An Employment Law Lesson Learned by a Gourmet Cookie Company

An Employment Law Lesson Learned by a Gourmet Cookie Company

Most employers know that it is illegal to discriminate in the employment process. Employment discrimination commonly occurs when an employee or job applicant is treated unfavorably because of his or her race, skin color, gender, disability, religion, or age, among other factors. It is also against the law to retaliate against an employee or job applicant who makes a claim of unlawful discrimination.

Many employers may be unaware of the law that prohibits discriminating against work-authorized, non-U.S. citizens when verifying their work authorization at the start of employment. The Immigration and Nationality Act (“INA”) prohibits discrimination against individuals who are otherwise authorized to work in the U.S., even if they are not U.S. citizens.

Mrs. Fields’ Original Cookies, Inc. recently learned the hard way that it may not discriminate against non-U.S. citizens when verifying their work authorization for employment. The U.S. Justice Department disclosed in December 2018 that Mrs. Fields had been requiring lawful permanent residents to provide specific documentation to prove their work authorization status, while not imposing that specific documentation requirement on U.S. citizens.

Under the INA, all work-authorized individuals, regardless of citizenship status, have the right to choose which document to present to employers, from a range of valid documents, to demonstrate their authority to work in the United States. In the employment context, work authorization typically arises at the point in the hiring process when an employer needs to verify an employee’s work authorization. This is accomplished by following the guidance under Form I-9.

Although all U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment, the INA provides a specific list of acceptable documents evidencing identity and employment authorization. An employer, as Mrs. Fields now knows, may not pick-and-choose what documents it will accept. Rather, an employer must accept any valid authorization document presented by an applicant.

Under the settlement reached with the Justice Department, Mrs. Fields will pay $26,400.00 in civil penalties to the United States and be subject to monitoring and reporting requirements.

What lessons may be learned from the Mrs. Fields experience? First, acknowledge that it is not desirable for an employer to create a recipe for employment verification that differs from the recipe set forth within federal law, to use a baking metaphor. Second, employers should be aware that all U.S. citizens, lawful permanent residents and other work-authorized individuals are protected from national origin discrimination in the workplace. Employers may not request more or different documents than are required to verify employment eligibility, as set forth under the I-9 process, with the purpose or intent of discriminating on the basis of citizenship or national origin. We suggest consulting with your employment law attorney with any questions or for a review of your hiring practices to make sure that they comply with applicable state and federal law.


Arbitration? What am I Gaining? What am I Losing?

Arbitration? What am I Gaining? What am I Losing?

You have probably heard the word “arbitration” before. Maybe you have purchased a consumer product and looked at the fine print to discover a reference to arbitration. Perhaps you have seen a reference to it in some other context. In some situations, such as a consumer product purchase, you may not have much of a choice when it comes to submitting any disputes to arbitration. In other cases, however, you may have some negotiating power over the terms of a contract you are a party to. For example, perhaps you are negotiating a contract with a homebuilder for the construction of your new dream home and you have come across an arbitration clause. In these and similar instances, it is to your benefit to have a basic understanding of the concept of arbitration and know what you are losing and what you are gaining by agreeing to submit your disputes, should they arise, to arbitration.

Arbitration is a form of alternative dispute resolution. In other words, it is a means of resolving disputes privately as an alternative to a formal lawsuit in court with a judge and jury. In arbitration, the judge is replaced by a private individual, usually chosen and paid for by the parties. Arbitrator rates vary widely and can range anywhere from a couple hundred in total to several hundred dollars per hour.

The benefit of an arbitrator, as opposed to a judge, is typically faster action on disputes that arise during the process. The arbitrator, unlike a judge with many other cases, will usually have more time to turn to your particular matter sooner. However, unlike a judge, who is funded by the taxpayers, an arbitrator’s bill can grow fast.

Another difference between arbitration and a formal lawsuit is the time between start and finish of the case. Lawsuits in court can drag on for months and oftentimes years. Arbitration, on the other hand, can be over in under six months or even sooner.

