Go Buy An Umbrella

Go Buy An Umbrella

The above title is not encouraging you to buy something to protect you from the rain! It refers to purchasing an umbrella insurance policy to protect you and your family from liability claims, and to provide you with ample coverage for your losses due to injuries sustained in an auto accident. The typical cost for a $1,000,000 umbrella policy can be as little as $200 or $300 per year. This is a bargain for an additional $1,000,000 in protection.

As attorneys, not only do we represent clients, we also counsel them. One of my favorite topics to discuss with clients is having adequate insurance, including the purchase of “umbrella” coverage. This coverage refers to an extra layer of protection on top of your existing insurance coverage, of at least $1,000,000 or more, to protect you in case you have personal liability in an auto accident or under your homeowner’s policy. The umbrella policy you purchase should also include an endorsement to apply to your underinsured and uninsured motorist coverage on your automobile insurance policy. Some insurance companies may offer an umbrella policy you can purchase, and some may not. Some insurance companies may sell you an umbrella policy that applies to liability coverage only, for example, if you are at fault under your homeowner or auto policy. However, you need to consider being insured by a company that offers an umbrella policy that covers liability and has an endorsement to cover underinsured and uninsured motorist coverage in case you sustain serious injuries in an auto accident. You need to specifically ask for all three of these protections to have the best protection possible.

The reason for having an umbrella policy is to simply provide a significant increase in insurance coverage for a very low cost. In our practice, we see all types of auto accidents, and homeowner’s liability issues, and the first thing we ask our clients when they come to us is what type of insurance is available from the other party, and from our client. All too often we must tell our clients that the person who ran into them with their vehicle either had no insurance, or minimum insurance limits. We then look to our client’s insurance policy for potential additional coverage, and if they have low underinsured or low uninsured coverage there may be very little we can do to obtain compensation for our clients for their significant losses. Given the high cost of medical care, injured parties can easily sustain tens of thousands or hundreds of thousands of dollars in medical bills, in addition to significant wage loss and potential permanent disability preventing future earnings. If you have an umbrella policy of at least $1,000,000 that applies to liability and uninsured motorist coverage and underinsured motorist coverage, you will have a better chance of protecting yourself and obtaining full compensation for your injuries.

In summary, go buy an umbrella policy to protect yourself and your family. In order to give yourself full protection, you need to tell your insurance agent that you need the umbrella policy to cover (1) liability for home and auto, and (2) an endorsement so that the umbrella applies to your underinsured and uninsured automobile coverage. If you have any questions about an umbrella policy, please feel free to contact me and I will be happy to discuss it further with you.

 

Returning to Work After a Work Comp Injury

Returning to Work After a Work Comp Injury

Absent the lucky few, most Wisconsin workers are considered “at-will” employees. This means absent exceptions for unlawful discrimination (e.g. race, gender, age, religion, etc.), a worker can be fired for any reason, or no reason at all.  However, worker’s compensation injuries are another exception to this “at-will” presumption that makes a work injury a protected category.

Under Wisconsin’s workers’ compensation law, Wis. Stat. § 102.35(3), an employer (at time of injury) who terminates, or unreasonably refuses to rehire, an employee after a work injury is subject to a penalty of up to one year’s lost wages. The purpose behind this law is to dissuade discrimination against employees who have been injured on the job and, assuming there is work available within the worker’s restrictions, make sure the injured worker gets back to work with his former employer. This is yet another outgrowth of the bargain struck between workers and employers under Wisconsin’s worker’s compensation regime:  workers do not get to sue their employers or co-workers for injuries, but they are entitled to a system of no-fault benefits and job protections.

When returning to work, there is a distinction between returning while still healing with temporary physical restrictions versus returning to work with permanent physical restrictions. An employee must provide notice to their employer of any temporary (as well as permanent) restrictions. If the employer can provide work within the temporary restrictions at the same rate of pay, no temporary disability is owed; if the employer can only provide work at lower wages or less hours, the worker is owed temporary partial disability; and, if the employer cannot provide any work, the employee is owed temporary total disability. If an employer terminates a worker while they are still healing, the worker has an unreasonable refusal to rehire claim.

When an injured worker reaches an end of healing or “healing plateau,” the treating physician may assign permanent physical restrictions along with any permanent disability percentage. If the worker is provided permanent work restrictions, they must provide the same to their employer. Under Wis. Stat. § 102.35(3), the employer must offer “suitable employment…within the employee’s physical and mental limitations.” If the worker’s permanent restrictions allow return to their same job at the time of injury, they should be offered it. However, the employer must offer any suitable position available even if different than the position the worker had at the time of the injury. Only when there is truly no work available within the worker’s restrictions can the employer refuse to rehire the injured worker. The employer, not the employee, bears the burden of proving the lack of suitable employment.

