Earlier in the Fall I talked about NJ's proposed privacy bill that would prohibit employers from requiring employees and job applicants to disclose their private social media account information. (Click here for prior post) Well, the law took effect December 1. Be mindful that this new law applies to all employers regardless of size.
Well this doesn't happen every day - or does it? The SEC finds itself being investigated for improper financial holdings. According to a November 2013 Reuters post, federal prosecutors and the office of the inspector general of the SEC contacted employees in the SEC's New York office about trading in companies that are under SEC investigation. This is a direct violation of internal SEC rules. While the report indicates that it does not appear to be a widespread issue, it is another black eye for the SEC that is still marred by the 2009 allegations regarding insider trading by SEC employees. Stay tuned to see how this plays out.
New Jersey residents voted on November 5, 2013 to approve an amendment to the New Jersey Constitution that resulted in a $1.00 increase in the state's hourly minimum wage. Effective January 1, 2014, the minimum wage rate in New Jersey will increase from $7.25 to $8.25 per hour. What makes this wage increase different from others is that it ties future wage increases to cost of living increases as reflected by the consumer price index. On September 30 of every year, the state will review the minimum wage rate and make a cost of living adjustment as necessary.
In the past the Securities and Exchange Commission had allowed defendants to settle civil and administrative claims brought by the SEC without requiring defendants to admit or deny liability. However, there has been a change of policy with the recent appointment of the new SEC Chair Mary Jo White. Now, in "egregious" cases, the SEC will push extremely hard for, and in fact almost require, an admission of wrongdoing.
This new policy creates a tactical dilemma for defense counsel on several fronts. Defense counsel needs to be cognizant that shareholders will be able to use the admission of wrongdoing as the main exhibit in any civil lawsuit brought against their client. As a result, timing is a consideration. Settle to early before the statute of limitations runs on the civil side and the results can be disastrous.
However, the real conundrum for defense counsel is predicting how the Department of Justice will react in its parallel criminal investigation when its target has just admitted wrongdoing in writing. Making matters worse is the fact that it is the "egregious" cases that the DOJ is interested in. Will DOJ prosecutors be satisfied with the admission of wrongdoing in the SEC case or use it as low hanging fruit in its criminal prosecution?
In addition, can you even enter into a settlement with the SEC where you admit wrongdoing and not commit perjury? Defendants will occasionally give testimony to the SEC early in the process minimizing their role. Does the admission of wrongdoing in the settlement directly contradict the earlier statements? Do you need to take the 5th amendment earlier on in the SEC investigation to prevent this from happening?
Ever wonder what an "instrument under seal" is? When the word [SEAL] is placed next to the signature block at the end of the written guaranty or loan agreement, does it have any impact? The answer is a big YES.
Earlier this summer, the Pennsylvania Supreme Court confirmed what we have always told our clients when they have asked us this question. When a written contract states that it is an "instrument under seal" and has the word "SEAL" next to or part of the signature block, the statute of limitations to enforce the terms of the written contract in question has been increased from the standard 4 year limitation period to 20 years!
So what is the important take away here? Review your loan agreements and other agreements (a guaranty for example) to make sure this language is standard on all agreements going forward. Not only does this give you a longer time period to decide if you want to bring legal action for nonperformance, but it also makes your negotiable instruments more marketable should you decide to sell them to third parties.
CLIENT REMINDER: OCTOBER 31, 2013 DEADLINE LOOMS FOR COMMERCIAL USE BUILDINGS IN PHILADELPHIA IN EXCESS OF 50,000 SQUARE FEET
The October 31, 2013 compliance deadline under Philadelphia's Energy Conservation Act is fast approaching. As previously detailed in my earlier blog entry (click here), commercial landlords have only until the end of October 2013 to comply and register their building's electrical and water usage rates as well as other building characteristics. Fines will be levied for noncompliance.
Critical deadlines under President Obama's Patient Protection and Affordable Care Act are quickly coming. HR departments of large companies are aware that if there are more than fifty (50) employees, the company is required to provide employees with health insurance as of January 1, 2014. However, even companies with as few as 1 employee have a compliance deadline under the ACA.
The ACA requires that on or before October 1, 2013 all employers must deliver a notification to each of their employees that informs them of: (1) the availability of public insurance exchanges; (2) the federal premium tax credit (under certain circumstances) if the employee purchases a qualified health plan through an insurance exchange; and (3) the possibility of losing the employer contribution if the employee purchases through the exchange.
The Notice must be delivered either by First Class mail or email. Going forward all new hires must receive this Notice within fourteen days (14) of being hired and commencing as January 1, 2014, at the time of hire. Two model forms are available on the Department of Labor's website (one form if you offer health insurance and another form if you do not).
Governor Christie signed into law on August 29 a privacy bill that prohibit employers from requiring employees and job applicants to disclose their private social media account information. The law will become effective December 1, 2013. Click here for a related blog entry I wrote on a similar law in Philadelphia.
