Business and Corporate

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On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “ARRA”), the comprehensive economic stimulus package. Among its other provisions, the ARRA includes an extension of the right to elect COBRA coverage, a reduction in COBRA premiums for eligible participants, and new notice obligations for employers.
Continue Reading American Recovery and Reinvestment Act of 2009: New COBRA Rights and Obligations

The federal First Circuit Court of Appeals recently rejected a taxpayer’s claim for a refund based on recharacterization of a payment for a non-competition agreement. Muskat v. United States, 2009 WL 211067 (1st Cir. 2009).

In connection with the sale of a business structured as an asset sale, the Buyer and the CEO (who was also the largest shareholder of the Seller) agreed in definitive documents that $1.0 million of the retained CEO’s new compensation package would be allocated to his non-compete covenants. Although the CEO initially recorded that payout as ordinary income for his 1998 taxes, in 2002 he filed an amended return for 1998, recharacterizing the $1 million payment as consideration of his personal goodwill, which he argued entitled him to capital gain treatment (which would have entitled him to a refund of over $200,000). The IRS denied Muskat’s request so he brought an enforcement action against the IRS. The district court, too, denied his request, finding that Muskat lacked “strong proof” that the non-competition payment was intended as payment for personal “goodwill” rather than as a covenant not to compete.Continue Reading A Taxpayer’s Post-Closing Remorse Relating to Tax Allocations

Offers and sales of “securities” must be registered unless there is an applicable exemption from the federal and state securities laws. The most commonly known exemption is the private placement exemption set forth in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933 (and corresponding private placement exemptions under applicable state “blue sky” laws).

Regulation D was primarily designed to facilitate capital raising transactions, as opposed to employee stock option or stock purchase plans. Many people are unaware that when an employer (or controlling Shareholder) sells stock to an employee (even at a discount, or even if to an executive), such a sale is subject to the securities laws and applicable federal and state exemptions from registration must be found.Continue Reading New Louisiana Regulation Creates Safe Harbor For Certain Equity-Based Compensatory Plans of Privately-Held Companies

Historically, the IRS has said that a disregarded entity could (and maybe should) use the owner’s taxpayer identification number for income and other tax purposes. For employment tax reporting, the IRS issued Notice 99-6, 1999-1 CB 321 , which said that employment taxes for employees of a disregarded entity could be reported by a disregarded entity in one of two ways:

(1) Calculation, reporting, and payment of all employment tax obligations with respect to employees of a disregarded entity by its owner (as though the employees of the disregarded entity are employed directly by the owner) and under the owner’s name and taxpayer identification number; or

(2) Separate calculation, reporting, and payment of all employment tax obligations by each state law entity with respect to its employees under its own name and taxpayer identification number.Continue Reading IRS Requires Employer Identification Numbers for Disregarded Entities Beginning in 2009

On May 19, 2008, OSHA Directive Number 08-03 became effective. That directive provides the criteria by which OSHA will conduct the 2008 Site-Specific Targeting (“SST-08”) plan. OSHA’s SST program is the main programmed inspection plan for non-construction workplaces that have 40 or more employees.

OSHA’s SST-08 plan has three listings of “establishments” that will be targeted. The focus of the agency’s unannounced comprehensive safety inspections under SST-08 are approximately 3,800 high-hazard workplaces contained on OSHA’s Primary List.  The workplaces on the Secondary List and Tertiary List will only be inspected pursuant to SST-08 if all of the workplaces on the Primary List are inspected.Continue Reading OSHA Site-Specific Targeting of 3,800 High Hazard Workplaces Recently Announced

In New Investment Properties, L.L.C. v. ABC Company, et al, 2007 W.L. 4305464 (4TH Cir. 2007), the Court of Appeals addressed the range of personal jurisdiction. Like that of a shepherd’s crook, the court exercised personal jurisdiction over a non-resident defendant. Plaintiffs, New Investment Properties, L.LC. and Creek Apartments Team, L.L.C. (“Creek Apartments) are both Louisiana corporations and the owners of two apartment complexes in New Orleans. Defendant, R. P. Beckendorf, is a California corporation with its principal place of business in Los Angeles. It is an independent insurance agency which obtained flood and wind policies for an apartment complex. The policies were delivered to the Champion Group, Inc., which is a California corporation with its principal place of business in Los Angeles.   The two managers of the plaintiffs are both residents of California, who are also managers of the Champion Group in California.
Continue Reading Where You May Be Doing Business – The Personal Jurisdiction Snare

On January 22, 2008, in Allen v. Administrative Review Bd., ____ F.3d ____, 2008 WL 171588 (5th Cir. 2008), the United States Court of Appeals for the Fifth Circuit (the federal appellate court circuit that includes Louisiana, Mississippi, and Texas) issued its first ruling addressing the employee whistleblower protections provided by the Sarbanes-Oxley Act (“SOX”). In the Allen ruling, the Fifth Circuit interpreted the scope of “protected activity” under SOX narrowly. Hopefully, this trend will continue and this new whistleblower protection for employees of publicly-traded companies will not be unreasonably broadened by the courts.
Continue Reading Fifth Circuit Issues First Opinion Regarding A Sarbanes-Oxley Whistleblower Complaint

The Louisiana Fourth Circuit Court of Appeal recently held that the single business enterprise theory may apply in a breach of contract case.

The single business enterprise theory, a jurisprudential theory under which one or more entities affiliated with another entity may be held liable for such other entity’s debts or liabilities, was first recognized in Louisiana by the First Circuit Court of Appeal in 1991 in the case of Green v Champion Insurance Co. This theory is somewhat unique to Louisiana and greatly erodes traditional corporate laws which generally shield shareholders and affiliated entities from the debts or liabilities of a corporation or other entity.   Although the Louisiana Supreme Court has not expressly adopted the single business enterprise theory, it has had opportunities to repudiate or criticize such a theory but has not done so; and as a result, other appellate courts in Louisiana have continued to invoke the theory.Continue Reading Single Business Enterprise Theory Continues to Gain Ground

GENERAL DUTIES OF EMPLOYERS

Louisiana Revised Statutes 23:1306: requires employers to notify the Office of Workers’ Compensation within ten (10) days of actual knowledge of an injury resulting in death or lost time in excess of one week after the injury. This rule applies even if no claim for workers’ compensation benefits has been filed.

Ø    The form generally used for this purpose is a Form 1007 Employer First Report of Injury/Illness (a copy of which is attached for your ready reference).

Ø    If an employer elects not to use the Form 1007, he must provide, at the minimum, the following information: (1) The name, address, and business of the employer; (2)  The name, Social Security number, street, mailing address, telephone number, and occupation of the employee; (3) he cause and nature of the injury or death; (4) The date, time, and the particular locality where the injury or death occurred; (5) The wages, as defined in R.S. 23:1021(10), the worker was earning at the time of the injury.

Ø    All information and records submitted pursuant to this Section shall be confidential and privileged, shall not be public records, and shall not be subject to subpoena. However, such information or records may be used to compile statistical data wherein the identity of the individual or employer is not disclosed.Continue Reading Summary of Louisiana Workers’ Compensation Laws