Legal

2020-winter-protecting-your-business-from-employment-claims

Protecting Your Business From Employment-Related Claims: The Importance Of Training

We all know that it’s coming, and there is nothing that we can do to stop it.  January 1.  New Year’s Day.  A time to reflect.  A time to turn our attention to making “changes” that we know we need to make.  New Year’s resolutions. Eat better. Exercise more. Unplug from the Matrix!  Easy to […]

We all know that it’s coming, and there is nothing that we can do to stop it.  January 1.  New Year’s Day.  A time to reflect.  A time to turn our attention to making “changes” that we know we need to make.  New Year’s resolutions. Eat better. Exercise more. Unplug from the Matrix!  Easy to say, but often difficult to do.  Like Jerry Seinfeld once said: “You know how to take the reservation, but you don’t know how to hold the reservation.  And that really is the most important part of the reservation!”

The same is true for employers across the country.  You know that there are things that you can and should do to limit your potential liability for employment-related claims.  You often commit to doing these things, but either don’t follow through or find some excuse for not doing them.  Here is one New Year’s resolution that is a MUST for all employers in 2020.

Train your employees.  I don’t mean to train them with respect to how to make widgets or how to operate machinery.  I mean, train them in the critical areas of employment law.  When is the last time that you conducted harassment training for your employees?  In light of the #MeToo movement, harassment training has become even more critical to protecting employers from potential liability.  The only way to establish the affirmative defense to harassment liability is to show that you did two things: (1) took reasonable steps to prevent harassment in the workplace; and (2) took prompt and appropriate corrective action once you had knowledge of the harassment complaint.

In order to establish that you took reasonable steps to prevent harassment, you must be able to show that you “regularly train your employees with respect to harassment.”  Regular training is not once every 2 or 3 years.  In order to show that your business is committed to preventing harassment at work, you will need to show that you conduct at least annual harassment training.

Sticking your employees in front of a computer for on-line harassment training, however, will not satisfy this requirement.  In the EEOC’s “Guidance on Harassment,” it has clearly warned employers that on-line harassment training is not sufficient.  According to the EEOC and some states that have adopted mandatory training statutes, in order to be effective, harassment training must be “interactive” and conducted by a live instructor who can answer questions from attendees and involve them in hypothetical situations or role-playing exercises.   This type of “live” training forces attendees to be involved in the training, to think about the issues, and to answer questions. They cannot simply turn off the volume and click their way to a certificate of completion.

Your harassment training also has to be tailored to the appropriate audience.   Supervisors and non-supervisors should not receive the same training.  Although many of the issues will be the same, supervisors require specialized training that teaches them about their obligations to protect employees from harassment and to take prompt and appropriate corrective action in response to complaints.  Supervisors not only need to know what harassment is, but they must also understand that they play a critical role in the prevention and elimination of harassment in the workplace.  They must understand that failure to satisfy these responsibilities could lead to potential personal liability.

Finally, in order to be effective, the training must devote the necessary time actually to cover the subject matter.  Thirty minutes is not enough.  This is not a tanning session or a nail appointment.  It is not a pizza delivery guarantee.  At a minimum, your non-supervisor training must be at least one hour, and your supervisor training needs to be two hours.  Anything less is nothing more than window dressing, and the EEOC will view it as such.

Beyond harassment training, have you trained your supervisors with respect to how to be a good supervisor?  Have you provided your supervisors with any training in these critical areas:  interviewing, handling employee complaints, investigations; performance evaluations; ADA and FMLA issues, disciplining and terminating employees; and the importance of proper documentation?  When you hired someone as a supervisor or promoted someone from a non-supervisory position, did you simply assume that they knew how to be a good supervisor?  Did you assume that they had all of the skills necessary to effectively manage other employees?  Did you assume that they could just figure it out?  I am sure that I don’t need to remind you what happens when you assume things.

Most new supervisors have no idea how to interview potential employees, how to conduct a proper workplace investigation, or how to prepare a performance evaluation.  They also don’t understand how asking the wrong question in an interview, botching an investigation, or creating an inadequate performance evaluation can result in significant potential liability for the employer.

Supervisors everywhere are busy.  It is a universal truth.  Because of this, they often fail to document critical employment-related issues:  performance counseling, behavioral problems, disciplinary steps; employee meetings; and many others.  Unfortunately, when faced with an employment-related claim, this documentation is absolutely critical to protecting the employer from liability.  Without it, the employer’s ability to defend itself (and its supervisors) will be significantly limited.

The only way to ensure that your supervisors have these critical skills and understand the importance of these critical issues is to train them.  Yes, the training will undoubtedly have a cost.  Yes, it is easy to convince yourself that you don’t need it.  Yes, you’ve gotten this far without training, and its never been a problem.  In this regard, however, I have a saying that I frequently share with employers: “It’s not a problem until it is.  And when it is, it will undoubtedly be a BIG problem.”

Happy New Year!  Time to go.  I’m meeting a friend for lunch (salads) and then I have to hit the gym.  Time to eat better and exercise more!

