviction or professional licensing sanction can bring, he compassionately works with his clients to focus on what matters most to them. Learn more.

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CRA to Hold Public Hearing and Receive Comments on New Package of Rules

The Michigan Cannabis Regulatory Agency has scheduled a public hearing for the purpose of receiving public comment on a proposed omnibus rule-making package on Tuesday, May 6, beginning at 9:00 a.m.

Why it Matters: The proposed rules are meant to address a number of important policy issues, including accounts receivable and hemp-derived products. Once the public hearing has concluded and the public comment period has ended, the CRA’s final rules will be sent to the Legislative Service Bureau for formal certification. The draft rules can be found here.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Intellectual Property | Andrew Martin
Labor, Employment & Civil Rights | David Houston
Criminal Law | Robert Andretz