Arnstein & Lehr Partner Gary Brown Talks Construction Law

Arnstein & Lehr Fort Lauderdale Partner Gary L. Brown presented an informational webinar titled, “Construction Law: Ultimate Bootcamp.” The topics discussed were Key Contract Terms, Managing Risk, Design Deficiencies, Changes and Delays, and Remedies for Non-Payment.

The webinar was co-sponsored and hosted by the Palm Beach County Bar Association live on June 27, 2017, but the recorded version can be viewed here.

Gary Brown is a partner in the Fort Lauderdale office of Arnstein & Lehr LLP and is a member of the firm’s Construction Practice Group. He is Board Certified by The Florida Bar in Construction Law. He practices in general commercial and business litigation, handling both complex and routine matters for clients with special expertise in construction-related matters. Gary has practiced law since 1995 in state and federal trial and appellate courts throughout Florida, where he has gained extensive experience in both trial and arbitration proceedings.

Fort Lauderdale Partner Gary Brown Publishes Update To His Book Florida Construction Defect Litigation

Arnstein & Lehr LLP Fort Lauderdale partner Gary Brown recently published an update to his book, Florida Construction Defect Litigation. It covers the legal framework within which construction defect claims are addressed, typical claims and defenses, contractual considerations, standards of care for contractors and design professionals, the applicability of insurance and surety bonds, and the role of experts. This book is a great resource for:

  • Developers, owners, and contractors
  • Real estate and construction attorneys
  • Personal injury attorneys
  • Insurance defense firms
  • Insurance and surety companies
  • Libraries (both legal and public libraries)

The new chapter in Florida Construction Defect Litigation, focuses on the arbitration of construction defect claims under state (Florida) and federal law such as pros and cons of arbitration, applicable statutes, the proceedings, enforcement of arbitration decisions, etc.

Find more information about the book here.

Gary Brown is a partner in the Fort Lauderdale office of Arnstein & Lehr LLP and is a member of the firm’s Construction Practice Group. He is Board Certified by The Florida Bar in Construction Law. He practices in general commercial and business litigation, handling both complex and routine matters for clients with special expertise in construction-related matters. Gary has practiced law since 1995 in state and federal trial and appellate courts throughout Florida, where he has gained extensive experience in both trial and arbitration proceedings.

West Palm Beach Partner Covers Construction Defect Law on “Legal News & Review” Radio Program

Josh Atlas

Photo Courtesy of Legal News & Review

Arnstein & Lehr LLP West Palm Beach partner Joshua Atlas made a year-end appearance on local AM radio show, Legal News & Review, where he discussed construction defect and construction lien issues. Mr. Atlas was joined by William Cornwell of Weiss, Handler & Cornwell, P.A., who covered class action lawsuits, and legal panel host Toni Kissel, who discussed traffic ticket law. Click here to listen to the segment.

Legal News & Review is an award-winning program recognized by the Florida Bar that covers a weekly roundup of legal news and issues every Friday evening. An independent production covering Southeast Florida, Legal News & Review is broadcast nationally on iHeartRadio and locally on WBZT.


Chicago Partner’s Article on Illinois Mechanics Lien Act Published in SubStance Magazine

James T. Rohlfingby James T. Rohlfing

This was published as an article called, “Courts Put Teeth in Attorney Fee Section of Illinois Mechanics Lien Act” in the December 2016 issue of SubStance Magazine.

Two recent Illinois cases have strengthened the section of the Illinois Mechanics Lien Act (the “Lien Act”) which, in essence, provides that if a party in a mechanics lien case acts in bad faith, that party must pay the attorneys’ fees of the winning party. In the recent case of Roy Zenere Trucking & Excavating, Inc v. Build Tech, Inc., 2016 Ill. App (3d) 140946, August 2, 2016, the court decided to put teeth into section 17 of the Lien Act in holding that an owner who wrongfully withheld payment for work performed must pay the contractor’s attorneys’ fees. And, in Father & Sons Home Improvement II, Inc. v. Stuart, 2016 IL App (1st) 143666, the court ordered a contractor that had litigated a fraudulent lien claim to pay the attorneys’ fees of the property owner. Although section 17 of the Lien Act has been law since 1995, few courts have been willing to enforce that section to discourage bad conduct on either side of lien litigation. These two cases are a positive development both for good faith lien claimants as well as property owners subjected to overreaching lien claims. The new law means property owners may pay a price for refusing to pay a contractor when there is no basis for withholding payment, and, in addition, wrongfully prosecuting or overstating a lien claim could be a risky proposition for contractors.

