In the latest Weekly Wright Report:
The Bezos’ Divorce
The richest man in the world is getting divorced. Jeff Bezos, reportedly worth $137 billion, and his wife MacKenzie, recently announced on Twitter that the two had “decided to divorce” after 25 years of marriage and “after a long period of loving exploration and trial separation.” While the Tweet was sent over the names of both Jeff and MacKenzie and refers fondly to their years of marriage [“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other.”], Jeff has been publicly dating former “So You Think You Can Dance” judge and host, Lauren Sanchez, for some time. The divorce will undoubtedly have a dramatic effect on Jeff’s net wealth—he and MacKenzie did not have a prenuptial agreement. While Jeff and MacKenzie reside in Washington State, one might speculate about the outcome of their divorce had they had been living here in Maryland and Maryland’s laws about marital property were to apply to them.
The first thing to consider is that Maryland is an “equitable distribution” state. That means that marital property is divided between spouses based on what’s fair. Equitable does not necessarily mean equal. Maryland’s marital property statute includes many factors a court must consider in deciding on an equitable division of marital property. The ones most relevant to the Bezos’ divorce are:
- the monetary and nonmonetary contributions of each party to the family;
- the circumstances that contributed to the estrangement of the parties;
- the duration of the marriage;
- how and when marital property was acquired; and
- an award of alimony.
The most valuable asset by far in the Bezos marital estate is Jeff’s 15 percent ownership of Amazon, which is purportedly worth $120 billion. Jeff can take credit for that monetary contribution to the family. However, MacKenzie will likely claim significant non-monetary contributions to the family, namely: (a) having had the greater responsibility for raising the Bezos’ four children; (b) providing emotional support to Jeff as he amassed his fortune; and (c) spending countless hours accompanying Jeff to corporate and social functions that buoyed Jeff’s stature as the Amazon CEO. In addition, it’s been reported that MacKenzie, herself a smart and capable woman (she graduated from Princeton with a degree in English), contributed to the early Amazon business plan, which, it is said, she and Jeff wrote while driving cross country from New York, where they had been living, to Washington State, where they were married.
Jeff’s relationship with Ms. Sanchez could affect how a court divides Jeff’s fortune. Jeff and MacKenzie were reportedly friends with Ms. Sanchez and her now estranged husband for some time before Jeff and MacKenzie separated. Jeff’s lawyer has said, however, that Jeff and Ms. Sanchez did not begin their romantic relationship until after he and MacKenzie separated. If there is evidence that Jeff’s romantic interest in Ms. Sanchez preceded the separation, and thus contributed to the divorce, that would favor MacKenzie in the equitable distribution of property.
The Bezos 25-year marriage is not as long as some marriages, but it is still relatively lengthy. It was long enough to allow Jeff to start and grow Amazon to the behemoth on-line company it is today. Put another way, Jeff’s interest in Amazon would be considered marital property because he acquired that interest fully during the marriage. A Maryland court must value marital property at the time of the divorce. Thus, absent a catastrophic decline in Amazon’s business between now and when Jeff and MacKenzie actually get divorced, MacKenzie will benefit from the astronomic rise in the growth of Amazon during the Bezos marriage. However, Jeff and his lawyer should keep in mind that a court in Maryland may also consider the extent to which one party was responsible for the acquisition of marital property during a period of separation. Thus, in a Maryland court, if the value of Amazon stock—and consequently Jeff’s interest in Amazon—was to appreciate after the separation, and if that appreciation was substantially the result of Jeff’s efforts as Amazon CEO, Jeff would be able to argue that MacKenzie should not benefit from the degree to which Amazon’s value increased during the separation.
Apart from the division of marital property, MacKenzie is undoubtedly a candidate for alimony. There is virtually no chance she will be able to earn on her own as much as Jeff and that she will need a source of income in order to achieve a lifestyle the Bezos family enjoyed during the marriage. In Maryland, a court is required to take into account an award of alimony in deciding on a fair division of marital property. Thus, if MacKenzie was to receive a substantial alimony award, it could lessen the amount of her marital property award.
When all is said and done, MacKenzie will undoubtedly be awarded a significant portion of Jeff’s $137 billion net worth. If she were to receive a monetary settlement of half that amount, according to Forbes, MacKenzie would become the fifth richest person in the world.
Part I of Avoiding Uncontrollable FLSA Lawsuits and How Your Unpaid Wages Can Become PAID
In an effort to permit employers to become more proactive in resolving unknown payroll problems, the Department of Labor has extended its pilot compliance program called the Payroll Audit Independent Determination (PAID). Under the program, employers self-report a wage violation to the DOL, along with a calculation of back wages owed. In exchange for paying 100% of back wages owed, the DOL will supervise the settlement and issue a release of the claim. Short of using PAID, the only other two options available to release FLSA claims are through a court-approved settlement or via a DOL-initiated investigation. The DOL also is actively working with state labor officials to get their endorsement and/or cooperation with the PAID program as a means of resolving state associated claims.
Understandably sensitive to the idea that employers will be leery of voluntarily coming forward to report violations, DOL representatives emphasized that the program is focused on achieving compliance with federal laws and not increase opportunities to nab employers. To interest employers, several concessions are made by the DOL for those using the program. For instance, DOL will not seek a third year of back wages, liquidated damages, or civil money penalties; it will not seek a press release, and it will keep the identity of the employer confidential, subject to FOIA requests. Importantly, the DOL will not investigate the issue self-reported and will rely on the calculations prepared by the employer. Once approved, the DOL will provide clearance and releases for employees to sign, the employer must pay the back wages owed to the employee(s) during the next payroll cycle and provide proof of payment to the DOL. The DOL expects the entire process from start to finish will take 90 days.
WCS is currently successfully assisting an employer going through the process after weighing several options available to the employer. If you have questions or would like to know more, please contact us.
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