Business Law

January 25, 2013

PAY RATE NOTICE REQUIREMENTS FOR ALL NEW YORK EMPLOYERS

For all of our clients who maintain offices in New York:

By February 1, all New York employers are required by the New York State Wage Theft Prevention Act to provide a written notice regarding specific wage information to each employee. Fines for not following the below listed requirements can be up to $2500 per employee, not including costs and attorney’s fees.

Specific information for each employee includes:

1. Rate of pay, including any applicable overtime rates;
2. The unit by which the employee is paid (ex. By the hour, shift, month, etc.);
3. Official name of the employer and any others used in the course of business;
4. Mailing address and physical address and phone number of the employer’s main location; and 5. Allowances taken from any minimum wage rates of pay.

This information must be provided at the time of hire, every year between January 1 and February 1 and under certain other specific circumstances. The notice must be provided in English and in the employee’s primary language. The employer is also required to keep an acknowledgement form from the employee that they received the notice and retain this acknowledgement for 6 years. Templates for the notice and acknowledgment may be found here: www.labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm
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January 22, 2013

WORKPLACE NOTICE REQUIREMENTS

by H. Adam Shapiro

As a reminder to our business clients, federal and state law requires that employers post notices informing employees of their rights in the workplace. Notices that are required are specific to the type of employer and the number of employees employed. Failure to post these notice can result in fines. Below are posters that most employers should have.

Federal Government Employment Posting Requirements
• Job Safety and Health Protection, OSHA information
• Fair Labor Standards Act Minimum Wage Poster
Pennsylvania Employment Posting Requirements
• Minimum Wage Law Poster and Fact Sheet • Abstract of Equal Pay Law • Unemployment Compensation Poster • Workers’ Compensation Insurance Posting
National Labor Relations Board
• Employee Rights Notice Poster
Copies of these and other posters are available through the links provided. The posters must be physically posted in areas where employees will be able to see the posters. The information also is sometimes required to be posted on the employer’s website.

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January 15, 2013

PENNSYLVANIA CREATES NEW CORPORATION KNOWN AS A “BENEFIT CORPORATION”

by H. Adam Shapiro

On January 23, 2013, Pennsylvania will become one of twelve states to have created a new type of corporation known as the “benefit corporation.” Titled the “Pennsylvania Benefit Corporation Act“, the act allows “social” entrepreneurs to focus not only on the bottom line but to also consider other non economic societal factors (community, environment, employees etc…). While the Benefit Corporation is based upon the familiar corporate form, it has three additional requirements – purpose, accountability and transparency.

Purpose. In short, the Benefit Corporation must have a purpose designed to create a positive impact on society and the environment which will be judged against a third-party standard. Examples could include companies focused on protecting the environment, educating inner city children or promoting awareness on health issues. The Act itself sets forth a non-exclusive list of appropriate purposes.

Accountability. Fiduciary duties of officers and directors have been broadened to require consideration of not only the traditional bottom line analysis, but how a decision impacts non-financial interests such as the environment or the company’s employees. For example, if a company is going to be acquired in a merger, the officers and directors are no longer required to solely maximize shareholder value. A Benefit Corporation’s Board of Directors are able to accept a lower price per share if going this route will result in no employees being terminated.

Transparency. Benefit Corporations are required to deliver to their shareholders an annual “benefit report” describing how the company met its stated public benefit goals as set forth in its articles of incorporation and if not, what transpired that prevented this from happening. The benefit report must filed with the Department of State and be posted on the company website. If there is no website, then the company must provide a copy to any person who requests a copy.

So, why would you want to form a Benefit Corporation or possibly switch your current entity to a Benefit Corporation? First and foremost, you may be socially conscious and believe a corporation has a responsibility to focus on more than just the bottom line. Second, there are tax advantages and incentive programs aimed at Benefit Corporations that are not available to other companies. Finally, marketing surveys have seen a push amongst consumers to direct their purchasing dollars towards businesses which are aligned with their priorities. Especially in this age of social media, where the effects of corporate behavior have fast implications, this can be a great way to distinguish your business from the competition.
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January 4, 2013

AT WILL EMPLOYMENT DISCLAIMERS – WORD CHOICE MATTERS

by H. Adam Shapiro

The General Counsel’s Office for the National Labor Relation’s Board has recently provided guidance regarding at-will employment disclaimers in employee handbooks. In the past, challenges of unfair labor practices (violation of Section 7 rights) have been successful before administrative law judges where the challenged language was read to imply that the at-will employment relationship could never be changed. Language that has recently found to be acceptable was where the employment was considered to be at-will, but that it could be changed only by the president of the company and that it must be in writing.