In the Roy Zenere case, the owner failed to pay amounts requested as change orders as well as a balance due under the base contract. The trial court found the property owner did not approve and, as a result, was not obligated to pay disputed change order requests. Therefore, the lien claimants were not entitled to be paid the amounts requested as change orders. The trial court did, however, award the lien claimants the unpaid amount due under the original contracts. Thus, the lien claimants received some but not all of what they were asking for in the case. The trial court decided there was no justification for not paying the balance of the original contracts, but it still denied the lien claimants request for attorneys’ fees.

The appellate court reversed the lower court’s decision not to award attorneys’ fees. The appellate court wrote that Section 17 of the Lien Act, specifically allows for attorneys’ fees where the owner’s failure to pay was “without just cause or right.” The evidence did not show any justification for the owner’s failure to pay the original contract amounts. The appellate court acknowledged that the owner may have had “just cause or right” not to pay the unapproved extras portion of the lien claim, but this did not preclude the claimants’ right to receive attorney’s fees for the owner’s failure to pay the undisputed amount. Therefore, even though the owner was justified in not paying the extras, the owner was not entitled to withhold payment for the amounts that were essentially uncontested, and therefore, the owner was required to pay the lien claimant’s attorneys’ fees.

Unfortunately, it is all too common that an owner will withhold all payments due under a contract, even when everyone knows at least some amount is due. The owner’s strategy, of course, is to use financial leverage to force a contractor to capitulate by not paying anything unless the contractor agrees to accept a lesser amount. In light of the Roy Zenere case, an owner should think twice about withholding payments that it knows are due because it might end up paying a lien claimants’ attorneys’ fees if the failure to pay is without good reason.

Section 17 of the Lien Act works both ways – it also provides that a lien claimant who wrongfully asserts or unjustifiably overstates a claim risks having to pay the owner’s attorneys’ fees. In another recent case, the appellate court decided that property owners were entitled to recover their attorney fees for defending a mechanics lien claim that was brought without just cause or right. In Father & Sons Home Improvement II, Inc. v. Stuart, 2016 IL App (1st) 143666, 52 N.E.3d 581, a contractor recorded a lien claim eight months before completing construction, which claimed that all of the work required by the contract was completed and that the claimant was owed $46,200. Though it is permissible to file a lien claim before the work is complete, it is not permissible to assert that the work is complete when, in fact, it is not even close to complete. The court held that the claimant’s misrepresentation was sufficient to prove constructive fraud. Thus, not only was the entire lien unenforceable, but the lien claimant was ordered to pay the attorneys’ fees incurred by the owner who had to defend the fraudulent claim. The trial court found several false statements were made by the lien claimant and the appellate court held that the trial court’s imposition of attorneys’ fees was justified.

These two cases demonstrate that under the right circumstances, a lien claimant or an owner may recover attorney fees in connection with a mechanics lien case if there is bad faith conduct involved. In light of these cases, owners would be well served to pay any undisputed amounts owed to lien claimants, even where there are separate amounts that are legitimately disputed. On the other hand, lien claimants must be careful to assert only those amounts in a lien claim that are supported by a good faith belief that they are entitled to payment.

James T. Rohlfing is a partner in the Chicago based law firm of Arnstein & Lehr LLP. He serves as chair of the firm’s Construction Practice Group. Mr. Rohlfing is a Martindale-Hubbell AV rated attorney, whose practice is focused in the areas of construction law and business litigation. Mr. Rohlfing is the editor and a chapter author of the West Publication Illinois Construction Law Manual. Please send any questions or comments to

West Palm Beach Partner’s Column on Construction Defect Litigation Costs Runs in Daily Business Review

Atlas_Joshby Joshua M. Atlas

This was published as a column called, “Construction Defects: Will the Florida Supreme Court End the Battle?” on November 23, 2016, in the Daily Business Review. 

The Florida construction industry will wait to find out if state law requires general liability insurers to defend contractors from claims during the pre-litigation defect process outlined in Chapter 558, Florida Statutes.

That is because a recent decision by the U.S. Court of Appeals for the Eleventh Circuit certified to the Florida Supreme Court the issue of whether the notice and repair process is considered a “suit” within the meaning of a standard insurance services office commercial general liability, or CGL, policy.

Enacted in 2003, Chapter 558 provides a process for a property owner, before filing a lawsuit, to give notice of construction or design defects and allow the responsible parties to inspect. Parties receiving this notice must then either make an offer to voluntarily resolve the defect claim or deny liability.