Arbitration moves faster than a formal lawsuit for a number of reasons. First, in arbitration, the parties are not competing for the court’s priority with hundreds, and oftentimes, thousands of other cases. Second, the arbitration process typically does not provide for beneficial tools known as “discovery” that help parties prove their claims and defenses. These discovery tools, including depositions, written questions, document requests, and more, while very useful in finding and fleshing out evidence, add time to the process. Because the tools are usually not available in arbitration, the process tends to move faster but it can also make it more difficult to prove claims and defenses if there is information you want from the other side.

Before agreeing to any contract with an arbitration clause included, you should consider consulting an attorney who can advise you further on these and many other advantages and disadvantages of choosing this method for resolving disputes with the other party or parties to your contract, should they arise.


Protect Your Rights After a Hit-and-Run

Protect Your Rights After a Hit-and-Run

When people envision an auto wreck, their minds usually go to an image of two crashed vehicles on the side of the road, and the police are present talking to the parties and witnesses to document what occurred. As a result, an accident victim can readily identify the at-fault party and insurance company to pursue compensation for his or her injuries and losses. However, in a hit-and-run, if the other driver is never identified, the accident victim obviously cannot identify a driver or insurance company to pursue. Therefore, in order to obtain compensation for injuries sustained in a hit-and-run, the accident victim must use his or her Uninsured Motorist coverage. This can make recovering compensation more complicated, as there are procedural pitfalls awaiting an accident victim.

While using Uninsured Motorist coverage (also referred to as “UM”) may seem counterintuitive, under Wisconsin law, one of the definitions of an “uninsured motor vehicle” is “an unidentified motor vehicle involved in a hit-and-run accident with another person.” Since Wisconsin law requires every automobile insurance policy sold in the state to contain UM coverage, every Wisconsin automobile insurance policy has protection for a hit-and-run (the amount of protection depends on the limits of UM purchased).

The “more complicated” part referenced above comes from policy language that imposes additional duties on the accident victim in order to utilize the UM coverage for a hit-and-run. While every insurance company and policy is different (and they are always changing), many policies require the person making a claim for a hit-and-run to notify the police and the insurance company in a timely matter. Some insurers only require the person “promptly notify,” while others have even more stringent requirements of 30 days or even 72 hours. As always, you want to read and follow your policy’s duties and deadlines to avoid the argument that you breached the policy and are not entitled to UM coverage. Therefore, in addition to the ever-present three-year statute of limitations that the claim must be brought within, the policy imposes its own obligations.

As if not already complicated enough, if you are injured in an accident in which the unidentified vehicle did not physically make contact with your vehicle (a/k/a “phantom motor vehicle”), a set of even more stringent requirements await you. For example: a driver comes over the centerline forcing you to swerve, your vehicle overturns and you are injured. In this type of scenario, Wisconsin law requires that: (1) the facts be corroborated by “competent evidence” provided by someone other than the insured or the person making the claim; (2) within 72 hours of the accident, a report of the accident is made to the police, peace or judicial officer, or the DOT (or equivalent in another state); and (3) within 30 days after the accident, a statement under oath is filed with the insurer setting forth the claim and facts in support of the statement.

Depending on your viewpoint, these obligations permit the insurance company the opportunity to investigate difficult claims timely, serve as a way for insurance companies to deny meritorious claims, or a little bit of both. Regardless, they are but one example of why it is so important to seek representation immediately after an accident. Even without these potential procedural pitfalls, an accident victim is likely to face a fight with the insurance company over liability for the accident and what compensation is owed. You do not want to be barred from even making a claim because of failure to comply with any policy and statutory requirements.


Seven Things You Need When You are Personal Representative of an Estate

Seven Things You Need When You are Personal Representative of an Estate

Being asked to wind up the affairs of a deceased loved one may feel like an honor, but the duties of a Personal Representative, or Executor, as the position is sometimes called, can also be complicated. If you have been named as Personal Representative in the Last Will & Testament of someone who has died, here are some things to keep in mind:

1. You Will Need Patience.
Being appointed takes time. Your nomination as Personal Representative does not give you authority to act on behalf of the estate. Before you can act, you will need to file an application with the probate court to request that you be appointed. You will be required to file a number of documents to open the administration, and will be appointed only after all interested parties, heirs, and beneficiaries have been given notice of the proceedings and any applicable waiting periods have passed. The process and time frame varies depending upon the number of heirs and beneficiaries, and whether any party raises an objection to the Will or to your appointment as Personal Representative. In the meantime, you will not have authority to pay bills, secure property, or handle administrative tasks for the estate.

