New York & New Jersey Business Lawyer Blog

"Are funny people more successful in business?" This was the question asked recently by Forbes columnist Jenna Goudreau. She noted how humor in a work setting can improve morale and foster trust and cohesion among workers. Lawyers, as a general rule, do not get to use humor in their work very often. For business owners, it can be a fine line to walk. Humor can help build a team, but inappropriate humor can drive people apart.

Goudreau quotes psychologist Steven Sultanoff, Ph.D., who has studied workplace humor extensively. He lists three ways that humor impacts people: cognitive, emotional, and psychological. From a cognitive standpoint, humor can help put a problem into perspective for employees, and can help people to relate to a difficult issue. Emotionally, humor can supplant stress or frustration. People who effectively use humor often have a better ability to interact and connect with others, which can lead to a more productive workplace. As for the psychological aspects of humor, people tend to work better when they are happy and feel good, and when they perceive their environment as positive.

Of course, not all situations lend themselves to humor, and not all people can effectively use humor. Some issues are too important, and some problems too critical, to lighten with jokes. Goudreau mentions several companies that have successfully incorporated a sense of humor into their businesses and shows how and why it works.

Southwest Airlines is famous for its funny flight attendants. The airline identified a necessary but rather dull feature of commercial flying, the safety instructions, and found a way to make it more engaging for passengers. They did this without neglecting important information and without making light of the serious issue of passenger safety. Another example is Ben & Jerry's, a company that produces clever and creative ice cream flavors. The unique personalities of the founders became an integral part of the company's identity.

A business owner or manager must take care to ensure that office humor does not cross a line into harassment, and this can be a difficult task. Each person has a different sense of humor, and what is funny to one person could be highly offensive to another. Attempts at humor should always focus on bringing workers together, not pointing out differences. This is particularly true if jokes relate to race, gender, religion, sexual orientation, and so forth. Nothing can tear apart office cohesion like issues of harassment or discrimination, and managers must be constantly on watch for this. Humor that leads to legal liability for a business is clearly not worth the trouble.

Continue reading "Humor and the New York and New Jersey Small Business" »

The Wage Theft Prevention Act (WTPA), which passed the New York Legislature in 2010 and took effect in April 2011, requires New York employers to provide annual notices to their employees detailing their total wages and providing the identifying information of the employer. The WTPA is intended to help workers assert their rights by ensuring they have all the information they would need to make a wage claim if they believe their employer has violated New York labor laws. It applies to all private sector employers, regardless of size. The WTPA has generated controversy among business owners, and has even led some of its original sponsors to say it should be modified.

The law requires extensive reporting of wage amounts, withholding of income and payroll taxes, and other benefits for every employee. For many small businesses, this can be quite an onerous task. Some business leaders quoted by Buffalo's WGRZ News describe the law as "government overstepping its bounds and being a problem for the private sector." Some state legislators already have plans to try to repeal all or part of the law. One state senator noted that the information required by the law is available to the Department of Labor on demand already if they initiate an investigation of an employer.

The WTPA requires employers to keep reports on file for six years. It also requires employers to provide notices to employees in the employee's "primary language." The Department of Labor has produced template forms in Chinese, Creole, English, Korean, Polish, Russian, and Spanish. Penalties for failing to provide notices in a timely manner can be as high as $50 to $100 per employee per week.

A Democratic state senator who sponsored the bill in 2010 has stated that she believes the law should be "tweaked." For example, she says that employers who provide weekly or bi-weekly pay stubs, which generally contain income and withholding information, should not be required to file annual notices as well. The purpose of the law, she told WGRZ, was to help the Department of Labor investigate and penalize employers who bilk employees out of wages or skip out on payroll taxes. Put another way, the WTPA was intended to catch "bad employers," not add burdens to good employers.

Continue reading "New York Employers Must Verify Their Employees' Salaries Under 2010 Law" »

The Supreme Court heard arguments last month in a dispute over how to calculate disability payments for an injured worker under the Longshore and Harbor Workers' Compensation Act (LHWCA). The case, Roberts v. Sea-Land Services, originated in Alaska and made its way through the Ninth Circuit Court of Appeals until the Supreme Court granted certiorari in September 2011.

Maritime worker Dana Roberts was injured on the job in February 2002. He worked for Sea-Land Services as a gatehouse dispatcher in Dutch Harbor, Alaska. He slipped on some ice, injuring his shoulder and neck. Sea-Land's insurance carrier put him on temporary total disability up until May 2005, when it stopped paying him benefits. The Benefits Review Board of the Department of Labor (DOL) determined that Roberts reached maximum medical improvement, the point at which further treatment would not improve his condition any further, in July 2005. An administrative judge then ruled in October 2006 that Roberts had become eligible for permanent total disability (PTD) compensation in 2005, and that he was eligible for permanent partial disability (PPD) after October 2005.

The LHWCA provides workers' compensation for maritime workers injured on or near navigable waters. It limits compensation to an amount equal to twice the national average weekly wage (NAWW) for the "applicable" fiscal year. The issue presented to the Supreme Court, in essence, is which fiscal year is "applicable" in a given case.