If there is no resolution, the owner can then proceed to court. The goal of the statute is to reduce the amount of litigation over construction defects.

For larger projects like condominiums, the process usually takes months and involves multiple inspections by different designers, contractors and subcontractors. This process was instituted by the Florida Legislature in response to the pre-recession construction boom that flooded Florida courtrooms with complex multi-party lawsuits.

At least 30 other states have similar statutes because defect cases are costly to the parties and taxing to the judiciary’s limited resources.

Suit Or Not?

In Altman Contractors v. Crum & Forster Specialty Insurance, the Eleventh Circuit was asked to consider a contractor’s appeal of a summary judgment order finding in favor of the insurer and determining that the Chapter 558 process was not a “suit” within the meaning of the standard ISO CGL policy.

The U.S. District Court for the Southern District of Florida found that the CGL policy required the insurer to defend the contractor from any “suit” seeking damages that the insured was obligated to pay caused by bodily injury or property damage but ruled that because the Chapter 558 process does not provide for a means to reach an ultimate decision on disputed liability, it does not fall within the policy definition of a “suit.”

In the district court and again on appeal, the contractor argued that the Chapter 558 process is part of a “suit” because under Florida law it is a mandatory step that must be completed before a lawsuit can be filed. Because it is part of the larger action of bringing a lawsuit, the contractor asserted that the Chapter 558 process should be considered a “civil proceeding” that falls within the policy definition of a “suit.”

The Eleventh Circuit held that the contractor and insurer both presented reasonable interpretations of the term “suit” but did not find an ambiguity in the policy. Under Florida law, that would have required the court to accept the contractor’s interpretation and reject the insurer’s.

Instead, after noting the lack of clear case law to guide it and determining that its decision would have significant practical and policy implications, the Eleventh Circuit decided that the issue was of such importance that the Florida Supreme Court should resolve it.


As noted by the Eleventh Circuit, there may be a significant impact on the Florida construction industry depending on where the Florida Supreme Court comes down. For example, a contractor receiving a Chapter 558 notice may simply decide to not respond and wait to be sued so its insurer will pick up the cost of defense.

Project owners wanting to trigger a contractor’s insurance coverage and bring an additional source of settlement money to the table may also just file suit without complying with Chapter 558 (and may even do so with the contractor’s cooperation). Under the statute, the only penalty would be a limited stay of the owner’s lawsuit while the process is completed.

Alternatively, parties may also contractually agree that the Chapter 558 process does not apply to their project with much more regularity than is common now. Under Chapter 558, the only way to opt out of the otherwise mandatory pre-litigation process is to agree by contract that a project is exempt.

If the Florida Supreme Court determines that a “suit” includes the Chapter 558 process, insurers may react by increasing insurance rates to cover the cost of what they contend are increased risks and obligations.

It is questionable though whether insurer costs would actually increase as even before the Altman Contractors case, carriers typically participated in the Chapter 558 process if there was otherwise coverage. If rates do increase, those additional costs will likely be passed on to owners and developers making projects more expensive.

Regardless of how the Florida Supreme Court rules, the likely effect may be an increase in defect litigation in Florida. Since that contradicts the Florida Legislature’s express purpose for enacting Chapter 558, it is easy to see why the Eleventh Circuit concluded that the Florida Supreme Court should decide this issue of state law. Now, Florida contractors and insurers must simply wait a little longer to find out how they will be impacted.

Joshua M. Atlas is a partner in the firm’s West Palm Beach office and a member of the construction law and commercial litigation practice groups.

Chicago Partners Co-Present Mason Contractors Webinar on Mechanics Liens

W. Matthew BryantJames T. RohlfingChicago partners James Rohlfing and W. Matthew Bryant  presented an educational webinar called, “Protecting Contractors with Mechanics Liens and Related Rights.” It summarized the Mechanics’ Lien Act and basic terms to help contractors understand conversations about liens with customers and attorneys.

This event was recently featured in the Chicago Daily Law Bulletin‘s “In the News” section and can be viewed here.

The webinar was hosted by the Mason Contractors Association of America live on November 16, 2016, but the recorded version can be viewed on under On Demand Education. The webinar is filed under “Ethics & Business Practices.” MCAA members have the opportunity to log in, register, and view the on-demand version of the presentation by clicking here.

