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 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.

​By Attorney Edward Jesson

When business owners think of employee handbooks, oftentimes they think of it as just one more administrative task that needs to be checked off the list when onboarding a new client. Because there are so many online HR services that will offer an employee handbook as part of their services, it can be tempting to just take whatever they have on offer and call it a day.

However, in North Carolina, and many other jurisdictions, the employee handbook is not just a HR document, it’s a legal document which can create legally binding promises between your business and your employee. Often, what you’ll obtain from your online HR service is a generic template, designed to work for thousands of clients over multiple jurisdictions and over many different industries. However, generic, nonspecific language is a risk when it comes to your employee handbook.

Employment law is highly state specific; what is required in, for example, California, can be vastly different from what is required in North Carolina. For example, North Carolina’s Wage and Hour Act has very specific rules on what can be withheld from an employee’s final paycheck and under what circumstances a business can withhold those funds. Violating the Wage and Hour Act can result in, among other things, an award of treble damages for the aggrieved employee as well as the business having to pay that former employee’s attorney’s fees—that can turn a small mistake into a big financial headache.

One example of an employee handbook that we recently came across discussed final paycheck withholdings and simply (and generically) stated that “state law applies.” In North Carolina, that is insufficient, the employee handbook has to state, specifically, what withholdings may be withheld from that final check. Accordingly, the employer wasn’t able to withhold anything from the paycheck, despite having invested a lot of money in training that the employer wished to recoup.

Your employee handbook is one of the most important legal documents your company has. It governs how you treat your employees, how you handle disputes, and how you hold up in court. Delegating it to an HR platform because it's convenient is like using an online will generator because it's fast — it might technically do the job, until it doesn't. And when it doesn’t, there are going to be real issues that arise as a result.

If you need an employee handbook reviewed, or need a handbook drafted from scratch, the attorneys at Jesson & Rains, PLLC are ready and able to assist in ensuring it’s compliant with your state’s legal requirements.

By Associate Attorney Ashley N. Bonomini

Marriage is one of life's most important commitments, but it is also a legal and financial partnership. When most people think of prenuptial agreements, they think of divorce planning, but it is so much more than that.  A prenuptial agreement can be a foundational component of a sound estate and business plan.

While discussing a prenuptial agreement may not seem romantic, it provides couples with an opportunity to establish clear expectations regarding financial matters and protect their interests before entering into marriage. One of the primary benefits of a prenuptial agreement is the protection of premarital assets. Individuals entering a marriage often have property they wish to keep separate, such as real estate, investment accounts, retirement savings, family inheritances, or ownership interests in a business.

Many people are shocked to learn that, immediately upon marriage, your spouse has automatic rights as it relates to inheritance!  You cannot legally disinherit your spouse in North Carolina or leave them less than the statutory “elective share,” which is a percentage of your estate based on the number of years you are married, unless you have a prenuptial agreement.

Therefore, individuals who expect to receive an inheritance or who wish to preserve family assets for children from a prior relationship often use prenuptial agreements as part of their estate planning strategy.  A prenup can help ensure that inherited assets remain separate property and can clarify how assets will be distributed in conjunction with a comprehensive estate plan. This is significant for individuals entering a second (or third) marriage or those with children from prior relationships who want to preserve assets intended for their children or other beneficiaries while balancing the financial needs of a new spouse.

Likewise, prenuptial agreements are particularly valuable for business owners. A business may represent years of hard work and substantial financial investment. Without a prenup, questions may arise regarding the appreciation in value of the business during the marriage or whether marital efforts contributed to its growth. A carefully drafted agreement can help protect the business and minimize the risk of costly litigation. This is vital for business owners looking to protect their business and livelihood from distribution to a spouse as part of a divorce or at death.

To be enforceable in North Carolina, a prenuptial agreement must be in writing and signed by both parties before the marriage. The agreement should be entered into voluntarily, and both parties should have adequate time to review the terms and seek independent legal counsel. Waiting until just days before a wedding can create unnecessary pressure and may increase the likelihood of future challenges to the validity of the agreement.

Ultimately, a prenuptial agreement is not just about planning for divorce. Instead, it is a proactive planning tool that allows couples to make informed decisions about their financial future.

Jesson & Rains, PLLC, has recently added the preparation of prenuptial agreements to our service offerings.  We understand that discussing a prenuptial agreement can be a sensitive topic. Our attorneys work closely with clients to create customized agreements that protect their interests while promoting fairness, transparency, and peace of mind. Whether you are entering your first marriage, a second marriage, own a business, have significant assets, or simply want to establish clear financial expectations, our team can guide you through the process with professionalism and care.