02a0363p.06

7KH +RQRUDEOH *OHQ 0 :LOOLDPV 6HQLRU 8QLWHG 6WDWHV 'LVWULFW
-XGJH IRU WKH :HVWHUQ 'LVWULFW RI 9LUJLQLD VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
$/(;,6 0 +(50$1
6HFUHWDU\RI/DERU8QLWHG
6WDWHV'HSDUWPHQWRI/DERU
3ODLQWLII$SSHOODQW
Y
)$%5,&(17(56 2) $0(5,&$
,1&
'HIHQGDQW$SSHOOHH
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R²3DXO50DWLD&KLHI'LVWULFW-XGJH
$UJXHG-XQH
'HFLGHGDQG)LOHG2FWREHU
%HIRUH6,/(5DQG&/$<&LUFXLW-XGJHV:,//,$06
'LVWULFW-XGJH

-- 1 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
3XUVXDQW WR )HG 5 $SS 3 F (ODLQH / &KDR WKH FXUUHQW
6HFUHWDU\ RI /DERU LV DXWRPDWLFDOO\ VXEVWLWXWHG DV WKH SURSHU SODLQWLII LQ
WKLV FDVH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' /HLI -RUJHQVRQ 81,7(' 67$7(6
'(3$570(17 2) /$%25 2)),&( 2) 7+(
62/,&,725 :DVKLQJWRQ '& IRU $SSHOODQW .HLWK /
3U\DWHO.$671(5:(670$1 :,/.,16$NURQ2KLR
IRU$SSHOOHH21%5,()/HLI-RUJHQVRQ3DXO)ULHGHQ
81,7('67$7(6'(3$570(172)/$%252)),&(
2) 7+( 62/,&,725 :DVKLQJWRQ '& IRU $SSHOODQW
.HLWK / 3U\DWHO +DUOH\ 0 .DVWQHU .$671(5
:(670$1 :,/.,16$NURQ2KLRIRU$SSHOOHH
&/$<-GHOLYHUHGWKHRSLQLRQRIWKHFRXUW:,//,$06
'- S GHOLYHUHGDVHSDUDWHRSLQLRQFRQFXUULQJLQWKH
UHVXOW6,/(5- SS GHOLYHUHGDVHSDUDWHGLVVHQWLQJ
RSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
&/$<&LUFXLW-XGJH3ODLQWLII$OH[LV0+HUPDQIRUPHU
6HFUHWDU\RI/DERURIWKH8QLWHG6WDWHV'HSDUWPHQWRI/DERU
³WKH 6HFUHWDU\´ DSSHDOV IURP WKH MXGJPHQW RUGHULQJ
'HIHQGDQW)DEUL&HQWHUVRI$PHULFD,QF ³)&$´ WRSD\
IRULWVYLRODWLRQVRIVHFWLRQV F D
DQG D RIWKH)DLU/DERU6WDQGDUGV$FWRI ³WKH
)/6$´ 86& † D † F † D DQG
† D 7KHGLVWULFWFRXUWGHWHUPLQHGWKDW)&$RZHG
WKH DJJUHJDWH DPRXQW RI IRU LWV RYHUWLPH
OLDELOLWLHVXQGHUWKH)/6$EXWWKDW)&$ZDVHQWLWOHGWRDQ
³H[WUDFRPSHQVDWLRQ´FUHGLWRISXUVXDQWWR
86&† K 2QDSSHDOWKH6HFUHWDU\FKDOOHQJHVWKH

-- 2 of 14 --

1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
GLVWULFW FRXUW¶V DZDUG RI WKH H[WUD FRPSHQVDWLRQ FUHGLW WR
)&$)RUWKHUHDVRQVVHWIRUWKEHORZZH$)),50LQSDUW
5(9(56(LQSDUWDQG5(0$1'IRUIXUWKHUSURFHHGLQJV
FRQVLVWHQWZLWKWKLVRSLQLRQ
%$&.*5281'
$ 3URFHGXUDO+LVWRU\
2Q$SULOWKH6HFUHWDU\EURXJKWWKLVHQIRUFHPHQW
DFWLRQXQGHUVHFWLRQRIWKH)/6$86&†LQWKH
8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLR
WR HQMRLQ )&$ DQG LWV FKLHI H[HFXWLYH RIILFHU $ODQ
5RVVNDPP IURP YLRODWLQJ VHFWLRQV F D DQG
D RIWKH)/6$,QWKHFRPSODLQWWKH6HFUHWDU\VRXJKW
RYHUWLPHOLDELOLWLHVRQEHKDOIRI)&$¶VXQLRQL]HGZDUHKRXVH
HPSOR\HHV 6HFWLRQ UHTXLUHV HPSOR\HUV WR SD\ FRYHUHG
HPSOR\HHVIRUKRXUVZRUNHGORQJHUWKDQIRUW\LQDZRUNZHHN
DWDUDWHQRWOHVVWKDQRQHDQGRQHKDOIWLPHVWKHUHJXODUUDWH
DWZKLFKWKH\DUHHPSOR\HG86&† D 6HFWLRQ
F UHTXLUHV FRYHUHG HPSOR\HUV WR ³PDNH NHHS DQG
SUHVHUYHVXFKUHFRUGVRIWKHSHUVRQVHPSOR\HGE\KLPDQGRI
WKH ZDJHV KRXUV DQG RWKHU FRQGLWLRQV DQG SUDFWLFHV RI
HPSOR\PHQWPDLQWDLQHGE\KLP´86&† F
8QGHU VHFWLRQ D LW LV XQODZIXO IRU DQ\ SHUVRQ ³WR
YLRODWHDQ\RIWKHSURYLVLRQVRIVHFWLRQRUVHFWLRQRI
WKLVWLWOH´86&† D 6HFWLRQ D PDNHVLW
XQODZIXO ³WR YLRODWH DQ\ RI WKH SURYLVLRQV RI VHFWLRQ
F ´86&† D 2Q-XQHWKH
6HFUHWDU\YROXQWDULO\GLVPLVVHG5RVVNDPPXQGHU)HG5&LY
3 D
7KHSDUWLHVWKHQSUHSDUHGDQGILOHGDMRLQWVWLSXODWLRQRIWKH
IDFWVRQ6HSWHPEHU2Q2FWREHUWKHSDUWLHV
ILOHGWKHLUUHVSHFWLYHPRWLRQVIRUVXPPDU\MXGJPHQWXQGHU
)HG5&LY37KH6HFUHWDU\VRXJKWDGHWHUPLQDWLRQRI
WKHDPRXQWRIWKHRYHUWLPHOLDELOLWLHVWKDW)&$RZHGWRWKH
ZRUNHUVZKLOH)&$LQLWVFURVVPRWLRQSHWLWLRQHGIRUH[WUD
FRPSHQVDWLRQ FUHGLW DJDLQVW DQ\ GHWHUPLQHG RYHUWLPH
OLDELOLWLHVXQGHUWKH)/6$

-- 3 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
7KHGLVWULFWFRXUWLVVXHGDPHPRUDQGXPRSLQLRQDQGRUGHU
RQ6HSWHPEHUJUDQWLQJLQSDUWWKH6HFUHWDU\¶V5XOH
PRWLRQ DQG JUDQWLQJ LQ SDUW )&$¶V FURVVPRWLRQ IRU
VXPPDU\ MXGJPHQW 3XUVXDQW WR D MRLQW VWLSXODWLRQ WKH
DJJUHJDWHDPRXQWRI)/6$RYHUWLPHWKDW)&$ZDVOLDEOHWR
SD\ZDV+RZHYHUWKHGLVWULFWFRXUWGHWHUPLQHG
WKDW)&$ZDVHQWLWOHGWRDQ³H[WUDFRPSHQVDWLRQ´FUHGLWRI
7KXVWKHQHWDPRXQWWKDW)&$RZHGDVDUHVXOW
RI WKH GLVWULFW FRXUW¶V RUGHU ZDV $ ILQDO
MXGJPHQWLQFRUSRUDWLQJWKHMRLQWVWLSXODWLRQZDVHQWHUHGRQ
1RYHPEHU7KH6HFUHWDU\ILOHGDWLPHO\DSSHDO
% 6XEVWDQWLYH+LVWRU\
7KHUHOHYDQWIDFWVDUHXQGLVSXWHG)&$RZQVDQGRSHUDWHV
YDULRXVUHWDLOVWRUHVSULQFLSDOO\XQGHUWKHQDPHVRI-R$QQ
)DEULFVDQG&UDIWV&ORWK:RUOG1HZ<RUN)DEULFVDQG-R
$QQ WR VHOO IDEULFV QRWLRQV DQG FUDIWV ,W DOVR RSHUDWHV D
ZDUHKRXVHDQGGLVWULEXWLRQFHQWHUIRUWKHUHWDLOVDOHRIIDEULFV
FUDIWVDQGQRWLRQVDW'DUURZ5RDGLQ+XGVRQ2KLR
3XUVXDQW WR WKH )/6$ )&$ LV DQ ³HQWHUSULVH HQJDJHG LQ
FRPPHUFHRUWKHSURGXFWLRQRIJRRGVIRUFRPPHUFH´XQGHU
86&† V DQGLVDQ³HPSOR\HU´XQGHU86&
† G 7KXVLWLVXQGLVSXWHGWKDW)&$LVVXEMHFWWRWKH
SURYLVLRQVRIWKH)/6$
7KHGLVWULFWFRXUWVXFFLQFWO\H[SODLQHGWKHQDWXUHRIGLVSXWH
DVIROORZV
7KHJUDYDPHQRIWKLVDFWLRQLV)&$¶VFDOFXODWLRQRI
RYHUWLPH3ULRUWRUHQHJRWLDWLQJWKHFROOHFWLYHEDUJDLQLQJ
DJUHHPHQWRYHUWLPHSD\IRU)&$HPSOR\HHVZDVEDVHG
VROHO\ RQ WKHLU EDVH UDWH RI SD\ 1RWZLWKVWDQGLQJ WKH
RWKHUUDWHVRISD\DYDLODEOHDW)&$DOORYHUWLPHKRXUV
ZHUH FRPSHQVDWHG DW WKH ORZHVW UDWH SRVVLEOH ,W LV
XQGLVSXWHG KRZHYHU WKDW )&$¶V FRPSHQVDWLRQ SODQ
DOORZHGHPSOR\HHVWRHDUQSUHPLXPVLQH[FHVVRI)/6$
VWDQGDUGV 7KHVH SUHPLXPV DFFUXHG UHJDUGOHVV RI
ZKHWKHUHPSOR\HHVZRUNHGRYHUWLPH7KXVWKHTXHVWLRQ
DWWKHKHDUWRIWKLVPDWWHULVZKHWKHUWKHSUHPLXPVSDLG
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
KDYHEHHQJLYHQVRPHGHIHUHQFHXQGHU&KHYURQ86$,QF
Y1DWLRQDO5HVRXUFHV'HIHQVH&RXQFLO,QF86
,DJUHHZLWKWKHPDMRULW\WKDWQRGHIHUHQFH
VKRXOGEHJLYHQWRWKHRSLQLRQOHWWHUVIURPWKH6HFUHWDU\,I
WKH6HFUHWDU\ZLVKHVIRUGHIHUHQFHVKHKDVWKHDXWKRULW\WR
SURPXOJDWHUHJXODWLRQVZKLFKFDQEHJLYHQGHIHUHQFHXQGHU
&KHYURQ7KHUHIRUHIRUWKHVDPHUHDVRQVUHODWHGE\-XGJH
)HLNHQVLQ$EEH\,ZRXOGDIILUPWKHGHFLVLRQRIWKHGLVWULFW
FRXUWKHUH