Chicago Partner Published in ABA Forum November 2016 Newsletter

W. Matthew Bryantby W. Matthew Bryant

This was published as an article called, “Extended Warranties in Bonded Contracts: Effects on Bond Obligations, Costs and Negotiating Tips” in the ABA Forum on Construction’s November 2016 newsletter, Insurance, Surety & Liens. Mr. Bryant co-authored it with Ciara C. Young of Kinsley Construction, Inc.

Extended warranty periods are becoming increasingly common in construction contracts. Contractors can no longer assume the customary one year warranty or repair/maintenance period. The frequency of 18 month, two year and even five year warranties is growing. So, what does this mean and how does it impact the construction contract and any performance bonding obligations?

From bid time, the contractor must be aware of the warranty requirements of the bid documents. On bonded projects, the duration of the warranty period can substantially impact the bid price and contract sum. Most performance bonds guarantee performance of all obligations under the contract. The AIA A312 Performance Bond form provides as follows: “The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the Owner for the performance of the Construction Contract, which is incorporated herein by reference.” Other proprietary bonds are even more unequivocal and expressly state that the surety is obligated for all extended warranties.

Where a performance bond incorporates the underlying construction contract by reference, the provisions of the contract become provisions of the bond. For example, in Tudor Development Group, Inc. v. U.S. Fidelity & Guar. Co., 692 F. Supp. 461 (U.S.D.C. — M.D. Pa. 1988), the court held that where a plaintiff owner alleged that a contractor violated a warranty provision contained in the construction contract, the surety could be held responsible under the terms of the bond it supplied for the construction contract. Id. at 465. See also Sweetwater Apartments, 5 P.A., LLC v. Ware Construction Services, Inc., 2012 WL 3155564 at *5 (U.S.D.C. – M.D. Ala. 2012) (collecting cases). Similarly, when a contract including a warranty provision of 18 months, two years, or five years is incorporated into a performance bond, the surety guarantees performance of the contract obligation for the full contract warranty term. The surety’s obligation normally remains limited by the penal sum of the bond.

Typically, bond premiums are based on the bond remaining in place for one year from substantial completion. However, if the bond needs to stay in place for two years or more to cover extended warranties, the bond premium will increase accordingly. Sureties know that the longer the contractor’s obligations extend, the more risk the contractor and the sureties are taking on.

Unfortunately, contractors often just assume a one year period and fail to ensure the bond pricing used on bid day or in a negotiated contract covers the applicable warranty period for the project. If an extended warranty and the associated additional premium is missed in a hard bid or a negotiated contract, a contractor can find itself in the difficult predicament of either absorbing the costs, or going back to the owner and telling it that the bond costs will actually be much more, and asking it to cover the costs.

Contractors can use this knowledge to be creative in the negotiation process with owners in an effort to be the low bid and win the work. One option is to provide alternate pricing at bid time. For example, if the contract documents require a two year warranty, it may be beneficial to provide alternate pricing for a one year warranty. Also, in contrast to extended-term performance bonds priced on the full contract sum, owners may be willing to consider separate maintenance bonds that are typically based on only 10% of the contract sum as the repair or correction of a portion of the work is expected to be less than the cost of performing the whole of the contract work. This could be a value engineering option presented to an owner desiring the protection of extended warranties.

Also, if the contractor has subcontractor default insurance, it might be able to persuade an owner to not require performance bonds for more than the typical one year, thereby allowing the contractor to provide a savings to the owner that its competitors may not be able to provide. With subcontractor default insurance, a contractor can assure the owner that coverage exists to allow the contractor to address any deficiencies of the subcontractors’ work, and that performance bonds for the duration of the warranties are not necessary.

Owners are seeking longer warranty coverage for the work they ask contractors to perform. Contractors will provide the warranties their customers demand. Sureties will provide performance bonds that cover the contracts presented to them, at a price. Being aware of the implications of a warranty beyond the customary one year duration will allow owners, contractors, and sureties to consider the amount of assurance appropriate to guarantee performance of extended warranty obligations. The assurance needed can then be priced consistently with the risk undertaken by a surety, and all the parties can reach an efficient balance of risk and cost for a guarantee of extended warranty performance.

W. Matthew Bryant is a partner in the Chicago office of Arnstein & Lehr LLP. Mr. Bryant focuses his practice on construction and commercial litigation and dispute resolution. He has represented owners, architects, engineers, contractors, and subcontractors in lawsuits relating to construction defects, mechanics liens, bond claims, delay claims, change order disputes and fraud. To contact Mr. Bryant, please email

The Miller Act Trap: How to Protect Your Rights

Patrick Johnsonby Patrick J. Johnson

The Miller Act 40 U.S.C. § 3131 – § 3134, requires that any contractor performing construction on a federal building or public work over $100,000 furnish bonds guaranteeing payment to subcontractors and completion of the project. Under the Act the party having a contractual relationship with a subcontractor but no contractual relationship with the contractor furnishing the payment bond may bring an action on the payment bond following written notice within 90 days from the last date on which the party last supplied labor or materials for which the claim is made 40 U.S.C. § 3133(b)(2).

