Articles were written by attorneys for attorneys and published in the “Legislative Update” issue of the printed publication, Communiqué (September 2017):
- All Aboard the Omnibus: Highlights of AB 314 Changes to Probate and Trust Law By Alan D. Freer, Esq. and Jeffrey P. Luszeck, Esq.
- “Nevada 2017 Legislative Update: Gaming Law” By Jennifer Gaynor, Esq.; Greg Gemignani, Esq.; Kate Lowenhar-Fisher, Esq.; and Jeff Silver, Esq.
- “Changes to affect court practice, procedure for Clark County Civil Bench-Bar” by Jacquelyn Franco, Esq.
- “Nevada Expands its Laws Protecting Animals Left in Hot Cars – But Will It Result in Change?” by Jennifer Braster, Esq.
- “AB 276 presents non-compete covenant questions, challenges” By Aviva Y. Gordon, Esq.
Also, the printed magazine are practical features and highlights for Nevada attorneys including:
- Enact and React: New Legislation Affecting LVJC by Justice of the Peace Melissa Saragosa
- “Good News from Southern Nevada Senior Law Program” By Elana Graham, Esq.
- Nevada Appellate Court Summaries by Joe Tommasino, Esq.
- Pro Bono Corner By Mary Bacon, Esq.
© 2017 The following articles were originally published in Communiqué, the official publication of the Clark County Bar Association. (September 2017). All rights reserved. For permission to reprint this article, contact the publisher Clark County Bar Association, 717 S. 8th Street, Las Vegas, NV 89101. Phone: (702) 387-6011.
All Aboard the Omnibus: Highlights of AB 314 Changes to Probate and Trust Law
By Alan D. Freer, Esq. and Jeffrey P. Luszeck, Esq.
AB 314, which becomes effective October 1, 2017, makes various changes to probate and trust law. Although the bill provides omnibus amendments to the law governing trusts and estates (primarily contained in NRS Titles 12 and 13), most provisions are designed to minimize litigation and reduce the cost and expense to the parties. Generally, these amendments fall into four broad categories: (1) creditors and exemptions; (2) estate planning; (3) administration of estates and trusts; and (4) litigation and contested proceedings.
Creditors and exemptions
In the area of creditors and exemptions, Section 1 amends NRS 21.090 to increase the exemption amount available to all judgment debtors for money held in retirement or pension accounts from $500,000 to $1,000,000, while also providing state law creditor protection for inherited retirement accounts. As to creditors of a decedent’s estate, Section 24 amends NRS 147.130 to now give all creditors the option of filing a petition for summary determination of a rejected creditor’s claim in the probate court instead of filing a separate civil lawsuit to adjudicate the claim. Likewise, Section 25 amends NRS 147.150 to permit all lienholders to foreclose on security interests on estate property without filing a creditor’s claim, if the lienholder expressly waives all recourse against any other property of the estate.
Perhaps the most substantial change in this category is the overhaul of Nevada’s non-probate transferee liability statutes (which permits recovery against recipients of certain transfers of property where the probate estate possesses insufficient assets to satisfy creditors). Specifically, Section 2 amends NRS 111.721 to clarify that property transferred from a third party estate or trust through a power of appointment does not constitute a non-probate transfer. Similarly, Section 3 amends NRS 111.779 to define the procedural steps to be taken when seeking to impose liability on a non-probate transferee, clarify the limitations period in which such actions must be commenced depending on how the creditor’s claim was processed in the probate estate, and clarify exemptions to enforcement.
Estate planning and trust formation
AB 314 also provides several amendments relating to estate planning. Section 47 authorizes a settlor to incorporate trust provisions that permit a trustee to be exonerated, indemnified, or reimbursed for tort arising from trust property so long as the trustee has not acted with malice, gross negligence, or intentional misconduct (NRS 163.130). Section 54 amends NRS 451.024 to expressly provide that a provision for cremation in a valid durable power of attorney or last will and testament is enforceable.