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A Financial Power of Attorney is an Important Estate Planning Tool

If you become incapacitated or are not mentally capable of making decisions, who will handle bank accounts in your name alone, sign checks, deal with your retirement accounts, or otherwise make financial decisions for you? Following a traumatic incident, you and your family may not have the time or ability to address those issues, but […]

If you become incapacitated or are not mentally capable of making decisions, who will handle bank accounts in your name alone, sign checks, deal with your retirement accounts, or otherwise make financial decisions for you? Following a traumatic incident, you and your family may not have the time or ability to address those issues, but a bit of advance thought and planning can be extremely beneficial and potentially save significant time, money, and heartache. You may think if anything happened to you that your spouse or kids could automatically take care of your financial affairs, but that may not be true. To avoid issues and make things easier on your family should something happen to you, it is best to have a comprehensive Durable Financial Power of Attorney in place.

What is a Power of Attorney?

Generally speaking, a Power of Attorney is a document in which you (the “principal”) designate someone to act for you (the “agent”), either for your convenience or because you become physically or mentally incapacitated. Under a financial power of attorney document, you appoint an agent to handle your financial affairs-for example, pay your bills or handle your bank accounts, real estate, business interests, IRAs, other retirement accounts, and insurance. A power of attorney may also authorize your agent to make gifts on your behalf or create or change a retirement plan or insurance beneficiaries, among other things. Given those broad powers, your agent must be someone you trust, such as your spouse, your child(ren), or a trusted friend. Generally, Pennsylvania law requires i) the principal of a financial power of attorney to sign the statutorily required notice, ii) the principal’s signature or mark to be witnessed by two individuals (not the agent or the notary) and acknowledged before a notary public, and iii) the agent to sign the approved acknowledgment to essentially act in good faith. The agent must act in accordance with, and within the scope of, the specific powers set forth, act in accordance with the principal’s reasonable expectations, if known, and, otherwise, act in the principal’s best interests. The Power of Attorney remains in effect unless and until revoked by the principal or by court order. The agent’s authority to act under the Power of Attorney ceases upon the principal’s death.

What makes a Power of Attorney durable?

In the context of a Power of Attorney, Durable means the powers conferred upon the agent are exercisable even if the principal subsequently becomes disabled or incapacitated. Under Pennsylvania law, and absent language to the contrary, all powers of attorney are presumed to be durable.

What are Some Benefits of a Power of Attorney?

Choosing your agent.  For the vast majority of us, it is critically important that we decide who makes decisions on our behalf. Most of us would rather name and appoint our agent(s) to handle our finances and make financial decisions for us, rather than rely upon the court to later appoint a guardian (who you may not even know) to do so. By creating a Power of Attorney, you control who will act for you and can consider the specific powers or limitations of your agent, the best person for the position given your particular assets and circumstances, as well as give thought to your particular family dynamics, such as a second family situation. The power to select an agent of your choosing cannot be overstated.

Opportunity to review with your agent.  Advance consideration, thought, and preparation of a Financial Power of Attorney provides an opportunity for you to discuss your needs and expectations with your agent before a disabling physical or mental illness or condition undermines that opportunity. You may discuss your specific intent and wishes in detail with your agent, so your agent is prepared to act when the time comes or discuss how your needs are likely to change as your family changes or as you get older.  Through a properly drafted Durable Power of Attorney, you can address all of those issues with your agent.

Avoid confusion.  With your intent and wishes specified and set forth in a properly executed Power of Attorney, you typically avoid confusion and uncertainty regarding how your affairs should be handled during your lifetime in the event you become incapacitated. A well-drafted Power of Attorney can remove the disputes between family members regarding how your financial needs should be handled. Should you become legally incapacitated, your family members should not spend time fighting over how your finances should be addressed.  Instead, there should be someone ready and willing to step in and make the necessary decisions.  If you plan ahead, with the assistance of a durable Power of Attorney, you can avoid most of those disputes.

Avoid time and expense of legal guardianship proceedings.  In the event you become incapacitated and are without a Power of Attorney, your family members (or some other interested party) may be required to file for the appointment of guardian to act for you. Guardianships are legal proceedings where an interested party files a petition with the court requesting the court to appoint a guardian (most often a family member but in frequent instances an attorney or another unrelated third party) to act for you due to your incapacity. Once appointed by the Court, the guardian handles your financial affairs under the supervision of the Court. Not only can guardianship proceedings be time-consuming and expensive, as well as be emotionally painstaking for your family, but your assets/finances (for most of us sensitive and private information) will be reviewed by the Court, or court-appointed third parties. You can generally avoid this situation by executing a Durable Financial Power of Attorney while you are healthy; in fact, your Power of Attorney may actually name who you would like to be your guardian if future circumstances so require. You make the decision about who is to act for you in the future, not the Court.

Provide flexibility for asset protection. This becomes particularly important when an individual enters a nursing home.  If someone fails to take proper steps to protect their assets before becoming a nursing home resident, those assets could be taken to pay for nursing home care. Through a properly drafted Power of Attorney, your agent may take certain steps to properly shelter your assets or a portion of your assets.  For example, your agent may deed real property or make gifts that help protect your assets.

The Durable Power of Attorney is an important component of one’s estate plan, along with a Will and Health Care Power of Attorney/Living Will. So, while healthy, take the time to protect the assets you worked so hard to acquire and accumulate by preparing a well-drafted and comprehensive Durable Financial Power of Attorney.

This article is intended as general legal information and not as legal advice. Should you have any questions regarding the subject matter of this article or wish to discuss your particular circumstance or situation, please contact the author.

