Articles Posted in Business Law

Online-Legal-Forms
Potential clients frequently ask me why they should not buy contract forms online or from an office supply store. Why pay for an attorney when I can buy a legal form for a nominal fee?  I understand the inclination to go online because its entirely at your convenience and it is undoubtedly cheaper.  However, this comes at a potentially high cost.   Legals forms do not always comply with all legal requirements for a given industry and location (federal, state and local).  The danger you expose yourself to by avoiding working with a lawyer is the unknown.  It is the risks you don’t realize you are taking that frequently come back to bite you the hardest.  I am writing this blog today as a cautionary tale why such forms should be avoided because of a recent conversation I had with a potential client.

The Form Office Lease

Last week a potential client came into my office with a complaint that a former tenant had recently filed against him.  The tenant claimed damages against the landlord because the lease did not comply with the Philadelphia Lead Disclosure & Certification Law.  This law applies to any dust, dirt/soil, paint, and as of March 1 pipes that drinking water may pass through. If the allegations set forth in the complaint are true, the landlord will have to refund all rents received during the rental period, pay for his tenant’s attorneys’ fees and other fines up to $2,000.   The landlord in this case thought he followed all of the rules.  He even showed me the lead based paint disclosure form that came with his form lease.  Unfortunately, Philadelphia has very specific requirements concerning lead disclosures for buildings that were built prior to 1978.  Moreover, not only are there requirements for what has to be disclosed; but the manner in which disclosures must be made are also regulated by code.  In fact, this is such a prevalent problem in Philadelphia because it is such and old city that it has an excellent publication on this topic.  Click here for Philadelphia Landlord’s Guide to Lead Disclosure.  While, the form lease that was purchased at the chain office supply store might have complied with Pennsylvania state law, it did not satisfy the Philadelphia Code and this will be an unfortunate and expensive lesson for this landlord.

The each page of the newest version of the I-9 form is laid out for display.
All US employers are required to use an I-9 form to verify the identity and eligibility of individuals (both citizens and non-citizens) for employment in the United States.  Please take notice that effective today, January 22, 2017, there is a new I-9 form that replaces the one currently in place.  You can download a copy of the new I-9 form by clicking here. For easy access, bookmark this blog entry for when you will need the form in the future.

Whats New?

This new form looks very similar to other recent incarnations with a few specific changes. The digital version linked above is now much easier to fill out online. It also includes the ability to general a QR code upon filling out the form, which can be helpful for providing copies to the appropriate parties. It also includes much more space to indicate preparers, translators, and other information that has often found it’s way to being written in the margins.

Wage-History-Question-Blog
Philadelphia City Council passed a Bill earlier this month that will soon make it illegal for any employer to ask a job applicant about his or her wage history.  This law will go into effect 120 days after it is signed by Mayor Kenney.  A spokesman from the Mayor’s office stated that the Mayor intends to sign the Bill into law shortly so we can expect this to be the law in Philadelphia in late March or early April 2017.  Philadelphia officials modeled the Bill after Massachusetts which passed its own wage history ban earlier in the summer.  At the state level, both the Pennsylvania and New Jersey legislatures have similar wage history proposals under consideration, but for now, it looks like the Philadelphia law will go into effect first.

Gender Wage Gap

The primary purpose behind the Bill is to address the gender wage gap.  According to the United States Census Bureau 2015, in Pennsylvania woman are paid 79 cents for every dollar a man makes.  woman of color are paid even less.  It is not uncommon for an employer to base a salary on what you were making at your previous job.  Therefore, basing an employee’s wage upon what she earned at a previous employer only serves to perpetuate the gender wage gap.   This Bill stresses that wages should be based upon job responsibilities and an applicant’s or employee’s qualifications.

New Overtime Law Blocked- Where, Why, and for How Long?

