Interns - A Benefit or a Liability - Update

Last week, on April 28th a Federal appellate court issued a decision on whether students working in a school affiliated nursing home should be considered employees.  The court’s ruling disregarded the Department of Labor’s six factor test about whether an student serving an internship should be classified as an employee.  Last June, I wrote an article about the six factor test titled Summer Interns A Benefit or a Liability.   

The court in Solis v. Laurelbrook Sanitarium said a different analysis should be used.  The court said “We find the WHD's test to be a poor method for determining employee status in a training or educational setting. For starters, it is overly rigid and inconsistent with a totality-of-the-circumstances approach, where no one factor (or the absence of one factor) controls."

The court focused on who receives the primary benefit - the intern or the business.  To make that determination who receives the primary benefit,  “Factors such as whether the relationship displaces paid employees and whether there is educational value derived from the relationship are relevant considerations that can guide the inquiry. Additional factors that bear on the inquiry should also be considered insofar as they shed light on which party primarily benefits from the relationship.”

For people using interns, the good news is that you don’t have to meet all six factors in Department of Labor test.  However, in looking at all the circumstances the experience needs to be a greater benefit to the student rather than to the business.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Government Targets Business Owners for Employee Work Eligibility

Business owners, particularly in the food service industry may want to review their employee work eligibility status.  

A recent article in the Wall Street Journal titled Immigration Crackdown Widens With Criminal Probe and Arrests at Restaurant Chains highlights recent government investigations and in one case criminal prosecution relating to hiring illegal immigrants.

As the article notes the government’s focus previously had been on just arresting and deporting illegal immigrants, but now the government is focusing on prosecuting the business owners.

A recent story in QSR Magazine titled Who’s Working in Your Kitchen? reported “Recent government crackdowns on Chipotle and Pei Wei that forced both concepts to at least temporarily close locations have reminded restaurant operators that the government is taking illegal immigration very seriously.”

Illinois business owners can use the E-Verify system.  One advantage of using the system is that it creates a “rebuttable presumption” that the employer has complied with immigration laws. However, Illinois state government is not a fan of the E-Verify system.  In fact,Illinois attempted to block private employers from using the E-Verify system, but lost a lawsuit brought by the Department of Homeland Security.

Even though the Illinois state government failed in its attempt to prevent private business owners from using E-Verify, Illinois has placed significant restrictions on its use.  Therefore, an Illinois employer should review those restrictions carefully before using the E-Verify system.  Illinois employers are required to complete I-9 forms for each of their employees.

It is these I-9 records that the government is auditing and which are being used as the basis for prosecutions.

To avoid being the federal government’s next target business owners may want to review their personnel files to make sure that they are in compliance.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Buy/Sell Agreements - Planning Ahead

For small businesses with two or more owners, a buy/sell agreement can help prevent challenging situations from becoming unbearable.

When one of the business owners dies, becomes disabled, divorces or just says “I have had enough - I am out of here” that can be challenge for the remaining owner or owners just to keep the business operating.  That challenge can be unbearable if there is no arrangement in place to deal with those situations.

One of my fellow lawyer bloggers wrote an excellent article on buy/sell agreements.  The article raises a number of questions that business owners should think about.  Just thinking about these questions should provide a mental picture.  That picture may be as sobering as Ebenzer Scrooge’s glimpse of “Christmas yet to come.”  Fortunately, like Scrooge there is an opportunity to do something about it.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Employer Liability - Common Mistakes That Can Be Costly

With the economy improving, businesses are hiring again and bringing in independent contractors.  Because mistakes relating to compensation can be costly, now might be good time to review several common mistakes that can be expensive.

The most common mistakes involve:

1. Misclassifying an employee as exempt from overtime;

2. Misclassifying a person as an independent contractor when they should be an employee;

3. Assigning tasks to an unpaid intern that result in them being classified as an employee;

4. Failing to file employee payroll taxes on time.

This article discusses some of those common mistakes and how to avoid them.

