Mandatory Arbitration of Sexual HarassmentEmployers who use arbitration agreements for employment disputes just had the scope of those agreements narrowed. On March 3, 2022, President Biden signed into law the Forced Arbitration of Sexual Assault and Sexual Harassment Act.

As the name of the Act implies, the new law prohibits employers from requiring that sexual harassment and sexual assault claims be arbitrated as part of a mandatory arbitration agreement of employment claims. The new law also overrides any terms of employment agreements that prohibit class actions for sexual harassment or sexual assault claims.

Finally, the law will have an immediate impact because it applies retroactively. This means that it invalidates any current arbitration agreement that an employee has signed to the extent that the claim is for sexual harassment or sexual assault. The only exception is for cases that are already pending or completed in arbitration.

Continue Reading New Law Prohibits Mandatory Arbitration of Sexual Harassment and Sexual Assault Claims

Bareboat CharterIn Florida, we are lucky to have a year-round boating season. However, with so many boats here in Southwest Florida, boat owners often look for ways to maximize their boats’ usage and, of course, their profitability. Boat owners can maximize profitability and limit liability by renting their boats under bareboat charter arrangements.

What is a Bareboat Charter?

A bareboat charter is a vessel that is leased by the owner to another person (a “charterer”) for a period of time without captain and crew. The person leasing the vessel is then responsible for the entire vessel’s operation and any captain and crewing requirements. For a valid bareboat charter, the vessel owner must completely relinquish “possession, command, and navigation” of the vessel.

Elements of a valid Bareboat Charter:

  1. The charterer must have the option of selecting and paying crew, although the owner may require general levels of proficiency for the crew that is retained based on federal statutes;
  2. The master/crew are paid by the charterer;
  3. All food, fuel, and stores are provided by the charterer;
  4. Insurance is obtained by the charterer;
  5. The charterer is responsible for the safe navigation of the vessel;
  6. The charterer may discharge, for cause, the master or any crew member without referral to the owner;
  7. The vessel is surveyed upon its delivery and return.

What are the benefits of a Bareboat Charter?

Continue Reading Bareboat Charters: Things to Consider

COVID LawIn response to the U.S. Supreme Court’s recent ruling that stopped OSHA from enforcing its mandatory COVID vaccination Rule for large employers, OSHA announced on January 25, 2022, that it is withdrawing the Rule. OSHA introduced the Rule as an emergency temporary rule in October 2021. The Rule applied to all employers nationwide with 100 or more employees, with only extremely limited exceptions. It was set to go into effect in December 2021, but a federal judge issued a nationwide injunction prohibiting OSHA from implementing the Emergency Rule.

After procedural moves resulted in the Sixth Circuit Court of Appeals being assigned the case, a three-judge panel in late December 2021 lifted the injunction. That opened the door for OSHA to begin implementation of the Rule in early January 2022, with enforcement to begin in February 2022.

Instead, the U.S. Supreme Court heard the matter on an expedited basis, taking oral arguments on January 7, 2022. The following week, the Court reinstated the injunction and blocked OSHA from implementing the Rule while the matter was being decided on its merits in the courts. Taking its cue from the Supreme Court’s written decision reinstating the injunction, OSHA apparently concluded that its argument was unlikely to prevail before the lower courts. Hence the withdrawal of the Rule, effective Wednesday, January 26.

What’s next

Continue Reading OSHA COVID Rule for Large Employers Withdrawn

Tax TimeWelcome to 2022 tax season! As the vast majority of businesses, small and large, were affected by the COVID-19 pandemic, many companies received support through the Paycheck Protection Program. However, there were many question marks with the Paycheck Protection Program, such as the timing of forgiveness and if eligible expenses are deductible for federal income tax purposes.

Timing of PPP loan forgiveness

As we all know, the Paycheck Protection Program (“PPP”) was created to assist businesses in paying their employees’ paychecks. If the funds received from PPP were used for qualified expenses, the amount of the loan was forgiven. Recently, the IRS released guidance on the timing of PPP Loan forgiveness. With some business owners not receiving their forgiveness letter in 2021, the question arose when the PPP loan will be forgiven for tax-exempt income purposes.

The IRS stated that taxpayers may treat such income as received or accrued when either:

  • expenses eligible for forgiveness are paid or incurred;
  • an application for PPP loan forgiveness is filed; or
  • PPP loan forgiveness is granted.

Thus, a taxpayer who submitted their application for forgiveness in 2021, but has not been granted forgiveness in the 2021 tax year, may choose the date of the forgiveness application, the date the forgiveness is granted, or the when eligible expenses are paid or incurred.