The above is not meant to suggest that there is an absolute unassailable right to return to work for the same employer following a work injury. When determining whether there is “suitable employment,” the statute allows for consideration of “the continuance in business of the employer.” This gives rise to the employer’s argument that the nature of business or economic situation dictated its refusal to rehire the injured worker, not the work injury.

Unsurprisingly, these are highly fact-dependent issues and claims. Moreover, unreasonable refusal to rehire penalties are paid by the employer, not the work comp insurance company, which means they are hotly contested and litigated. The above is only a brief snapshot and is not meant to cover all the variations that accompany return-to-work decisions after a work injury; if you have questions, do not hesitate to reach out to one of our worker’s compensation or employment law attorneys.

 

Legal Considerations for Running a Business from Home

Legal Considerations for Running a Business from Home

The past decade has seen a steady increase of businesses being run from individual’s homes and the changes brought about by the Covid-19 pandemic have only increased this trend. Whether a “side-hustle” or primary source of income, business owners should carefully consider the legal and tax rules at play before opening their homes for business.

In addition to aspects relevant to all businesses, those operating a business from home must consider: (1) relevant property restrictions, (2) home business tax deductions, and (3) special liability and insurance considerations.

Property Restrictions

Property restrictions should be among the earliest factors analyzed, ideally before expenses are invested into the venture, as municipal zoning or private land restrictions may flatly prohibit the at-home business altogether.

Counties and municipalities enforce zoning restrictions which classify large swaths of land under different rules for use. These zoning programs are intended to organize land use in a planned and practical manner. For example, zoning codes may protect the interests of quiet suburbs by prohibiting the construction of multi-unit apartments or noisy factories in the area. While every local government unit has their own approach to zoning, generally, larger communities have more specific, restrictive, and regularly enforced zoning programs than smaller ones. Depending on your local rules, your home may be in an area which prohibits commercial activity. Whether your planned business falls under the relevant rules can only be determined by checking to see how the local codes define and restrict commercial use. Faced with an adverse zoning designation, you may be able to apply for a variance – a special exception to the zoning rule applied for and reviewed on a case-by-case basis.

Your use of the home may also be subject to private land-use restrictions. Most obviously if you rent your home, your lease may restrict your ability to operate a business from the property. If you have a good relationship with your landlord, they may be willing to amend the lease, as the inclusion of commercial use restrictions in the lease is often the result of a landlord using a form document, not their particular objection to you using the property that way.

Homeowners are not necessarily free from private party restrictions, as many properties are subject to restrictive covenants. These documents are essentially private contracts that were put into place by former owners and whose terms automatically pass on to new owners of the property. Some neighborhoods form Homeowner Associations to enforce these covenants. Others do not, but still allow any property owner, also subject to the covenants, to sue for their enforcement. Make sure to read your restrictive covenants carefully before opening a business. In addition to restrictions on business operations, check the rules for signage restrictions and parking and guest vehicle restrictions if clients will be visiting your home office. If the covenants restrict the type of activity you plan to perform, check to see what process is available for amending them.

Taxes

Assuming no land use restrictions prevent you from operating the business from your home, you will want to ensure you are taking maximum advantage of any available tax saving options. When considered during the onset of a new business, these tax rules may influence how you choose to organize running the business from your home.

Businesses are entitled under the tax code to deduct necessary and ordinary business expenses from their taxes. For example, if a business purchases a couch for their waiting room and hires a cleaning service to maintain it, this will typically be deductible as a business expense. If an individual purchases that same couch for personal use and hires the same cleaning crew to clean their home, this expense is not entitled to deduction. Because of a home business’s inherent melding of business and personal use expenses, the rules for home office deductions are somewhat complex. This article will review in broad strokes how these rules operate, but a qualified tax accountant or attorney can help guide you through the nuance of your particular situation. While no substitute to qualified professional advice, Reviewing IRS Publication 587 may also be a good start to understanding the basic rules at play.

The first step towards taking advantage of these tax benefits is to qualify for the deduction. Generally to qualify, a part of your home must be used exclusively and regularly for business purposes. As an example, using your living room couch as a place to sit when you check email is unlikely to qualify. Special variations of the general rules exist for unattached separate structures, space used for storage of inventory, daycare facilities or property used for rental purposes. Like most areas of law, the qualification tests are deceptively simple, and careful attention must be paid to how the rules define each word in a given test.