The Act contains an unexpected trap – the 90-day notice requirement is not tolled if payment remains past due for some labor or material, but payment is received for more recently supplied materials or labor which, if had gone unpaid, would have permitted a claim under the Act. In ABC Supply[1], a subcontractor supplied roofing materials on three different dates in October 1995. Subsequently, one additional shipment was made on January 11, 1996, which the defendant paid in full, leaving the three shipments from 1995 unpaid. ABC Supply gave notice to the defendant within 90 days of the January 11 shipment[2]. The court held that the notice was not timely as the “act requires notice be given within 90 days from the date on which materials were supplied….for which said claim is made[3]. Since the claim related to the unpaid shipments in 1995, the 90-day period began to run from the last shipment in 1995 and the notice was untimely.

Thus, to protect rights under the Miller Act, a subcontractor or supplier must be certain to send a notice under the Act within 90 days of when work was last performed AND unpaid for, even if subsequent payments are received that might lull the claimant into a false sense of security. Moreover, when pursuing an action against a payment bond under the Miller Act, be certain to know, specifically for the claim being made, the date on which labor or materials were last supplied for that claim to avoid a defense that the notice is inadequate.

Please contact the attorneys at Arnstein & Lehr so we can help you protect your Miller Act rights.

[1] United States ex rel. American Builders & Contrs. Supply Co. v. Bradley Constr. Co., 960 F. Supp. 145 (N.D. Ill. 1997).

[2] 960 F. Supp. 145, 147 (N.D. Ill. 1997).

[3] Id. at 148.

Patrick J. Johnson is an associate in the Chicago office of Arnstein & Lehr LLP, with experience in reviewing contracts for construction projects and negotiating agreements with opposing counsel at Fortune 500 companies, as well as smaller energy conglomerates.

West Palm Partners Co-Author Daily Business Review Column on Downtown Condo Projects

Joshua M. AtlasSteveDanielsby Steven L. Daniels and Joshua M. Atlas

This was published as a column called, “Downtown West Palm Condos Compete With New Luxury Units,” on August 11, 2016, in the Daily Business Review. 

Now that the Great Recession has been officially over for several years, many new residential projects are either under construction or on the drawing boards throughout Palm Beach County, particularly in and around downtown West Palm Beach.

As a result of these new projects coming online in the immediate and not too distant future, existing condominiums are facing a different problem than they faced 10 years ago: stiffer competition from their newer and more modern neighbors for buyers. The new challenge is demanding condo associations to take a proactive approach to mitigate the impact of new luxury condos being delivered in a relatively small market. Not taking action is not an option if condo owners want to protect and grow the value of their condos by remaining competitive in the market.

Many of the condo associations we represent, especially in downtown West Palm Beach, are preparing for this new competition and the resulting pressure on property values by upgrading their exterior appearance, modernizing their amenities and improving the infrastructure of their buildings. They want to be ready to compete when downtown West Palm Beach begins to deliver a significant number of new luxury condo units.

Between Bristol Condominium on Flagler Drive and Park Palm Beach in the Northwood-Curry Park section of downtown, 174 units are expected to be delivered during this real estate cycle. That’s nothing compared with the over 1,600 combined units planned between the Icon Palm Beach, Eighty Points West and Transit Village projects, none of which have broken ground yet. Development in the North Flagler-Riviera Beach neighborhoods, the Northwood-Currie Park area and the South Dixie corridor also promise to bring additional options to condo buyers seeking the urban living experience.

Unlike the Miami condo market, with the influx of foreign buyers looking to protect their wealth with investment in Miami real estate, Palm Beach County condo buyers are often northerners or existing residents looking to upgrade their existing units, downsize their residences or trade in the gated community golf club scene for an urban living experience. As such, the pressure to buy is not as great, and they can be more discriminating in their purchase. As is often the case in Palm Beach County, many buyers (condos and noncondos alike) seem to gravitate to newer projects. So with all of these new units coming online, how does an existing 20- to 30-year-old condominium compete? They do so in several ways.