In the area of formation of trusts, Section 42: (1) amends NRS 163.002(1) by clarifying the types of declarations acceptable for the formation of a valid trust, including allowing a declaration by a property owner that someone else owns the property as trustee, and (2) expressly permits a schedule of trust property to qualify as a valid declaration that the listed property is held in trust.
The largest change in the area of estate planning occurs in Sections 38 and 39 of the bill by recognizing and permitting the creation of purpose trusts under Nevada law. A “purpose trust” is an irrevocable trust that does not have an ascertainable beneficiary and is not created for charitable purposes, but rather is used for the maintenance of grave sites, the maintenance of family property such as art, memorabilia, and similar collections, or the maintenance of a family homestead or ranch, digital assets or family trust companies.
Administration of estates and trusts
Numerous sections within AB 314 amend and simplify trust and estate administration. Several sections amend definitions to further clarify their application within the probate code, such as Chapter 132’s definitions for “expenses of administration” (Section 6) and “fiduciary” (Section 7).
With respect to ascertaining whether a will was revived, lost, or stolen, Section 8 amends NRS 133.130 to now permit extrinsic evidence to be introduced concerning the manner in which a testator revoked a will in determining whether the testator intended to revive a prior will by such action. Similarly, Section 9 clarifies NRS 136.240 and conforms that section to common law by setting forth the information that must be presented to the court when proving a lost or stolen will.
In the area of special administrators, Section 13 now permits the appointment of a special administrator to be appointed to protect the rights and privileges of a decedent, in addition to preserving the decedent’s estate.
Three sections were passed that assist in streamlining the sale of real property in the estate administration process. Section 26 expands the scope of permitted waivers of publication of notice of sale of real property under NRS 148.220 to include situations where the property is listed in a multiple listing service or where the property is being sold as a short sale. Similarly, Section 27 amends NRS 148.260 to allow the court, for good cause shown, to waive the requirement of a current appraisal when confirming a probate sale. Section 28 clarifies and conforms the overbid process in sales of real property (NRS 148.270) to current practices to provide that where the overbid purchaser is the highest bidder on a sale of real property, the original purchase contract remains in force and effect except for the substitution of the purchase price and the new purchaser. This section also amends this subsection to exempt short sale purchases from the overbid process.
Litigation and contested matters
Sections 10 and 41 amend the no‑contest clause statutes for both wills (NRS 137.005) and for trusts (NRS 163.00195) by providing a public policy statement confirming that public policy favors enforcing the intent of the testator/settlor but does not favor forfeitures. This amendment clarifies that a no contest clause must be strictly construed to carry out the testator’s intent. This section adds a safe harbor provision from the no contest provisions for seeking to enforce the fiduciary duties of the trustee/personal representative.
Section 11 clarifies the post‑probate will contest procedure in NRS 137.090 and conforms it with procedures for pre‑probate will contests (NRS 137.010(1)) regarding the issuance of a citation upon filing a contest. With respect to service of citations, Section 35 now permits service of citation by certified mail, with a return receipt requested, similar to NRS 159.0475 (NRS 150.050).
Lastly, Sections 20 and 46, clarify the court’s authority and procedure with respect to entering restraining orders over personal representatives subject to its appointment, trustees subject to its jurisdiction, and property over which it could exercise in rem jurisdiction. (NRS 143.165 and 163.115).
The primary intent of AB 314 was to clarify the laws relating to estate planning, trust administration, probate, and property transfers. Due to the breadth of AB 314 it is impossible to go through each amendment in detail. An Executive Summary of AB 314 that was offered by the Legislative Committee of the Probate and Trust Law Section of the Nevada State Bar can be found at https://www.leg.state.nv.us/Session/79th2017/Exhibits/Senate/JUD/SJUD1008E.pdf.
