The guys discuss the effect of the Heartbleed virus on small businesses and then provide guidance on exempt employees.

Full Podcast Transcript

NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.

MATT: And this is Matt Staub.

NASIR: And this is where we cover business in the news with our legal twist and also answer some of your business legal questions that you, the listener and business owner, can send in to ask@legallysoundsmartbusiness – did we get the dot-com for that?

MATT: Yeah, I think we got everyone – dot-com, dot-net, dot-org, dot-pizza.

NASIR: Have those come out yet? I don’t know if those subdomains or those domains have come out yet but we’re definitely getting when it comes out – unless one of our listeners takes it from us and extorts us.

MATT: It’s most likely already taken because that would be really popular name that people want to have.

NASIR: Especially for a pizza joint, it’d be perfect for them.

MATT: When the internet was kind of up and coming, everyone was on the internet at this point but people still didn’t understand, there was a very old – not very old but like ten to fifteen years maybe, ten to fifteen years, somewhere in that range – SNL commercial. I’m not going to say what the website they say on the show. You can go look it up because it’s probably not appropriate but it’s pretty funny. It’s basically making fun of the fact that every URL is taken already and this was at least ten years ago so it’s pretty interesting.

NASIR: It’s true. Pretty much every dictionary word is done for dot-coms. Pretty much every dictionary word with another dictionary word seems to be taken. It’s slim pickings now. But that’s why they came up with these other domains. I mean, we have clients that have alternative domain names and we have a lot of startup companies that use alternative domain names – whether it’s dot-co or dot-whatever, you know. And so, it’s becoming more popular and understandable.

MATT: Yeah. Well, enough of that, let’s get into the story we have for today. I assume that everyone had heard of this but I was just talking with people yesterday and not everyone was aware.

NASIR: How could they not? I’ve gotten five or six emails about this Heartbleed vulnerability and I’m surprised people haven’t heard about it yet.

MATT: For those that, I guess, haven’t, there’s this new security flaw that came out. When was this? Last week? At least that’s when we got the emails, I think.

NASIR: Yeah, what’s weird is that I think the internet community found out about it one day and then it just started populating after that and then we also found out that the US government knew about it before it was published or released and so forth. This security flaw is huge. It’s basically that encrypted connection that you have with these websites, yeah, all that information that’s passing by, in theory, I guess, some of these people can get that information – including passwords, credit card information, whatever – and with that goes onto the next level.

MATT: We’re going to kind of approach it from the small business perspective but, essentially, it did infiltrate all these big websites and a lot of private information so it’s all the personal data that might have been stored by these – they mentioned some of the ones that were effected like Dropbox, for example, that’s a pretty big company. I think there was a lot of precautionary things that people were taking. I’m trying to remember which sites sent me emails. Google, they keep saying change your Google password.

NASIR: I didn’t get anything from Google but I got two types of emails – one email was saying change your password and then another email saying, “You don’t have to do anything. We’re not affected.” Because I think everyone was kind of scared about all this so they were just being precautionary.

MATT: Yeah, it sounds like it is more precautionary stuff but we want to talk about how this does affect small businesses.

NASIR: I think there’s a few ways. A lot of the businesses work with private sensitive data. Whether you’re storing it on your servers or someone else is storing it on – for example, Dropbox, right? If you’re storing confidential information on there and you have a fiduciary duty or ethical duty whether you’re an accountant or dealing with medical information or whatever, I think at the least, you have an ethical obligation to change your password. If you don’t do that and then your data is later stolen then you can’t claim that someone else is responsible because you were forewarned beforehand.

MATT: Probably my biggest concern, if you have client data and you have a security breach with your own business, then you’re in a lot of trouble. We just passed tax season but I know that, in the past what people have done is steal personal data from CPA’s tax repairs, et cetera, and then file fake tax returns, get those refunds. And then, when those real people try to go file their tax returns with that social security number, if you send it in, they’ll say, “No, we already have a return for that social security number.”

NASIR: Wow, yeah.

MATT: That’s a problem.

NASIR: That’s a big deal.
Actually, I don’t know if a lot of people know this. I think maybe some of the professionals out there know but, if you do have a security breach, the standard is pretty low. Basically, if you find out or if you have even reason to know that it might be a possibility because someone hacked into your system, you have an obligation legally to inform your customers – usually, in writing – within a certain period of days – it’s state by state – to let them know that there might be a security breach. As consumers, we’ve gotten these before – whether it’s from Adobe or from Target saying, “Our servers have been hacked and your credit card might be stolen or information,” or what-have-you, and they may specify what is available to them but that’s actually a law that was started in California. Now, I don’t know how many states but many other states have adopted it. I know Texas has and I know New York has as well and has pretty much adopted California’s model of what they call security breach notification.