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Hey Doc, is that Prescription a License to Drive?

As societal norms have changed in recent years, the use of controlled substances, legal and illegal, has increased exponentially. While there are divergent views on whether we benefit from a more medicated populace, one thing is certain. We all agree that the roadways should be safe from impaired drivers. Just because you hold a prescription […]

As societal norms have changed in recent years, the use of controlled substances, legal and illegal, has increased exponentially. While there are divergent views on whether we benefit from a more medicated populace, one thing is certain. We all agree that the roadways should be safe from impaired drivers. Just because you hold a prescription from a physician, that does not mean you can, or should, operate a motor vehicle as that prescription is not a license to drive.

We are all familiar with the statistics. At least ten states have completely legalized the use of marijuana. More than 40 states permit some form of medicinal marijuana, and most of those states have decriminalized the possession of a small amount of marijuana for personal use. Recent studies have shown that one-half of everyone in the United States has taken a prescription medication within the past thirty days. More than 85% of those over the age of 60 are regularly prescribed medicine. More than 10% of adults use anti-depressants. Millions of children, including driving-age teenagers, take central nervous system depressants for attention deficit disorder and similar conditions. Tens of millions of adults are prescribed analgesics for pain. Add all of the preceding to those who take over-the-counter medications or who use controlled substances illegally, that is without a prescription from a licensed prescriber, whether recreational or due to an addiction, and it is evident that you and nearly everyone with whom you have contact ingests something into their body which is intended to have a physiological effect on the mind or body.

Every State prohibits the operation of a motor vehicle “while under the influence of alcohol.” Even though there is no scientific method to determine whether someone is actually under the influence of alcohol, there is a consensus that having a blood alcohol concentration of .08% or greater has a physiological effect, which makes the inherently dangerous task of operating a motor vehicle much more difficult and dangerous. Accordingly, all States make it an offense to drive with that level of alcohol in one’s body.

Given the thousands of controlled substances – narcotics, hallucinogens, stimulants, depressants, anti-depressants, anti-psychotics, to name a few – and all of the illegal drugs like cocaine, heroin, and methamphetamines, and the infinite combinations and permutations of controlled substances and illegal drugs, the scientific community has not been able to quantify at what levels of ingestion someone is so impaired to render his operation of a motor vehicle dangerous. Consequently, every state has made it illegal to operate a motor vehicle “while under the influence of a controlled substance, drug or any combination thereof,” without reference to a level of impairment.

So, if your physician prescribes medication for your chronic back pain, or if you are taking an anti-depressant or anti-anxiety medication in strict accordance with the instructions of your physician or pharmacist, you can still be charged with, and convicted of, operating a motor vehicle “while under the influence of” that medication if your driving is affected.

Without a scientific determination of impairment due to ingestion of controlled substances or drugs, most states, including Pennsylvania and New Jersey, permit police and law enforcement officers, with no or minimal medical training, to render an opinion in court that they believe someone has operated a motor vehicle while “under the influence of” a substance. These opinions are often the only evidence used to convict someone of driving under the influence offenses.

So, consider the following scenario. You are driving home from work one evening with the right-of-way, obeying the speed limit and all other traffic laws, when, without prior notice, another driver does not stop at a red light and crashes into your car. Fortunately, you are not injured. The police arrive at the scene to investigate the accident. You are asked if you used any medication, legal or illegal, prior to the collision. You truthfully tell the police officer that you took your physician-prescribed anti-anxiety medication that afternoon, which occasionally causes you drowsiness or has some other minor side effect. You are upset that your car has been damaged in the collision, which impedes your ability to think clearly and to communicate with the police officer. The officer, both observing you and considering your admission that you took medication, and further taking into consideration the other driver’s insistence that his light was green, decides to arrest you for driving while under the influence of a controlled substance – your prescription medication. It happens. How are you going to demonstrate in court at a later date that you were not drowsy, and therefore not under the influence of your prescribed medication when you were driving?

Likewise, consider the same scenario above, but instead of you, it is your employee who is on-duty. The other driver who ran the red light is severely injured in the collision with your company vehicle, which is driven by your employee. Even though the other driver was at fault, he makes a claim for injuries because your employee was arrested for driving under the influence, or even if not arrested, admitted to taking the medication prior to driving.

The decision of whether or when to operate a motor vehicle while using medications, and the consequences of driving in this hyper-medicated society, requires deliberation and consultation with your physician because a prescription to use medication is not a license to operate a motor vehicle and does not grant immunity from a driving under the influence charge or from civil liability.

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Unleash Your Niche!

What is niche marketing?  According to businessdictionary.com, niche marketing is defined as Concentrating all marketing efforts on a small but specific and well-defined segment of the population. Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and […]

What is niche marketing?  According to businessdictionary.com, niche marketing is defined as Concentrating all marketing efforts on a small but specific and well-defined segment of the population. Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them. As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond. Also called micromarketing.

Pretty self-explanatory, right?  So, what does it have to do with those who work in professional services?  You know, accountants, architects, engineers, financial planners, IT consultants, lawyers, and management consultants.  Niche marketing has everything to do with these folks if they want to build a profitable business, and maybe have some fun while doing it.

