Franchisor Liability in the Face of Misrepresentation
When considering franchise opportunities, due diligence is absolutely necessary prior to purchasing any franchise in order to protect yourself and your investment. What are your options when a franchisor misrepresents the estimated costs to operate a franchise in a disclosure document? Specific contract language for franchise liability will help to protect franchisees from purposeful fraud or misunderstandings.
Non-Compete Agreements and Non-Management Employees
A common question we are asked is whether employers may require non-management personnel to sign a non-compete agreement. The answer is yes, but there are limitations of which employers should be aware. To be enforceable in the State of Illinois, the agreement must (1) have adequate consideration, (2) be reasonably necessary to protect the employer’s legitimate business interest, (3) not impose undue hardship on the employee, and (4) not be injurious to the public. Courts will generally determine the enforceability of a non-compete agreement based on the totality of these factors. As of January 2017, however, employers are prohibited from requiring any low-wage employees under the Illinois Freedom to Work Act to sign non-competes. The Act effectively protects employees earning less than $13.00 per hour or minimum wage, whichever is greater. Read more…
Gender Identity and the Workplace
Gender identity is a protected class against discrimination under the Illinois Human Rights Act. http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2266 The law protects employees against discrimination in all terms and conditions of employment, including hiring, selection, promotion, transfer, pay, tenure, discharge, and discipline. To ensure compliance, employers are encouraged to participate in diversity training, revise workplace policies, and to promote inclusivity.
Employers should also note that the Equal Employment Opportunity Commission (EEOC) https://www.eeoc.gov/ prohibits gender identity discrimination under Title VII. https://www.eeoc.gov/laws/statutes/titlevii.cfm EEOC has found that examples of unlawful discrimination include: failure to hire because a person is transgender, firing an employee based on a gender transition, intentional misuse of a transgender employee’s new name and pronoun, and denying an employee equal restroom access. In interpreting the Illinois Human Rights Act, state courts look to federal law.
Reporting Change of Address or Responsible Party with the IRS
Beginning with 2014, it is mandatory that businesses report changes in responsible parties to the IRS. For non-publicly traded entities, a responsible party is the person who has a level of control over, or entitlement to, the funds or assets in the entity that as a practical matter enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds or assets. For most small businesses, this is the primary owner of the entity.
Within 60 days of a change in responsible parties, the entity must file form 8822-B, Change of Address or Responsible Party-Business with the IRS to report the change. Although there are no direct penalties for failing to file the form, a failure to receive a notice of deficiency or demand for tax, the penalties and interest will continue to accrue, even though the responsible party fails to receive the notices.
All businesses with EINs should review their SS-4, Application for Employer Identification Number, and file Form 8822-B with the IRS to update any changes in business addresses and responsible parties, as soon as possible. Here is the link to IRS form 8822-B http://www.irs.gov/pub/irs-pdf/f8822b.pdf.
If you have any questions, please contact Ken McLaughlin at 630-230-8434.
Written By: Bob Kovanic, MBA, CPA, Padgett Business Services
NOTE: This publication should not be regarded as legal advice or legal opinion. The content is intended for general informational purposes only. If you have any concerns regarding anything in this publication you may contact your own attorney, CPA or our law office at 630-230-8434, website www.ma-lawpc.com.
A WOMAN’S RIGHT TO BIRTH CONTROL VS. RELIGIOUS RIGHTS
On June 30th, the U.S. Supreme Court ruled in favor of three family-owned businesses, with the majority of the court saying that businesses can refuse to pay for certain forms of contraception they find “morally repugnant.” At issue are four contraceptives known as abortifacients which are contraceptives that prevent ovum implantation or cause a miscarriage shortly after becoming pregnant.
In writing the majority opinion, Justice Samuel Alito noted that the Obama White House already provided an opt-out for nonprofit religious corporations by allowing an outside insurance company to pay for birth control and felt this should also apply to for-profit employers. It was suggested by the court that the Government could assume the cost of providing the four contraceptives at issue to women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections.
Federal Involvement in Gay Marriage Rights
Recently the Obama administration, along with the Department of Labor, have proposed expanding the definition of spouse to allow legally married same-sex couples the same rights as heterosexual couples under the Family Medical Leave Act (FMLA) and Family Military Leave Act. This means that if same-sex couples were married in a state that has legalized gay marriage, then these couples would experience the benefits of the FMLA no matter which state they live in, even if gay marriage in that state is illegal. This in effect would impose federal law over something which has always been a state regulated matter.
In addition, this week U.S. District Judge Richard Young, for the 7th Federal Judicial District, ruled that the State of Indiana’s ban on gay marriage was unconstitutional. This issue is expected to be presented to the U.S. Supreme court because several similar Federal rulings are on hold pending appeal.
Starting a Business as a Non-Citizen, Part lll (Work Visas for USA)
This is the third installment of a series discussing the options for non-citizen business investors to obtain Work Visas in the USA. The following are a list of the least desirable visa options a non-citizen may apply for in order to work for the company that he or she built:
Temporary Visas (Less than one year duration)
B-1:The B-1 visa temporarily allows non-citizens to participate, and get paid, for activities of a “commercial or professional nature.” While the United States Citizenship and Immigration Service (“USCIS”) does not limit the definition of “commercial or professional nature,” managing a business would be an accepted activity under B-1 so long as the applicant can show that the purpose of the trip is legitimate, the stay is for a limited period of time, there are adequate funds to cover the trip, and the applicant has a residence outside the United States that they do not intend to abandon. However, with a B-1 visa and extension good for only one year in the United States, this visa is a temporary solution that would not be ideal for a potential business owner or investor looking to build a business. Read more…
Starting a Business as a Non-Citizen, Part ll (Work Visas for USA)
This is the second installment of a series discussing the options for non-citizen business investors to obtain work visas for the USA. The following are a list of the most recommended visa options a non-citizen may apply for in order to work for the company he or she built:
Temporary Visas (More than one year duration)
E-2 (“Treaty Investor”): The E-2 visa is the ideal visa for a foreign national looking to start a business in the United States. The E-2 visa is available to non-citizens that invest substantial capital into a bona-fide enterprise in the United States. Substantial capital is a sufficient investment to ensure success. Also, a bona-fide enterprise is one that is operating and possesses an employer identification number, tax returns, financial statements, or other information that shows the legitimacy of the business. The E-2 visa allows the holder to work for their company, and spouses may also work after getting special authorization from the USCIS. This visa is initially granted in two year increments and possesses no maximum number for renewals. However, the E-2 visa is only available to nationals of a country that possess a certain treaty with the United States. The list of treaty countries is located on the United States Departments of State website at http://travel.state.gov/content/visas/english/fees/treaty.html. As of 2014, India, China, and Mexico do not possess such treaties with the United States. Read more…
FMLA Benefits Now Must Be Provided to Employees with Same-Sex Spouses
When the U.S. Supreme Court struck down the Defense of Marriage Act (“DOMA”) in U.S. v. Windsor, we advised that there would be sweeping implications to employers from everything from benefits enrollment to FMLA entitlements. (See DOMA posts from June 26th, June 28th — Immigration Issues and June 28th — Employee Benefits Issues).
Travel VISAs are now available for Same-Sex Couples
Secretary of State John Kerry announced that “effective immediately” same-sex spouses applying for Visas will be treated in the same manner as opposite-sex spouses. For example, if you are the same-sex spouse of a US Citizen, or a noncitizen your Visa application will be considered equally as if you were an opposite-sex couple. Read more…