-- 4 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
BBBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBBB
6,/(5&LUFXLW-XGJHGLVVHQWLQJ,UHVSHFWIXOO\GLVVHQWQRW
EHFDXVHWKHPDMRULW\RSLQLRQLVLOORJLFDOLQLWVFRQFOXVLRQWKDW
WKHSUHPLXPFUHGLWVDOORZHGE\86&† K VKRXOG
EHOLPLWHGWRWKHVDPHZRUNSHULRGLQZKLFKWKHSUHPLXPV
ZHUH SDLG EXW EHFDXVH WKH VWDWXWH GRHV QRW VR SURYLGH ,
ZRXOGQRWSHQDOL]HWKHHPSOR\HUZKRFRPSXWHVLWVSUHPLXP
FUHGLWVDVDOORZHGLQWKLVFDVH
7KH PDMRULW\ RSLQLRQ KDV DQDO\]HG WKH FDVH ODZ RQ WKLV
SRLQW7KXVDQHPSOR\HULQ,OOLQRLVLVUHVWULFWHGWRSUHPLXP
FUHGLWVZLWKLQWKHVDPHZRUNSHULRGLQZKLFKWKHSUHPLXPV
ZHUHSDLG6HH+RZDUGY&LW\RI6SULQJILHOG)G
WK&LU 1RODQY&LW\RI&KLFDJR)6XSS
G 1',OO 2QWKHRWKHUKDQGDIHGHUDO
HPSOR\HU D *HRUJLD HPSOR\HU RU SUHYLRXVO\ D 0LFKLJDQ
HPSOR\HUFRXOGUHFHLYHSUHPLXPFUHGLWVRYHUDJUHDWHUSHULRG
RIWLPHWKDQWKHVDPHZRUNSHULRG6HH$OH[DQGHUY8QLWHG
6WDWHV)G )HG&LU .ROKHLPY*O\QQ
&RXQW\)G WK&LU $EEH\Y&LW\
RI-DFNVRQ)6XSS ('0LFK ,W
LVXQIDLUIRUWKH6HFUHWDU\RI/DERUWRIRUFHDQHPSOR\HUWR
SD\WKHDGGLWLRQDODPRXQWRIZKHQWKHVWDWXWH
GRHVQRWVRSURYLGHQRUHJXODWLRQKDVHYHUEHHQSURPXOJDWHG
RQWKHVXEMHFWDQGHPSOR\HUVLQRWKHUVWDWHVDUHDOORZHGWKHVH
SUHPLXPFUHGLWV$V-XGJH0DQLRQVWDWHVLQKLVGLVVHQWLQ
+RZDUG )G DW ³1HLWKHU WKH SURYLVLRQV RI
† K RIWKH)/6$QRULWVDFFRPSDQ\LQJUHJXODWLRQV
UHTXLUHVXFKDOLPLWDWLRQ´
%RWKSDUWLHVDJUHHWKDW)&$ZRXOGEHHQWLWOHGWRDFUHGLWRI
DQ\ SUHPLXP SD\ 7KH LVVXH LV ZKHWKHU WKH SUHPLXP SD\
FUHGLWLVOLPLWHGWRWKHVDPHWLPHSHULRG7KH'HSDUWPHQWRI
/DERUKDVIRUPRUHWKDQWHQ\HDUVNQRZQ WKDWWKHUHZDVD
GLVSXWHDERXWWKHOLPLWDWLRQVRIWKHSUHPLXPFUHGLWVEXWLWKDV
FKRVHQQRWWRDWWHPSWWRSURPXOJDWHUHJXODWLRQVZKLFKZRXOG
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
$V WKH GLVWULFW FRXUW SRLQWHG RXW )&$ QR ORQJHU XVHV WKLV
FRPSHQVDWLRQ IRUPXOD HOLPLQDWLQJ WKH SROLFLHV FKDOOHQJHG E\ WKH
6HFUHWDU\ LQ WKH SUHVHQW DSSHDO ZKHQ WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQW
ZDV DPHQGHG RQ 0D\
7KH ZDUHKRXVH HPSOR\HHV LQ TXHVWLRQ GLG QRW LQFOXGH VXSHUYLVRUV
VDOHV UHSUHVHQWDWLYHV SDUWWLPH RU FOHULFDO HPSOR\HHV LQ WKH ZDUHKRXVH
XQGHU WKH SODQ RIIVHW DQ\ DOOHJHG VKRUWFRPLQJV LQ
FDOFXODWLQJRYHUWLPHSD\
3ODLQWLII $OH[LV 0 +HUPDQ 6HFUHWDU\ RI /DERU
8QLWHG6WDWHV'HSDUWPHQWRI/DERU ³'2/´ FRQWHQGV
WKDWWKH)/6$GLFWDWHVWKDW)&$LQFRUSRUDWHDOOHPSOR\HH
SD\UDWHVLQWRWKHEDVHUDWH RUUHJXODUUDWH IRURYHUWLPH
SXUSRVHV 7KH '2/ IXUWKHU FRQWHQGV WKDW SUHPLXPV
HDUQHG E\ HPSOR\HHV PD\ RQO\ RIIVHW RYHUWLPH GXH
ZLWKLQWKHVDPHZRUNZHHN,QUHEXWWDO)&$DUJXHVWKDW
WKHSUHPLXPVFDQRIIVHWWKHWRWDORYHUWLPHGXH$IWHU
VSRWLQYHVWLJDWLRQVDW)&$WKH'2/EURXJKWWKLVDFWLRQ
RQ EHKDOI RI )&$ HPSOR\HHV WR UHFRYHU RYHUWLPH
FRPSHQVDWLRQWKDWLVDOOHJHGO\RZHG XQGHUWKHIRUPHU
FRPSHQVDWLRQSODQ
-$DW
&HQWUDOWRWKHVHTXHVWLRQVZDVWKHFRPSHQVDWLRQIRUPXOD
WKDW )&$ XVHG WR GHWHUPLQH WKH ZDJHV RI ZDUHKRXVH
HPSOR\HHVGXULQJWKHWLPHSHULRGLQGLVSXWH$SULOWR
0D\7KHZDUHKRXVHHPSOR\HHV ³WKHHPSOR\HHV´
ZHUH UHSUHVHQWHG E\ WKH 8QLWHG 6WHHOZRUNHUV RI $PHULFD
$/)&,2&/& 8SKROVWHU\DQG$OOLHG,QGXVWULHV'LYLVLRQ
/RFDO8QLRQ1R87KHHPSOR\HHVZHUHDVVLJQHGDMRE
FRGH WKDW UHSUHVHQWHG WKHLU KRPH EDVH ZLWKLQ WKH +XGVRQ
2KLRZDUHKRXVHZKHUHWKHHPSOR\HHVZHUHW\SLFDOO\DVVLJQHG
WR SHUIRUP WKHLU ZRUN 8QGHU WKH FROOHFWLYH EDUJDLQLQJ
DJUHHPHQW WKH HPSOR\HHV ZHUH SDLG D ³EDVH UDWH´ ZKHQ
ZRUNLQJDWWKHLUSULPDU\ORFDWLRQRUKRPHMREFRGHVLQWKH
+XGVRQ 2KLR ZDUHKRXVH 7KHLU ³UHJXODU SD\´ ZDV