Assuming you qualify to take the deduction, the next step is to calculate the amount of the deduction. Here, you have a choice for each year you claim the deduction, either use a calculation for actual expenses or elect to use the simplified method offered by the IRS. Whatever your method of accounting for the deduction, make sure to keep adequate records to support your claims if you are challenged by the IRS. Your records should be maintained as long as the facts they support may still be challenged. For tax purposes, this usually is three years following the date that year’s tax return was filed.

Liability and Insurance

A lawsuit can wipe out years worth of income if proper precautions are not taken by a business owner and running a business from the home introduces unique risks. These risks are compounded if you have business clients or employees of the business meet or work at your home.

Like all business owners, a home business operator should consider forming a Limited Liability Company (LLC), Corporation or other form of limited liability business entity to operate their business out of to shield their personal assets from any suits made against their business.

To the extent possible, anyone entering your home for business purposes should remain in the portion of the property used for the business, as an injury occurring in another part of the home may blur lines between a business contact of your LLC and a house guest to whom you are personally liable for. It may be difficult to argue a personal injury lawsuit should be limited to your LLC when the injury was a result of tripping over a toy left in the living room by your child.

Even with proper limited liability entity planning, the assets of the business inside the entity are still subject to the suit and may be a devasting loss if liquidated to pay a settlement or judgement. Thus, insurance on the business is the first line of defense to maintain your assets, with the limited liability entity planning serving as an emergency flood wall against a disastrous lawsuit wiping out your entire estate. Most homeowner’s carry homeowner’s insurance, but these policies may not cover damages flowing from business use of the property. You should consult with your insurance provider to make sure you are appropriately covered and whether you need a supplemental business insurance policy. In addition to liability coverage, if your business owns expensive equipment or large amounts of inventory stored in your home, consider loss coverage to fund the replacement of those assets in the event of a flood, theft, or fire. Like with liability coverage, homeowner’s coverage for your personal assets will be unlikely to cover the garage full of business inventory that is damaged, destroyed or stolen without additional coverage options. If you have questions, do not hesitate to reach out to one of our business or tax law attorneys.

 

Non-Compete Agreements Are Ripe for Review

Non-Compete Agreements Are Ripe for Review

As many employers and employees know, non-compete agreements are fast becoming a centerpiece of many employer-employee relationships. A non-compete may not only protect a company’s confidential information from disclosure, but also restrict an employee who leaves to work for a competitor. Non-competes may also describe the duration of such restriction and geographic limitations.

Employers favor such restrictions because they protect their business interests in relation to their competitors. Employees dislike such restrictions, because they inhibit their practical choices when they leave one employer for another. Courts tend to look suspiciously at non-compete agreements because they limit the free flow of labor resources across the broader economy. Yet, when non-compete agreements are carefully drafted, they have been upheld by state and federal courts.

It may soon be time for employers to review their non-compete agreement due to a new presidential executive order that asks the Federal Trade Commission (FTC) to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

Each state has its own rules that regulate how far non-compete agreements can go in restricting the movement of former employees. Wisconsin’s rules regarding non-compete agreements are found in § 103.465, Wisconsin Statutes. Wisconsin law requires non-compete agreements to be properly limited in duration, scope and geographic area, among other limitations.

What role will the FTC play in changing the non-compete landscape? Most observers believe the agency will first conduct a state-by-state review of non-compete agreements. Then the FTC is likely to propose limits on the types of professions that may be subject to non-compete agreements.

As the landscape for non-compete agreements undergoes federal examination and likely recommendations for changes, employers and employees are well advised to consult with their attorneys for the latest developments with respect to the enforceability of non-compete agreements in Wisconsin and across the nation.

 

Will You Be My Guarantor?

Will You Be My Guarantor?

One of the questions you may be asked in your lifetime is to be a guarantor. This request may come from a family member or even a friend that needs someone to be a guarantor for a lease, loan, etc. Your first thought may be to agree right away to help that individual but, there are many things you should consider prior to becoming a guarantor.

It is important to understand that as a guarantor you are making yourself financially responsible for the obligations of the individual if they fail to perform. Often the Landlord or Lender requires a personal guarantor to provide an extra level of protection to ensure they are paid what they are owed. This likely means the individual does not meet their rental or loan criteria and is considered high risk. Therefore, the Lender or Landlord is looking to protect their interests by having a more qualified person guarantee to fulfill the financial obligations of the individual in the event they are unable to satisfy the prescribed conditions.