Alan D. Freer, Esq. is a partner at the Las Vegas law firm of Solomon, Dwiggins & Freer Ltd., where he focuses his practice primarily on trust and estate litigation. Mr. Freer presently serves as co-chair of the Legislative Committee for the Probate and Trust Section of the Nevada State Bar.
Jeffrey P. Luszeck, Esq. is a partner at the Las Vegas law firm of Solomon, Dwiggins & Freer Ltd. His practice areas are primarily trust and estate litigation and small business litigation. Mr. Luszeck presently serves as secretary of the Legislative Committee for the Probate and Trust Section of the Nevada State Bar.
Nevada 2017 Legislative Update: Gaming Law
By Jennifer Gaynor, Esq.; Greg Gemignani, Esq.; Kate Lowenhar-Fisher, Esq.; and Jeff Silver, Esq.
In 2017, Nevada’s lawmakers addressed gaming industry issues, including the confidentiality of information submitted to Nevada gaming regulators, the boundaries of gaming enterprise districts (“GEDs”) in the City of Las Vegas, and pari-mutuel wagers for esports events. Below, we take a look at the key gaming bills passed this session.
Senate Bill 376 (SB376)
SB376 amends NRS 463.120, the statutory section that provides for confidentiality of information submitted as part of the Nevada state gaming application process. Section 463.120 was originally adopted in 1959 to ensure that information and data furnished to the Nevada Gaming Control Board (“Board”) and Nevada Gaming Commission (“Commission”), or prepared or obtained by a Board agent or employee pursuant to audit, investigation, determination, or hearing, is “confidential and may be revealed in whole or in part only in the course of the necessary administration of Chapter 463, or upon the lawful order of a court of competent jurisdiction.” This statute also provides that information derived from this confidential information and transmuted into the work product of an agent, such as an investigative summary, is not only confidential, but absolutely privileged (as upheld in Rosenthal v. Nevada, 514 F. Supp. 907 (D. Nev. 1981)).
The confidentiality protections of NRS 463.120, however, have been under continual assault by civil litigants. For example, in 2008, a U.S. Bankruptcy Court judge allowed portions of a gaming application to be revealed to opposing counsel after the judge reviewed the entire application in camera. Then, in 2013, a Nevada state district court judge found in a discovery action that papers submitted to the Board by a gaming license applicant were not entitled to confidentiality protection. Additionally, each jurisdiction has differing views on whether records maintained by a sister agency are entitled to protection. For example, if New Jersey gaming regulators obtain investigative materials from the Nevada Board, would that information or data still enjoy protection under New Jersey law?
Therefore, we have SB376, which attempts to strengthen NRS 463.120 by providing that:
[I]f any applicant or licensee provides or communicates any information and data to an agent or employee of the Board or Commission in connection with its regulatory, investigative or enforcement authority:
a. All such information and data are confidential and privileged and the confidentially and privilege are not waived if the information and data are shared or have been shared with an authorized agent of any agency of the United States Government, any state or any political subdivision of a state . . . [and]
b. The applicant or licensee has a privilege to refuse to disclose, and to prevent any other person or government agent, employee or agency from disclosing, the privileged information and data.
“Information and data” is also broadly defined in the new law. Whether these broad definitions of protectable information contained in SB376 will be upheld by the courts, however, is yet to be seen.
Assembly Bill 75 (AB75)
AB75–otherwise known as the gaming “omnibus” bill–was signed by Governor Sandoval on May 23, 2017, and became effective on July 1. The bill was largely uncontroversial and accomplished a number of objectives, including that it:
- Expands the term “manufacturer” for gaming licensing purposes to include those who assume responsibility for certain actions constituting manufacturing and then exempts certain manufacturers and independent contractors from licensing if a licensed manufacturer assumes responsibility for the actions performed by the unlicensed manufacturer or independent contractor.
- Exempts licensed manufacturers and distributors from any additional licensing requirement in connection with furnishing equipment or services to a licensee in exchange for a percentage of gaming revenue.