-- 5 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
GHWHUPLQHGE\PXOWLSO\LQJWKHLUZHHNO\LQKRPHMREKRXUV
ZRUNHGWLPHVWKHLUKRXUO\EDVHUDWH
)RU HPSOR\HHV ZKR ZRUNHG RXWVLGH RI WKHLU KRPH MRE
FRGHVWKHLU³UHJXODUSD\´ZDVGHWHUPLQHGE\WKHKLJKHURI
RQHRIWZRIRUPXODV8QGHUWKHILUVWIRUPXODLIWKHFDOFXODWHG
³DYHUDJHUDWH´UHVXOWHGLQFRPSHQVDWLRQWKDWZDVJUHDWHUWKDQ
WKH HPSOR\HHV¶ QRQKRPH EDVH KRXUV PXOWLSOLHG E\ WKHLU
KRXUO\EDVHUDWHSOXV³ERQXVSD\´WKHQWKHHPSOR\HHVZHUH
HQWLWOHG WR FRPSHQVDWLRQ EDVHG XSRQ WKHLU QRQKRPH EDVH
KRXUVZRUNHGPXOWLSOLHGE\WKHLUFDOFXODWHG³DYHUDJHUDWH´
7KHHPSOR\HHV¶³DYHUDJHUDWH´ZDVFDOFXODWHGE\GLYLGLQJWKH
HPSOR\HHV¶DJJUHJDWHHDUQLQJVLQFOXGLQJ³RYHUWLPHSD\´IRU
DVL[PRQWKSHULRGDQGGLYLGLQJWKHDJJUHJDWHDPRXQWE\WKH
DJJUHJDWH QXPEHU RI KRXUV ZRUNHG E\ WKH HPSOR\HHV
LQFOXGLQJRYHUWLPHKRXUVIRUWKDWVL[PRQWKSHULRG,IWKH
XVHRIWKH³DYHUDJHUDWH´IRUWKHHPSOR\HHVZRUNLQJRXWVLGH
RIWKHLUKRPHMREFRGHGLGQRWUHVXOWLQDKLJKHUILJXUHWKHQ
WKHLU³UHJXODUSD\´ZDVGHWHUPLQHGE\PXOWLSO\LQJWKHLUKRXUV
ZRUNHGWLPHVWKHLUKRXUO\UDWHSOXV³ERQXVSD\´
8QGHU WKH VHFRQG IRUPXOD XVHG IRU HPSOR\HHV ZKR
SHUIRUPHG ZRUN RXWVLGH RI WKHLU KRPH MRE FRGHV WKH
HPSOR\HHVUHFHLYHG³ERQXVSD\´)&$GHWHUPLQHG³ERQXV
SD\´E\XVLQJHLWKHU WKHXQLWVRIPHUFKDQGLVHFRPSOHWHG
DWHDFKERQXVWLHUPXOWLSOLHGE\DVHWERQXVUDWHIRUHDFKVXFK
WLHURU VSHFLDOERQXVHVFDOFXODWHGE\WKHMRELGHQWLILFDWLRQ
,I WKH ³DYHUDJH UDWH´ IRU HPSOR\HHV ZRUNLQJ RXWVLGH WKHLU
KRPHMREFRGHGLGQRWUHVXOWLQDKLJKHUILJXUHWKHQWKHZDJH
HTXDOHGWKHSURGXFWRIKRXUVZRUNHGPXOWLSOLHGE\WKHEDVH
UDWH SOXV DQ\ ³ERQXV SD\´ ,Q RWKHU ZRUGV FRPSHQVDWLRQ
HTXDOHGWKHQXPEHURIKRXUVZRUNHGWLPHVWKHEDVHUDWHWR
ZKLFK³ERQXVSD\´ZDVDGGHG
)&$¶V ZDUHKRXVH HPSOR\HHV DOVR ZHUH SDLG ³RYHUWLPH
SD\´ZKLFKZDVFDOFXODWHGE\WKHDJJUHJDWH³RYHUWLPH´KRXUV
PXOWLSOLHGE\WLPHVWKHLUKRXUO\EDVHUDWHV(PSOR\HHV
UHFHLYHG RYHUWLPH SD\ ZKHQ WKH\ ZRUNHG PRUH WKDQ HLJKW
KRXUVSHUGD\RUZKHQWKH\ZRUNHG6DWXUGD\VDIWHUZRUNLQJ
IRUW\ KRXUV GXULQJ WKH ZRUN ZHHN (PSOR\HHV ZHUH SDLG
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
BBBBBBBBBBBBBBBBBBBB
&21&855(1&(
BBBBBBBBBBBBBBBBBBBB
:,//,$066HQLRU'LVWULFW-XGJHFRQFXUULQJ,FRQFXULQ
WKHUHVXOWVHWIRUWKLQ-XGJH&OD\¶VRSLQLRQ,ZULWHVHSDUDWHO\
WRVD\WKDW,EHOLHYHWKDWWKLVRSLQLRQFRUUHFWO\IROORZVWKH
UXOHV RI VWDWXWRU\ LQWHUSUHWDWLRQ $OVR , DJUHH ZLWK WKH
RSLQLRQ RI WKH 6HYHQWK &LUFXLW LQ +RZDUG Y &LW\ RI
6SULQJILHOG )G WK &LU , DP RI WKH
RSLQLRQ WKDW WKH IRXUWK ILIWK DQG VL[WK SDUDJUDSKV RI WKH
6XEVWDQWLYH +LVWRU\ VHFWLRQ RI WKLV RSLQLRQ KDYH QR
DSSOLFDWLRQLQWKLVFDVHDQGDWPRVWDUHGLFWXPLQZKLFK,GR
QRWFRQFXU
:LWKUHJDUGWR-XGJH6LOHU¶VGLVVHQWLQJRSLQLRQKLVSRVLWLRQ
KDVPHULW+RZHYHULIWKHODZLVWREHFRUUHFWHGLWVKRXOGEH
GRQHVRE\&RQJUHVVRUWKHDGPLQLVWUDWLYHDJHQF\DQGQRWE\
WKH&RXUW

-- 6 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
ILQGLQJ WKDW )&$ ZDV HQWLWOHG WR DQ ³H[WUD FRPSHQVDWLRQ´
FUHGLWRISXUVXDQWWR86&† K DQG
5(0$1'WKHPDWWHUWRWKHGLVWULFWFRXUWWRGHWHUPLQHWKH
DPRXQWRIFRPSHQVDWLRQFUHGLWWKDW)&$PD\FODLPRQDSD\
SHULRGE\SD\SHULRGEDVLV
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
WZLFH WKHLU KRXUO\ EDVH UDWHV IRU DOO 6XQGD\ ZRUN KRXUV
(PSOR\HHVDOVRUHFHLYHG³KROLGD\SD\´ZKLFKZDVFDOFXODWHG
E\YLUWXHRIWKHQXPEHURIKROLGD\KRXUVZRUNHGWLPHVWKH
³DYHUDJH UDWH´ IRU WKDW HPSOR\HH ³$YHUDJH UDWH´ ³ERQXV
SD\´ ³GRZQWLPH SD\´ DQG ³VKLIW GLIIHUHQWLDOV´ ZHUH QRW
LQFOXGHGLQWKHKRXUO\EDVHUDWHIRUSXUSRVHVRIFDOFXODWLQJ
RYHUWLPHSD\ZKHQHPSOR\HHVZRUNHGPRUHWKDQIRUW\KRXUV
SHU ZRUN ZHHN ³'RZQWLPH SD\´ ZDV FDOFXODWHG E\
PXOWLSO\LQJ WKH HPSOR\HHV¶ GRZQWLPH UDWH E\ WKHLU KRXUO\
GRZQWLPHKRXUV
$VWKHGLVWULFWFRXUWUHFRJQL]HG)&$GLGQRWFRQWHVWWKH
WKUHVKROGLVVXHRIZKHWKHULWYLRODWHGWKH)/6$E\FDOFXODWLQJ
RYHUWLPHSD\PHQWVXVLQJRQO\WKHHPSOR\HHV¶EDVHUDWH$V
WRWKLVPDWWHUWKHGLVWULFWFRXUWIRXQGWKDW)&$YLRODWHGWKH
)/6$ E\ IDLOLQJ WR LQFOXGH WKH QRQGLVFUHWLRQDU\ ERQXVHV
³DYHUDJHUDWH´DQGRWKHU³VKLIWGLIIHUHQWLDOV´DVSDUWRIWKH
³UHJXODUUDWH´7KXVWKHGLVWULFWFRXUWKHOGWKDWWKH6HFUHWDU\
ZDVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZRQLWVFODLPWKDW
)&$¶VFDOFXODWLRQRIWKH³UHJXODUUDWH´IRURYHUWLPHSXUSRVHV
ZDVLQYLRODWLRQRIWKH)/6$
,QVWHDG)&$¶VDUJXPHQWLQWKHGLVWULFWFRXUWIRFXVHGVROHO\
RQZKHWKHULWFRXOGFUHGLWWKHFRQWUDFWSUHPLXPVSDLGWRLWV
HPSOR\HHV DJDLQVW WKH RYHUWLPH SD\ WKDW ZDV RZHG WKHP
6SHFLILFDOO\)&$LQLWVFURVVPRWLRQIRUVXPPDU\MXGJPHQW
VRXJKW WR RIIVHW WKH RYHUWLPH SD\ WKDW ZDV RZHG ZLWK WKH
FRQWUDFW SUHPLXPV WKDW LW KDG SDLG LQ H[FHVV RI )/6$¶V
UHTXLUHPHQWV,QRSSRVLWLRQWKH6HFUHWDU\FODLPHGWKDWXQGHU
86&† K )&$ZDVDOORZHGDFUHGLWRQO\IRUWKH
SUHPLXPVWKDWZHUHSDLGGXULQJWKHVDPHZRUNZHHN7KH
GLVWULFWFRXUWVXPPHGXSWKHGLVSXWHLQWKHIROORZLQJWHUPV
³)&$LVFODLPLQJWKDWDOOSUHPLXPVDUHFUHGLWDEOHUHJDUGOHVV
RIWKHZRUNZHHNWKH\ZHUHSDLGZKLOHWKH'2/FRQWHQGVWKDW
SUHPLXPVFDQRQO\EHRIIVHWZLWKLQWKHVDPHZRUNZHHNDVWKH
PLVVHGRYHUWLPH´
,QDJUHHLQJZLWK)&$¶VDUJXPHQWWKHGLVWULFWFRXUWUHO\LQJ
XSRQ$EEH\Y&LW\RI-DFNVRQ)6XSS ('0LFK
IRXQGWKDW³>E@DVHGXSRQWKHSODLQODQJXDJHRI†