As food for thought, the following are possible niche markets.  The accountant can create a niche representing the legal industry.  The lawyer can market legal services to the accounting industry.  We have seen many lawyers with niche practices such as cemetery law, food law, self-storage law, and equine law to name a few.  The architect can market her expertise in all things regarding historic homes and buildings.  A civil engineer can market a niche targeting school design and building.  The management consultant can build a niche helping family-owned business or women-owned businesses.  The possibilities are endless as long as there is a market for your services.

The benefits of building a niche are plenty.  You can become a true leader in a narrow space.  With this leadership, you can create a premium brand.  As we all know, people will pay more for a premium brand – so be that brand.  Also, premium brands, by their nature, are more in demand.  Using simple math, your niche allows you to charge more, and there is a higher demand.  That is a formula for high profits and a huge success.

Because this concept is not new to us, we have heard many of the common arguments against this approach.  Niche marketing is about marketing.  We have clients that will push back and tell us, we do more than that.  Don’t fret, you can do other things, just market appropriately to the niche. Just because an accountant has many law firm clients doesn’t mean she can’t have a restaurant client.

As mentioned earlier, for a niche marketing to be successful, there has to be a market for the services.  For the youngsters out there, you may not remember Y2K. Many lawyers thought that Y2K was going to be the next legal boom. They put all their marketing eggs into the Y2K basket.  It was a bust. The point is to make sure there is a buying market for your niche.  It may not be a good idea for the architect to market a historic building niche in a rural area with no historic buildings.  However, maybe this architect can develop a niche, designing buildings for the agriculture industry.

Also, we highly recommend that whatever niche you choose, you have a passion for it. Or, at least an interest. Marrying your passion with your job can be very lucrative as well as fun and satisfying.  We love the legal industry, saw a need for high-level marketing services in an underserved market.  This was the birth of ESQuisite Marketing.

So, to sum, identify a niche that will have demand, build the niche using a strategic marketing plan, try to include a passion, make more money, and have more fun.

ESQuisite Marketing is a professional service marketing company with a niche in the legal industry. Clients include large and small law firms, solo practitioners, certified legal nurse consultants, public speakers, financial services firms, and nonprofits in the Lehigh Valley and throughout the U.S., including New Jersey, Florida, Nevada, Michigan, Tennessee, and New York.

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Passing the Smell Test – How Does it Work When it Comes to Medical Marijuana

Other than the fact that all marijuana is a Schedule 1 drug under the Controlled Substances Act, and illegal at the federal level, there is nothing simple and straight forward about the law on marijuana use in Pennsylvania (or in any part of the country) right now.  From law enforcement to business owners, there is […]

Other than the fact that all marijuana is a Schedule 1 drug under the Controlled Substances Act, and illegal at the federal level, there is nothing simple and straight forward about the law on marijuana use in Pennsylvania (or in any part of the country) right now.  From law enforcement to business owners, there is a struggle to understand what is legal as courts and agencies are hard-pressed to keep up with the legalization of marijuana and the conflict between state and federal laws.

On April 6, 2016, Pennsylvania passed the Medical Marijuana Act (the “Act”) which legalized the use or possession of medical marijuana in the Commonwealth.  By February 15, 2018, medical marijuana was available for distribution at Pennsylvania dispensaries for patients who meet certain requirements.  Specifically, the patient has to have one of seventeen enumerated “serious medical conditions,” receive certification from a practitioner to acquire the marijuana from an approved dispensary in Pennsylvania and be in possession of a valid identification card issued by the Pennsylvania Department of Health at any time they are in possession of medical marijuana.  The patient must also be under the ongoing care of the practitioner who issued the certification during any in-person visit to the dispensary.  There is no reciprocity between the states, meaning that a patient must have a Pennsylvania certification to get medical marijuana from a Pennsylvania dispensary.

The Act confirms that medical marijuana may only be dispensed as a pill, oil, topical form (including gel, creams or ointments), vaporization or nebulization, tincture or liquid.  Smoking marijuana is not permitted by the Act.  Likewise, marijuana in edible forms, such as brownies, is illegal unless it is done to aid ingestion by the patient – the medical marijuana cardholder.    Despite these clear designations and protections under the Act for the legalized use of medical marijuana in Pennsylvania, the rest of the state’s legislation remains unchanged.

Recently in the case of Commonwealth v. Barr, the Honorable Maria L. Dantos of the Lehigh County Court of Common Pleas granted the Defendant’s motion to suppress evidence that claimed the  search of a vehicle by the police was improper since it was based upon the smell of burnt and raw marijuana through the open window of the vehicle and a passenger in the vehicle possessed a medical marijuana card.  In his defense, the Defendant produced an expert who testified that the odor of ingesting medical marijuana with a vaping pen was the same as the odor of smoking regular marijuana from an unlawful source.  The arresting officer admitted she was not aware that the odor was the same.  In rendering the decision, Judge Dantos highlighted that this search and subsequent arrest of the Defendant for possession of marijuana (amongst other charges) demonstrated the “clear disconnect between the medical community and the law enforcement community” with regard to the legalization of medical marijuana and found that the smell of marijuana alone does not provide law enforcement with probable cause to conduct a search.