- Exempts the trustee of an employee stock ownership plan from certain licensing requirements (current law similarly exempts a bank acting as a fiduciary).
- Provides that the Board’s expenditures from the Board’s revolving account (which is used to facilitate confidential investigations) may exceed the amount authorized by the legislature only when the expenditures are derived from state or federal forfeiture funds.
- Transfers certain duties related to the approval of associated equipment manufacturers and distributors from the Commission to the Board.
Finally, one of the more interesting components of the bill is that it grants the Commission the authority to “reject” an application that the Board has recommended for denial. A rejection of the application would not constitute a determination of the suitability of the applicant or a denial of the application of the applicant. It is not clear from the bill what circumstances would lead the Commission to reject an application rather than deny or remand the application.
Assembly Bill 219 (AB219)
AB219 was brought on behalf of the City of Las Vegas to help them redefine the boundaries of GEDs within the City. The bill does this in two parts.
First, the bill eliminates a portion of the Las Vegas Boulevard gaming corridor GED where it encroached into an established residential area.
Second, it creates the Historic Downtown Gaming District, to encourage development in the historic gaming center of downtown Las Vegas. For many years, the City’s municipal code had established a permissive downtown casino district where nonrestricted gaming would be acceptable. Concerns with the proliferation of casinos in residential areas led the Nevada legislature to create state-level restrictions on the location of nonrestricted gaming in the 1990s. This included that nonrestricted licenses could be issued only in designated GEDs and all previously designated GEDs that did not have operating nonrestricted licensees were eliminated.
Consequently, the permissive casino district created by the City was replaced with a map containing a checkerboard of parcels upon which the City’s existing casinos were located. These casinos could continue to operate but expansion options were limited.
Recognizing that there was interest in development in the downtown gaming corridor, the City asked the Nevada legislature to re-establish its original casino district as its designated GED. With AB219, the legislature did so, but with a number of specific conditions to ensure that development would include more than just a casino floor. To take advantage of gaming expansion in the newly-defined GED, the development must be a nonrestricted resort hotel (a statutory definition that requires a minimum of 200 hotel rooms and other amenities), located on an entire city block, and have a value of at least $100 million.
Senate Bill 240 (SB240)
SB240 is the product of the Gaming Law Policy course at the William S. Boyd School of Law at UNLV. Under pre-existing law in NRS 463, a sports book was permitted to take wagers on sporting events and other events by any system or method of wagering. Under NRS 464 (pari-mutuel wagering statute), however, all references to the pari-mutuel system of wagering were limited to racing and sporting events. SB240 expressly expands NRS 464 to include “other events” as suitable subject matter for pari-mutuel wagering.
SB240 did not alter the current statutory and regulatory framework for approvals required for wagering to occur on “other events,” nor did it alter requirements for pari-mutuel wagering on sporting events or racing. Although SB240 is often cited in the press as an esports bill, and it does provide that Nevada regulators may permit pari-mutuel wagering on esports, the bill is neutral with regard to the subject matter of the “other events” upon which wagering may be approved and allows for pari-mutuel wagering on a variety of other non-racing or sporting events.
Senate Bill 120 (SB120)
SB120 revises the membership and duties of the Advisory Committee on Problem Gambling. Proponents provided that the advisory committee needed more flexibility in the requirements for its membership because some of the seats had been so narrowly defined that they were left vacant due to an inability to find appropriate people to fill them.
Jennifer Gaynor represents clients before the Nevada State Legislature, Nevada gaming regulators, and other state and local regulatory bodies.
Gregory Gemignani focuses primarily on intellectual property law, gaming law, technology law, Internet law, online gaming law, and online promotions law.
Kate Lowenhar-Fisher provides counsel on regulatory issues in connection with mergers and acquisitions, corporate restructuring, reorganizations and financings, and Internet law.
Jeffrey Silver represents clients on gaming law, liquor licensing, regulatory law, planning and zoning matters, contractors licensing, and transportation law.
