By Associate Attorney Ashley N. Bonomini

Employee classification and compensation are two areas where a seemingly small payroll decision can turn into a much bigger—and much more expensive—problem for a business. Paying a salary or allowing employees to receive tips does not necessarily determine how the law treats that worker. For North Carolina employers, understanding the basic rules can help avoid unpaid wage claims, penalties, and costly litigation.

One company could learn a very expensive lesson from such a misclassification. A class action lawsuit was recently filed against Restaurant Services of the Outer Banks, LLC, a company operating over 50 Dunkin’ Donuts and Baskin-Robbins locations in North Carolina and Virginia. The suit alleges that the franchisee improperly classified their store managers and failed to pay them overtime wages where they should have, resulting in potentially millions of unpaid wages owed to employees. This provides a timely reminder for employers to take a closer look at how their employees are classified and paid.

One of the most common wage-and-hour mistakes is assuming that a manager—or anyone receiving a salary—is automatically exempt from overtime. Under the federal Fair Labor Standards Act (“FLSA”), most employees must receive at least the applicable minimum wage and overtime compensation at one-and-one-half times their regular rate for hours worked over 40 in a workweek unless an exemption applies.

While payment on a salary basis is a requirement for many exemptions, salary alone is generally not enough. The employee must also satisfy the requirements of a particular exemption, which may include specific job-duty requirements. For example, if your “manager” spends most of the day performing the same work as hourly employees and has limited actual management authority, it may be time to take another look at that classification. The job duties are key.

North Carolina businesses must also consider the North Carolina Wage and Hour Act (“NCWHA”), which regulates issues such as payment of promised wages, deductions from wages, and notification of employees regarding their wages and employment practices.

In addition to federal minimum-wage and overtime requirements, North Carolina law addresses issues such as promised wages, commissions and bonuses, payroll deductions, and notice to employees about compensation practices. Employers should pay particular attention if they have these compensation arrangements, and their written policies should clearly explain when compensation is earned, when it will be paid, and what happens to outstanding compensation when employment ends.

Classification and wage issues are often easier—and considerably less expensive—to address before a dispute arises. For North Carolina employers, a periodic wage-and-hour checkup can help identify problems before they turn into litigation.

The attorneys at Jesson & Rains, PLLC can help North Carolina businesses review employee classifications, compensation practices, employment agreements, and workplace policies so you can spend less time worrying about payroll problems and more time running your business.

By Attorney Kelly Jesson

When Dolly Parton passed away last month, along with all of the tributes pouring in from every corner of the world, came a question estate planning attorneys hear all the time: who gets everything? Weeks later, we still don't have a clear answer. And according to the lawyers speaking to the press, we may never get one.

Parton's fortune has been estimated at $450 million, built from decades of songwriting royalties, Dollywood, and a sprawling collection of businesses and intellectual property. Her husband predeceased her last year, and the couple never had children. By the usual math, that should mean a very public, very complicated probate proceeding, with a courthouse full of records for every reporter and curious fan to comb through.

Instead, nothing has been filed: no will identifying beneficiaries. No probate inventory listing assets. Estate lawyers quoted in the days after her death gave a simple explanation: much of what she owned was very likely never in her name to begin with. It was already sitting inside one or more trusts.

That's not a loophole. It's one of the main points of having a trust. A properly funded trust never goes through that process at all. The trustee simply carries out the instructions the trust already contains, privately, without a filing, a docket number, or a stranger's ability to read who got what.

None of this happened by accident. In interviews going back to at least 2020, Parton spoke about deliberately getting her affairs in order with an estate attorney, citing the very public, very messy situations left behind by other entertainers who died without a plan. She wanted to spare her family exactly the kind of scramble and exposure that a will-only plan invites.

This is exactly what we help our clients build. You don't need a music catalog or a theme park to benefit from the same structure. Every trust-based plan we put in place for a client accomplishes the same three things Parton's apparently did: keep the details of what someone owned and who received it out of the public record, avoid a court process that can take months (or years) to resolve, and let a trustee step in and carry out clear instructions immediately, without waiting on a judge's calendar. Contact Jesson & Rains if you want to protect your legacy for your family outside of the public view.

​By Attorney Edward Jesson

For landowners who are concerned about taxes and/or their property being developed after they pass away, whether it be farmland, timberland, or mountain land, a conservation easement can be a valuable tool in estate planning. When properly utilized, conservation easements can protect land from future development, generate meaningful tax benefits at both the state and federal level, and help ease the transfer of property to the next generation.

Conservation easements are voluntary legal agreements between the landowner and a qualifying land trust or government entity that permanently limits certain uses of the land to protect its conservation value as undeveloped land. The landowner still owns the land, and can sell it, lease it, or pass it on to their heirs, but the easement runs with the land, meaning that the specific conservation restrictions bind all future owners, not just the person who granted it. Common restrictions may include limits on subdivision, commercial development, and mineral extraction, while still allowing things like agricultural use, timber management, and various recreational uses.

There can be several tax benefits to using conversation easements in your estate plan.  In North Carolina specifically, a conservation easement can provide a significant reduction in property taxes.  Someone who makes a qualified donation of a real property in North Carolina for an approved public benefit may be eligible for an income tax credit up to 25% of the fair market value of the land.