New Overtime Law is Blocked

The new overtime law that would have increased pay for millions of employees starting on December 1 has been blocked by a preliminary injunction issued by a Texas federal court.  The law would have raised the minimum salary hourly threshold exemption for white collar employees under the Fair Labor Standards Act from $23,660 to $47,476.  Since this occurred in a federal court, the  injunction applies to the entire country.  A preliminary injunction however, is not a final determination by the Court. All this means is that the Court wants to look into this matter further and that for now, the status quo will remain in effect.  From an employer’s perspective, this means that no changes need to take place on December 1 and employers can follow the existing overtime rules.  Please click here for our May 2016 blog post that discussed the impact the new overtime law would have had on your business.

Employer Overtime Considerations

Cyber Security For the Small Business

Cyber Security Month

October is Cyber Security Month. If your company uses any kind of computers, cell phones, networks, software, etc. to go about its business, then this month applies to what you do day in and day out. Having these technologies makes our lives more advanced and efficient but they also leave us open to security issues. Business large and small have to have plans and processes in place for how they deal with their digital technologies BEFORE something terrible happens.  It can seem like a big undertaking for the little guy given that the big guys seem to be hit time and time again. Yahoo for example, was recently the victim of yet another network security breach. One might ask what can a small business do with limited funds?   After all, if large companies with departments solely dedicated to thwarting cyber intrusions cannot stop hackers, what can a small business do?  The answer is simple – plenty.

  • Understand Your Business Network

Tax Amnesty Programs Available in Pennsylvania in 2017 to Individuals and Businesses

What is the Pennsylvania tax amnesty program?

Tax amnesty  is a program where taxpayers (businesses and individuals) who owe outstanding taxes can settle with the Pennsylvania Department of Revenue (“Department”) by paying less than what is owed.  Under the  program, if the taxpayer pays the entire amount of the outstanding tax due, the Department will waive all penalties and one-half of the interest associated with the underlying tax.  This is an incredible opportunity for taxpayers to settle with the Department and take advantage of the savings being offered.

When does the tax amnesty program take place?

Confession of Judgment
A recent court decision from the Philadelphia Courts should cause anyone with a commercial lease to review their contracts.  The issue in this case required the court to determine if a confession of judgment clause in a commercial lease was enforceable.  The Court ruled the confession of judgment clause was not enforceable against the tenant because the landlord did not strictly follow the statute.  As a result, the Court struck down the confessed judgment.  While not ground breaking in and of itself, the opinion serves as a reminder that a court will closely scrutinize all confessions of judgment.  You can read the court’s decision by clicking here.  Before we look closer at the court’s decision, a basic understanding of what a confession of judgement is and why it is so powerful is required.

What is a confession of judgment?

A confession of judgment clause is usually found in most commercial lending transactions and commercial leases.  In a nutshell, a confession of judgment clause flips our notion of due process on it head.   A confession of judgment clause authorizes the attorney for the bank or landlord to appear for the borrower or tenant without any notice and enter a judgment for a specific amount of money (or for possession of the premises in a lease situation).   Think about this for a second.  The first pleading your lender serves is the paper that informs you a judgment was entered against you.  Game over. Or is it?

Bankruptcy and Sheriff Sales Blog ImageAs a professional real estate developer or someone with an interest in purchasing real estate at a sheriff sale, you need to understand how the bankruptcy and foreclosure laws work together.  Foreclosure is a process by which a private party (a bank for example) or a municipality bring a lawsuit to collect monies that are past due. This can be taxes or other fees owed. Once a judgment is entered, the sheriff will schedule a sale to satisfy the money owed at a public auction.  This is known as a foreclosure or sheriff’s sale. Can a bankruptcy filing stop a foreclosure?  The simple answer is yes. However, the investor that fails to perform simple due diligence can make a foreclosure sale purchase a very costly and time consuming proposition.  Before turning to this, a little background on the bankruptcy laws.

Bankruptcy: The Automatic Stay.