Changes to affect court practice, procedure for Clark County Civil Bench-Bar
By Jacquelyn Franco, Esq.
On July 11, 2017, at the Civil Bench-Bar Meeting, the Honorable Judge Gloria Sturman presented a Legislative Update. With the assistance of a PowerPoint presentation created by Joe Tommasino, Esq., Staff Attorney, Las Vegas Justice Court, Judge Sturman reviewed, in part, the following:
- AB 37 – Revises procedure for “affidavit of prejudice” against a judge and expands the process to include justices of the peace and municipal judges. Also, a judge may now challenge the affidavit and file a response. The questions regarding the judge’s disqualification will then be heard and determined by another judge, who is either a judge that is agreed upon by the parties or, if they are unable to agree, by a judge who is appointed. (Effective May 22, 2017.)
- AB 63 – Requires every applicant for certification as a court interpreter or appointment as an alternate court interpreter to submit, with his/her application, a complete set of his/her fingerprints to be forwarded to the Central Repository for Nevada Records of Criminal History and the Federal Bureau of Investigations for their initial report on the criminal history of the applicant. (Effective May 23, 2017.)
- AB 102 – Change of venue – NRS 13.050 is amended to read as follows: 1. If the county designated for that purpose in the complaint, petition or motion is not the proper county, the proceeding may, notwithstanding, be tried or heard therein unless (a) after the filing of a complaint or petition, the defendant demands in writing, before the time for answering expires, that the trial be had in the proper county, and the place of trial be thereupon changed by consent of the parties, or by order of the court. (Effective October 1, 2017.)
- AB 125 – Requires certification of court interpreters. Also, the term “person with a language barrier” is replaced with “person with limited English proficiency”. (Effective October 1, 2017.)
- AB 207 – Enlarges selection pool for jurors from current voter lists, DMV, and certain utilities to include recipients of benefits from the Employment Security Division. In addition, the Jury Commissioner is to maintain records of demographic information provided by jurors, which includes name, occupation, address, and race, and to report the same annually to the Court Administrator. Lastly, it is a gross misdemeanor to misuse juror selection lists. (Effective July 1, 2017.)
- AB 314 – Part one of the bill increases exemption for execution to $1,000,000 in money and $10,000 in nonexempt personal property. (Effective October 1, 2017.)
- SB 202 – Each municipal judge must be a licensed member of the State Bar of Nevada. This requirement does not apply to any municipal judge who holds the office on October 1, 2017 and continues to serve as such in uninterrupted terms. (Effective October 1, 2017.)
- SB 230 – Increases exemption from execution to 82 percent of a judgment debtor’s disposable earnings for any workweek if gross wages are $770 or less and maintains the exemption of 75 percent if the wages exceed $770. (Effective October 1, 2017).
The Civil Bench-Bar meetings are held on the second Tuesday of each month. The Honorable Judge Nancy Allf hosts the meetings at 12:00 p.m. in Courtroom 3A at the Regional Justice Center, 200 Lewis Avenue, Las Vegas, Nevada. All members of the State Bar of Nevada are invited to attend the meetings to comment and/or ask questions about some of the ongoing modifications of processes in the civil department. Lunch is served.
Jacquelyn M. Franco, is an associate with Stephenson and Dickinson. Her practice focuses on insurance defense litigation, including commercial transportation, personal injury, and construction defect claims. She can be reached at (702) 474-7229 or firstname.lastname@example.org.
Nevada Expands its Laws Protecting Animals Left in Hot Cars – But Will It Result in Change?
By Jennifer Braster, Esq.