-- 7 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
$V WKH GLVWULFW FRXUW QRWHG LW ZDV XQGLVSXWHG WKDW )&$¶V
FRPSHQVDWLRQ SODQ DOORZHG HPSOR\HHV WR HDUQ SUHPLXPV LQ H[FHVV RI
)/6$ VWDQGDUGV 7KH FRQWUDFW SUHPLXPV ZHUH DSSDUHQWO\ SDLG SXUVXDQW
WR D FROOHFWLYH EDUJDLQLQJ DJUHHPHQW DQG ZHUH QRW UHTXLUHG E\ WKH )/6$
H[LVWLQJFDVHODZDQGWKHOHJLVODWLYHKLVWRU\RI†>D@OO
SUHPLXPSD\PHQWVFDQEHFUHGLWHGWRZDUGWKHWRWDORYHUWLPH
RZHG´7KHGLVWULFWFRXUWVSHFLILFDOO\QRWHGWKDWWKHUHZDVQR
³TXDOLI\LQJ ODQJXDJH LQ WKH VWDWXWH OLPLWLQJ FUHGLWV RQ D
ZRUNZHHNEDVLV´7KHGLVWULFWFRXUWDOVRVWDWHGWKDWWKHUHZDV
QRWKLQJLQWKHODQJXDJHRI†RUWKH6HFUHWDU\¶VUHJXODWLRQV
WKDW UHTXLUHG LW ³WR UHDG D TXDOLILHU LQWR FOHDU VWDWXWRU\
ODQJXDJH´,QJUDQWLQJMXGJPHQWDVDPDWWHURIODZWR)&$
UHJDUGLQJLWVFODLPDERXWFUHGLWLQJSDVWSUHPLXPVWRZDUGWKH
RYHUWLPHOLDELOLW\WKDWLWRZHGWKHGLVWULFWFRXUWFRQFOXGHG
³&RQJUHVVFRXOGKDYHVSHFLILHGDSHUZRUNZHHNOLPLWDWLRQLQ
† K LI LW VDZ ILW $V LW VWDQGV WKDW ODQJXDJH DQG
WKHUHIRUHWKDWOLPLWDWLRQGRHVQRWH[LVWLQ† K DQGWKH
&RXUWUHIXVHVWRVXSSO\WKDWOLPLWDWLRQ´
',6&866,21
$ ,VVXHDQG6WDQGDUGRI5HYLHZ
7KHLVVXHEHIRUHWKLV&RXUWLVZKHWKHU)&$PD\XVHLWV
FRQWUDFWSUHPLXPVWRRIIVHWRYHUWLPHRZHGWRLWVHPSOR\HHV
RQO\ZLWKLQWKHVDPHZRUNZHHNDVWKHPLVVHGRYHUWLPHDVWKH
6HFUHWDU\FRQWHQGVRUDJDLQVWWKHWRWDODPRXQWRIRYHUWLPH
RZHGDV)&$PDLQWDLQVXQGHU86&† K 7KLV
&RXUWUHYLHZVWKHGLVWULFWFRXUW VJUDQWRIVXPPDU\MXGJPHQW
GHQRYR+HUPDQY&ROOLV)RRGV)G WK&LU
:KHQWKHIDFWVRIDFDVHDUHXQGLVSXWHGDQGWKHVROH
LVVXHEHIRUHWKLV&RXUWLVDOHJDOTXHVWLRQWKHOHJDOTXHVWLRQ
LVUHYLHZHGGHQRYR,G ,QWKLVFDVHWKHGLVWULFWFRXUWHUUHG
LQJUDQWLQJ)&$¶VFURVVPRWLRQIRUVXPPDU\MXGJPHQWE\
ILQGLQJWKDW)&$ZDVHQWLWOHGXQGHU86&† K WR
DSSO\FRQWUDFWSUHPLXPVDVFUHGLWDJDLQVWWKHWRWDORYHUWLPH
RZHG
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
WKHRIILFHUVRUDJHQF\FKDUJHGZLWKLWVHQIRUFHPHQW¶´%LJJV
)G DW TXRWLQJ 8GDOO Y 7DOOPDQ 86
6SHFLILFDOO\LQDQRSLQLRQOHWWHUGDWHG'HFHPEHU
WKH'HSXW\$GPLQLVWUDWRUVWDWHG
:H ZLVK WR SRLQW RXW WKDW VXUSOXV RYHUWLPH SUHPLXP
SD\PHQWVZKLFKPD\EHFUHGLWHGDJDLQVWRYHUWLPHSD\
SXUVXDQW WR VHFWLRQ K RI >WKH@ )/6$ PD\ QRW EH
FDUULHG IRUZDUG RU DSSOLHG UHWURDFWLYHO\ WR VDWLVI\ DQ
HPSOR\HU¶VRYHUWLPHSD\REOLJDWLRQLQIXWXUHRUSDVWSD\
SHULRGV
:/DW '2/:DJH+RXU'HFHPEHU
7KH 6HFUHWDU\ FODLPV WKDW WKLV LQWHUSUHWDWLRQ LV
FRQVLVWHQWZLWKSUHYLRXV:DJH+RXURSLQLRQOHWWHUV
&&+:+ ˆ DQG ˆ GDWHG 'HFHPEHU DQG
'HFHPEHUH[SUHVVLQJWKHYLHZWKDWWKHZRUNZHHN
RUZRUNSHULRGFRQFHSWLVWKHVWDQGDUGSRLQWRIUHIHUHQFHIRU
LQWHUSUHWLQJWKHSURYLVLRQVRIWKH)/6$
:HQRWHWKHSHUWLQHQWFRQWHQWRIWKHVHRSLQLRQOHWWHUVIRU
LOOXVWUDWLYHSXUSRVHVZHZRXOG KROG DVZHGRHYHQLQWKH
DEVHQFHRIVXFKRSLQLRQOHWWHUV7KHLQIRUPDWLYHQDWXUHRI
WKHVH RSLQLRQ OHWWHUV ZKLFK VXSSRUW WKH 6HFUHWDU\¶V
LQWHUSUHWDWLRQRI† K LVQRWOHVVHQHGE\WKHIDFWWKDWWKH
RSLQLRQOHWWHUVLQTXHVWLRQZHUHGLUHFWHGWRWKLUGSDUWLHVQRW
)&$6HH8QLWHG6WDWHVY0HDG&RUS86
ILQGLQJ WKDW &XVWRP¶V FODVVLILFDWLRQ UXOLQJ ZDV
HQWLWOHGWR³UHVSHFWSURSRUWLRQDOWRLWVμSRZHUWRSHUVXDGH¶´
XQGHUWKHSULQFLSOHVVWDWHGE\-XVWLFH-DFNVRQLQ6NLGPRUHY
6ZLIW &R 86 DQG WKDW ³>V@XFK D
UXOLQJPD\VXUHO\FODLPWKHPHULWRILWVZULWHU VWKRURXJKQHVV
ORJLFDQGH[SHUWQHVVLWVILWZLWKSULRULQWHUSUHWDWLRQVDQGDQ\
RWKHUVRXUFHVRIZHLJKW´
&21&/86,21
7KXVIRUWKHIRUJRLQJUHDVRQVZH$)),50WKHGLVWULFW
FRXUW¶VRUGHUILQGLQJWKDW)&$ZDVOLDEOHIRUWKHDJJUHJDWH
DPRXQWRIIRULWVRYHUWLPHOLDELOLWLHVXQGHUWKH
)/6$+RZHYHUZH5(9(56(WKHGLVWULFWFRXUW¶VRUGHU

-- 8 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
7KH :DJH DQG +RXU 'LYLVLRQ RI WKH 'HSDUWPHQW RI /DERU ZDV
FUHDWHG WR DGPLQLVWHU WKH $FW 86& †
LQWHUSUHWLQJWKHYHUVLRQRIWKH)/6$WKHQLQHIIHFWKHOGWKDW
DQHPSOR\HUPXVWSD\RYHUWLPH³SURPSWO\DQGZKHQGXH´DQG
LVQRWDOORZHGWRFRPSURPLVHRUVHWWOHVXPVGXHHPSOR\HHV
E\³ZLWKKROGLQJZDJHVEH\RQGWKHWLPHZKHQWKH\VKRXOGEH
SDLG´)GDW6SHFLILFDOO\5RODQGQRWHG³WKDWWKH
$FW WDNHV DV LWV VWDQGDUG D VLQJOH ZRUNZHHN FRQVLVWLQJ RI
VHYHQFRQVHFXWLYHGD\V´,G$OWKRXJK5RODQGZDVGHFLGHG
EHIRUH† K ZDVHQDFWHGLQDQGWKXVGLGQRWDGGUHVV
WKHLVVXHRIFUHGLWLQJLWHQXQFLDWHGWKHEURDGSULQFLSOHWKDW
WKHZRUNZHHNRUZRUNSHULRGLVFHQWUDOWRWKHXQGHUVWDQGLQJ
RIWKH)/6$
&RQWUDU\WR)&$¶VDUJXPHQWWKH6HFUHWDU\¶VLQWHUSUHWDWLRQ
RI† K GRHVQRWSURYLGHD³ZLQGIDOO´IRULWVHPSOR\HHV
LQWKLVFDVH$VWKH6HFUHWDU\SRLQWVRXW)&$H[FHHGHGWKH
UHTXLUHPHQWVRI)/6$FKRRVLQJWRSD\LWVZRUNHUVFHUWDLQ
SUHPLXPV*LYHQWKDWWKHUHLVQRWKLQJLQWKH)/6$JHQHUDOO\
RU† K LQSDUWLFXODUWKDWUHTXLUHG)&$WRSD\WKHVH
SUHPLXPV DQ\ ³ZLQGIDOO´ DURVH DV D UHVXOW RI )&$¶V RZQ
FKRVHQ SD\ SUDFWLFHV $FFRUGLQJO\ ZH DJUHH ZLWK WKH
6HFUHWDU\ WKDW )&$¶V SD\ SUDFWLFHV VKRXOG QRW FRQWURO WKH
RSHUDWLRQRIWKH)/6$:HUHWKDWWKHFDVHWKHQDQHPSOR\HU
ZKRSDLGWZLFHWKHPLQLPXPZDJHLQRQHZHHNZRXOGQRW
RZH DQ\WKLQJ WKH IROORZLQJ ZHHN IRU WKH VDPH QXPEHU RI
KRXUVZRUNHG6HH%DUUHQWLQHY$UNDQVDV%HVW)UHLJKW6\V
,QF86 UHPDUNLQJWKDW³>W@KH)DLU
/DERU6WDQGDUGV$FWZDVQRWGHVLJQHGWRFRGLI\RUSHUSHWXDWH
>LQGXVWU\@FXVWRPVDQGFRQWUDFWV´
)LQDOO\ ZH QRWH WKDW WKH 6HFUHWDU\¶V LQWHUSUHWDWLRQ RI
† K KDVEHHQVHWIRUWKLQVHYHUDO:DJH+RXURSLQLRQ
OHWWHUV LVVXHG E\ WKH :DJH DQG +RXU 'LYLVLRQ RI WKH
'HSDUWPHQWRI/DERULQWHUSUHWLQJ86&† K DV
DSSO\LQJDZRUNZHHNRUZRUNSHULRGVWDQGDUG³:KHQIDFHG
ZLWKDSUREOHPRIVWDWXWRU\FRQVWUXFWLRQIHGHUDOFRXUWVVKRXOG
VKRZμJUHDWGHIHUHQFHWRWKHLQWHUSUHWDWLRQJLYHQWKHVWDWXWHE\
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
% $QDO\VLV
,QGHFLGLQJWKLVFDVHZHDUHJXLGHGE\WKHSULQFLSOHVRI
VWDWXWRU\ LQWHUSUHWDWLRQ :KHQ LQWHUSUHWLQJ D VWDWXWH WKLV
&RXUWPXVWEHJLQZLWKLWVSODLQODQJXDJHDQGPD\UHVRUWWRD
UHYLHZRIFRQJUHVVLRQDOLQWHQWRUOHJLVODWLYHKLVWRU\RQO\ZKHQ
WKHODQJXDJHRIWKHVWDWXWHLVQRWFOHDU,QUH&RPVKDUH,QF
)G WK&LU FLWLQJ&RQVXPHU3URG
6DIHW\ &RPP¶Q Y *7( 6\OYDQLD ,QF 86
³:KHUHWKHOLWHUDOODQJXDJHRIWKHVWDWXWHGRHVQRW
FRQFOXVLYHO\ UHYHDO OHJLVODWLYH LQWHQW WKH FRXUWV PXVW ORRN
EH\RQG OLWHUDOPHDQLQJDQDO\]LQJWKHSURYLVLRQLQFRQWH[W
ZLWKWKHZKROH´,QUH$UQHWW)G WK&LU
FLWLQJ.RNRV]NDY%HOIRUG86
)XUWKHU ZH QRWH WKDW WKH )/6$ DV D VWDWXWH GHVLJQHG WR
SURWHFW LQGLYLGXDO ULJKWV LV ³UHPHGLDO DQG KXPDQLWDULDQ LQ
SXUSRVH´DQG³PXVWQRWEHLQWHUSUHWHGRUDSSOLHGLQDQDUURZ
JUXGJLQJ PDQQHU´ 7HQQHVVHH &RDO ,URQ 5 &R Y
0XVFRGD/RFDO1R86 VHHDOVR
/DPEHUWY$FNHUOH\)G WK&LU
6HFWLRQ K DGGUHVVHV H[WUD FRPSHQVDWLRQ FUHGLWDEOH
WRZDUGRYHUWLPHFRPSHQVDWLRQDVIROORZV
([FHSWDVSURYLGHGLQSDUDJUDSK VXPVH[FOXGHG
IURPWKHUHJXODUUDWHSXUVXDQWWRVXEVHFWLRQ H VKDOOQRW
EHFUHGLWDEOHWRZDUGZDJHVUHTXLUHGXQGHUVHFWLRQRU
RYHUWLPHFRPSHQVDWLRQUHTXLUHGXQGHUWKLVVHFWLRQ
([WUDFRPSHQVDWLRQSDLGDVGHVFULEHGLQSDUDJUDSKV
DQG RIVXEVHFWLRQ H RIWKLVVHFWLRQVKDOOEH
FUHGLWDEOH WRZDUG RYHUWLPH FRPSHQVDWLRQ SD\DEOH
SXUVXDQWWRWKLVVHFWLRQ