This decision raises many questions for business owners and their interactions with their employees.  For instance, what happens when an employer encounters an employee who smells of marijuana but shows no evidence of any other impairment?  Will the smell of marijuana be enough to create the reasonable suspicion needed to demand a drug test?  Will the smell of marijuana potentially place an employer on notice of a possible disability?  Does the employer have to give the employee the opportunity to provide a legitimate medical reason for smelling of marijuana before it can take any employment action?  How do the answers to these questions change when the employee is in a safety-sensitive position?  There is little, if any, guidance from the courts on these scenarios; however, applying the reasoning in the Barr case, the smell test, alone, is likely not enough for an employer to take adverse employment action against its employee.

As these types of decisions continue to be made, the legal landscape surrounding marijuana use in Pennsylvania will only evolve.  Where do we go next?

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Business Divorces in Pennsylvania

This year is the 40th anniversary of the release of the Oscar-winning movie Kramer vs. Kramer.  Kramer vs. Kramer which starred Dustin Hoffman and Meryl Streep was one of the first movies to depict the turmoil that ensues when the dissolution of a marriage and the battle for custody of a child makes its way […]

This year is the 40th anniversary of the release of the Oscar-winning movie Kramer vs. Kramer.  Kramer vs. Kramer which starred Dustin Hoffman and Meryl Streep was one of the first movies to depict the turmoil that ensues when the dissolution of a marriage and the battle for custody of a child makes its way into the courtroom.  By now these custody fights are ingrained in our pop culture and can be witnessed on an almost daily basis on television.  There is another type of divorce that can be just as emotional and bitterly fought as the custody fight in Kramer vs. Kramer: that is the business divorce.

Business divorces involve the break-up of a small closely-held business.  Although these cases are at times referred to colloquially as “business divorces” they are more appropriately referred to as shareholder (or member in an LLC) oppression suits or minority shareholder (member) freeze-out cases.  These cases arise because unlike publicly traded corporations, the ability of minority shareholders to sell their shares of a small business is extremely limited.  As such, Pennsylvania law has established procedures to protect minority shareholders which are balanced against a natural reluctance to interfere in the operations of businesses.

Pennsylvania Courts define shareholder oppression as conduct that substantially defeats the reasonable expectations of a minority shareholder.  A freeze-out happens when a minority shareholder is removed from office, or his power or compensation is substantially diminished.  The majority shareholder or member’s conduct is measured against the business judgment rule.  The question that courts require to be answered is whether the majority shareholder had a rationale belief that he was acting in the best interest of the company.  If the majority shareholder is acting in accordance with the business judgment rule, then the owner has nothing to worry about.  If she is not, then the consequences may be significantly more severe than those suffered by Dustin Hoffman in Kramer vs. Kramer.

In Kramer vs. Kramer, Dustin Hoffman’s character ended up in court because he was spending too much time at work and not enough time with his family.  Just like in marital divorce cases, there are certain behaviors that will almost assuredly land a majority owner in court.  The most frequent misbehavior is failing to provide the minority with financial information about the business.  It is remarkable how frequently majority members take the position that it is their company, and the books are not the minority owner’s business.  Not only is that attitude shortsighted, but it is also completely contrary to Pennsylvania law.  Minority owners have a statutory right to see necessary financial information so long as the request for information is legitimate.  If the minority owner offers a legitimate reason to review the records, a court will compel the inspection of the financial records.

Other behaviors that can lead to a finding of minority oppression include:

  • Failing to observe corporate formalities. Refusing to have corporate meetings or not adopting necessary resolutions will be perceived as denying necessary information to the minority shareholder.
  • Terminating the employment of a minority owner. Since most owners of a closely held business also work for the business there is nothing that will get a minority shareholder to a courthouse quicker than the majority owner firing a minority owner.
  • Paying the majority owner excessive compensation or the corollary, paying the minority owner an inadequate salary.
  • Failing to award dividends or distributions. If the business is profitable, minority shareholders have a reasonable expectation that they will reap the benefits.  If too much money is tied to the salary of the majority member, it will engender the type of ill-will that leads to litigation.
  • Diverting corporate assets for the majority’s personal benefit. Just because you are the majority owner does not allow you to use the company credit card for the first-class vacation to Europe.
  • Usurping corporate opportunities. Courts frown when majority owners get involved in competing businesses in their personal capacity, which should have been brought to the corporation for the benefit of the corporation and all of its shareholders to enjoy.

Just like in custody cases where courts have broad authority to fashion an award, courts have a number of tools at their disposal to remedy shareholder oppression.  The most significant and detrimental tool for the majority owner to be aware of is that the court can award both compensatory and potentially punitive damages to the oppressed shareholder.  Courts can also appoint a receiver to run the business on a temporary basis while the parties are litigating their dispute.  Courts can always order the dissolution of a business if the owners are not able to work with each other.  Dissolution is most appropriate when the shares of the company are equally owned, and the owners can no longer run the business together.

The key to avoiding a business divorce is the same as avoiding a marital divorce: communication.  The majority owner has a fiduciary duty both to the corporation and to the minority owners.  Keeping all of the owners informed about day to day decisions will go a long way to keeping the business and its owners away from the turmoil that Dustin Hoffman and Meryl Streep’s characters endured.