Since 2007, Nevada’s animal cruelty laws have prohibited a person from leaving a dog or cat in a car during periods of extreme heat or cold. NRS 574.195. Violation of this law is a misdemeanor. Id. During the 2017 Legislative Session, with Senate Bill 409, Senators Manendo, Cannizzaro, and Parks sought to expand this law to further protect animals left in vehicles and those who come to the animals’ aid. Ultimately, the revised law essentially made three changes: (1) expressly stating that animal control officers must provide these rescued animals with shelter and care; (2) clarifying the protections afforded to those individuals authorized to aid these animals; and (3) expanding the application of the law to not just dogs and cats but all pets. It remains to be seen if these changes will result in change.
Within minutes, a vehicle can prove deadly to children and animals
While unfortunately there are several stories a year about children dying in hot cars, many do not realize how quickly a vehicle can also become a death trap for animals. The Animal Veterinary Medical Foundation provides the following chart: See AVMA, https://www.avma.org/public/PetCare/Pages/Estimated-Vehicle-Interior-Air-Temperature-v.-Elapsed-Time.aspx (last visited July 30, 2017).
In Washoe County, Regional Animal Services responds to an average of 400 to 500 calls of dogs and cats left in hot vehicles each summer. Minutes of the Senate Committee on the Judiciary, 79th Session (April 7, 2017) (statement of Robert Smith, Manager, Washoe County Regional Animal Services). Clark County Animal Control has reported responding to over 200 calls a day in the summer regarding animals left in extreme heat – whether in vehicles or simply outside. With S.B. 409, Senator Manendo sought to bring the dogs in hot cars law in line with the laws regarding children left in hot cars. At the end of the day, the legislation that passed did not deviate significantly than the laws on the books, but serves as a stepping stone to further protecting animals from these dangerous circumstances.
Nevada is one of 25 states that allows the rescuing of animals left in hot cars
Approximately half of the states allow certain individuals to rescue animals left in hot cars and/or provides immunity to those that undertake such acts. Nevada is one of sixteen states that allows public officers to rescue an animal left in a hot vehicle and/or provides civil and/or criminal immunity for such acts. Nine states go one step further and have enacted legislation allowing good samaritans to rescue animals left in hot cars in certain situations and/or provides civil and/or criminal immunity from such acts. See Humane Society, Pets in Hot Cars Laws – Current Landscape, http://blog.humanesociety.org/wp-content/uploads/2017/06/hot-car-laws-map-1.pdf (last visited July 30, 2017).
Changes in Nevada’s hot car law as a result of SB 409
During the 2017 Legislative Session, the Humane Society of the United States lobbied to expand the language of S.B. 409 to allow good Samaritans to save animals left in hot vehicles without incurring civil liability. The proposed language suggested by the Humane Society of the United States would have allowed someone with a good faith belief that an animal was in imminent danger to forcibly enter a vehicle to save the animal if the person first called 911, or otherwise contacted the authorities, and remained with the animal until the authorities arrived. Minutes of the Senate Committee on Judiciary, 79th Session (April 7, 2017) (Exhibit K). Ultimately, the enrolled version of S.B. 409 did not expand on those authorized individuals who could rescue such distressed animals. Under S.B. 409, only the following individuals may rescue a pet left unattended in a parked or standing motor vehicle during periods of extreme heat or cold without incurring civil liability: peace officer, animal control officer, governmental officer or employee whose primary duty is to ensure public safety, employee or volunteer of a fire department, or a member of a search and rescue organization that is under the direct supervision of a sheriff. S.B. 409.
There are three main changes to Nevada’s laws protecting animals from being left in hot cars – and protecting those who come to the animals’ aid. Both the 2007 law and S.B. 409 allow those certain authorized individuals identified above to rescue such animals without incurring civil liability. S.B. 409 specifically states that those authorized individuals “who reasonably believe that a violation of this section has occurred may, without incurring civil liability, use any reasonable means necessary to protect the pet and remove the pet from the motor vehicle.” S.B. 409.
SB 409 also clarified that both peace officers and animal control officers must take possession of such animal if they deem the animal to have been treated cruelly and provide it with shelter and care. S.B. 409 protects such individuals from liability:
A person required … to take possession of a pet removed pursuant to this section may take any action relating to the pet specified [under Nevada law] and is entitled to any lien or immunity from liability . . .