1. Misclassifying  an employee as exempt from overtime pay

The federal Fair Labor Standards Act (“FLSA”) requires that employees receive overtime pay equal to 1.5 X their hourly rate if they work either more than 8 hours in one day or more than 40 hours in one week.  There are several job classifications that are exempt.  Employer problems often occur when they mistakenly believe that a particular employee qualifies for the exemption when they don’t.  

The overtime pay exemption categories include a) executives, b) administrative, c) professional, d) computer employee, e) outside sales and f) highly compensated employee.  The most common problems involve the administrative, computer and outside sales exemptions.  Job titles don’t count.  What counts is the type of work that a person performs.

Here is a link to a brief overview of requirements to qualify for those exemptions.

2. Misclassifying a Person as an Independent Contractor

One of the most common mistakes businesses make is to classify someone as an independent contractor when they are actually an employee.  The IRS and state governments aggressively pursue this type of  misclassification because it reduces the amount of taxes that IRS and state governments collect.

The IRS website provides some guidelines to help determine whether a person qualifies as an independent contractor.  You can also ask the IRS to evaluate your specific situation.  The IRS will issue a determination.  This can be done by filing IRS Form SS-8.

Briefly, factors that the IRS considers in determining whether a person is properly classified as an independent contractor include:

• Does the person have the ability to perform similar work for other businesses without your permission;
• Can the person set their own hours for when they will perform the work;
• Can the person hire other people to assist them in performing the work;
• Does the person supply their own tools or equipment to perform the work;
• Is the work done for a fixed fee where the person bears the risk of profit or loss depending upon how quickly they perform the work;

Because businesses do not pay payroll taxes for independent contractors a business can be liable for significant expenses if the IRS later determines that the person should have be classified as an employee.

As discussed below under the payroll tax liability section the business owners can be personally liable for failing to pay payroll taxes.

3. Unpaid Interns Who Should Be Treated as Employees Based Upon Their Work

An internship can be beneficial for both the student and the business.  The student gets experience that can help them find a job when they graduate and the business gets assistance for free.  However the intern’s activities must meet a six factor test for the business to justify not paying the intern.

Briefly those six factors are:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees (rather than the employer);
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

A business must meet all six factors.  Failing to meet one of the six factors can expose the business to liability under the Fair Labor Standards Act and to liability for failing to pay payroll taxes.

4. Personal Liability for Failing to Make Payroll Tax Payments

A problem that commonly effects businesses that are having cash flow problems is failing to pay their payroll taxes on time.  The IRS and state governments take this issue very seriously.  Their position is that this is money that doesn’t belong to the employer, but is held in trust for the benefit of the employees and the government.  So, it goes beyond failing to pay taxes.  The government views it as taking money that doesn’t belong to you.  For that reason, the officers, directors and shareholders can be personally liable for failing to timely pay payroll taxes.

Further, this is a liability that a business owner cannot discharge by filing a personal bankruptcy.

In Illinois not only is there potential tax liability, but also there is potential liability from the Illinois Department of Labor and the employees themselves in lawsuits under the Illinois Wage Payment and Collection Act.  For more information on a business’ potential exposure under this Illinois statute see my blog post titled Potential Exposure for Employers Under New Illinois Law.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

When Separate Corporations Are Not Separate for City of Chicago Head Tax

Business owners who have operations at separate locations often set up separate corporations for each location.  There are many good reasons to do this including limiting liability at one location from effecting the other locations.  The separate corporations should have their own bank accounts, bookkeeping, business licenses, corporate records, employees, tax identification numbers.  

