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

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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?

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?

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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

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Vaccine PassportAt the start of summer, Governor Ron DeSantis declared that Florida is “no longer in a state of emergency.” This statement preceded a bill banning vaccine passports, and two executive orders suspending local government COVID-19 restrictions.

For employers, this doesn’t mean you should rush to discard your face marks requirement, nor should it impact your decision to mandate vaccines. Employers remain free to implement safety features they feel needed.

New York vs. Florida

Many Northeastern states have begun experimenting with COVID passports. For instance, New York City now requires at least one dose of a COVID-19 vaccine for entry to indoor dining, gyms, and entertainment performances. For better or worse, Florida has gone in the opposite direction. Florida law now prohibits businesses from implementing these measures with respect to customers. Specifically, the new law says that “business entities,” including for-profit and not-for-profit entities, cannot require that patrons or customers provide documentation certifying that they received the COVID-19 vaccine or certifying that they have recovered from the virus to enter or receive a service from the business.

EEOC’s View

Continue Reading What Florida employers need to know about the vaccine passport ban

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Launching your own business is a huge decision, one not to take lightly. From developing your product or service and getting funding to taking measures to protect your business, entrepreneurs must do their homework. As a business and tax attorney, one question I often hear is:

What is the best way to set up a new business?”

While the answer varies depending on the goals of each client, an LLC is often chosen.

What is an LLC?

An LLC, or limited liability company, is a U.S. business structure that combines the simplicity, flexibility, and tax advantages of a partnership with the personal liability protection of a corporation. The owners of LLCs are called members. An LLC can have one or many members. Members can be individuals or other businesses, and there is no limit to the number of members an LLC can have. With an LLC structure, members’ personal assets are protected from the LLC’s creditors. LLCs are more cost effective and simpler to form than a corporation. This, in addition to the discussion below, has led to LLCs becoming the ‘go-to’ business structure to form.

Who should form an LLC?

Continue Reading What is an LLC and why do I need one?

Maritime GPSA group of charter boat captains are making waves by challenging NOAA Fisheries plan to monitor charter boats in the Gulf of Mexico. Last July, NOAA Fisheries issued a mandate requiring charter boats to allow federal agencies to monitor 24-hour GPS devices on their boats. The rule, which has since been delayed would affect an estimated 1,700 charter boat captains, including many in Lee County.

NOAA New Rule

The new rule requires charter boat captains to submit an electronic fishing report (or logbook) using federally approved hardware and software with GPS location capabilities. Along with the transmission of fish-related information, captains are “required to report certain business data: charter fee, fuel usages, fuel price, number of passengers, and crew size.” Prior to departing for any trip, charter boat captains must declare the type of trip, whether for-hire or not, and details of the expected completion. NOAA states the new rule is intended to

improve the best scientific information available for regulatory decisionmaking; increase the accuracy of economic impacts and value estimates specific to the for-hire industry; and will support further value-added research efforts and programs aimed at increasing net benefits to fishery stakeholders and the U.S. economy.”

Captains’ Concerns

Continue Reading Mandated Monitoring Attempts to “Hook” Charter Boat Captains 24/7