First off, the law will apply to ALL NEW JERSEY EMPLOYERS regardless of size. Yes that is correct; there is no minimum number of employees for this law to apply. There is a minor exception relating to state and county jails and parole officers but for purposes of this entry, this law applies to ALL NEW JERSEY EMPLOYERS.
Under this law, an employer will not be able to force an applicant or a current employee to disclose any password, user name or other account login information to any social media that is used exclusively for personal communications and is unrelated to a business purpose of the employer. It will be a violation of this law if you even ask a prospective job applicant or current employee if they have a social networking site. However, there is nothing in this law that would prevent an employer from doing his own search to see if the prospective employee has her own social media accounts at Facebook and similar sites.
Like most laws, there are exceptions. In certain limited circumstances, an employer will be allowed to compel an employee to disclose his or her username and password. For example, disclosure may be required for (1) the employer to comply with a state or federal statute; or (2) employer investigations of workplace misconduct or theft of proprietary or confidential information. In each workplace investigation, the employer must be acting on credible and specific information and not be conducting a fishing expedition.
The law has anti-retaliation provisions designed to protect the applicant or employee from adverse actions of an employer who violates this law. If an employer does violate this law it will be fined $1,000 for the first violation and $2,500 for each successive violation. The proceeds will be collected by the Commissioner of Labor.
Delaware recently joined the fast growing Benefit Corporation "club". Effective August 1, 2013, Delaware became the 20th state to adopt its own version of the Benefit Corporation. The provisions governing this new business entity can be found under new Subchapter XV of the Delaware General Corporation Law. Earlier this year you may recall (click here) I discussed how Pennsylvania became the 12th state to adopt its version of the Benefit Corporation.
The Delaware Benefit Corporation is almost identical to the Pennsylvania Benefit Corporation. Both acts are designed to allow "social" entrepreneurs to focus not only on the bottom line but to also consider other non economic societal factors (community, environment, employees etc...). Both acts have provisions governing allowed purposes, accountability and transparency requirements (although Delaware has an every 2 year reporting requirement as opposed to Pennsylvania's every year).
One interesting difference between the two states relates to derivative litigation (click here for link to derivative information on Danziger Shapiro & Leavitt website). While Pennsylvania is silent with respect to minimum share ownership requirements for shareholders to bring derivative actions, Delaware decided to establish minimum share ownership requirements. Most likely, this is a reflection of Delaware recognizing the practical consequences that will follow by allowing officers and directors to consider subjective societal concerns when making business decisions. Namely; not everyone shares the same political, religious and social concerns. By placing a minimum share ownership requirement in order to bring a derivative action, Delaware is just trying to reduce the strain on an already overburdened court system.
NEW JERSEY ANGEL INVESTOR TAX CREDIT PROGRAM RULES PUBLISHED TODAY (HOPEFULLY) IN NEW JERSEY REGISTER
An angel investor who invests in a "qualifying" New Jersey emerging technology business in tax year 2012 and beyond is now eligible to receive a tax credit of up to 10% of the total amount invested. This law is designed to stimulate investment in emerging New Jersey technology companies by allowing the investor to use the 10% tax credit as a direct offset against an investor's New Jersey business or gross income tax. While Governor Christie signed this act, known as the New Jersey Angel Investor Tax Credit Act, into law on January 31st of this year, the underlying rules do not come out until today, August 5, 2013, in the New Jersey Register.
The act defines both "qualified investment" and "New Jersey emerging technology business" and I will not bore you with every detail here. However, in brief; in order for an investment to be a "qualified investment," the investment must be a non-refundable transfer of cash to a "New Jersey emerging technology business" in exchange for rights to participate in the upside of the business or to use or market the technology.
To be considered a "New Jersey emerging technology business," the act specifies the physical connection the company must have to New Jersey as well as the technological areas the business must be involved with. For example, the New Jersey business must have fewer than 225 employees, of whom at least 75 percent work in New Jersey. The company must also transact business, own property, or maintain an office in New Jersey. Finally, the company is required to operate in one of the following industries: advanced computing, advanced materials, biotechnology, electronic device technology, information technology, life sciences, medical device technology, mobile communications technology or renewable energy technology.
For investments made on or before July 1, 2013, an investor must submit a completed application before July 1, 2014. For all other investments, an investor must submit a completed application within one year of the date of the qualified investment. There are application fees not to exceed $1000 and approval fees that will be offset against the tax credit.
PHILADELPHIA HAS NEW ENERGY AND WATER USE REPORTING REQUIREMENTS FOR OWNERS OF LARGE COMMERCIAL USE BUILDINGS
Owners of commercial buildings located in Philadelphia in excess of 50,000 square feet are now required to measure energy and water usage and report the results into the EPA's Energy Star Portfolio Manager annually. Bill No. 120428A titled "Energy Conservation" went into effect last month on June 13.
Under this new ordinance, the owner of a "covered building" must report the required information no later than June 30 of each year for the previous calendar year. For 2013 only, information must be entered into the EPA's system by October 31, 2013.