-- 9 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
3DUDJUDSKV DQG RI † H SURYLGH DV IROORZV
H 5HJXODU UDWH GHILQHG
$V XVHG LQ WKLV VHFWLRQ WKH UHJXODU UDWH DW ZKLFK DQ HPSOR\HH
LV HPSOR\HG VKDOO EH GHHPHG WR LQFOXGH DOO UHPXQHUDWLRQ IRU
HPSOR\PHQW SDLG WR RU RQ EHKDOI RI WKH HPSOR\HH EXW VKDOO QRW
EH GHHPHG WR LQFOXGH
H[WUD FRPSHQVDWLRQ SURYLGHG E\ D SUHPLXP UDWH SDLG IRU
FHUWDLQ KRXUV ZRUNHG E\ WKH HPSOR\HH LQ DQ\ GD\ RU ZRUNZHHN
EHFDXVH VXFK KRXUV DUH KRXUV ZRUNHG LQ H[FHVV RI HLJKW LQ D GD\
RU LQ H[FHVV RI WKH PD[LPXP ZRUNZHHN DSSOLFDEOH WR VXFK
HPSOR\HH XQGHU VXEVHFWLRQ D RI WKLV VHFWLRQ RU LQ H[FHVV RI WKH
HPSOR\HH V QRUPDO ZRUNLQJ KRXUV RU UHJXODU ZRUNLQJ KRXUV DV
WKH FDVH PD\ EH
H[WUD FRPSHQVDWLRQ SURYLGHG E\ D SUHPLXP UDWH SDLG IRU
ZRUN E\ WKH HPSOR\HH RQ 6DWXUGD\V 6XQGD\V KROLGD\V RU
UHJXODU GD\V RI UHVW RU RQ WKH VL[WK RU VHYHQWK GD\ RI WKH
ZRUNZHHN ZKHUH VXFK SUHPLXP UDWH LV QRW OHVV WKDQ RQH DQG
RQHKDOI WLPHV WKH UDWH HVWDEOLVKHG LQ JRRG IDLWK IRU OLNH ZRUN
SHUIRUPHG LQ QRQRYHUWLPH KRXUV RQ RWKHU GD\V
H[WUD FRPSHQVDWLRQ SURYLGHG E\ D SUHPLXP UDWH SDLG WR WKH
HPSOR\HH LQ SXUVXDQFH RI DQ DSSOLFDEOH HPSOR\PHQW FRQWUDFW RU
FROOHFWLYHEDUJDLQLQJ DJUHHPHQW IRU ZRUN RXWVLGH RI WKH KRXUV
HVWDEOLVKHG LQ JRRG IDLWK E\ WKH FRQWUDFW RU DJUHHPHQW DV WKH
EDVLF QRUPDO RU UHJXODU ZRUNGD\ QRW H[FHHGLQJ HLJKW KRXUV RU
ZRUNZHHN QRW H[FHHGLQJ WKH PD[LPXP ZRUNZHHN DSSOLFDEOH WR
VXFK HPSOR\HH XQGHU VXEVHFWLRQ D RI WKLV VHFWLRQ ZKHUH VXFK
SUHPLXP UDWH LV QRW OHVV WKDQ RQH DQG RQHKDOI WLPHV WKH UDWH
HVWDEOLVKHG LQ JRRG IDLWK E\ WKH FRQWUDFW RU DJUHHPHQW IRU OLNH
ZRUN SHUIRUPHG GXULQJ VXFK ZRUNGD\ RU ZRUNZHHN>@
86& † H DQG $V )&$ DFNQRZOHGJHV WKHUH LV QR
GLVSXWH WKDW LWV SUHPLXP SD\PHQWV ILW ZLWKLQ 86& † H
DQG
86& † K DQG HPSKDVLV DGGHG $V WKH
6HFUHWDU\SRLQWVRXWWKHVWDWXWHLVVLOHQWDVWRZKHQ³H[WUD
FRPSHQVDWLRQ´ FUHGLW PD\ EH XVHG DQG WKXV WKH SODLQ
ODQJXDJHRIWKHVWDWXWHGRHVQRWGHWHUPLQHZKHWKHU)&$PD\
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
7KH&LW\KRZHYHUDGYRFDWHVDPHWKRGRISD\PHQWWKDW
ZRXOGDOORZLWWRSD\LWVRYHUWLPHREOLJDWLRQVDWDWLPH
IDUUHPRYHGIURPZKHQWKDWRYHUWLPHDPRXQWZDVGXH
7KDWLVLQFRQVLVWHQWZLWKWKHVWDWXWRU\UHTXLUHPHQWWKDW
RYHUWLPHSD\PHQWVPXVWEHWLPHO\PDGH
+RZDUG)GDW
,QDGGLWLRQWKH1LQWK&LUFXLW¶VRSLQLRQLQ%LJJVY:LOVRQ
)G WK &LU VXSSRUWV WKH 6HFUHWDU\¶V
FRQWHQWLRQWKDWLWVLQWHUSUHWDWLRQSUHYHQWVSRVVLEOHDEXVHVRI
WKH)/6$,QWKDWFDVHWKH1LQWK&LUFXLWDGGUHVVHGWKHLVVXH
ZKHWKHUDQHPSOR\HU¶VODWHSD\PHQWRIZDJHVFRQVWLWXWHGD
YLRODWLRQRIWKHPLQLPXPZDJHUHTXLUHPHQWSURYLVLRQVWDWHG
LQ86&† D 6LPLODUWR† K WKHUHLVQR
H[SUHVVODQJXDJHLQ† D VSHFLI\LQJZKHQ† D LVWR
DSSO\$QDO\]LQJWKHVWDWXWRU\VFKHPHDVDZKROHWKH1LQWK
&LUFXLWFRQFOXGHGWKDW† D VKRXOGEHDSSOLHGZLWKWKH
ZRUNZHHNVWDQGDUGDVWKHUHIHUHQFHSRLQW,Q%LJJVWKH1LQWK
&LUFXLW QRWHG WKDW ³>W@KH REOLJDWLRQ >WR SD\ WKH PLQLPXP
ZDJH@NLFNVLQRQFHDQHPSOR\HHKDVGRQHFRYHUHGZRUNLQ
DQ\ZRUNZHHN´DQGWKDW³>L@IDSD\GD\KDVSDVVHGZLWKRXW
SD\PHQW WKH HPSOR\HU FDQQRW KDYH PHW KLV REOLJDWLRQ WR
μSD\¶´,GDW$V%LJJVQRWHG³>X@QOHVVWKHUHLVDGXH
GDWHDIWHUZKLFKPLQLPXPZDJHVEHFRPHXQSDLGLPSRVLQJ
OLDELOLW\ IRU ERWK XQSDLG PLQLPXP ZDJHV DQG OLTXLGDWHG
GDPDJHVZRXOGEHPHDQLQJOHVV´,G7KHVDPHUHDVRQLQJIRU
XVLQJWKHZRUNZHHNRUZRUNSHULRGVWDQGDUGDOVRDSSOLHVZLWK
UHVSHFWWR† K VLQFHLWFRPSHOVHPSOR\HUVWRPDNHWLPHO\
SD\PHQWVRIRYHUWLPHLQFRQIRUPLW\ZLWK WKH$FW6HH
&)5 UHTXLULQJ WLPHO\ RYHUWLPH SD\PHQWV VHH
DOVR%URRNO\Q6DYV%DQNY2¶1HLOO86Q
³7KH QHFHVVLW\ RI SURPSW SD\PHQW WR ZRUNHUV RI
ZDJHVKDVORQJEHHQUHFRJQL]HGE\&RQJUHVVDVZHOODVE\
VWDWHOHJLVODWXUHV´
)XUWKHUDVWKH6HFUHWDU\SRLQWVRXW5RODQG(OHFWULF&RY
%ODFN)G WK&LU VXSSRUWVWKHLGHDWKDWWKH
VWDWXWRU\SURYLVLRQLQTXHVWLRQVKRXOGRSHUDWHRQDZRUNZHHN
RU ZRUN SHULRG EDVLV ,Q 5RODQG WKH )RXUWK &LUFXLW