2. You Will Need Help.
You will often need the assistance of an attorney to prepare the initial required filings and help you through the remaining probate process. The required legal filings can be complicated. In addition, you will need legal advice regarding claims filed against the estate, tax issues, distribution methods, or objections by beneficiaries. Your attorney can coach you through legal questions and situations as they arise. He or she can also conduct research on specific matters and look over or prepare paperwork before filing.

3. You Will Need Information.
Before initiating the probate process, you will need information about the decedent’s assets and the original Last Will & Testament. Not all estates are subject to probate. If the deceased named direct beneficiaries on his or her life insurance, bank accounts or retirement accounts, for example, these assets will not need to go through the probate process. How assets are titled matters in determining what procedures will be necessary to handle the decedent’s affairs. If you don’t have very much information regarding assets and expenses, an attorney will not be able to tell you which procedures can be used until you gather more information. It may be necessary to sort through files and go through all of the decedent’s paperwork before you can begin the process.

4. You Will Need Time.
Administering an estate is very time consuming. It will take several months to administer a basic estate, and much longer for complicated estates. In Wisconsin, there is a three month period after the estate has been opened, during which creditors may file claims in the estate. In addition, the estate will need to remain open until all assets, including real estate, are liquidated and transferred. This may mean waiting several months to a year or more for real estate to be sold. Being a Personal Representative can feel like a “second job” as you spend time making phone calls to obtain information from banks, mortgage servicers, investment firms, and life insurance companies and schedule meetings with financial advisors, realtors, accountants, and attorneys. You may need to sort through and dispose of years of accumulated paperwork and personal property, often while dealing with other grieving family members who also have an interest in personal property and sentimental items.

5. You Will Need Excellent Skills.
You must have good organizational and financial skills. Personal Representatives are required to keep very good records and provide an accounting to the probate court for all expenditures. You will need to keep meticulous records of financial transactions, as well as communications with attorneys, accountants, bankers, and other contacts. If you hate the thought of balancing your own checkbook, and happily relinquish financial tasks in your household to your spouse or partner, you will have difficulty dealing with the tasks of a Personal Representative. In that case, a good Personal Representative will enlist the help of professionals to organize the estate’s finances.

6. You Will Need Money.
As Personal Representative, you will likely incur expenses during the administration of an estate, such as travel, mileage, postage, etc. Fortunately, you are entitled to be compensated for out-of-pocket costs. You are also entitled to compensation in the form of a Personal Representative’s fee, typically 2% of the value of the estate. Be prepared, however, that heirs do not always understand the amount of time involved in administering an estate, and the Personal Representative’s fee may become a source of conflict. While the law allows the fee, many Personal Representatives feel uncomfortable accepting payment.

7. You Will Need to Fulfill Legal Duties.
Personal Representatives have a duty under the law to properly administer the estate. Personal Representatives are required to complete certain duties, such as paying administration and funeral expenses, publishing notices to creditors, filing tax returns, providing notice to heirs, and following the distribution instructions as set forth in the decedent’s Will. The law also provides a time frame in which these tasks must be completed. In addition, you have a legal duty to properly value assets and make sure that heirs receive the inheritance to which they are entitled.

The role of Personal Representative of an estate requires time, patience, and the organizational skills to deal with a somewhat overwhelming amount of legal and financial documents. With this information, we hope that you are more prepared to handle the responsibility of being Personal Representative. Please note that Anderson O’Brien Law can assist you in the process of administering an estate.


Trust Settlements – How to Navigate the Process

Trust Settlements – How to Navigate the Process

Regardless of the type of estate plan you have set up, if someone passes away, there are a number of matters that will need to be addressed. A trust sets up the terms for how a trustee should administer the affairs and assets of the deceased. Below are discussion points for some of the most common matters associated with the trust settlement process.

