Philadelphia Business Lawyer Blog

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.

Continue reading "Pennsylvania Property Owners Not Always Liable for Contractor's Injuries" »

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.

Continue reading "Could Your Business Lose Its Name in Pennsylvania?" »

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.

Continue reading "President Obama Extends Bush Era Tax Cuts" »

It's been discussed for years (decades?) and the subject of numerous mayoral campaign debates, but it looks like major changes to Philadelphia business taxes may be in the works. The Philadelphia Inquirer is reporting that a majority of City Council has signed onto a plan to shift the business tax burden away from profits towards gross receipts. All at first blush this seems to be a counterintuitive move since our firm, like many others, has for years advised clients who located their businesses outside of the city because of the onerous gross receipts tax. However, there are provisions which may make this shift not only palatable, but beneficial to small businesses in the city.

The Inquirer is reporting that the first $100,000 of sales will be exempt from the gross receipts tax. Further, certain industries such as manufacturing and retail will be taxed at preferential gross receipts tax rates, some as low as 0.10%. for other businesses, the proposed 0.53% tax, on receipts over $100,000, is targeted to hit out of town operations harder than local mom-and-pop's. Whether that holds true or not, or if Mayor Nutter even goes along with the plan, is something that remains to be seen.

One thing the does seem to be certain is that we're going to see a major shift in the compensation packages paid to owners and principles of small businesses in Philadelphia. For years the business privilege tax pushed owners to take their income as salary and bonus, rather than profits and distribution, unlike their colleagues in the rest of the country. With the abolishment of the Business Privilege Tax we're nearly certain to see small business owners in Philadelphia making a change to pay themselves a distribution, subject to the lower capital gains tax rate, rather than the higher taxed bonuses we've seen over the past few years.

If this bill goes through, savvy business owners will start to think about establishing secondary entities outside the city limits to reduce the gross receipts subject Philadelphia taxes.

Continue reading "Major Changes Coming for Philadelphia Business Taxes?" »

With the upcoming deadline fast approaching, we wanted to follow-up our April 15, 2010 post titled "New Lead Paint Rules for Contractors" with a timely reminder. As most people are aware, lead based paints were banned from residential construction in the late 1970's because of the harmful affects to individuals and particularly, the developmental issues it created in young children.

Renovation firms/contractors and workers will have until September 30, 2010 to obtain the necessary training/certifications; or at least be enrolled in these classes to avoid violating the new Renovation Repair and Painting Rule. Requirements include, among others items, new training guidelines, new certification processes for paint disturbances where lead may be present and that each project must have a designated certified renovator that is responsible for overseeing the project and insure compliance with the new RRP Rule. The rule imposes requirements where a failure to comply can result in a substantial fine of $37,500 for a single violation! We know the costs of those new approved HEPA vacuum and filtration systems are high, but they don't approach the level of the potential fines for most small to mid-sized jobsites.
While we don't yet know exactly how expensive the new regulations will be in regards to lawsuits, we are working closely with many of our landlord clients to prepare for this new liability. We've already seen instances of contractors and property owners attempting to nod and wink their way out of compliance as a cost saving measure. From the landlord's perspective, even if the fines aren't enough of a deterrent, the potential lawsuits should be terrifying.

Going forward, we are advising our contractors, property managers and other clients who own and rent/lease real estate that this will be a major issue and that their contracts will need to be reviewed to allocate for this new liability. In addition, clients need to talk with their insurance adjuster as well to make sure they have coverage as well.

Continue reading "Building and Renovation Contractors Need to Understand EPA's Renovation Repair and Painting Rule" »

Building Owners in Philadelphia need to be aware of the February 2010 Philadelphia façade ordinance. This ordinance was enacted in response to the recent high profile collapses of building façades that severely injured or even killed pedestrians walking on the sidewalks.

In a nutshell, the new ordinance affects building higher than 6 stories or that have appurtenances in excess of 60 feet in height. If your building falls into this category, and most of the tall Philadelphia buildings with their intricate ledges and facades do, then you will be required to hire a licensed professional who is experienced in building facades or structural engineering to evaluate your building. The engineer will deliver a report of "safe", "unsafe" or "safe with a repair and maintenance program." If preventative action is required, it must be performed within a very tight time schedule. All of these reports will be filed with the Philadelphia Department of Licenses and Inspections.

The inspection requirement will be phased in over the next 5 years based upon the age of the building. The oldest buildings will require certification by June 30, 2011, and re-inspection is required every 5 years after the initial report. Going forward, we are advising our clients that this will be an issue for both landlords and tenants, as inspections, certifications and repairs will impact tenant costs as well as creating potential business access issues.

Continue reading "Philadelphia Façade Ordinance Compels Action by Commercial Property Owners" »