Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8.     Commitments and Contingencies

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business, and through its insurance programs, the Company endeavors to manage any underlying or related potential risk.

The Company executes the services it provides to its domestic clients through independent field merchandising, auditing, assembly and other specialists (each a "Field Specialist"), the vast majority of whom are provided by SBS. For affiliated relationships, contractual details, and payment amounts, see Note 5 to the Condensed Consolidated Financial Statements –

Related

Party Transactions

- Domestic Related Party Services

, in this Quarterly Report, above. The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company (consistent with their Prior Agreements and to endeavor to manage related potential risks). That treatment is being challenged currently in a California class action lawsuit where the State Court separated the issues of independent contractor status and damages, tried the status issue first, and ruled that the Field Specialists were employees because (among other things) they failed to sufficiently exercise their independence. The second stage of the trial will be the determination of damages, if any. When a decision has been reached on those damages, the liability and damage decisions can be appealed to a higher court. There can be no assurance that SBS will succeed in defending any such challenge, the legal expenses of prolonged litigation and appeals could continue to be (and have from time to time been) significant, and any adverse determination could increase the Company's costs of doing business.

The Company's management does not anticipate at this time that disposition of those matters would be likely to have a material adverse effect on the Company.