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Boy Meets Girl

Once upon a time, “family” meant Husband and Wife, two or so children, a dog, a picket fence, a single income, ’til death do us part, and so many other Rockwellian clichés.  Our society, enamored with that ideal, sculpted our society around the “nuclear” family of the 1950s (1550s?).  Everything around us operates under and […]

Once upon a time, “family” meant Husband and Wife, two or so children, a dog, a picket fence, a single income, ’til death do us part, and so many other Rockwellian clichés.  Our society, enamored with that ideal, sculpted our society around the “nuclear” family of the 1950s (1550s?).  Everything around us operates under and in favor of this construct, and there’s only one small problem: These types of families are, at this point, in the minority.

It would be disingenuous for me even to attempt to describe the “typical” family of the twenty-first century, for the simple reason that it doesn’t exist.  Family can only be defined by its makeup, and its makeup defies such restrictive boundaries as a definition.

It causes a problem for the courts, who have, traditionally, been heavily involved in the family, from the issuance of a marriage license to the end of probate, and, to be certain, every step in between.  Courts prefer the “typical” situation: Boy Meets Girl, Boy marries Girl.  Boy and Girl are fruitful and multiply.  Boy and Girl acquire wealth and assets.  Boy and Girl disagree, divorce, distribute their marital estate, and reveal the worst of themselves in a fight over where the kids sleep.  Boy and Girl die, and bitter kids fight over their stuff.

This isn’t really “typical” anymore.

Today it can be Boy meets Boy, Boy marries Boy, Boys start a family using alternative reproductive technology.  The law of Boy-Meets-Girl says that only one can be Dad because the fundamental rights of the anonymous biological donor (and possibly the uninterested surrogate mother) cannot be compromised by something as droll as an intact family unit.  And it seems like so much to do over nothing when these two fathers just want to enjoy their newborn child together.  But when Boy disagrees with Boy, one of them runs the risk of being fully excluded.

Today it can be a grandfather who lived up to that erstwhile family ideal: worked hard, met Girl, raised a family, and—by no fault on his part—watched as that family destroyed itself at the expense of their own children.  Now, septuagenarian Grandad must (re-)assume the role of Dad, Mom, and Power of Attorney instead of enjoying his golden years…so long as he can convince a court that he is a better option than his deadbeat kids.

Today it can be Boy meets Girl, Girl meets another Boy, Girl has a baby, and 10 years later Boy and Girl and Boy are left to determine if “Dad” means the one who raised, loved, and supported the child, or the one who shares a 99.999% probability of biological parenthood.

It can be Boy meets Girl, but Boy and Girl see no worth in the institution of marriage and can have the kids, and the dog and the picket fence, and everything is just fine until they part ways and realize there are no protections for their mutual property rights.

Today it can be Boy Meets Girl, Boy rapes Girl, Girl forced to tolerate as Boy exercises custody anyway.

The law that was written is the Law of Boy-Meets-Girl.  As that law slowly adapts to meet the needs of an ever-changing nucleus, most of the above situations require creativity, common sense, and the pure gall necessary to ask for something that Boy-Meets-Girl failed to contemplate.

“Family” can no longer be limited to the Boy-Meets-Girl standard.  We have a few useful touchstones that allow us to work within the confines of Boy-Meets-Girl: lofty, esoteric phrases like “the best interests of the child” and “fundamental rights of a parent.” For the increasing list of situations that can’t be pigeonholed into Boy-Meets-Girl, however, we must innovate.  In order to make family-inclusive, we must continue to expand the law to accommodate every family, regardless of their makeup.   Knowing that there’s no limit to what constitutes a Family, we must never limit ourselves.

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Is Your Estate Plan Digitally Vigilant?

Given the prominence of our use of computers, the cloud, and online technology in our professional financial, and personal lives, it is indisputable that a good estate plan—including your Will, Power of Attorney, and any applicable trusts—must clearly address your wishes as to your intended beneficiaries of your digital assets and the person or persons […]

Given the prominence of our use of computers, the cloud, and online technology in our professional financial, and personal lives, it is indisputable that a good estate plan—including your Will, Power of Attorney, and any applicable trusts—must clearly address your wishes as to your intended beneficiaries of your digital assets and the person or persons you wish to control and gain access to these assets upon your incapacity or death. But there is more that you need to know.

What are “Digital Assets? These assets can include the following, to name only a few: 1. Emails. 2. Files stored on the hard drive of your computer or other drives, including, for example, your saved passwords to banking and investment accounts. 3. Photographs, documents, music, and videos stored in the cloud or posted to social media sites. 4. Blogs written by you. 5. Cryptocurrency. 6. Popular digital storefronts such as eBay© pages, and valuable web domains.

The State of the Law in Pennsylvania Regarding Access to Digital Assets is… “None Yet”. As of the writing of this article, all but 7 states have passed legislation that, at a minimum, confers power on personal representatives of estates (executors or administrators) to access and manage the digital assets of the deceased. Many of those states’ laws also confer similar powers on those appointed as agents under Power of Attorney and as legally appointed guardians. In 2015, the Uniform Law Commission developed a Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) for consideration and possible adoption by the legislature of each state. Despite prior bills introduced in the Pennsylvania legislature, Pennsylvania has yet to enact any form of RUFADAA, although legislation currently awaits action by the Pennsylvania Senate.