Lastly, the 2007 law only protected cats and dogs left in hot cars. S.B. 409 expanded those protections to all pets.
The changes to Nevada’s animal cruelty laws are encouraging and hopefully will result in fewer animal deaths – and further protections to those authorized individuals who come to the aid of these animals, especially in a state with such extended periods of extreme heat.
Jennifer L. Braster is a founding partner of Naylor & Braster and one of the founding members of the Animal Law Section of the State Bar of Nevada. Jennifer practices primarily in the area of commercial litigation and has also represented clients with various animal law issues, including animal custody, enforcement of dangerous dog regulations, and civil rights cases along with attorney Maggie McLetchie involving the shootings of pet dogs.
AB 276 presents non-compete covenant questions, challenges
By Aviva Y. Gordon, Esq.
Assembly Bill 276 was passed on May 26, 2017, in the final days of the Nevada Legislative Session, and although it was a latecomer, it has the ability to considerably change business owners’ abilities to prevent competition from former employees. The Act revises provisions governing covenants not to compete, which raises questions as to the efficacy of existing agreements and how it may affect current employees.
To make matters more challenging, the Act’s requirements were implemented immediately, giving employers and their employees zero advance notice. Because of this, existing agreements could be invalid, creating even more questions, as well as the possibility of litigation.
The new law spells out conditions that may make an existing non-compete covenant void and unenforceable:
- It is not supported by valuable consideration; and/or
- It imposes a greater restraint than is required for the employer’s protection, thereby placing an undue hardship on the employee, or it contains restrictions that are inappropriate vis-à-vis the consideration given.
Because the law does not define “valuable consideration” or “undue hardship,” it will likely lead to additional litigation to decide if a non-compete agreement has or has not fulfilled the requirements as stated by the law.
And that is not all. Employers lose some of the power to restrict previous employees from contacting their clients or customers for business purposes.
In addition, employers need to provide consideration to employees in return for the covenant not to compete. Arriving at valuable consideration can be a difficult balancing act – it needs to have a correlation to the agreement and yet, it cannot force the employee to suffer the aforementioned “undue hardship.” It is unclear whether it is “valuable consideration” to simply offer employment or if additional compensation is required.
If the employee was laid off due to reduction in workforce or reorganization, a non-compete can only be enforced as long as the employer paid the employee upon his or her dismissal. Again, the amount is still up for debate.
If an employee is dismissed as a result of economic difficulties experienced by the company, business owners whose businesses are already financially vulnerable would have to pay employees not to compete in an effort to comply with AB276. In theory, this could put businesses in a precarious position – pay employees who agree to a non-compete agreement or run the risk of directly competing with them.
The law’s ambiguous language and its immediate enforcement will likely lead to more litigation and the predominant question likely to be litigated is: Are the current non-compete agreements worthless? Although the courts have the ability to “blue pencil” an overly broad agreement, a courts’ ability to rewrite an agreement will, in all probability, lead to more litigation, not less. This change was in response the Nevada Supreme Court’s decision in Golden Road Motor Inn, Inc. v. Islam, 132 Nev. Adv. Op. 49, 376 P.3d 151 (2016). (For a comprehensive discussion of this decision, please see http://www.clarkcountybar.org/communique/march-2017/#enforcingnoncompetes)
This leaves business owners who seek to limit competition and solicitation among former employees on thin ice. Attorneys who advise clients on non-compete agreements must keep abreast of new non-compete agreement limitations and tread carefully when the courts are asked to determine whether new or existing covenants not to compete are enforceable.
Gordon Law founder Aviva Y. Gordon, Esq., has more than 20 years’ experience practicing business law in Southern Nevada and has successfully argued before the Nevada Supreme Court. She is a member of both the Nevada and California Bars.
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