Expenses paid with 2020 PPP loans

Continue Reading How does receiving a PPP Loan impact filing my company’s taxes?

Henderson Franklin’s legal team returns to Sanibel Harbour Resort & Spa on Friday, February 25, 2022 with a new twist. The main room will offer the firm’s most popular workshop, HR Law & Solutions.

New for 2022, attendees will have the option to attend breakout sessions focusing on niche corporate matters and contracts, family businesses, startups and how to make informed real estate decisions. Click here to download the brochure.

Topics and speakers

General Session #1, Lingering Effects of COVID on Florida Employers, presented by Scott Atwood, Esq.

From business shutdowns and PPP loans to vaccinations, COVID has presented unique challenges to Florida businesses. Henderson Franklin’s employment group chair Scott Atwood will address the multi-faceted employment issues that employers may face, including: current obligations over masks and mandatory vaccinations; how to deal with possible long-term disability claims and leave issues arising from COVID; increased union activity; and the pros and cons of a remote/hybrid workforce.

General Session #2, Saving a Buck can Cost you a Million. Update on Recent Employment Cases and Mistakes that Employers Keep Making, presented by Scott Atwood, Esq. and Robert Shearman, Esq.

Continue Reading Registration is Open: Southwest Florida Legal Summit

COVID LawAfter a protracted battle in the Courts, on January 13, 2022, the U.S Supreme Court effectively ended the Biden Administration’s efforts to mandate widespread COVID vaccinations for large employers. That day, the Court issued a stay of an OSHA emergency temporary regulation that required all employers nationwide that had 100 or more employees, regardless of industry, to implement a mandatory vaccination policy for their employees and verify that the employees were vaccinated.

The practical effect is that there will be no federal mandatory vaccination requirements for employers except for employers in the healthcare industry who receive Medicare/Medicaid funds.

What does this mean for health care providers?

healthcareFor those health care providers who receive Medicare/Medicaid funds, a 5-4 majority of the Supreme Court upheld (by refusing to issue a stay) a separate regulation that requires mandatory vaccinations for employees in that industry by February 28, 2022. Conservative Justices Roberts and Cavanaugh sided with the liberal Justices. They found that the rule was more focused since it was limited to the more traditionally regulated health care industry and thus was not the same expansive use of agency authority. Moreover, the limitation of the rule to providers that received federal funds was deemed relevant because the courts have been more relaxed in enforcing rules that basically are a condition of receipt of the government money.

Finally, there is some question whether some states (such as Florida) who generally enforce these regulations will enforce the rule. Politics, however, deem it unlikely that the Biden administration would give up enforcement if certain states don’t enforce the rule. In such cases, Florida health care providers should be cautious when making a decision to ignore the new rule.

The OSHA “Stay” Explained

Continue Reading What does the Supreme Court’s Order rejecting the OSHA Rule mean for employers?

new businessWhat if I were to tell you, you could be both an LLC and an S-corporation and still be considered one single business entity?

An S-corporation is not a state law entity designation, similar to a Florida corporation or a Florida limited liability company. However, an S-corporation is merely a federal income tax classification made on a specific Internal Revenue Service form (Form 2553). Thus, one can form a Florida limited liability company (“LLC”) and elect to be an S-corporation for federal income tax purposes with the Internal Revenue Service (“IRS”).

Who is eligible to make the election?

Generally, the entity wishing to make the election needs to be a domestic corporation or an LLC. However, certain types of businesses are ineligible to make the election, such as insurance companies or financial institutions. In addition, the entity must have eligible shareholders, meaning the owners of the entity must meet specific requirements of the Tax Code.

Who can be an eligible shareholder?

shareholderAn eligible shareholder can be an individual (other than non-resident alien), estates, certain trusts, certain qualified retirement trusts, or charitable organizations. More specifically:

  • So long as the individual is not a non-resident alien, individuals are eligible S-corporation shareholders. Individuals may co-own an S-corporation with other individuals, such as husband and wife, as joint tenants by the entirety.
  • If an individual shareholder declares bankruptcy, the bankruptcy estate is a permissible S-corporation shareholder. If an individual shareholder passes away, their estate is an eligible S-corporation shareholder, as well.
  • Testamentary Trusts. These trusts become effective upon the death of a shareholder and hence become eligible to be an S-corporation shareholder.
  • Voting Trusts. Shareholders may create these trusts to temporarily transfer their shares to the trustee to combine their voting power. Voting trusts are eligible to be S-corporation shareholders.
  • Qualified Subchapter S Trust (“QSST”). A QSST is an eligible S-Corporation shareholder if it meets specific rigid requirements.
  • Small Business Trust (“ESBT”). An ESBT is a trust for beneficiaries that are all eligible s-corporation shareholders that acquired their trust interest by lifetime gifts or upon the death of an owner. These are more flexible trusts than the QSST described above.