But apparently, this is not enough for the City of Chicago.  A recent Illinois Appellate court decision DTCT v. The City of Chicago upheld the City of Chicago’s position. In this case a husband and wife owned several separate corporations.  Each of those corporations owned a different McDonald’s restaurant location. The City of Chicago said that because each of the corporations had the same shareholders then all the corporations would be counted as one business entity for the purpose of calculating the employer’s expense tax (a.k.a. the “head tax”). This tax applies to employers who have 50 or more employees working in Chicago. The tax rate is $4 per employee per month.  The individual restaurants had less than 50 employees, but all of them together had more than 50 employees.

The separate corporations had followed all the corporate formalities.  They had separate bank accounts, separate books and records, each had their own City of Chicago business license, they had separate tax identification numbers and filed separate tax returns.  But this was not enough for the City of Chicago in determining the “head tax.”

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Small Business and the Health Care Law

The new health care law certainly has been controversial, but its effect on small business is less certain.  A recent article in QSR magazine discusses possible effects and provides a timeline illustrating when various provisions and obligations will take effect.  The article is titled The Real Way Health Care Reform Affects You.

For small businesses with 50 or more employees, particularly businesses where many of the employees salaries are close to the minimum wage the impact of the new law is likely to be significant.  The article does not recommend taking drastic action now, but watch for developments and evaluate plans for how to comply with the new law cost effectively.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Potential Exposure for Employers Under New Illinois Law

Changes to Illinois Wage Payment and Collection Act provide substantially more exposure to Illinois employers.

On January 1, 2011 changes to Illinois wage claim statute became effective.  The changes give employees substantially more leverage in claims for unpaid compensation.  The term compensation includes not just salary payments, but also benefits such as vacation pay, bonuses, commissions, incentives, etc.  So even an honest dispute about compensation can come within this new law.  The reason for concern is the increased potential damages can put employers at serious disadvantage.

Here are some of the important changes that give employees more leverage.

An employee in a private lawsuit against an employer can recover attorney’s fees.  This will encourage more attorneys to take wage claim cases since they can recover fees.  Those fees can be greater than the amount of the wages claimed.  This attorney fee’s provision is a one way street.  If an employer wins, there is no provision for getting the employee to pay the employer’s attorney’s fees.  This amounts to a “heads I win and tails you lose situation” for employees.

An employee who wins in a private lawsuit is also entitled to interest on the unpaid wages.  The interest is equal to 2% per month.  Yes, that is 2% per month (not per year).  The interest starts from the date that the payment should have been made up until it is finally paid.  In comparison, interest on judgments in Illinois is 9% per year.  And interest on judgments accrues from the time you win the lawsuit not from the time the claim arose.  So the interest under this law is not only at a much higher rate, but also it accrues from the time the claim arose.

There now is personal liability for the company’s officers even if they didn’t have knowledge of the dispute but have day to day operational control.  For many mid-size businesses that have human resources and payroll personnel handling employee compensation, the company’s officers who may also be its owners now have personal liability.   If lower level employees--say the payroll department person--have knowledge of the wage claim they now also can be personally liable.

For wages claims of $3,000.00 or less, the Illinois Department of Labor has the authority to hear those claims and now their findings will be binding.  An employer still can dispute the finding in the circuit court, but the standard for reversing that decision will be higher.

These changes mean that Illinois employers must be more careful about how they deal with employee compensation.  A dispute, if not resolved quickly, can be substantially more expensive for employers than the disputed amount.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Employee Non-Compete Agreements

A nightmare for business owners is an employee, who you spent a lot of time and money training, leaves to work for a competitor. One way to reduce the risk of that nightmare becoming reality is to have employees sign non-compete agreements.

Sounds great in theory, but are they practical in Illinois. A recent Illinois Appellate Court decision discussed two tests Illinois courts have used to determine whether an employee non-compete agreement is valid. One makes non-compete agreements difficult to enforce. The second and newer test makes non-compete agreements easier to enforce, hence more practical.

The court in the case Steam Sales Corporation v. Brian Summers stated that the new test, which it referred to as the “reasonableness test” was the correct standard Unfortunately, the court applied the older and narrower “legitimate business interest” test. The facts in the case were so egregious that the employee would have lost under either test.