For high-net-worth individuals concerned about estate tax exposure, conservation easements can reduce a property’s fair market value due to the development restrictions, thus lowering their total net worth. Moreover, when land is donated to an eligible organization, it is usually treated as a charitable donation leading to significant tax benefits.

There are, of course, tradeoffs. Once recorded, a conservation easement cannot be undone by the current or future owner who has a change of heart about the best use of the land.  The specific terms of the easement are negotiated between the landowner and the holding organization, and the drafting stage is critical: a well-drafted easement, properly integrated into the broader estate plan, can protect both the land and the family for generations. On the other hand, a poorly drafted one can create restrictions no one intended and cause disputes among heirs who never agreed to them in the first place.

Anyone considering a conservation easement as part of their estate plan should work with an attorney early in the process, well in advance of signing anything restrictive, to make sure the easement's terms actually reflect the family's long-term goals and that the certification and credit application deadlines aren't missed. The attorneys at Jesson & Rains are ready to assist you in creating a conservation easement and all of your other estate planning needs. 

​By Associate Attorney Nicole M. Perozzi

If you’ve recently inherited a tax-deferred retirement account, such as a traditional IRA, you’ve also inherited a deadline.  The rules for liquidating an inherited IRA have significantly changed since 2020 with the enactment of the SECURE Act.

Prior to 2020, a beneficiary could “stretch” withdrawals from an inherited IRA over their entire lifetime, allowing tax-deferred assets to potentially grow for decades.  The SECURE Act ended that option for most beneficiaries.  If you do not meet one of the exceptions (such as being a surviving spouse), you likely will need to liquidate the entire IRA within 10 years of the deceased owner’s death.  The IRS further clarified in 2024 that if the deceased owner had already started taking their own required minimum distributions (“RMDs”) before death, the beneficiary must also take annual withdrawals in years one through nine of that 10-year period. Missing one of those withdrawals can trigger a steep penalty.

The rules that apply also depend on who it is that inherits the account-- whether you are the named beneficiary, the deceased owner’s Estate is the beneficiary, or deceased owner’s Trust is the beneficiary.

If you are directly named as the beneficiary, the standard “10-Year Rule” usually applies. However, if you are a surviving spouse, a minor child, or a disabled or chronically ill beneficiary, you may be able to stretch withdrawals over a longer period of time.

If the deceased owner’s Estate is the beneficiary, the Estate is not treated the same as an individual, and the same 10-Year Rule does not apply.  The rules are stricter, and how strict depends on whether the owner had already begun their own RMDs before death.  If not, the IRA typically must be liquidated within five years.  Plus, higher tax rates on withdrawals could apply.

If the deceased owner’s Trust (or subtrust) is the beneficiary, the Trust may be able to qualify for the 10-Year Rule, but this requires very careful drafting.  A Trust prepared before the SECURE Act may not work as intended.  If the Trust fails to qualify, it will be treated like an Estate and lose the more favorable rules.

Naming the wrong beneficiary on your IRA can carry significant tax consequences upon your death.  If you've recently inherited an IRA, or you're unsure how to name the beneficiaries on your own personal IRA, contact us today at Jesson & Rains to discuss your options!

​By Associate Attorney Ashley N. Bonomini

With various AI programs so readily available, many people have turned to using AI software to draft contracts and other legal documents. But when it comes to contracts, relying on AI can create significant legal and financial risks. Many of these AI generated documents are incredibly general and often lack specific terms that are essential to the enforcement of an agreement. A North Carolina man recently learned this the hard way when he sued to enforce a contract provision that was too vague and missing essential terms.

In Langley v. Autocraft, Inc., a former employee sought to enforce a provision in his employment agreement that stated he would receive a 10% ownership interest in the company after five years of continuous employment. Although the provision appeared to be straightforward, it failed to include terms regarding the purchase price of the ownership interest, how the price would be calculated, financing terms, payment schedules, or other terms that would be material to the transaction. Since North Carolina courts cannot create essential contractual terms that were never negotiated by the parties, the Court found the ownership provision was void for indefiniteness and thus unenforceable.

The inclusion of specific and essential terms in a contract is where AI falls short. AI programs and online templates can be exceptionally good at predicting what legal language should look like. However, they are far less capable of determining the legal language that is actually necessary for a particular transaction. AI does not know your business objectives, does not understand your industry, fails to look at your negotiating leverage, nor addresses state-specific legal requirements that it should address in the agreement.

Instead, AI generates language based on patterns it has learned from training models and other text. Even when you continue to use the same program and it learns more and more about your business and industry, it usually omits critical provisions or leaves out specific details necessary to ensure the agreement is enforceable. These omissions often lay dormant, only rearing their ugly heads when a dispute arises and fixing the problem becomes an incredibly tedious – and significantly expensive – undertaking.  It costs less to pay an attorney to draft the document correctly the first time than pay an attorney to litigate an issue later.

The Langley case is a reminder that just because AI can create a document that is professional and polished, it does not mean that it is the best contract for you.  You will not be protected using AI for your contracts.  Whether you’re entering into an employment agreement, buying or selling a business, contemplating a commercial transaction, or forming a new entity, the attorneys at Jesson & Rains, PLLC are ready and able to assist you in ensuring your contracts actually protect you.