Coming back to the opening question of an LLC or an S-corporation, so long as the individuals forming the LLC are eligible shareholders described above, the LLC can make the election treated as an S-corporation.

When to make the election?

Continue Reading Should I start my new business as an LLC or S-Corporation?

401KEmployers who sponsor retirement plans for their employees must periodically restate the plans for changes in applicable laws to maintain the plans’ favorable tax status. The Internal Revenue Service generally requires that plans be restated on a six-year cycle, the last of which concluded in 2016.

The current cycle is the third since the six-year cyclical program of plan restatements was implemented. Cycle 3 restatements of pre-approved defined contribution plans, including most 401(k) and profit sharing plans, must be adopted by no later than July 31, 2022.

The Appeal of Pre-Approved Retirement Plans

Pre-approved plans are retirement plans offered by a document provider (such as a financial institution or benefits practitioner) for adoption by employers. The plan document typically includes a variety of elective provisions from which an employer may choose and effectively customize the plan to best serve the needs of the organization and its employees.

Before making the plan document available for adoption by employers, the document provider will have obtained IRS approval of the plan as meeting the requirements applicable to tax-qualified retirement plans under the Internal Revenue Code.

Continue Reading The retirement plan for your employees may need a fresh look – soon

Health-related apps are widely available for smartphones and watches. There is no shortage of connected health-monitoring devices such as personal glucose and heart rate monitors.

These apps and devices read, track and record both health-related information and, by signing up for or registering the app or device, information that identifies the particular person using the app or device. Some of these apps and devices even interface with other apps or devices; for instance, syncing the calendar apps records histories like sleep cycles, heart rate or glucose levels or to forecast such as fertility cycles. The question then arises:

What protection do consumers have over the health and personal data generated by these relatively new apps and connected devices?”

The Federal Trade Commission (“FTC”) recently issued a policy statement addressing this issue and protection of the information gathered by these relatively new technologies.

Existing Framework

Privacy of health-related information gathered by providers of healthcare services or supplies — such as physician offices and pharmacies — has long been protected by the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA also contains provisions requiring healthcare providers to notify impacted individuals when HIPAA-protected data is breached or compromised and the FTC enforces those provisions.

Continue Reading FTC Addresses Privacy Concerns over Data Collected by Health-related Apps and Devices

Intellectual PropertyAfter months (or, perhaps, years) of diligent legal work, your business has finally secured its intellectual property rights through a patent, a trademark registration, a copyright registration or some combination thereof. Finally, you breathe a sigh of relief, put your legal paperwork in a file cabinet and get back to running your business. Years later, you find that a competitor is infringing your rights. After blowing the dust off your paperwork you discover, to your dismay, that your intellectual property rights were not properly maintained and have expired. What happened and what do you do now?

Unfortunately, many clients fail to realize that most intellectual property rights carry maintenance obligations until it is too late. That being said, these are pitfalls which can be easily avoided, and clients often have tools they can use to “backfill” rights if a deadline is inadvertently missed.

Patent Maintenance

patent lawU.S. Patents are subject to periodic maintenance fee payments. The motivation behind this is the anti-competitive effect patents have on the market. Congress decided that there should be some affirmative, monetary obligation of patent owners to maintain patent rights as a means of culling unused patents which might otherwise be preventing competition. Such patent maintenance fees are due at the 3½, 7½ and 11½ year marks. These fees follow the following schedule:

  • 3½ year maintenance fees can be paid between 3 and 3½ years after the patent issuance date;
  • 7½ year maintenance fees can be paid between 7 and 7½ years after the patent issuance date; and
  • 11½ year maintenance fees can be paid between 11 and 11½ years after the patent issuance date.

Additionally, each of these fees can be paid within a six-month grace period (for an additional fee).

If these fees are not timely paid, then the underlying patent lapses and is no longer enforceable. This can be an enormous problem. Many clients either forget or are not told about patent maintenance obligations. The result can be a loss of rights and the inability to stop knock-off products. There are certain procedures to try to reinstate a patent which was unintentionally abandoned in this way, but the costs can be high and the probability of success can vary. This can also open the door to intervening rights by certain competitors. The best thing to do is to carefully calendar maintenance fee deadlines ahead of time and engage counsel to help you.

Trademark Maintenance

Continue Reading IP Maintenance 101: Keeping Your Intellectual Property Rights Alive