So what does this mean to employers? Word choice matters. Drafting an employee handbook alone or going to an office supply store and purchasing a form may seem like a good way to save money up front but can quickly cost more money in the long run. It is much better to have an attorney meet with you and actually observe and understand how your company operates and then draft a handbook that is tailored to your business and your state laws. In fact, insurance companies frequently will offer you a discount if you have an employee handbook that clearly states, for example, that sexual harassment and discrimination will not be tolerated and provides an employee a way to report such misconduct. Other issues a well thought out handbook should address include privacy and internet policies, as well as what benefits are and are not provided by the company. This is not meant to be an exhaustive list but is designed to get you thinking about what issues you should want to be clearly written down so that your employees know exactly what is expected of them in the workplace.
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May 23, 2011

Protections for Employees Reporting Illegal Activity

by H. Adam Shapiro

Just this spring, what is usually seen as a pro-business Supreme Court issued a ruling clearly on the side of workers. The case, Kasten v Saint-Gobain Performance Plastics Corp., addressed the question of protection for workers who file complaints against their employers. Smart business owners, with the right policies, will be able to turn this case to their advantage in keeping government investigators out.

The general rule has historically been that workers who report the illegal activities or illegal working conditions of their employers are protected from retaliation. This makes sense, we want those with inside knowledge of their employers fraud or illegal activities to feel they can come forward without risking their livelihood. But if the employee reported the problem internally, to an owner or supervisor instead of the government, there was always a question of whether protection applied. In other words, by trying to get the company to fix the problem in house, quietly and without a governmental investigation, did the employee lose the protections of the anti-retaliatory laws? The Court said no, employees who try to solve problems in house are still protected by the law (in this case, it was the Fair Labor Standards Act), even though the government was not involved. To qualify for protection against retaliation, the complaint can even be as simple as a verbal statement to a supervisor, it doesn’t have to be in writing.

Since it’s not unusual for less then stellar employees to have complained to a supervisor about working conditions or practices, this certainly creates an additional burden for the employer to comply with prior to terminating these under performing workers. It’s not hard to image a scenario in which a company’s failure to plan appropriately creates retaliation liability even when there was no provable case of an underlying violation. Of course, it also presents a huge opportunity for a proactive company to encourage internal self-reporting. As an owner, it’s always preferable to learn about potential problems directly from your employees, rather then after they’ve reported your business to the governmental authorities.
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May 13, 2011

Confidential Settlement Agreements and the Public’s Right of Access

by H. Adam Shapiro

Confidentiality terms in settlement agreements are fairly commonplace, but most people do not know that until recently the courts would often ignore them. Historically, the public’s “right of access” to judicial records outweighed a party’s desire to keep their settlement confidential. This makes sense when the issues involve public interests or safety concerns. But when the settlement involves trade secrets or other proprietary information, businesses have long argued the public’s right of access should be more limited. In many cases, especially with regard to hi-tech and growth companies, the desire for confidentiality is the prime motivation for settling the case.

In a recent 3rd Circuit ruling, LEAP Systems Inc. v. MoneyTrax, the court shifted away from previous decisions to allow business’s a better chance at maintaining the confidentiality of settlement agreements. In the LEAP case, the settlement was based on assurances from the court that the agreement would remain confidential. The district court’s assurances of confidentiality were clearly a pervasive factor for the 3rd Circuit, and not something every trial judge is going to agree to put on the record. But counsel certainly should ask for a statement on the record that confidentiality is a key term of the settlement. Also, in most cases the business will want to justify the reasons for the confidentiality on the record, since the importance of trade secrets may not be as apparent to courts reviewing the matter in the future as it is to the trial judge overseeing the settlement discussions. These were both factors considered by the 3rd Circuit in finding in favor of LEAP on the confidentiality issue.

One way around this privacy risk has always been to keep the terms of your settlement agreements away from the courthouse. But in many cases, especially in certain federal courts or business law courts like Philadelphia’s Commerce Program, judges may be highly involved in facilitating the settlement process. When that happens, the settlement agreements or even the oral transcripts of the proceeding may be considered judicial records subject to public access. Even if the parties reach a settlement on their own, the court often becomes involved with motions to enforce down the line. The LEAP case begins an outline of how to maintain the confidentiality of these records.
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May 10, 2011

Pennsylvania Property Owners Not Always Liable for Contractor’s Injuries

by H. Adam Shapiro

The Pennsylvania Supreme Court in a recent decision stated that residential and commercial property owners who hire contractors are not responsible for personal injuries happening during construction on their property. Previously, plaintiffs had argued for a “retained control” exception where property owners could be held responsible for injuries to workers if the owner was present at the job site and exercised control over the construction project. The theory was if the owner was present at the job site, then the owner bore a responsibility to recognize any unsafe condition and do something about it. This recent decision by the court ends this avenue of attack created by the plaintiff’s bar, which had put owners in the uncomfortable position of weighing liability burdens against the need to supervise their own projects. Now the law is clear that property owners are not liable for the injuries to the contractors and their subs so long as the owners did not control the “means and methods” of how the work was performed. In other words, did the owner actually tell the injured party how to ply his trade?