-- 10 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
IURP WKH WZLQ HYLOV RI H[FHVVLYH ZRUN KRXUV DQG
VXEVWDQGDUGZDJHV%DUUHQWLQH>Y$UNDQVDV%HVW)UHLJKW
6\VWHP,QF86 @0RQDKDQY
&RXQW\RI&KHVWHUILHOG9LUJ)G WK
&LU 7RZDUG WKDW HQG WKH VWDWXWH UHTXLUHV WKH
SD\PHQWRIWLPHDQGDKDOIIRURYHUWLPHZRUN&RXUWV
KDYHORQJLQWHUSUHWHGWKH)/6$DVUHTXLULQJWKDWWKRVH
SD\PHQWVEHWLPHO\PDGH%URRNO\Q6DYV%DQNY2 1HLO
86 5RJHUV Y &LW\ RI 7UR\
1<)G G&LU &DOGHURQY:LWYRHW
)G WK&LU 7KXVWKHVWDWXWHLV
YLRODWHG HYHQ LI WKH HPSOR\HU HYHQWXDOO\ SD\V WKH
RYHUWLPHDPRXQWWKDWZDVGXH6HH5RJHUV)GDW
,Q IDFW WKDW UHTXLUHPHQW PD\ QRW EH ZDLYHG DQG
HYHQ WKH ZRUNHUV HQWKXVLDVWLF DVVHQW WR GHIHUUHG
SD\PHQW²DIRUPRIHPSOR\HUKHOGVDYLQJVDFFRXQW²LV
LQHIIHFWXDO&DOGHURQ)GDW7KDWSULQFLSOH
LVDOVRIRXQGDW&)5†ZKLFKSURYLGHVLQ
UHOHYDQWSDUW
7KH JHQHUDO UXOH LV WKDW RYHUWLPH FRPSHQVDWLRQ
HDUQHGLQDSDUWLFXODUZRUNZHHNPXVWEHSDLGRQWKH
UHJXODU SD\ GD\ IRU WKH SHULRG LQ ZKLFK VXFK
ZRUNZHHN HQGV :KHQ WKH FRUUHFW DPRXQW RI WKH
RYHUWLPHFRPSHQVDWLRQFDQQRWEHGHWHUPLQHGXQWLO
VRPHWLPHDIWHUWKHUHJXODUSD\SHULRGKRZHYHUWKH
UHTXLUHPHQWV RI WKH )/6$ ZLOO EH VDWLVILHG LI WKH
HPSOR\HUSD\VWKHH[FHVVRYHUWLPHFRPSHQVDWLRQDV
VRRQDIWHUWKHUHJXODUSD\SHULRGDVLVSUDFWLFDEOH
3D\PHQWPD\QRWEHGHOD\HGIRUDSHULRGORQJHUWKDQ
LVUHDVRQDEO\QHFHVVDU\IRUWKHHPSOR\HUWRFRPSXWH
DQGDUUDQJHIRUSD\PHQWRIWKHDPRXQWGXHDQGLQQR
HYHQW PD\ SD\PHQW EH GHOD\HG EH\RQG WKH QH[W
SD\GD\DIWHUVXFKFRPSXWDWLRQFDQEHPDGH
$OWKRXJKWKDWUHJXODWLRQLVQRWHQWLWOHGWRGHIHUHQFH
LWLVQRQHWKHOHVVSHUVXDVLYHDVLWLVFRQVLVWHQWZLWKWKH
LQWHUSUHWDWLRQRIWKH)/6$WKDWWKHFRXUWVKDYHUHDFKHG
7KHUHIRUHXQGHUWKHVWDWXWHRYHUWLPHJHQHUDOO\PXVWEH
FDOFXODWHGDQGSDLGRQDSD\SHULRGE\SD\SHULRGEDVLV
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
DSSO\LWVFRQWUDFWSUHPLXPVRQO\LQWKHVDPHZRUNZHHNRU
ZRUNSHULRGLQZKLFKWKHRYHUWLPHOLDELOLW\ZDVLQFXUUHGRU
ZKHWKHULWPD\XVHLWDJDLQVWWKHWRWDORYHUWLPHGHILFLHQF\
0RUHRYHUDVWKHSDUWLHVUHFRJQL]HQR'HSDUWPHQWRI/DERU
³'2/´ UHJXODWLRQVSHFLILFDOO\DGGUHVVHVWKHSUHFLVHLVVXHLQ
WKLVFDVH7KXVLQGHWHUPLQLQJZKHWKHU† K SHUPLWV
)&$WRXVHLWVFRQWUDFWSUHPLXPVWRRIIVHWRYHUWLPHRZHGWR
LWVHPSOR\HHVZHQHHGWRH[DPLQHWKHWH[WRIWKHVWDWXWRU\
SURYLVLRQ LQ OLJKW RI WKH UHOHYDQW OHJLVODWLYH KLVWRU\ DQG LQ
FRQWH[W ZLWK WKH )/6$ DV D ZKROH DQG LWV LPSOHPHQWLQJ
UHJXODWLRQV
7KHOHJLVODWLYHKLVWRU\RI† K
$UHYLHZRIWKHUHOHYDQWOHJLVODWLYHKLVWRU\WHQGVWRIDYRU
WKH6HFUHWDU\¶VSRVLWLRQWKDWWKHVWDWXWHVKRXOGEHLQWHUSUHWHG
WR LQFOXGH D ZRUNZHHN RU ZRUN SHULRG UHVWULFWLRQ $V WKH
SDUWLHVDFNQRZOHGJH86&† H DQG DQG
† K ZHUHHQDFWHGLQUHVSRQVHWRWKH6XSUHPH&RXUW¶V
GHFLVLRQLQ%D\5LGJHY$DURQ86 ,Q%D\
5LGJHWKH&RXUWLQWHUSUHWLQJDFRQWUDFWEHWZHHQVWHYHGRULQJ
FRPSDQLHVDQGWKH,QWHUQDWLRQDO/RQJVKRUHPHQ¶V$VVRFLDWLRQ
³,/$´ UHTXLUHG WKH HPSOR\HUV WR SD\ VWDWXWRU\ RYHUWLPH
FRPSHQVDWLRQ WKDW ZDV FDOFXODWHG E\ LQFOXGLQJ FHUWDLQ
FRQWUDFWXDO SUHPLXPV LQ WKH UHJXODU UDWH DQG WKXV SD\
³RYHUWLPHRQRYHUWLPH´$VDUHVXOWRI%D\5LGJH&RQJUHVV
UHVSRQGHG E\ SDVVLQJ 3XEOLF /DZ ZKLFK FRQWDLQHG
ODQJXDJHWKDWDOORZHGFUHGLWIRUFRQWUDFWXDOSUHPLXPVSDLGE\
HPSOR\HUV³WRZDUGDQ\SUHPLXPFRPSHQVDWLRQGXH´XQGHU
VHFWLRQ RI WKH $FW )DLU /DERU 6WDQGDUGV $FW RI
3XE / 1R † 6WDW HPSKDVLV
DGGHG
$V WKH SDUWLHV DFNQRZOHGJH WKH OLIH RI WKH ³WRZDUG DQ\
SUHPLXPFRPSHQVDWLRQGXH´ODQJXDJHRI3XEOLF/DZZDV
VKRUWOLYHG6RRQWKHUHDIWHU&RQJUHVVWKURXJK3XEOLF/DZ
SDVVHGH[WHQVLYHUHYLVLRQVRIWKH)/6$FUHDWLQJWKH
SUHVHQWVWDWXWRU\ODQJXDJHIRXQGDW† K ZKLFKDOORZV
FUHGLW IRU FRQWUDFWXDO SUHPLXPV ³WRZDUG RYHUWLPH
FRPSHQVDWLRQSD\DEOHSXUVXDQWWRWKLVVHFWLRQ´86&