Curb Appeal

First and foremost, they improve the “curb appeal” of their building. At the Waterview Condominium on Flagler Drive, the exterior has just been painted with clean-looking white as opposed to a brown color that was popular in the 1970s. With the blue water of the Intracoastal Waterway and white hulls of the boats docked behind the building, the white exterior softens the look of the building and creates a more modern and appealing appearance. The Waterview also recently renovated their fitness area along the Intracoastal.

On South Flagler Drive just next to the Sunfest concert area, Trump Tower Condominium will soon be undergoing the process of completely renovating their lobby area, freshening up the exterior landscape and upgrading their fitness area. The takeaway from such extensive common area renovations is that no matter how much a unit owner renovates their unit to protect and enhance its market value, if the exterior and lobby of a building does not have an inviting look, potential buyers may not even make it to the elevator.

In some cases, condos like Trump Plaza have also made major repairs and upgrades to the guts of their building. They recently replaced their vertical HVAC piping and connections to units in both towers and are in the process of replacing their emergency generator. These upgrades may not be visible, but to a savvy buyer who is concerned about a condominium building’s physical condition and the potential of significant special assessments in the near future, these improvements are a great selling point.

When undergoing these types of improvements, it is not enough to simply extend competitive bids to contractors and vendors. In many cases, the size and complexity of these improvements extend beyond the more common contracts handled by condominium boards and managers. A degree of expertise is necessary in order to ensure that the correct work is bid, the right contractor selected, and the appropriate contract is negotiated and executed.

Preparing good and accurate bid instructions and clear construction specifications should be done by those who perform those tasks on a regular basis. Condominium building improvements can often cost in the high six figures or even higher, and having the wrong person or person overseeing the process can result in devastating results, whether in needless delays, cost overruns or design and construction defects.

Once the decision and effort are made to enhance their building and protect and increase the value of their units, the last thing an older condominium association needs is to be embroiled in construction litigation.

Steven L. Daniels is the managing partner in the West Palm Beach and Boca Raton offices of Arnstein & Lehr concentrating in real estate and condominium/community association law. Joshua M. Atlas is a partner in the firm’s West Palm Beach office and a member of the construction law and commercial litigation practice groups.

DOL Announces Final FLSA Overtime Regulations

Jason Tremblayby E. Jason Tremblay

This was published as a Feature Story in the June 2016 edition of SubStance Magazine, which is distributed by the Illinois Mechanical & Specialty Contractors Association.

On Wednesday, May 18, 2016, the U.S. Department of Labor’s (DOL) Wage and Hour Division released its final updated FLSA overtime regulations. While some of the changes were expected, there are a number of surprises.

First, the new salary threshold for exempt executive, administrative and professional employees will be $47,476.00 per year (or $913.00 per week). That is more than double the current $455.00 per week but less than the original proposal, which would have boosted the minimum annual salary threshold to over $50,000.00 per year.

Second, the salary basis test has also been amended to clarify that employers may use nondiscretionary bonuses and incentive payments (such as commissions) to satisfy up to 10% of the new salary threshold. This may allow certain employees who do not have an annual salary of at least $47,476.00 to still satisfy one of the overtime exemptions.

Third, in another deviation from the initially proposed regulations, the final regulations require an update of the salary threshold every three years, as opposed to every year, as originally proposed by the DOL.

Fourth, the final regulations also increase the “highly compensated employee” (HCE) exemption to an annual salary threshold of $134,004.00, an upward adjustment from what was anticipated to be an annual threshold of $122,148.00.

Finally, these new regulations will take effect on December 1, 2016, which will provide employers a longer period of time to comply with them, as prior indications were that the final regulations would take effect in July 2016.

In light of the foregoing, all employers must immediately analyze whether current “exempt” employees will satisfy the new FLSA regulations and, if not, develop FLSA-compliant pay plans for employees who have previously been treated as exempt but who will now not be exempt under the new overtime regulations.

Should you have any questions regarding the final FLSA regulations, or should you need assistance complying with the regulations, please do not hesitate to contact E. Jason Tremblay at 312-876-6676 or your designated Arnstein & Lehr LLP attorney.

E. Jason Tremblay is a partner in the Arnstein & Lehr Chicago office. He is the chair of the Employment & Labor Practice Group, as well as a member of the firm’s Litigation Group. Mr. Tremblay focuses his practice in employment and commercial litigation. In the commercial area, he represents parties in a broad range of complex business and tort litigation matters, including matters involving breach of contract, breach of fiduciary duty, fraud, interference with contract, shareholder disputes and insurance coverage. To contact Mr. Tremblay, please email