What are these two tests and what is their effect on employee compete agreements? To answer these questions you have to look at both tests.

The first test is the legitimate business interest test. Under the legitimate business interest test, the business must be one where its relationships with the business’ customers are near permanent and the employer would not have had contact with the customers if it had not been an employee. This test can also be satisfied if the employee gained confidential information through his employment that he attempted to use for his own benefit. Most businesses are not able to demonstrate that they have a “near permanent” relationship with their customers. So, it is very difficult to enforce a non-compete agreement if the court applies the legitimate business interest test.

The second test is the reasonableness test. Under the reasonableness test, the court looks at whether the terms of the non-compete will be injurious to the public (the customers) or cause undue hardship to the employee and whether the restriction on the employee is greater than necessary to protect the employer. This test is much easier for an employer to meet.

There are other factors in determining whether an employee non-compete will be enforceable. One such factor is whether the employee received any meaningful consideration for signing it. This is easy to show for brand new employees since the job offer can be conditioned upon signing a non-compete agreement.

Illinois courts applying a reasonableness test should allow employers to sleep a little more peacefully knowing that it is easier to have an effective employee non-compete agreement.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Payroll Taxes - A Personal Liability Trap

Recently, I was speaking with a very successful small business owner who almost stepped into a payroll tax trap. The business owner wanted to give a bonus to a key employee. The business owner, who uses a payroll processing company, thought that it would be okay to write the bonus check out of the business checking account. However, the business owner, who did not consult the payroll processing company was not planning to deduct payroll taxes from the bonus check. The business owner was about to step into a trap.

Bonuses like salary are compensation and are subject to payroll taxes. Failure to deduct payroll taxes will subject a business owner to personal liability. The fact that the business is a corporation or LLC will not shield the owner from personal liability.

Further, the personal liability for unpaid payroll taxes is not dischargeable in bankruptcy. I was also recently speaking with another small business owner who is in financial trouble. The business owner made the decision to use the business’ scarce cash to pay vendors instead of paying payroll and sales taxes. The business owner planned to get caught up on the past due taxes, hoping, like many struggling businesses, that sales would improve in the future.

When sales did not improve, the business owner considered closing the business and filing for personal bankruptcy. Doing so would protect the business owner from other business liabilities that the owner personally guaranteed like bank loans. This business owner was surprised to learn that they could not discharge the unpaid business payroll and sales taxes in a personal bankruptcy.

So if the business owner files a personal bankruptcy, the owner would exit the personal bankruptcy still being liable for all the payroll and sales tax. Then the business owner would have lost everything--house, cars, business and the job working for the business with the liability for the unpaid payroll and sales tax still haunting them.

In these tough economic times payroll taxes and sales taxes are bills a business should not defer in the hope that times will improve.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Advice for New Business Owners

The Wall Street Journal published an article titled 10 Mistakes That Start-Up Entrepreneurs Make. Rosalind Resnick made some good points. In my experience representing new businesses, the ones that failed made one and often several of the mistakes listed in the article. The successful businesses made few if any of these mistakes.

The article also contained links to related articles on marketing on a limited budget and the Wall Street Journal calculator for estimating the start up costs.

People who have just started a business or are thinking of starting one should considering reading this article.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Employee Credit Checks Banned Effective January 1, 2011

Employers will be prohibited from doing credit checks on prospective employees under a new Illinois law. The new law that was just signed by Governor Quinn will be effective January 1, 2011. There are a few exceptions for employers in the banking and insurance industry and those dealing with trade secrets.

Here is a link to a Chicago Tribune article on the new law.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Summer Interns - A Benefit or a Liability

Summer interns may be a good opportunity for both your business and the intern, but if the interns are not paid you may be exposing your business to significant liability.

