Choppy Waters: Pacific Sun Files for Chapter 11 Bankruptcy

What This Could Mean for Retail Landlords


Surfer Riding a Wave

Pacific Sun, commonly referred to as “PacSun” by California surfers and 90’s kids, is in financial distress. The trendy skate and surf shop with 600 stores nationwide is just one of many retailers that overestimated consumer demand and expanded too quickly. While PacSun’s President and CEO, Gary Schoenfeld, noted that the private equity firm Golden Gate Capital will help make it possible to keep operating as usual, our commercial real estate group asks – what can our commercial real estate clients learn from PacSun’s mistake?

Ninth Circuit Validates USDOL Tip Pool Rules

In a surprising decision, on Tuesday, February 23, 2016, the United States Court of Appeals for the Ninth Circuit validated the 2011 Rule by the United States Department of Labor (DOL) prohibiting tip pooling programs that include “back of the house” employees and other workers who are not customarily and regularly tipped (e.g., cooks, dishwashers).  The Ninth Circuit decision confirms the DOL’s position that the 2011 Rule applies even to restaurants that do not take a tip credit.  This decision is binding in the following jurisdictions that previously relied on a different ruling:  Washington, Oregon, Alaska, Idaho, Montana, Nevada, California, Arizona, Hawai’i, Guam, and Northern Mariana Islands.


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Noncompete Agreements Becoming Obsolete?

The state House of Representatives may soon send noncompete agreements down the way of the dodo bird . . . toward extinction.


The House Labor and Workplace Committee voted 4-2 on Tuesday in favor of House Bill (HB) 2931, which would ban noncompete provisions from employment agreements in all but a few instances. The bill is now headed for a full House vote.


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It’s an “Economic Reality”: Your Independent Contractors May Actually Be Employees

  • The U.S. DOL clarifies how businesses should determine whether workers are independent contractors or employees
  • Classifying as independent contractor or employee is based on “economic realities” of relationship, not “control” of the worker by the employer
  • “Economic Realities” test looks at six broad factors

The federal Department of Labor (“DOL”), the agency charged with enforcing the Fair Labor Standards Act (“FLSA”), recently published an Administrative Interpretation clarifying the test businesses must apply to determine whether workers are properly classified as independent contractors or if they are, in fact, employees. The Interpretation makes clear that “control” of the worker by the employer is not the name of the game. Rather, proper worker classification is determined by the “economic realities” of the relationship.

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