MATT: Yeah, that’s definitely something to keep in mind. Of course, put as many precautions as you can in there to protect what you have because the money and small amount of time spent protecting is going to save a ton of time down the road if there’s any sort of breach – and money too if you don’t have any insurance, I suppose, especially small businesses too because it could be a big hit.

NASIR: One thing that I noticed is that, even though this seems like a huge security flaw, it seems like it was a pretty quick easy fix. I mean, I got emails saying that they fixed it within 24 hours. I even talked to one of my clients this week; they’re an IT consulting firm and so they handle some of the servers and so forth. They didn’t have to deal with any really security breaches; they just had to apply a patch and that’s it pretty much and everything seemed to be fixed and no longer vulnerable. I guess that’s computers for you – that computer stuff.

MATT: Yes, that’s computers for you.

NASIR: All right, let’s get to our question of the day.

MATT: “How do I know whether my employee is exempt or not?”
This comes from someone in Roseville, California.

NASIR: I don’t know. Listen to our previous fifty episodes about this subject.
See, I lump this in with independent contractor versus employee stuff. Maybe this is a little different, I suppose.

MATT: Yeah, I’m not sure we’ve really… we’ve definitely talked about this topic before but not maybe in depth. So, first of all, we don’t need to discuss the employee versus independent contractor thing. We get that, hopefully.

NASIR: No, we don’t.

MATT: We’re talking about employees here and they can be classified as exempt or non-exempt and the big thing is whether they’re exempt from essentially overtime pay. That’s a big concern with that.

NASIR: That’s a good distinction to make because, when people say exempt versus non-exempt, what they’re referring to is exempt to certain labor laws. By the way, if you’re an exempt employee, you may not be exempt to everything – just certain things. But I think the main thing is overtime is the main focus when it comes to this kind of classification.
So, what’s the answer here? How do you determine and what’s the difference?

MATT: I guess you’ve got to look at a few things.
You’ve got to look at, first things first, I guess, title. I wouldn’t be so concerned with what your title is. Or I guess we’re talking from the employer’s perspective – the titles that you give your employees because titles can be anything. Me, personally, I’m not very big on titles of any job position – unless it’s CEO because I know what that is. You know, you look at what they’re doing. We’re talking administrative work, executive work, other professional employees, outside sales people, computer employees too can be classified. That’s one kind of step in the right direction of trying to determine whether they’re exempt or not.

NASIR: Well, let’s take a step back. If you look conceptual, it kind of goes to the same independent contractor employee discussion. If you have a lot of control over your employee and more control over the personnel, they’re more likely to be an employee. But the same way if you have more control over your employee, then they’re more likely to be non-exempt versus exempt. The idea is – again, we’ve talked about this in the past – if they’re given a certain amount of independence, then they in theory have the ability to decide on their own when they work and how they work and have more freedom as to these overtime issues, right? That’s the general concept.
But understand that California has pretty rigorous steps and criteria on who is exempt, a little bit more strict than the federal standard. The federal standard is pretty much the concept of having a managerial position and so forth. But California makes a few specific distinctions. There’s one called the executive exemption and administrative exemption which I think are pretty obvious. But then, there’s also even a professional exemption like an attorney or a doctor. But then, there’s all subcategories and Matt mentioned them – the computer professional and outside sales person – and these have specific criteria you have to follow and it’s kind of hard to go into detail at this point but, if you’re thinking about classifying one of your employees in this manner, I would consult an attorney in that regard.
But then, beyond all of this, there is also a salary test. Basically, in California, exempt employees must also meet a certain amount of salary per pay period to be considered exempt. A lot of times, I have seen where someone’s a so-called manager but then they’re being paid minimum wage. That just doesn’t work.

MATT: Yeah, I think you’re alluding to the same sort of thing with employees versus independent contractors. This isn’t something that can be explained in a couple of sentences but we went over the different types of exemptions and the salary requirement, too. Probably about the best that someone can hope for, I suppose, in terms of getting a brief summary of the difference between the two or trying to determine which they are.

NASIR: By the way, the minimum salary requirement is it has to be no less than two times the state minimum wage. California is at $8.00 an hour right now and it’s going up to $9.25 or something this July.