Required information will include the building's energy and water usage as well as the building's "characteristics". A building's characteristics are defined to include not only the street address and year the building was built, but also specific items such as the percent of the building heated or air conditioned and the number of computers and refrigeration/freezer units in the building. The ordinance requires that each building's characteristics must be updated annually. Failure to comply will result in the City assessing fines against the building owner.
What does this mean from a landlord and tenant perspective going forward? From the landlord's point of view, it means that you are going to have to immediately notify tenants of the new reporting requirements and the associated deadlines. Going forward landlords should consider default and penalty provision language as possible additions to new leases.
From the tenant perspective, a tenant should consider what impact this new legislation will have on a landlord. Will public access to the results contained in the Energy Star Manager force landlords to update their mechanical systems? If so, will such improvements be passed onto the tenant? Can carefully crafted representations and warranties in the lease protect the tenant from these types of improvements being passed onto the tenant?
Pennsylvania has just passed legislation that allows, if certain conditions are met, the tax free transfer of a family owned business to a decedent's heirs. The idea behind this exemption is in these tight economic times to keep businesses in the family. This financial burden comes at a critical juncture as the business is now faced with not only a forced transfer of organizational control, but an inheritance tax bill when nothing has changed in the actual running of the fundamental core business. In some cases, the business is forced to sell assets to meets its inheritance tax obligations or in dire circumstances, has to shut down business operations altogether. While the local governments want to collect every penny they can, our elected officials also know this hurts the economy at the grass roots level because when an otherwise viable business shuts down only because it cannot afford to pay an inheritance tax, employees who were gainfully employed are now added to the unemployment line and this becomes another drain on the local economy.
With this as background, in order to be entitled to the family owned business inheritance tax exemption the following requirements must be met:
• Qualified Business - The business must be a "qualified business" which requires that the business must be operated by either a sole proprietor or through a business entity (LLC, partnership or corporation). The business must have fewer than 50 employees and a net book value of less than $5million dollars.
•Ownership of Qualified Business - The business must have been in existence for the past 5 years and must have been owned by the decedent and members of the decedent's family.
•Qualified Transferees - The "qualified business" may only be transferred to "qualified transferees". Qualified transferees are, as you would expect, the decedent's immediate family - spouse, children, grandchildren, siblings, cousins, parents and grandparents.
•Time Restriction - In order to retain this tax savings, the family business may not be transferred to another individual or entity for a period of 7 years from the date of the decedent's death. Yearly certifications to the taxing authority will be required. If the business is transferred within this 7 years period, all inheritance tax plus interest that would have been due will now become immediately due and payable.
The 2014 Pennsylvania property tax appeal deadline for Philadelphia and the surrounding four counties is fast approaching. The deadlines are as follows:
August 1: Buck, Chester, Delaware and Montgomery
October 7: Philadelphia
With the Pennsylvania State Tax Equalization Board releasing the new Common Level Ratio (CLR) on July 1, this leaves a very short time period to determine whether an appeal is necessary. (Please click to see my February 2013 post on how the CLR is used to determine your property tax)
I was reading the Philadelphia Inquirer this weekend and came across an interesting article in the business section. As a result, I decided to take a break from the typical commercial litigation or real estate post and ask you this: When you die, what happens to all of the pictures you posted on Facebook or Instagram? Who takes over your Gmail account? Would you like your children to be able to access these pictures? Have you ever asked yourself these types of questions?
Lucky for us, Karen Dilko's July 1, 2013 article sets forth the different policies by several media giants. If you are with Yahoo, you are out of luck. There is no right of survivorship. When you die, Yahoo will delete all account information upon presentation of a death certificate. That seems harsh, no? Luckily, it is different with other providers such as Facebook or Twitter. These entities will work with your estate to transfer ownership.
FEDERAL JUDGE BANS EXPERT TESTIMONY IN INSURANCE CASE - JURY CAN RELY UPON THEIR GENERAL KNOWLEDGE AND EXPERIENCE
For the second time in the last year a judge has precluded expert testimony regarding bath faith claims asserted against insurance companies. The most recent case out of the Western District of Pennsylvania involved a motor vehicle accident where the insurance company offered $13,000 on a policy with a $300,000 limit. In response to the paltry offer where plaintiff had sustained substantial injuries, plaintiff sued Geico alleging it had breached its contract with plaintiff and was handling the claim in bad faith.
To support his claim, the plaintiff attempted to introduce an insurance claims expert to provide the jury with information about the concept of bad faith. There have been cases in the past where insurance experts testified with explanations about standards and practices within the insurance industry. In this case however, the judge determined that the concept of bad faith and how it relates to the insurance industry was not too difficult or complex for the average juror to understand. Accordingly, the judge prevented the plaintiff from presenting his expert to the jury.
This is the most recent in a series of decisions in Pennsylvania since 1997 to establish that while bad faith is a legal concept, the general population doesn't require scientific or technical knowledge to understand it. In other words, the judge decided that the members of the jury were smart enough to understand the concept and any additional information presented to the jury in court would simply impede on the jury's fact finding function.