Elder Law Seminar: Protecting Family Assets From Long Term Care Costs For A Family Member

Join Pessin Katz Law, P.A., attorney Kevin F. Bress on Saturday, March 30th, at 9:30am in our Towson offices located at 901 Dulaney Valley Road, Suite 400, Towson, MD 21204.

Mr. Bress will speak on the ability to protect your family’s assets from long term care costs when incurred by you or your family member. Topics will include maximizing public assistance and also will touch on power of attorney and advanced health care directive documents; Both critical to allow your loved one’s wishes be carried out properly.

While this seminar is free, please call Rhonda King at 410.938.8800 or email rking@pklaw.com to register.

If you cannot make this date, please feel free to email Mr. Bress directly at kbress@pklaw.com for information or questions.

Estate Planning Seminar To Discuss Wills, Trusts & Other “Estate Issues” Featuring Helen M. Smith, Esq.

PK Law attorney Helen M. Smith will host an estate planning seminar in our seminar room at our Towson offices located at 901 Dulaney Valley Road, Suite 400, Towson, MD 21204, on Thursday, March 7th at 9:30am.

Ms. Smith, an experienced estate planning attorney, will discuss trusts vs. wills, “who needs a will,” estate tax issues and other estate planning questions. This seminar will be a general estate planning seminar addressing estate planning issues for single and married individuals with and without children, as well as couples who no longer have children living at home.

This informal seminar will include an interactive “Question and Answer” period with Ms. Smith, so you are encouraged to bring your questions and current estate planning documents, if any, with you!

This seminar is free, but registration is required. To register contact Rhonda King at 410.938.8800 or at rking@pklaw.com.

Misclassification of Workers: An Attempt to Save Could Cost Your Business A Bundle

In recent months, many business owners have noticed that their classification of workers is being closely scrutinized by a variety of  federal and state regulatory agencies. Whether a worker is classified as an “employee” as opposed to an “independent contractor” or an “exempt” employee as opposed to a “nonexempt” employee can have a significant impact on an employer’s bottom line. Generally, an employer must withhold income taxes and withhold and pay Social Security and Medicare taxes, as well as unemployment tax on wages paid to an employee, but does not need to withhold or pay any taxes on payments to independent contractors. An employer does not have to pay overtime to an exempt worker, but does have to pay overtime to a nonexempt worker. While classification of a worker as an independent contractor and an exempt worker can save an employer a significant amount of money, misclassification of a worker can cost the state and federal government a significant loss of revenue. At a time when every tax dollar counts, the IRS and other state and federal agencies are launching initiatives aimed at business owners to stop and correct misclassification. Along with back taxes that will be owed, the penalties can also be severe.

In addition to the state and federal agencies, workers who have been misclassified are also going after business owners. These workers, when misclassified, often suffer lost wages because employers do not have to pay overtime and benefits to independent contractors or exempt workers. Their claims, which are termed “wage theft” claims and are attractive to many attorneys because of potential awards of attorneys’ fees and treble damages, are popping up in significant numbers.

What should you do if you are a business owner? A good start includes looking at the factors that are used by relevant agencies to determine whether a worker is an employee or an independent contractor, or exempt or nonexempt.

Employee vs. Independent Contractor

The U.S. Department of Labor has indicated that the following factors should be considered when determining whether a worker is an employee or an independent contractor:

1) The extent to which the services rendered are an integral part of the principal’s business.

2) The permanency of the relationship.

3) The amount of the alleged contractor’s investment in facilities and equipment.

4) The nature and degree of control by the principal.

5) The alleged contractor’s opportunities for profit and loss.

6) The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.

7) The degree of independent business organization and operation.

Conversely, there are certain factors which are immaterial in determining whether there is an employment relationship. Such facts as the place where work is performed, the time or mode of pay, the absence of a formal employment agreement, or whether an alleged independent contractor is licensed by State/local government are not considered to have a bearing on determinations as to whether there is an employment relationship.

The IRS has set forth the following rules to help employers distinguish between an independent contractor and an employee. The focus is on the degree of control by the employer and independence of the worker. Facts that provide evidence of the degree of control and independence fall into three categories:

1) Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

2) Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

3) Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

Exempt vs. Nonexempt

The Fair Labor Standards Act requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and that they be paid overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a work week. However, the FLSA provides an exemption from both the minimum wage and overtime pay requirements for those individuals employed as bona fide executive, administrative, professional, outside sales, computer-related, and highly compensated employees, provided they meet certain tests relating to duties, responsibilities, and salary as set forth in regulations issued by the Secretary of Labor. In addition, there are a number of other exemptions for, among others, salesmen, partsmen, and mechanics at a dealership, certain farm workers and seasonal employees, and drivers, helpers, loaders, and mechanics employed by motor carriers. It is important to become familiar with the various industry-specific exemptions as well as the general exemptions.