MATT: I think just $9.00 even.

NASIR: $9.00 even, yeah, whatever it will be. So, no less than two times the state minimum wage for that monthly salary for what would be a full-time employment. You take the 40-hour workweek and calculate as follows. I don’t know the exact calculation but it should be around $2,700 per month. It’s not too bad. I think most people in that exempt position would probably fall under that, I mean, in the sense that, if they are truly exempt, they’re probably being paid at least that amount of money. I guess $9.00 an hour, how much is that going to be? I have $3,100 – $3,120 to be exact. That’s what it’s going to go up to and that might affect that because I can see a lot of exempt employees being in that range between $2,700 and $3,100 per month.

MATT: All right. Well, this is a good math podcast.

NASIR: Well, hopefully, that answers that question. It’s kind of a general question – how do you determine between exempt or non-exempt? It’s a tough question. Just like the independent contractor employee question is if you think you’re on the borderline, do not take the chance. It’s the same issue because worst case scenario is that you have a misclassified employee that’s really non-exempt and they’re working overtime, they’re missing lunches, they’re doing this and that, and you’ll end up having to pay back those past wages plus penalties. It’s not a fun process to go through.

MATT: Exactly. I couldn’t have said it better myself – well, I probably could have but…

NASIR: Yeah, with a little practice.

MATT: You did a good job.

NASIR: I appreciate it. Thank you so much.
Well, that’s our episode. We’ll end on a good note with a compliment from Matt saying how perfect I am.

MATT: Ah, yeah. As always, keep it sound and keep it smart.


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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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Latest Episodes

November 21, 2023

In this episode, Nasir Pasha and Matt Staub explore the legal implications of Artificial Intelligence in the business world. They delve into the most talked-about issue of 2023: AI and its impact on the legal landscape. Although AI isn’t necessarily a new topic, it has many unanswered questions in the legal world. Nasir and Matt…

July 12, 2023

In this episode, Attorney Nasir Pasha and Attorney Matt Staub delve deep into the complexities of mass layoffs and offer valuable insights, real-life examples, and practical advice to employers grappling with the aftermath of such challenging situations. Nasir and Matt emphasize the critical importance of effective communication when executing mass layoffs. They stress the need…

January 9, 2023

As the COVID-19 pandemic swept across the globe, businesses scrambled to adapt to the new reality it presented. In this blog post, we dive into the case of Goldman Sachs, a financial services giant, to examine their response to the crisis and the lessons other businesses can learn from their return-to-office strategy. From prioritizing employee…

October 28, 2022

Full Podcast Transcript NASIR: Finally, my two favorite worlds have collided – both the law and the chess – right here at Memorial Park in Houston, Texas. Windy day. We have some background noise – ambient noise. What are the two worlds that collided? Well, Hans Neimann has sued Magnus Carlsen for defamation in one…

September 26, 2022

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

July 7, 2022

Whether you are buying or selling a business, the transaction goes through the same steps. However, they are viewed from different perspectives. Sellers may not want to fully disclose all the blind spots while Buyers will want otherwise. Nasir and Matt battle it out in this Buyer vs. Seller to determine who has the advantage!…

May 12, 2022

When it comes to Restrictive Covenants, employers are fighting to keep their company safe while employees may use them to their advantage. Keep listening to find out if the Employer or the Employee wins this battle. Round 1: Trade Secrets A company’s trade secrets encompass a whole range of information and are one of the…

February 14, 2022

The Supreme Court rejected the nation’s vaccine mandate. Businesses with 100 or more employees are NOT required to have their employees vaccinated or go through weekly testings. However, this policy remains in effect for health care facilities. In this episode of Legally Sound | Smart Business, the team sat down to discuss their thoughts on this ruling.

December 1, 2021

In this episode of Legally Sound | Smart Business by Pasha Law PC, Nasir and Matt cover the Business of Healthcare. There is more to the healthcare industry than just doctors and nurses. Many Americans have health insurance to cover their yearly needs, but most Americans are not aware of what really goes on behind…

October 12, 2021

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image….

September 28, 2021

What is a Non-Disclosure Agreement, and when do I need one? In this episode, Nasir and Matt shares why you need to use Non-Disclosure Agreements, basic facts about NDA’s, and discuss about the infamous Jenner-Woods story. Having the right Non-Disclosure Agreement in place not only protects you and your business, but it also makes the…

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

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