-- 11 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
† K $V WKH 6HFUHWDU\ SRLQWV RXW WKH SUREOHP RI
HPSOR\HHV UHFHLYLQJ VWDWXWRU\ RYHUWLPH WKDW LQFOXGHG
FRQWUDFWXDOSUHPLXPVDVUHTXLUHGE\%D\5LGJHZDVVROYHG
E\ WKH HQDFWPHQW RI VHFWLRQV H DQG ZKLFK
H[SOLFLWO\UHIHUHQFHWKHZRUNZHHN7KXVZKHQWKH)/6$ZDV
DPHQGHG LQ 86& †† H DQG
H[FOXGHGFHUWDLQSUHPLXPSD\PHQWVIURPWKHFRPSXWDWLRQRI
RYHUWLPHZKLOH86&† K DOORZHGWKRVHSD\PHQWV
WREHFUHGLWHGDJDLQVW)/6$RYHUWLPH7KH6HFUHWDU\QRWHV
,W ZDV FRQVLGHUHG XQIDLU WR UHTXLUH WKH LQFOXVLRQ RI
FRQWUDFWXDO SUHPLXPV QRW UHTXLUHG E\ WKH $FW LQ WKH
UHJXODUUDWHRISD\IRURYHUWLPHSXUSRVHVWKHUHE\PDNLQJ
WKHHPSOR\HUSD\³RYHUWLPHRQRYHUWLPH´6HH6HQDWH
5HS1RVW&RQJQG6HVV ,WZDVDOVR
FRQVLGHUHG IDLU WR HPSOR\HUV WR JLYH WKHP FUHGLW IRU
FHUWDLQ FRQWUDFWXDO SUHPLXPV WKH\ SDLG DJDLQVW WKH
VWDWXWRU\ RYHUWLPH WKH\ PLJKW RZH ,G $V GHVFULEHG
DERYHKRZHYHUWKHUHFDQRQO\EHFRQFRPLWDQWIDLUQHVV
WRHPSOR\HHVLIWKHFUHGLWLQJSHUPLWWHGE\VHFWLRQ K LV
OLPLWHGWRWKHZRUNZHHNLQZKLFKWKHSUHPLXPVDUHSDLG
3ODLQWLII¶V%UDW
,Q YLHZ RI WKHVH UHYLVLRQV RI WKH )/6$ WKH 6HFUHWDU\
UHDVRQVWKDWLWPDNHVVHQVHWRLQWHUSUHWWKHUHODWHGHQDFWPHQW
RI VHFWLRQ K WR DOORZ IRU FUHGLWLQJ RQ WKDW YHU\ VDPH
ZRUNZHHNEDVLVVLQFH³WKHSUREOHPUHVXOWLQJIURP%D\5LGJH
VXSUD ZKLFK VHFWLRQ K ZDV HQDFWHG WR UHPHG\
LQYROYHG HPSOR\HHV ZKR URXWLQHO\ UHFHLYHG D FRQWUDFWXDO
SUHPLXPDQGZRUNHGVWDWXWRU\RYHUWLPHLQWKHVDPHZHHN´
3ODLQWLII¶V5HSO\%UDW HPSKDVLVLQRULJLQDO ,QIXUWKHU
VXSSRUWRILWVLQWHUSUHWDWLRQRI† K DVFRQWDLQLQJD
ZRUNZHHN TXDOLILFDWLRQ WKH 6HFUHWDU\ DOVR FLWHV WR 6HQDWH
5HSRUWDW ZKLFKUHIHUHQFHVSDUDJUDSKV
RIWKH:DJHDQG+RXU,QWHUSUHWDWLYH%XOOHWLQ1R
ZKLFKFRQWDLQH[DPSOHVUHJDUGLQJWKHFUHGLWLQJRIFRQWUDFWXDO
SUHPLXPVDJDLQVWVWDWXWRU\RYHUWLPHRZHGWRHPSOR\HHVE\
XVLQJ WKH VHYHQGD\ ZRUNZHHN DV WKH VWDQGDUG UHIHUHQFH
SRLQW $FFRUGLQJO\ LW ZRXOG DSSHDU WKDW WKH OHJLVODWLYH
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
LPSOHPHQWLQJ UHJXODWLRQV OHQG VXSSRUW WR WKH 6HFUHWDU\¶V
SRVLWLRQWKDWSUHPLXPFUHGLWVDOORZHGE\† K VKRXOG
EHOLPLWHGWRWKHVDPHZRUNZHHNRUZRUNSHULRGLQZKLFK
WKHVHSUHPLXPVZHUHSDLG
&DVHODZLQWHUSUHWLQJ† K
*LYHQ WKH VLOHQFH LQ WKH VWDWXWH DV WR ZKHQ RYHUWLPH
FRPSHQVDWLRQ PD\ EH FUHGLWHG DQG WKH ODFN RI DQ
LPSOHPHQWLQJUHJXODWLRQRQWKLVSUHFLVHLVVXHLWLVSHUKDSV
QRWVXUSULVLQJWKDWGLYHUJHQWFDVHODZKDVDULVHQ2QHOLQHRI
FDVHODZVXSSRUWVWKH6HFUHWDU\¶VLQWHUSUHWDWLRQWKDWSUHPLXP
FUHGLWVDOORZHGE\† K VKRXOGEHOLPLWHGWRWKHVDPH
ZRUNZHHN RU ZRUN SHULRG LQ ZKLFK WKHVH SUHPLXPV ZHUH
SDLG6HH+RZDUGY&LW\RI6SULQJILHOG)G
WK &LU KROGLQJ WKDW HPSOR\HU PD\ DSSO\ FHUWDLQ
FUHGLWVDJDLQVWRYHUWLPHRZHGRQDSD\SHULRGE\SD\SHULRG
EDVLV 1RODQY&LW\RI&KLFDJR)6XSSG
1',OO KROGLQJWKDW³WKHRIIVHWVVKRXOGEHFDOFXODWHG
RQ D SHULRG E\ SHULRG EDVLV´ $QRWKHU OLQH RI FDVH ODZ
VXSSRUWV )&$¶V LQWHUSUHWDWLRQ 6HH $OH[DQGHU Y 8QLWHG
6WDWHV)G )HG&LU QRWLQJWKDWWKH
³$FWSD\>SUHPLXPSD\SXUVXDQWWRVXEVHFWLRQV DQG
RI † H @ LV FUHGLWDEOH WRZDUG DQ\ RYHUWLPH
FRPSHQVDWLRQ GXH XQGHU WKH )/6$´ .ROKHLP Y *O\QQ
&RXQW\*D)G WK&LU KROGLQJ
³WKDWWKHFRXQW\VKRXOGEHDOORZHGWRVHWRIIDOOSUHYLRXVO\
SDLGRYHUWLPHSUHPLXPVDJDLQVWRYHUWLPHIRXQGWREHGXH
DQGRZLQJGXULQJWKHGDPDJHVSKDVHRIWKHWULDO´ $EEH\Y
&LW\RI-DFNVRQ)6XSS ('0LFK KROGLQJ
WKDWSUHPLXPSD\PHQWVIRURYHUWLPHKRXUVPD\EHXVHGWR
RIIVHWDOOGHILFLHQFLHVLQRYHUWLPHXQGHUWKH)/6$
1RWZLWKVWDQGLQJWKHFDVHODZVXSSRUWLQJWKH6HFUHWDU\¶V
LQWHUSUHWDWLRQDSSHDUVWREHPRUHSHUVXDVLYH6SHFLILFDOO\DV
QRWHG E\ WKH 6HYHQWK &LUFXLW LQ +RZDUG DOORZLQJ WKH
HPSOR\HU WR XVH SUHPLXPV WR RIIVHW WKH WRWDO OLDELOLW\ LV
LQFRQVLVWHQWZLWKWKHODQJXDJHDQGSXUSRVHRIWKHVWDWXWH
7KHFUHGLWSURYLVLRQPXVWEHUHDGLQWKHFRQWH[WRIWKH
VWDWXWHDVDZKROHZKLFKLVGHVLJQHGWRSURWHFWZRUNHUV

-- 12 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
HPSOR\HU PD\ HPSOR\ DQ\ HPSOR\HH >LQ WKH WREDFFR
LQGXVWU\@´ HPSKDVLVDGGHG
,QDGGLWLRQWKH'HSDUWPHQWRI/DERU ³'2/´ UHJXODWLRQV
LPSOHPHQWLQJWKH$FWVXSSRUWSURPSWSD\PHQWRIRYHUWLPH
VXJJHVWLQJWKDWWKHSUHPLXPVVKRXOGEHFUHGLWHGZLWKLQWKH
VDPHZRUNZHHNLQZKLFKWKH\ZHUHSDLG6SHFLILFDOO\
&)5†SURYLGHVLQSHUWLQHQWSDUW
7KHJHQHUDOUXOHLVWKDWRYHUWLPHFRPSHQVDWLRQHDUQHGLQ
DSDUWLFXODUZRUNZHHNPXVWEHSDLGRQWKHUHJXODUSD\
GD\IRUWKHSHULRGLQZKLFKVXFKZRUNZHHNHQGV:KHQ
WKHFRUUHFWDPRXQWRIRYHUWLPHFRPSHQVDWLRQFDQQRWEH
GHWHUPLQHGXQWLOVRPHWLPHDIWHUWKHUHJXODUSD\SHULRG
KRZHYHUWKHUHTXLUHPHQWVRIWKH$FWZLOOEHVDWLVILHGLI
WKHHPSOR\HUSD\VWKHH[FHVVRYHUWLPHFRPSHQVDWLRQDV
VRRQ DIWHU WKH UHJXODU SD\ SHULRG DV LV SUDFWLFDEOH
3D\PHQWPD\QRWEHGHOD\HGIRUDSHULRGORQJHUWKDQLV
UHDVRQDEO\QHFHVVDU\IRUWKHHPSOR\HUWRFRPSXWHDQG
DUUDQJHIRUSD\PHQWRIWKHDPRXQWGXHDQGLQQRHYHQW
PD\SD\PHQWEHGHOD\HGEH\RQGWKHQH[WSD\GD\DIWHU
VXFKFRPSXWDWLRQFDQEHPDGH
&)5†6HH5HLFKY,QWHUVWDWH%UDQGV&RUS
)G WK&LU QRWLQJWKH³JHQHUDOUXOHLV
WKDWRYHUWLPHFRPSHQVDWLRQHDUQHGLQDSDUWLFXODUZRUNZHHN
PXVWEHSDLGRQWKHUHJXODUSD\GD\IRUWKHSHULRGLQZKLFK
VXFKZRUNZHHNHQGV´ TXRWLQJ&)5† VHH
DOVR &)5 † GLUHFWLQJ HPSOR\HUV WR SD\
RYHUWLPHGXHRQDZHHNO\EDVLV &)5† VWDWLQJ
WKDWDQHPSOR\HUFDQQRWDYHUDJHWKHQXPEHURIKRXUVZRUNHG
RYHUWZRZHHNVLQRUGHUWRDYRLGSD\LQJRYHUWLPH &)5
† F ILQGLQJ WKDW FUHGLWV PD\ EH JLYHQ IRU GDLO\
FRPSHQVDWLRQ³DJDLQVWWKHRYHUWLPHFRPSHQVDWLRQZKLFKLV
GXH XQGHU WKH VWDWXWH IRU KRXUV LQ H[FHVV RI LQ WKDW
ZRUNZHHN´
7KXV ZKLOH WKH SODLQ ODQJXDJH RI † K GRHV QRW
VSHDNGLUHFWO\WRWKHSUHVHQWLVVXHDQGZKLOHWKH6HFUHWDU\KDV
QRWSURPXOJDWHGRUSXEOLVKHGDQ\UHJXODWLRQSHUWDLQLQJWRWKLV
VWDWXWRU\SURYLVLRQWKHVHRWKHUSURYLVLRQVLQWKH)/6$DQGLWV
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
KLVWRU\RIWKHVWDWXWHVXSSRUWVWKHQRWLRQWKDWWKHZRUNZHHNRU
ZRUNSHULRGLVFHQWUDOWRDQXQGHUVWDQGLQJRI† K
)&$ KDV D FRPSOHWHO\ GLIIHUHQW XQGHUVWDQGLQJ RI WKH
&RQJUHVVLRQDOUHVSRQVHLQWR%D\5LGJH$FFRUGLQJWR
)&$ WKH &RQJUHVVLRQDO GHEDWHV FRQILUPHG WKH YLHZ WKDW
FRQWUDFW SUHPLXP SD\PHQWV PD\ EH FUHGLWHG DJDLQVW DQ\
RYHUWLPHFRPSHQVDWLRQGXHXQGHUWKH$FW)&$DUJXHVWKDW
WKHSUHVHQWVWDWXWRU\ODQJXDJHLVPHUHO\³VRPHZKDWZDWHUHG
GRZQIURPLWVSUHGHFHVVRUμFUHGLWHGWRZDUGDQ\SUHPLXP¶´
DQGUHSUHVHQWVRQO\D³PLQRUVKLIWLQWH[W´'HIHQGDQW¶V%U
DW2Q)&$¶VYLHZWKHSUHVHQWVWDWXWRU\ODQJXDJHRI
† K LV PHUHO\ D UHSDFNDJHG YHUVLRQ RI WKH HDUOLHU
VWDWXWRU\ODQJXDJHDQGWKDW³WKHJKRVWRIWKHμFUHGLWHG
WRZDUGDQ\SUHPLXPFRPSHQVDWLRQGXH¶>ODQJXDJH@FRQWLQXHV
WRKDXQWWKHVWDWXWH¶VLQWHQW´'HIHQGDQW¶V%UDW
+RZHYHU)&$¶VVWDWXWRU\FRQVWUXFWLRQRI† K LVDW
YDULDQFH ZLWK WKH DSSOLFDEOH SULQFLSOHV RI VWDWXWRU\
LQWHUSUHWDWLRQ$VWKH6HFUHWDU\FRUUHFWO\SRLQWVRXWWKHIDFW
WKDW&RQJUHVVGHOHWHG³DQ\´LQDPHQGLQJWKHVWDWXWHPHDQV
WKDWLWSUHVXPHGWKDWWKHRPLWWHGWHUPZDVQRWLQWHQGHGWR
KDYH DQ\ HIIHFW RQ WKH SUHVHQW YHUVLRQ RI WKH VWDWXWH 6HH
5XVVHOOR Y 8QLWHG 6WDWHV 86
³>:@KHUH &RQJUHVV LQFOXGHV SDUWLFXODU ODQJXDJH LQ RQH
VHFWLRQRIDVWDWXWHEXWRPLWVLWLQDQRWKHUVHFWLRQRIWKHVDPH
$FWLWLVJHQHUDOO\SUHVXPHGWKDW&RQJUHVVDFWVLQWHQWLRQDOO\
DQGSXUSRVHO\LQWKHGLVSDUDWHLQFOXVLRQRUH[FOXVLRQ:H
ZRXOG QRW SUHVXPH WR DVFULEH WKLV GLIIHUHQFH WR D VLPSOH
PLVWDNH LQ GUDIWVPDQVKLS´ LQWHUQDO TXRWDWLRQ PDUNV
RPLWWHG VHHDOVR3HWUH\Y&LW\RI7ROHGR)G
WK &LU +HUH &RQJUHVV VSHFLILFDOO\ UHPRYHG WKH
ODQJXDJH LQ TXHVWLRQ WKDW LW KDG LQVHUWHG LQ WKH SUHYLRXV
YHUVLRQ EHIRUH WKH HQDFWPHQW RI WKH UHYLVHG VWDWXWH 7KLV
SURYLGHVHYHQJUHDWHUVXSSRUWIRU WKHSUHVXPSWLRQWKDWWKH
UHPRYHGODQJXDJHZDVQRWLQWHQGHGWRKDYHDQ\HIIHFWRQWKH
PHDQLQJRIWKHDPHQGHGVWDWXWH6HH6WHZDUWY5DJODQG
)GQ WK&LU ³:KHQOHJLVODWRUVGHOHWH
ODQJXDJHZHPD\DVVXPHWKDWWKH\LQWHQGHGWRHOLPLQDWHWKH
HIIHFWRIWKHSUHYLRXVZRUGLQJ´