Since you are making the commitment to be financially responsible for the obligations of another, you should consider some of the following items prior to becoming a guarantor. To begin with, you should consider the individual’s financial situation. Are they reliable and dependable? Are they able to handle their own bills? These are questions you will want to consider, because depending on the individual’s financial situation, you may be putting yourself at a greater risk than you are aware of.

In relation to knowing the individual’s financial situation you should also take a second to consider your own financial situation. It is wise to consider whether you would be financially able to fulfill the obligations of the individual in the event they fail to perform. If you would not be able to handle the financial obligations of the individual, then you should not be their guarantor.

Additionally, you should be attentive to the underlying document that you are being asked to guarantee. If you are asked to be a guarantor on a lease, that is typically only a year-long commitment. However, if you are asked to guarantee on a car loan or mortgage, then you could be taking on this extra financial responsibility for seven, fifteen, or even thirty years. It is important to consider the underlying document for the guarantee so that you understand how long you are committing to taking on this additional financial responsibility. Moreover, you should consider how this extra financial responsibility may impact your own debt to income ratio and thus your own ability to get a loan or mortgage in the future.

Another item you should consider is what type of guarantee the Landlord or Lender is expecting you to provide. Is it a limited or unlimited guarantee? If it is limited, then there is usually a set amount that the Landlord or Lender will be able to collect from you as the guarantor. However, if it is an unlimited guarantee then they would be able to recover the entire amount from you as the guarantor. It is very important to understand the type of guarantee that you would be providing before you become a guarantor.

These are just a few items you should consider before becoming a guarantor. In light of the substantial financial responsibility of becoming a guarantor, it is advisable to seek the advice of a business law attorney before executing any type of personal guarantor. An attorney will be able to analyze your situation and the requirements of the personal guarantee, in order to advise you on the risks and best course of action with regards to becoming a personal guarantor.

 

The “Right to Be Heard” in Wisconsin Criminal Proceedings and the Impact on Your Car Crash Case

The “Right to Be Heard” in Wisconsin Criminal Proceedings and the Impact on Your Car Crash Case

Those who have the terrible misfortune of being injured in a car wreck involving a drunk driver or a hit and run driver, often find themselves having to navigate the criminal justice system as well as the civil justice system. Since the former almost always takes place before the latter, accident victims face potential pitfalls by giving an early statement to the at-fault insurance company.

Any attorney will tell an accident victim not to speak with the at-fault insurance company after an accident for a myriad of reasons. These reasons include:
1. The conversation will be recorded.
2. It is always very soon after the crash before any investigation is complete or the victim has seen the crash report.
3. The victim does not yet know the full extent of their injuries or prognosis.
4. The victim does not have a lawyer present to assist them.
All these reasons also apply to a criminal court proceeding that may follow an accident.

Last spring, Wisconsin voters passed an amendment to Wisconsin’s constitution expanding crime victims’ rights, commonly referred to as “Marsy’s Law.” While the amendment included numerous provisions, one provision included the right “to be heard in any proceeding during which a right of the victim is implicated, including release, plea, sentencing, disposition, parole, revocation, expungement, or pardon.”

This amendment expanded victim involvement and statements to earlier phases of the criminal proceeding. Judges are specifically asking at early stage hearings, such as bond hearings or initial appearances, if there are any victims present who want to provide statements. These hearings take place soon after the accident and often before the victim has retained counsel for the case. The accident victim, justifiably, is angered that they have been injured and want the judge to know. However, the circumstances of these early statements give rise to many of the same concerns that attorneys have with accident victims talking to the at-fault insurance company soon after the accident.

First, the statements are being recorded by the court reporter, and while not under oath, there is an implied solemnity to statements made to the Court. Second, the victim has likely not seen the crash report or does not know the results of the investigation of the crash. Just like a statement to the insurance company a few days after the crash, no one wants to be locked into what happened with incomplete facts. Third, at this early juncture, the victim will have just started to treat for their injuries and will not know the full extent or diagnosis. What is a neck strain at the ER following an x-ray may turn out to be a disc protrusion needing surgery once an MRI is performed a month later.

In a civil accident case, the insurance company will likely learn about any statements the victim has made to the Court, obtain the transcripts, and use them to impeach and discredit. None of this will be because anyone was dishonest; instead, they simply did not yet have the full picture of the crash and injuries. Just as a recorded statement taken mere days after the crash can be a goldmine for the insurance company, a court transcript recorded mere days after the crash can provide the same.

Importantly, this is not a suggestion that accident and crime victims avoid invoking their right to be heard at criminal proceedings. Rather, this is another illustration of why it is important to get counsel involved soon after a crash so they can help navigate both the civil and criminal justice system and make sure justice is obtained in both. 

 

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