If there is an original last will and testament, it should be filed with the Register in Probate in the county of which the deceased was a resident prior to passing. Whether there is a trust governing disposition of assets or not, filing the original last will and testament is required under Wis. Stat. § 856.05(1).

A creditor claims notice should be published in the newspaper to bar creditor claims after the notice period. (Of course, there are certain exceptions to what types of creditors’ claims would be barred which I am not going into here.) Debts of the deceased should be paid. Often, there are many medical expenses that have been incurred immediately prior to passing. Those types of expenses have priority to be paid and should be paid promptly. Likewise, funeral/burial expenses have priority (to be paid) and should be paid promptly.

Credit Cards and Credit Bureaus
If there are credit cards in the deceased’s name, those companies should be contacted and provided a death certificate so that no additional charges can be made to those cards. Once those credit card accounts are settled and closed, all the deceased’s credit cards should be destroyed or discarded. Similarly, to avoid additional credit and fraud issues, the three credit bureaus (Equifax, Transunion, and Experian) should be notified of the deceased’s passing. This will prevent credit from being issued in the deceased’s name or with the deceased’s social security number.

Real Estate
If there is real estate in the deceased’s name, the real estate will need to be transferred from the deceased’s name. The method used to transfer the real estate in the deceased’s name will depend on how the real estate is titled. For example, if the real estate is titled in the name of both spouses as survivorship marital property, a termination of decedent’s interest form will need to be recorded with the appropriate register of deeds office. If the deceased owned the real estate solely in his/her name, then someone will need to have authority to sign a deed to transfer the real estate. Usually this person is the personal representative who has been appointed by the register in probate to settle the affairs of the deceased. Alternatively, if real estate is titled in the name of the trust, then the trustee of the trust will have authority to transfer the real estate. Some trusts require the real estate to be distributed directly to beneficiaries or may require the real estate to be sold. There is no single sure-fire method to remove the deceased’s name from the real estate and/or to transfer the real estate to the deceased’s beneficiaries. If there is real estate in the deceased’s name, it is better to take care of this as soon as possible. Leaving real estate in the deceased’s name for many years will only make resolving the situation more complicated. If real estate tax bills are still coming in the deceased’s name, this is an indication that something needs to be taken care of. It is recommended that you consult your estate planning attorney to discuss how to address real estate titled in the deceased’s name or in the deceased’s trust to ensure the provisions of the trust are complied with.

Bank Accounts
If there are bank accounts in the deceased’s name, you will need to know if: (a) those accounts have joint owners listed, (b) those accounts have any pay-on-death designations, or (c) those accounts are in the deceased’s name solely. If there are joint owners, then they are the owners of the account and the deceased’s name can simply be removed from the account. If there are pay-on-death designations, then those pay-on-death beneficiaries would own the account. If the bank accounts are in the deceased’s name only, a probate may be required to transfer those accounts to the deceased’s beneficiaries. If the accounts are in the name of the deceased’s trust, it is important to consult the trust document to make sure that the trust provisions are being followed. Some trusts may require distributions to beneficiaries or to other trusts created under the original trust.

Appraisals and Date of Death Valuations
Generally, real estate in the deceased’s name or deceased’s trust should be appraised to obtain a date of death value. The reason to obtain an appraisal is to take advantage of the step-up in basis rule. The step-up in basis is an adjustment to the value of an asset (usually an appreciated asset) for tax purposes. When an asset is distributed to a beneficiary, the asset is usually worth more than what the deceased paid to acquire it. The appraisal will assign a new basis to the asset so that if the beneficiary later sells the asset during the beneficiary’s life, the beneficiary’s capital gains tax is minimized or eliminated entirely. In conclusion, by having reliable appraisals and valuations completed, the beneficiaries will be able to take advantage of the step-up in basis rule.

Some think that because they have a trust, everything happens automatically. However, the trust settlement process requires involvement in addressing matters such as debts, real estate, wills, and more. If you find yourself in need of help navigating this process, contact our estate planning attorneys at Anderson O’Brien Law.