-- 13 of 14 --

+HUPDQY)DEUL&HQWHUVRI$PHULFD 1R
6LPLODUO\ ³SD\DEOH´ LV GHILQHG LQ %ODFN¶V /DZ 'LFWLRQDU\ WK
HG DV IROORZV ³ 2I D VXP RI PRQH\ RU D QHJRWLDEOH LQVWUXPHQW
WKDW LV WR EH SDLG ‡ $Q DPRXQW PD\ EH SD\DEOH ZLWKRXW EHLQJ GXH 'HEWV
DUH FRPPRQO\ SD\DEOH ORQJ EHIRUH WKH\ IDOO GXH´
1HYHUWKHOHVV)&$PDLQWDLQVWKDWWKHVWDWXWHFOHDUO\DOORZV
³H[WUDFRPSHQVDWLRQ´WREHFUHGLWHGDJDLQVWDQ\RYHUWLPHGXH
XQGHUWKH)/6$EHFDXVHWKH³FDUHIXOO\VHOHFWHGDQGYDU\LQJ
WHQVHVRIWKHYHUEVXVHGXQGHUVHFWLRQ K DOVREHWUD\
&RQJUHVV¶FOHDULQWHQW´'HIHQGDQW¶V%UDW6SHFLILFDOO\
)&$DUJXHVWKDW³ZKLOHWKHVWDWXWHXVHVWKHUHDUORRNLQJSDVW
WHQVHμSDLG¶WRGHVFULEHWKHH[WUDFRPSHQVDWLRQWREHRIIVHW
LW LQ PDUNHG FRQWUDVW XVHV WKH IRUZDUGORRNLQJ YHUEV
μFUHGLWDEOH¶DQGμSD\DEOH¶WRGHVFULEHWKHFUX[RIWKHEHQHILW
OHJLVODWHGIRUHPSOR\HUV´'HIHQGDQW¶V%UDW$FFRUGLQJ
WR)&$³>W@KHFOHDUPHVVDJHVHQWE\WKHZRUGμSD\DEOH¶LV
WKDW LWDSSOLHVWRIXWXUHSD\PHQWVQRWWKRVHDOUHDG\SDLG´
'HIHQGDQW¶V%UDW
)&$¶VH[SODQDWLRQDVWR&RQJUHVV¶OLQJXLVWLFLQWHQWIDOWHUV
LQWKLVUHVSHFWEHFDXVHWKHWHUP³SD\DEOH´LVQRWFXVWRPDULO\
XQGHUVWRRGWRUHODWHWRIXWXUHSD\PHQWV³3D\DEOH´LVGHILQHG
LQ%ODFN V/DZ'LFWLRQDU\
&DSDEOHRIEHLQJSDLGVXLWDEOHWREHSDLGDGPLWWLQJRU
GHPDQGLQJSD\PHQWMXVWO\GXHOHJDOO\HQIRUFHDEOH$
VXP RI PRQH\ LV VDLG WR EH SD\DEOH ZKHQ D SHUVRQ LV
XQGHU DQ REOLJDWLRQ WR SD\ LW 3D\DEOH PD\ WKHUHIRUH
VLJQLI\DQREOLJDWLRQWRSD\DWDIXWXUHWLPHEXWZKHQ
XVHGZLWKRXWTXDOLILFDWLRQWKHWHUPQRUPDOO\PHDQVWKDW
WKHGHEWLVSD\DEOHDWRQFHDVRSSRVHGWRRZLQJ
%ODFN V /DZ 'LFWLRQDU\ WK HG HPSKDVLV
DGGHG VHHDOVR7UXLOORY&\SUXV$PD[0LQHUDO&R5HW
3ODQ&RPP)G WK&LU QRWLQJWKDW
WKHWHUP³SD\DEOH´XQGHUWKH(PSOR\HH5HWLUHPHQW,QFRPH
6HFXULW\$FW³PHDQVμ>F@DSDEOHRIEHLQJSDLGVXLWDEOHWREH
SDLG DGPLWWLQJ RU GHPDQGLQJ SD\PHQW MXVWO\ GXH OHJDOO\
HQIRUFHDEOH¶´ TXRWLQJ%ODFN¶V/DZ'LFWLRQDU\ WKHG
,QUH5LSOH\)G WK&LU FLWLQJ
1R +HUPDQY)DEUL&HQWHUVRI$PHULFD
6HH DOVR -RKQVRQ Y 0HWKRUVW )G Q WK &LU
QRWLQJ WKDW ³:HEVWHU V 1HZ :RUOG 'LFWLRQDU\ G HG
GHILQHV μSD\DEOH¶ LQ SDUW DV μ>U@HTXLULQJ SD\PHQW RQ D FHUWDLQ GDWH
'8(¶´ &DWKH\ Y 8QLWHG 6WDWHV ) 6XSS G 6' 7H[
QRWLQJ WKDW ³(QJOLVK GLFWLRQDULHV DJUHH RQ WKH PHDQLQJ RI SD\DEOH
GHILQLQJ LW WR PHDQ LQWHU DOLD μ>W@KDW PD\ FDQ RU VKRXOG EH SDLG¶ μGXH¶
RU μFDSDEOH RI EHLQJ SDLG¶´ 5R\DO ,QGHPQLW\ &R Y :\FNRII +HLJKWV
+RVS ) 6XSS (' 1< ³$OWKRXJK μSD\DEOH¶
PLJKW PHDQ D IXWXUH REOLJDWLRQ LQ VRPH FLUFXPVWDQFHV DV LV XVHG LQ WKH
3ROLF\ WKH RQO\ UHDVRQDEOH XQGHUVWDQGLQJ LV WKDW LW DGGV WR WKH PHDQLQJ RI
μSDLG¶ E\ LQFOXGLQJ D VXP ZKLFK LV HQIRUFHDEO\ GXH RU REOLJDWHG EXW QRW
\HW DFWXDOO\ UHPLWWHG´
%ODFN¶V /DZ 'LFWLRQDU\ WR LQWHUSUHW ³SD\DEOH´ LQ VHFWLRQ
D RIWKH%DQNUXSWF\&RGHWRPHDQWKDW³WD[HVWKDW
KDYHμEHFRPHSD\DEOH¶DUHWKRVHWKDWPXVWEHSDLGQRZ´
%HFDXVHWKHWHUP³SD\DEOH´LVQRWFXVWRPDULO\XQGHUVWRRGWR
DSSO\ WR IXWXUH SD\PHQWV ZH UHMHFW )&$¶V DUJXPHQW WKDW
³SD\DEOH´DVIRXQGLQ† K HYLQFHV&RQJUHVV¶LQWHQW
WR DOORZ ³H[WUD FRPSHQVDWLRQ´ WR EH FUHGLWHG DJDLQVW DQ\
RYHUWLPHOLDELOLW\GXHXQGHUWKH)/6$
7KH )/6$ DV D ZKROH DQG LWV LPSOHPHQWLQJ
UHJXODWLRQV
$QDQDO\VLVRIWKH)/6$DVDZKROHDQGLWVLPSOHPHQWLQJ
UHJXODWLRQVDOVRIDYRUVWKH6HFUHWDU\¶VYLHZWKDW† K
VKRXOGEHLQWHUSUHWHGWRLQFOXGHDZRUNZHHNRUZRUNSHULRG
UHVWULFWLRQ$VWKH6HFUHWDU\SRLQWVRXWWKH)/6$DVDZKROH
DQGWKH'2/¶VLPSOHPHQWLQJUHJXODWLRQVRIWKH$FWKLJKOLJKW
WKH SULPDF\ RI WKH ZRUNZHHN FRQFHSW )LUVW YDULRXV
SURYLVLRQV RI WKH )/6$ H[SOLFLWO\ QRWH WKH SULPDF\ RI WKH
ZRUNZHHN6HH86&† D ³([FHSWDVRWKHUZLVH
SURYLGHGLQWKLVVHFWLRQQRHPSOR\HUVKDOOHPSOR\DQ\RIKLV
HPSOR\HHVZKRLQDQ\ZRUNZHHNLVHQJDJHGLQFRPPHUFH
IRU D ZRUNZHHN ORQJHU WKDQ IRUW\ KRXUV ³ HPSKDVLV
DGGHG 86&† O ³1RHPSOR\HUVKDOOHPSOR\DQ\
HPSOR\HHLQGRPHVWLFVHUYLFHIRUDZRUNZHHNORQJHUWKDQ
IRUW\ KRXUV ³ HPSKDVLV DGGHG 86& † P
³)RU D SHULRG RU SHULRGV RI QRW PRUH WKDQ IRXUWHHQ
ZRUNZHHNV LQ WKH DJJUHJDWH LQ DQ\ FDOHQGDU \HDU DQ\

-- 14 of 14 --