The impact of this decision is clear. With a little proper drafting, both residential and commercial property owners can greatly reduce their risks from personal injury claims of workers injured on their property. Commercial property owners should seek legal advice to have their contracts reviewed to insure they have language in place that require a safe and organized work site. From the contractor and subcontractor perspective, the gun has clearly been leveled in your direction and care needs to be taken to make sure you have the proper insurance in place in light of your increased singular exposure; as well as to make sure your contracts have the appropriate contractual protections as well. Contractor’s agreements also now need to be especially careful not to take on unnecessary liability in those situations where the owner is dictating the work or acting as their own GC.
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March 8, 2011

Attorney Client Privilege is now a Two-Way Street in Pennsylvania

by H. Adam Shapiro

Many clients have often been surprised to learn that the attorney client privilege in Pennsylvania did not necessarily apply to advice their attorney’s gave them. Previously, the Pennsylvania Superior Court had held that only communications made from the client to the lawyer were privileged, not those flowing from the attorney to the client. That holding, which is in conflict with the approach taken by most other states, was recently overturn on February 23, 2011 by the Pennsylvania Supreme Court. The Supreme Court held that the attorney client privilege now operates to protect confidential client to attorney and attorney to client communications made for the purpose of obtaining or providing legal advice. This decision is extremely important to both Pennsylvania lawyers and clients alike because it allows for a much more open flow of information between client’s and their attorney advisors.

The benefits afforded to clients as a result of this broader interpretation of the Pennsylvania privilege statute is that counsel may now, for example, proactively advise clients about a compliance issue without the attendant privilege concern that existed under prior law. Attorneys will be able to guide their clients through the process of curing ongoing legal problems without the fear that their advice could be discoverable in court. Not only will this benefit the client, as it will certainly facilitate a more open dialogue, but the benefits will also hopefully trickle down to benefit society as a whole.
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January 19, 2011

Could Your Business Lose Its Name in Pennsylvania?

by H. Adam Shapiro

Many corporations, LLC’s, LP’s, and other businesses registered to operate in Pennsylvania must take action this year to avoid losing the ownership of their name. Pennsylvania law requires something called a “Decennial Report” to be filed every 10 years with the Department of State. The report is filed in every year ending with the number “1”, so you’ve got until December 31, 2011 to get this year’s report in. A similar law also applies to registered marks and insignias so be sure to act to protect your logos as well.

Any business that fails to file a required decennial report loses the exclusive right to the ownership of its corporate name. In the case of a registered mark, when a business fails to file the mark becomes unregistered. Every January of a year ending in “2” we see poachers trying to appropriate the names of ongoing businesses to sell them as back. Make sure your business is not one of the unlucky ones by acting early and getting your filing done soon this year.

There are exemptions to this law, the biggest of which applies to businesses who have filed new or amended registrations with the Department of State since January 1, 2002.
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December 28, 2010

President Obama Extends Bush Era Tax Cuts

by H. Adam Shapiro

On December 17, 2010, President Obama signed into law a two year extension of former President Bush’s tax cuts that were set to expire at the end of this year. Remaining in effect till the end of 2012 are all of the Bush-era reductions on income and capital gains taxes. A fix to the estate tax, which temporarily expired this year, was also a hot topic between the Republicans and Democrats. The Republicans won this battle, with a reduced top rate of 35% next year, the lowest rate since 1931, and applies on estates larger than $5 million per person. For a married couple with the simplest of planning, that means estate under $10 million can be made free from estate tax. The Democrats had wanted the top rate to be 45% and the exemption to be applied after $3.5 million per person. This reduction is sparking fears in the non-profit community that charitable giving may drop substantially if there is no longer a tax benefit for the contributions.

Employers will benefit with deduction rules which allow businesses to write off 100% of certain capital investments made from September 9, 2010 through the end of 2011, instead of over the investment’s useful life. Employees get a 2 percent reduction in their payroll tax for the next year, which will mean more money into their pockets every week. This is a benefit that will positively affect sole proprietors and small business owners as well, and may require a rethinking of the traditional bonus vs. dividend analysis made during the year. The plan also continues extended unemployment insurance benefits through 2011.

Experts estimate the total cost of the tax cuts to be $858 billion over the two year life of the extension.
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