Compounding the hazards of the absence of current state law regarding digital access, a common continuing practice of certain social media sites and email accounts such as Gmail is to rely on their stated “terms of service” and “privacy policy” language to dictate what will happen to those accounts or assets at the death of the account holder. Google, for example, has an “active account manager” designation (https://myaccount.google.com/Inactive) that is useful only if one arranges his or her digital affairs before death. Facebook provides for your appointment of a “Legal Contact.” Without proper powers and directives in your estate planning documents, those persons you appoint to administer your assets during your incapacity or after your death might find themselves “locked out” of your accounts and barred from protecting and directing your valuable digital information and other digital assets.

How to Protect Your Digital Assets in the Absence of State Law. Because Pennsylvania has not yet adopted the RUFADAA or any similar access to digital asset law, it is important that you do the following:

  1. Clearly include appropriate authorization in your Power of Attorney, Will, and any trust you create that will empower your Agent, Executor, and Trustee to gain access to and manage your digital assets. Be as specific as possible as to your wishes and the consent and directions you intend those fiduciaries to have.
  2. Provide clear and detailed direction in your Will and any trusts as to who will receive or inherit these digital assets upon your death. In addition, specifically identify in those documents any digital accounts, such as social media accounts, or other private or confidential information or files that you wish to be deleted upon your death.
  3. Prepare — and update as necessary — as a separate, private document a complete inventory of your digital assets, online accounts, and their corresponding passwords. Keep a copy of the inventory with your secured personal documents and provide an up to date copy to your Estate Planning Attorney for your confidential file. (Many of my most technologically vigilant clients, for example) provide me with a sealed envelope containing this updated information on January 1 of each year.) Consider storing such passwords through corresponding websites or applications (for instance, the stored password options associated with your online bank or brokerage accounts). If you use a password management application, be sure to include that information in your inventory.

An experienced and adept Estate Planning Attorney will work with you to plan effectively for the proper disposition and management of these valuable—and too often overlooked— assets.

An Allentown native, Judith A. Harris, Esquire, LL.M (Taxation) is an Equity Member of the law firm of Norris McLaughlin, P.A., a full service business law firm (including Immigration Law, and a member of the MeritasTM Law Firms Worldwide network) with offices in Allentown, PA, Pennsburg, PA, Bridgewater, NJ, and New York City, and Co-Chair of the Firm’s Estate, Trust and Individual Tax Practice Group.

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MAYDAY, MAYDAY, ITS PAYDAY: The Dangers of Paying Employees Improperly

Much like the iceberg that sunk the Titanic, improperly classifying and paying employees has sunk its fair share of employers.  It seems like each week, or at least each month, employers are faced with a new law, regulation, or case interpretation which impacts the manner in which they have to pay employees. By way of […]

Much like the iceberg that sunk the Titanic, improperly classifying and paying employees has sunk its fair share of employers.  It seems like each week, or at least each month, employers are faced with a new law, regulation, or case interpretation which impacts the manner in which they have to pay employees.

By way of example, recently, the Pennsylvania Supreme Court heard argument in the matter of Chevalier v. Gen. Nutrition Centers, Inc., which pertains to an employer’s use of what is referred to as the “fluctuating workweek” and the potential significant difference between the federal and the Commonwealth’s interpretation of the law.  The federal Fair Labor Standards Act (FLSA) permits an employer to use the fluctuating workweek to pay an employee a fixed weekly salary for all hours worked, so long as the employer also pays an overtime premium equal to one-half of the employee’s regular hourly rate for hours worked in excess of forty (40) per week.  All states must adhere to the requirements of the FLSA.  States, however, are also permitted to implement their own wage and hour laws, and employers must follow whichever law is more beneficial to the employee.

In this regard, Pennsylvania has implemented the Pennsylvania Minimum Wage Act (PMWA), which mirrors the FLSA in most regards; however, it does include differing language as it pertains to the fluctuating workweek.  The PMWA is more “employee-friendly” because it requires employers to pay 1 and  imes the regular rate to employees for overtime worked rather than merely adding the “one-half” to such an amount as required by the FLSA.  As such, under the PMWA, an employer would be required to pay an employee more for the overtime hours worked than if the FLSA language applied. The foregoing is significant because employers are required to follow the law that is more beneficial to the employee, not the employer.  Depending on how the Pennsylvania Supreme Court rules, it may have a significant impact on an employer who uses a “fluctuating workweek” and may result in claims by employees for unpaid wages.

The fluctuating workweek is just one example of the potential pitfalls employers face when dealing with properly paying employees.  Given that it is summer, two other potential issues arise more often:  the use of independent contractors and unpaid interns.  Employers love using independent contractors because they do not have to pay overtime or payroll taxes.  Employers also love using unpaid interns because they are, well, unpaid.  In order for a worker to be classified as an independent contractor or an unpaid intern, however, they must meet specifically defined tests.  If they do not meet such tests, they have to be paid at least minimum wage and overtime for all hours worked over forty in a workweek.

So, who is an “independent contractor”?  As a general matter, for someone to be an independent contractor, the company cannot control the manner or means by which the individual performs the work.  By way of example, a company should not inform the worker how to do the work, what hours to do the work, or provide the tools to complete the job.  The company also should not provide the worker with any benefits that are provided to a regular employee, such as vacation time, health insurance, or a pension plan.  The worker should be free to work for other entities and should not spend the entirety of a workweek working for one company.  Further, the worker should have some potential liability with regard to the work being performed.  For example, if the company is not paid for work performed by the end client, the worker also does not get paid.