Buy-Sell Agreements: Working for the Best and Planning for the Worst

Buy-Sell Agreements: Working for the Best and Planning for the Worst

However optimistic you are about the future of your business, the reality is at some point your business will either end or change hands. A thorough business plan takes this into consideration. The best-case scenario is after many years of success, your business partners or a successor will fund a comfortable retirement for you by purchasing your interest in the business. The worst-case scenarios generally involve death, disability, divorce, disagreement or bankruptcy of you or your business partners. From the best-case to the worst, both you and your business may benefit from having a Buy-Sell Agreement in place.

Buy-Sell Agreements are sometimes called “business pre-nups” because they serve a similar function to the agreements soon-to-be married couples enter into which direct how their assets would be divided upon their death or divorce. Buy-Sell Agreements are binding contracts which spell out who business owners can sell their interests to, on what terms, and how the price will be determined. When the business is going well, and all the owners are getting along, it is much easier to agree on equitable terms than when tensions are high at the time of a buy-out and parties have little incentive to negotiate fairly. By discussing issues in advance and setting the ground rules for what happens upon the occurrence of certain events, business owners can avoid future arguments and limit the potential for expensive litigation down the road.

Starting with the best-case scenario, a voluntary retirement from a successful business, Buy-Sell Agreements can help define an exit strategy and ownership succession. The value of a business is not always clear and can be calculated in different ways with a wide range of potential results. The Agreement can state which valuation method will be used for the exiting owner’s share of the Company. The Agreement can also help define the structure of the exit to minimize taxes or allow them to be paid over time. For business owners hoping to fund a large part of their retirement using these proceeds, not knowing their buy-out price or tax burdens in advance can seriously jeopardize their ability to plan for retirement. These Agreements also are helpful in getting owners to think about who their buyers may be. As the Baby Boomer generation is entering retirement age, there will be a lot of small business owners looking to sell, and the market for willing and able buyers may be strained. If a buyer must be found unexpectedly or on short notice, the purchase price will likely be much lower than the true value.

As great as you and your business partners may get along now, it is possible at some point business or personal disagreement will rise to the level where one of you will be forced to leave the business. Business owners may also unexpectedly exit the business for reasons like a desire to focus on their families, illness of themselves or a loved one, or moving out of the area. In these situations, you and the exiting owner may have different opinions about what fair buy-out prices and procedures would be. In the absence of an Agreement, these disagreements can escalate quickly and may result in litigation. By having the Agreement in place, the emotional impact of dispute and the tendency for people to believe they are being treated unfairly is checked by being able to look to an agreement everyone consented to beforehand for how the exit will take place.

Even if you and your business partners are lucky enough to always agree, events outside of your control, such as an owner’s death, divorce, disability or bankruptcy, can lead to uncertainty as to who ends up with control of the business. When an owner dies, his or her share passes to their heirs. This often results in the spouse or children of a deceased business partner either wanting to participate in the business or, more commonly, wanting their proportionate share of the business earnings without having to work for them. Divorce can lead to a similar situation, and a court may order the business interest divided between divorcing spouses. If a business owner becomes disabled and unable to contribute to the business, their interest may become a burden on the other owners. Buy-Sell Agreements also often contain provisions for what happens if an owner becomes involved in criminal activity or becomes mentally unstable. If a business partner goes bankrupt, potentially for reasons having nothing to do with your business, creditors may be able to pursue their business interest to pay off what they are owed. Each of these situations result in either an unwanted business partner or an unexpected party demanding the value of the interest they now possess. A Buy-Sell Agreement can give the remaining owners rights to force out owners who have become a liability or purchase interests at a determined price to prevent heirs, ex-spouses, or creditors from gaining control. These goals are often accomplished by terms which give the remaining owners the first option to purchase any interest transferred from an owner for a price determined in the agreement. The source of funding the buy-out can vary, but is often a life insurance policy, which ensures available funds to buy the interest from the owner’s heirs.

Whatever the future holds for you and your business, a Buy-Sell Agreement can help make sure you are prepared for it. If your business already has a Buy-Sell Agreement in place, it may be time to review the document to make sure you understand it and that it still meets the needs of your business. An Agreement drafted for a start-up may no longer suit a business which has grown or added new business partners.


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