The day a debtor files bankruptcy (Chapter 13, for example), is the petition date.  On the petition date, a legal wall comes down known as the automatic stay.  All creditors are now required by federal law to stop collection efforts for debts owed prior to the petition date.  This includes all demand letters, lawsuits and sheriff sales.  So long as the petition date is prior to the “gavel falling” at the sheriff sale, the real estate remains with its original owner.  However, if bankruptcy is filed after foreclosure, even one day after, the real property passes to the successful bidder. The real property is then not part of the debtor’s bankruptcy estate.

Blog.6.14.16Driving to work this morning I was thinking about my aging receivables and was becoming increasingly frustrated.  Although I am a lawyer and work in a Philadelphia law firm, I am also, at my core, the owner of a small business.  I provide services and expect or hope to get paid.  My situation isn’t very different from any business or service provider.  As I thought about what I could do better to insure that I got paid, I thought there are probably a lot of other business owners, chief financial officers and the like that would appreciate options they can consider implementing to increase their chances of being paid for services rendered, products delivered or items that were manufactured.

The starting point – your contract. Whenever a client or potential client calls me and wants to discuss how to structure a transaction to insure they are paid or at the very least minimize the risk they are not paid the starting point is always the same.  Have you worked with this entity before and do you have any written agreements or standard terms and conditions that govern the contemplated transaction?  Every contract starts with the assumption that each party will be responsible for paying its own legal fees?  This concept is known as the American Rule.  However, if your contract or standard terms and conditions state that the buyer will be responsible for all costs and expenses, including legal fees incurred in connection with your collection efforts – you have successfully shifted the American Rule on its head.  Now, not only is the breaching company responsible for paying your outstanding receivable, but it is now responsible for your legal fees as well.  Keep in mind that this does not necessarily guaranty payment but you not have another hammer in your negotiation arsenal to use against the defaulting party.

Cash is king.  In my line of work the only way I can completely guarantee payment is with the retainer.  Similarly the simplest way to guarantee payment is cash up front before services begin.  This is why, for example, doctors require the co-payment before services are rendered and not on the way out.  However, recognizing this is stating the obvious, other possibilities include timing the payments better.  For example, if you are manufacturing a specific part for a customer or providing consulting services, develop a payment schedule that is tied to verifiable deliverables.  If you meet a deliverable milestone and they don’t pay, you stop working.  Other possibilities that can be explored is cash on delivery (COD).  COD is a very basic but effective method to insure that you are paid when a physical product is involved.

Starting December 1, 2016, a new overtime rule goes into effect that employers should be aware of that will impact employees on salary.  The Fair Labor Standards Act (FLSA) is a federal law that applies to all employers across the country. It guarantees a minimum wage to all employees as well as overtime compensation if over 40 hours a week is worked.  Overtime pay is calculated at a rate not less than one and one half the employee’s regular rate of pay for all time worked in a week in excess of 40 hours.  Many employers are under the mistaken belief that if they pay an employee a salary that the overtime laws do not apply.  This is incorrect.  Weekly salary divided by 40 (hours) must not be lower than the federal minimum wage then in effect.  As with any law there are exemptions and this is the focus of the new overtime law for salaried employees.

Under the law as it currently stands, there are overtime exemptions for employees who perform professional, executive, administrative, outside sales or computer functions. These exemptions are referred to as white collar exemptions.  To be considered exempt, employees must meet certain minimum criteria related to their primary job function and must be paid on a salary basis of not less than a specific minimum amount set by the Code of Federal Regulations (CFR).  Today that minimum amount under the CFR is not less than $23,660 annually which translates to a weekly salary of $455.  Stated differently, your employees are not entitled to overtime pay if you pay them at least $455 a week and their primary duties fall under the “white collar” exemptions.

Effective on December 1, 2016, this changes drastically and modified white collar exemptions will be put in place. The minimum amount required to be paid on an annual basis will be increased to $47,476, which translates to $913 a week.  If an employer pays its employee a salary of less than the $913 floor, the employee will now be entitled to overtime.  In addition, the highly compensated exemption will be increased from $100,000 to $134,000.  The new law also has automatic increases every 3 years tied to certain performance indices.

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