The foregoing is not an exhaustive list of factors which would be considered, but merely examples of what a court, or the Department of Labor, would review when determining if a company misclassified an employee as an independent contractor.  If such a determination is made, the company would be subjected to significant penalties and potential damages including attorneys’ fees and a twenty-five percent additional payment on the money due to a worker for unpaid wages.

Similarly, if a company misclassifies an employee as an unpaid intern, it could expose the company to similar damages and penalties.  In order to determine if an intern can be “unpaid,” a company should determine who is the primary beneficiary of the work being performed.  If the company is the “primary beneficiary,” then the internship must be paid.  If, on the other hand, the student is the “primary beneficiary,” then the internship may be unpaid.

In order to determine the “primary beneficiary”, a company can look to certain factors which include the following:  the intern clearly understands that there is no expectation of compensation; the internship provides training that would be similar to that which would be given in an educational environment; the internship is tied to the intern’s formal education program; the internship’s duration is limited; the intern’s work complements the work of paid employees; and the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Improper use of the fluctuating workweek, independent contractors, and unpaid interns are merely a few ways in which wage and hour issues can sink an employer.  It is imperative that an employer remains aware of all the changes and updates to the laws and regulations and properly pays its employees.  If an employer fails to do so, it will end up hitting an iceberg without a lifeboat.

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The Ugly Truth Sex Trafficking is Happening Here

The trafficking of humans for sexual exploitation sounds terrifyingly exotic; the plot in a Hollywood movie like Taken where beautiful women are abducted and sold to the highest bidder in an auction attended by the ultra-rich. In reality sex trafficking arrests are increasing in places like Allentown, Bethlehem, Easton, South Whitehall, Lower Macungie, Palmer and […]

The trafficking of humans for sexual exploitation sounds terrifyingly exotic; the plot in a Hollywood movie like Taken where beautiful women are abducted and sold to the highest bidder in an auction attended by the ultra-rich. In reality sex trafficking arrests are increasing in places like Allentown, Bethlehem, Easton, South Whitehall, Lower Macungie, Palmer and Bethlehem Townships. The victims are mostly young women from those same communities.

Today, sex trafficking takes place in your hometown. It happens at fake massage businesses, strip clubs, truck stops, hotels, and motels. It is made easy by online “escort” services and websites like skipthegames.com that allow the explicit advertisement of any and all sexual acts. One can browse through hundreds of “profiles,” many including X-rated images, each of which includes a list of the sexual acts the “escort” is willing to perform. So far these websites have been able to avoid the fate of backpage.com which served the same purpose until April 2018 when the Federal Government indicted several people connected to the site for facilitating prostitution.

This sex trafficking is brutal and humiliating. The victims are often children and young adults. The Hollywood imagery of Julia Roberts in Pretty Woman could not be less accurate. The overwhelming majority of women (and yes men also) being sold for sex have no choice in the matter. There is no “hooker with a heart of gold” story when a man pays $80 to have sex with a drug addicted teen in a motel room off Airport Road.

The truth is that most of these women are controlled by men; pimps or traffickers, who manipulate, exploit, control, extort, beat, and rape them. The pattern seen repeatedly in this business is a young woman, typically vulnerable, alone, and unsophisticated. Often overconfident in her ability to control the situation or the man who will exploit her. The pimp starts out as caring, protective, even charming. The promise of easy money, access to drugs, physical protection, and someone to take care of her is enticing to one unfamiliar with exploitation and violence. Often the victim is plied with drugs to the point of addiction. Opioids have become the favorite drug, especially fentanyl, because of how quickly the addiction is set and how long and torturously painful withdrawal can be. The need for the drug drives the women to acts they never would have previously considered. Refusal leads to withholding of the next fix and the pain of withdrawal. Physical assault and rape are constant threats against any woman who fails to follow the rules set down by her trafficker. Often degrading photos and videos of the women are used as a means extortion, with threats to release the images to family or more publicly on social media.

A woman trying to break free from this cycle fears the drug withdrawal, perhaps as much as she fears the rapes and beatings. Many who are in the control of a trafficker are also in fear of law enforcement due to their own criminal acts. The shame and humiliation threatened by the release of the videos and pictures often means returning to family is a fraught option they cannot face. Few believe they can escape safely.

While the ugliness of sex trafficking remains somewhat hidden, the damage it does affects the entire community. Illegal drug use and violence often accompany trafficking. The broken lives of the victims and their families cause a devasting ripple effect across generations. This is not just occurring in exotic locations. It is happening is Fogelsville, Hanover Township, Lehighton, Reading, and every local community.

The response is also occurring throughout our area. Local police and prosecutors work together, often with the Department of Homeland Security, to identify traffickers and prosecute them. Some high-profile cases have increased community awareness. A non-profit group Valley Against Sex Trafficking (VAST) has been working to end sexual exploitation and empower survivors of sex trafficking. Increased community awareness is part of the plan to eliminate human trafficking. One part of the solution is to shed light on the issue instead of allowing it to remain hidden or ignored. Resources are available locally and nationwide at www.thevast.org; 484.560.6836 and 1.888.373.7888.

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