The U.S. Department of Labor applies a six factor test to determine whether a for profit business may have an unpaid intern.

A copy this test and the Department of Labor's analysis can be found at the link below.

http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

Briefly, the six factor test that permits a for-profit business to have an unpaid intern is

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees (rather than the employer);
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If you have an unpaid intern and you do not meet all six factors of this test then you could be exposing your business to a Fair Labor Standards Act violation.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Secretary of State Warns of Scam on Corporations

The Illinois Secretary of State posted the following warning of a scam to charge a fee for filing corporate minutes. As the Secretary of State warns corporations are not required to file their corporate minutes.

WARNING! A non-governmental firm called "Illinois Corporate Compliance" or "Annual Corporate Compliance" is contacting Illinois businesses in an attempt to collect a $150 fee to file corporate meeting minutes. Please be aware that corporations are NOT required by law to file minutes with ANY government or private entity. It is recommended that corporations do NOT reply to the solicitation.

If you have questions about whether it is necessary to file a particular document you should contact your attorney.

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

US Targets Smaller Businesses for Hiring Illegal Aliens

The Department of Homeland Security announced last week that it is going to be targeting businesses that employee illegal aliens for prosecution.  In a fact sheet, the Deparment of Homeland Security indicated that it will target smaller businesses for prosecution.  Previously, the Homeland Security targeted business with at least 150 illegal employees.  Now Homeland Security is targeting business with at least 25  illegal employees for prosecution.

Employers who might have illegal alien employees might want to review their personnel files to make sure that they have current I-9 forms or have used some of the new verification tools such as E-Verify.

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Secretary of State Jesse White on Online Filing Fees

In a January 23^rd post , I wrote about Illinois Secretary of State premium/penalty for filing annual reports online.  The premium that Secretary of State charges for filing online is 50% above the normal filing cost.  Since then I had the opportunity to speak with Illinois Secretary of State Jessie White personally.

I gave Secretary White my reasons opposing his online filing fee premium.  I told him in an era of heightened environmental consciousness, his policy was anti-green.  It not only wasted paper, but required more fuel usage for mail delivery.  I also said that discouraging filing online meant more staff intensive handling of paper files.

Secretary White gave me the “Springfield Smile.”  The “Springfield Smile” is a look a politician gives you before he is going to pass the blame to someone else.  Secretary White followed his “Springfield Smile” with the response that his fees were set by the legislature. So, it was “out of his control.”  Secretary White’s response was disingenuous.  While it is technically true that the state legislature approves his fees, they act on his recommendation.

Perhaps a call, letter or e-mail to your state representative and state senator asking for an explanation of why Secretary of State Jesse White should be discouraging online filing might be helpful.

You can find the name of your state representative and state senator along with their addresses by clicking on this link to the Illinois Board of Elections.  

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Directors & Officers' Duty to Creditors

In normal situations, a corporation's directors and officers owe a fiduciary duty to the corporation and its shareholders.  But when a corporation becomes insolvent, that duty shifts to the corporation's creditors.  In these challenging economic times, this duty by corporate directors and officers to the corporation's creditors could lead to lawsuits from creditors against the directors and officers personally.

If a corporation is insolvent, contemplating bankruptcy or has filed for bankruptcy protection a suit by its creditors is likely a useless effort. However, the corporation may have a directors and officers liability insurance policy and/or the at least some of the directors and officers may personally have money.  So if creditors can sue the directors and officers personally the suit may be worthwhile.

For the duty to creditors to exist, the corporation must be insolvent.  So when is a corporation insolvent?  A corporation can be insolvent even before it has filed for bankruptcy protection or done an assignment for the benefit of creditors.  A recent Illinois federal district court opinion stated that "A corporation is insolvent when its liabilities far exceed its assets, or when it is unable to pay its debts."

For creditors this may provide another path to repayment.  For directors and officers of financially challenged corporations, it is one more of many risks to consider.

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. 

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.