The administrative law judge's compensation order is dated October 12, 2006. Roberts' eligibility for PTD benefits began on July 12, 2005. Applying benefits from the date of eligibility, Roberts would have been entitled to $1,047.16 per week, later increasing to $1,073.64 per week. This is the amount that the administrative law judge awarded to Roberts. If the NAWW in effect on the date of the order (one year later) were applied, however, the weekly amount would be $1,144.44. This is the amount Roberts wants applied. The Ninth Circuit upheld the administrative law judge's ruling in 2010, and Roberts appealed to the Supreme Court.

The Court heard oral arguments on January 11, 2012, focusing narrowly on the question of statutory construction. Roberts argued that the statute's phrase "newly awarded compensation" refers to the date of the award itself, not the date benefits became applicable. The government, joined by Sea-Land, argued that the phrase refers to the date of eligibility for benefits. From the analysis of the arguments at SCOTUSblog, there was apparently little to no chance of the parties finding common ground on their interpretations.

Continue reading "U.S. Supreme Court Report: High Court Reviews Systems for Payment of Disability Benefits to Employees" »

Technology has given businesses many different ways to collect payments from their customers, to the point that cash makes up only a portion of revenue for some businesses, and others do not receive cash at all. Credit card payments form a large part of how businesses collect payments, both through merchant accounts and services like PayPal. The fees associated with such payment methods are often more than worth the convenience they offer. Small businesses accepting credit cards through merchant accounts, in which a financial institution pays the business the amount of a transaction minus a small percentage, should know of recent legislation that may impose some reporting requirements on them come tax time.

The Housing Assistance Tax Act of 2008 became law in June 2008, primarily as a means of addressing the subprime mortgage crisis that had begun the previous year. The law mainly affects banks and other financial institutions that engage in mortgage lending, authorizing the Federal Housing Administration to guarantee certain fixed-rate mortgages and allowing states to refinance subprime mortgage loans. The financial crisis of late 2008 had a significant impact on Fannie Mae and Freddie Mac, two intended beneficiaries of the law, but certain provisions of the law have an impact even outside of the real estate sphere.

According to regulations from the Internal Revenue Service (IRS) that took effect in 2011, "payment settlement entities" must report payments made to merchants for credit card and other third-party credit transactions. "Payment settlement entities" are defined as banks and other financial companies that receive and process credit card, debit card, and other credit-based transactions for businesses (or "merchants.") This does not impose any additional tax liability, but rather requires reporting by these payment settlement entities of the amounts they pay to merchants, which could be companies of any size or even individuals who accept credit cards as part of their business activities. These reports are included in a Form 1099-K issued by payment settlement entities at the end of each calendar (or fiscal) year.

The important consideration for companies that accept credit card payments is this: reports by payment settlement entities do not include any credits, offsets, discounts, refunds, or other modifications made by the merchant for the customer. This means that the amount stated by the payment settlement entity on the 1099-K might not match the amount of income reported by the merchant to the IRS. The merchant then has the responsibility of accounting for the difference in the corporate or partnership tax returns or Schedule C of a personal 1040 form.

Continue reading "Federal Tax Law May Impose New Reporting Requirements on Any Business Accepting Credit Cards" »

The United States Supreme Court, which began its current term last October, is considering several cases that could have significant impact on small businesses in New York and New Jersey. An article published in Inc. last fall described five cases that directly affect small businesses and entrepreneurs. One of those cases, Sackett v. Environmental Protection Agency, addresses the question of when individuals or businesses can challenge administrative orders from a government agency. Ordinarily, one must first comply with the administrative order before challenging it in court. This can create an enormous burden on small businesses and individuals, who may have few resources remaining to marshal a defense of their rights.

Sackett deals with an Idaho couple, Mike and Chantell Sackett, who graded a lot and built a house in the northern part of the state in 2007, described as "their dream house near a lake." The Environmental Protection Agency (EPA) ordered them to stop construction immediately, alleging that their land was part of a wetland protected under the federal Clean Water Act. It further ordered them to perform remediation services on the lot by replacing vegetation and fencing off the site for at least three years. This would obviously deprive them of the use of their property, and it would constitute a significant financial burden for the couple.

The Sacketts had reportedly already conducted their own investigation and confirmed that their 0.63-acre lot was not a legally-defined "wetland." In order to challenge the EPA's order, however, they first had to comply with the order or face criminal prosecution and huge fines. The Sacketts brought a lawsuit against the EPA to request review of the agency's decision before they complied with its order.

The Sacketts lost their case in district court and in the Ninth Circuit Court of Appeals. The Supreme Court granted certiorari in June 2011, narrowing the question to whether or not the Sacketts could seek judicial review of the EPA's order before it is enforcement, and whether it violates the Due Process Clause if they cannot.

Continue reading "U.S. Supreme Court Report: Court Addresses Question of When Businesses Can Challenge Administrative Orders from the Government" »