Unfortunately, classification of a worker is not always a simple process.  Ambiguities will exist and certain laws may change an independent contractor into an employee.  In addition, there are some differences between federal and Maryland laws that may have the affect of the employee being exempt under federal law, but not under Maryland law.  Employers who are concerned that they may have workers who are misclassified should have a labor and employment attorney assess the classification of their workers before they are contacted by a federal or state agency or a plaintiff’s attorney.  To contact a PK Law Labor and Employment Attorney click here and to contact a PK Law Corporate and Business Services Attorney click here.

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.

The Affordable Care Act Healthcare Mandate: Will Your Business Be Affected?

After much ado, the employer healthcare mandate, under The Patient Protection and Affordable Care Act (“The Act”), will finally go into effect on January 1, 2014.  That gives affected employers less than a year to ensure they are in compliance, or face penalties.  The time is now to assess whether your business will be affected. 

The Act requires “large employers” to offer health insurance to their employees or else incur monetary penalties.  The employer mandate further provides that “large employers” who offer health insurance to their employees may nevertheless incur penalties if the insurance is not “affordable” or fails to provide “minimum value.”  Employers who employ fewer than 50 employees are not subject to the employer mandate but are nevertheless incentivized to provide health insurance for their employees by way of the small business health care tax credit.

The Act defines “large employer” as “an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.”  Notably, the hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer by dividing the total number of hours worked in a month by part-time employees by 120.  Thus, for example, if an employer has 35 full-time employees and 20 part-time employees who each work 24 hours per week (or, in other words, 96 hours per month), these part-time employees would be treated as the equivalent of 16 full-time employees, thus bringing the employer’s total of full-time employees to 51 and thus making the employer a “large employer.”

A “full-time employee” is, “with respect to any month, an employee who is employed on average at least 30 hours of service per week.” Apparently recognizing that this definition is broad and leaves many questions unanswered as to its application, the Act also provides that, “[the Secretary [of the Treasury], in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.” Although final regulations have not been adopted, proposed regulations were recently published which clarify how to determine whether an employee is a “full-time employee” under the Act.

Perhaps most notable is the fact that the Act incorporates the “aggregation rule” with respect to the calculation of the number of an employer’s employees, thus requiring that all of the full-time and full-time equivalent employees within a “controlled group” must be counted in determining whether an employer is a large employer subject to the employer mandate.  The aggregation rule applies to “parent-subsidiary controlled groups,” “brother-sister controlled groups,” and any combination of the two.  A parent-subsidiary controlled group exists when a parent organization owns 80% or more of the equity in a subsidiary organization.  A brother-sister controlled group exists when the same five or fewer persons (including individuals, estates, and trusts) own 50% or more of the stock of two or more entities.  Thus, the emphasis with respect to “controlled groups” is ownership, not the location of the entities or the goods or services they provide. 

The controlled group rules are made more difficult to avoid by “special rules” which attribute constructive ownership to one’s spouse (with limited exceptions), one’s minor children, and under certain circumstances, one’s adult children and grandchildren.  The special rules also contain expansive rules regarding constructive ownership not involving family ties.

Beginning on January 1, 2014, a large employer will be subject to a penalty if: (1) it fails to offer health insurance to its full-time employees and their dependents; and (2) any of its full-time employees obtains coverage through an exchange and receives a premium tax credit.  Individuals who are at or below 400% of the federal poverty level will be entitled to premium tax credits toward the cost of coverage obtained via an exchange.  The penalty will be the number of full-time employees minus 30 multiplied by one-twelfth of $2,000 for any applicable month.

A large employer who does offer health insurance to its full-time employees and their dependents is nevertheless subject to a penalty if any of its full-time employees obtain coverage through an exchange and receives a premium tax credit because the coverage offered by the large employer is not “affordable” or fails to provide “minimum value.”  Coverage is considered not “affordable” if a full-time employee’s required contribution toward the plan premium for self-only coverage exceeds 9.5% of his household income; coverage fails to provide “minimum value” if the plan pays for less than 60% of the actuarial value of covered health care expenses.  The penalty will be the lesser of the penalty discussed in the previous paragraph or one-twelfth of $3,000 for each full-time employee who receives a premium tax credit.

PK Law’s Labor and Employment Group is available to assist business owners with the requirements of the Act as well as other employment issues.  Click here for attorney contact information.  

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.

Harford County, Maryland, Proposing a Transfer of Development Rights (TDR) Program: UPDATE

The Harford County Council President has announced that the TDR program will not require the purchase of Development Rights for commercial or industrial land; the law will only require the purchase of  Development Rights for property that is zoned residential. The Bill has not yet been finalized and will not be introduced in January.

For the complete article, click here.