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Don’t Mess With Texas – Part II – DOL Salary Rule Nixed

A few months ago, the Federal Court in the Northern District of Texas issued a nationwide injunction on the FTC’s non-compete regulation.  Well, the Federal Court in the Eastern District of Texas wanted to step in and play as well.  On November 15, 2024, the Court struck down the U.S. Department of Labor’s (DOL) rule that raised the minimum salary required to be paid to most employees classified as exempt from overtime and minimum wage requirements under the Fair Labor Standards Act (FLSA).  

By way of background, the DOL’s final rule had raised the salary amount from $684 per week ($35,568 annually) to $844 per week ($43,888 annually) effective on July 1, 2024.   A second increase would have raised the salary amount to $1,128 per week ($58,656 annually) on January 1, 2025.

With this ruling, the salary threshold drops back to the prior $35,568 for the executive, administrative and professional employees and $107,432 for the highly compensated employees.   In plain English, the threshold for determining if someone is eligible for overtime remains at the lower level, which provides a business owner with more flexibility in labor costs.  

Prior to the election, both of these cases would likely be pushed through the appeals process.  With the change in administration coming up, it will be interesting to see how aggressive they want to be.   

The bottom line…..”Don’t Mess With Texas”
 
Happy Thanksgiving To Everyone!
 
Other Items of Interest
 

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.   

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.   

Tariffs and Price – Justify Your Value

With the election (or re-election) of President Trump, there’s been a lot of talk of tariffs and the impact on the US Economy.  More specifically, how they could impact businesses.  First, let’s make sure we define the term tariff.  A tariff is a tax imposed by one country on the goods or services imported from another country.  I am not here to get into the reasons these are used.  However, I do want to address how a business typically handles items like this (or any other form of tax). 

A business will almost always pass this increased cost on to their consumer/customer/client.  Yes, it is a burden, which is why it’s important that a business owner remains focused on justifying their price.  The value provided to the end user will almost always justify the price that is charged.  When the price paid exceeds the value, competition comes in and the price eventually adjusts.  Said another way, this is the way that a capitalist economy handles these issues.  It is not a linear adjustment, but it does eventually even out. Capitalism has a funny way of leveling the playing field of business.

As Warren Buffet famously said:

“Price is What Your Pay, Value is What You Get”

Here are some other items of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.   

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.   

BOI & FINCEN REPORTING – It’s Getting Closer!

We are getting closer to the end of 2024 and the BOI filing date is near.  There was an update on October 3, 2024 to the FAQ section (FYI, there were a ton of updates so in the interest of brevity, I am only including the questions and sections that you can look at; here is the FAQ link).   

A. 6. Is beneficial ownership information reported to FinCEN accessible under the Freedom of Information Act (FOIA)?

B. 7. Is a reporting company required to use an attorney, certified public accountant, enrolled agent, or other service provider to submit beneficial ownership information to FinCEN?

B. 9. If a third-party service provider who is not an attorney submits a reporting company’s beneficial ownership information to FinCEN, has that provider engaged in the unauthorized practice of law?

B. 10. How do I report multiple beneficial owners or company applicants on one report?

C. 17. Reporting companies are created (or, if a foreign company, registered to do business) in the United States by filing a document with a secretary of state or “similar office.” What government offices are “similar offices” to a secretary of state for this purpose?

C. 18. Does a conversion from one corporate type to another (e.g., LLC to corporation) create a new domestic reporting company that must file an initial beneficial ownership information report with FinCEN?

C. 19. Does a reporting company need to file a beneficial ownership information report each time it registers to do business in a different state?

D.1. Who is a beneficial owner of a reporting company?

        i.            How many beneficial owners can a reporting company have?

      ii.            What if a reporting company does not have any individuals who own or control at least 25 percent?

D. 2. What is substantial control?

D. 18. If one spouse has an ownership interest in a reporting company, is the other spouse also considered a beneficial owner if the reporting company is created or registered in a community property state?

F. 5. What are acceptable forms of identification that will meet the reporting requirements?

        i.            What is an example of a “non-expired identification document issued by a U.S. State or local government, or Indian Tribe”?

F. 12. What address should a reporting company report if it lacks a principal place of business in the United States?

F. 14. Are reporting companies required to report the addresses of beneficial owners or company applicants that participate in an Address Confidentiality Program (ACP)?

F. 15. For each beneficial owner or company applicant a company is required to report, the company must provide an identifying number from an acceptable identification document as well as an image of the identification document used to obtain this identifying number. Does the name on an individual’s acceptable identification document need to match the individual’s current full legal name?

L. 10. Would a reporting company qualify for the pooled investment vehicle (PIV) exemption (Exemption # 18) if it is operated or advised by an exempt reporting adviser (ERA)?

L. 11. Does a reporting company qualify for the large operating company exemption if it is run from a personal residence?

M. 2. How can I use a FinCEN identifier?

M. 5. Do I need to update or correct the information I submitted to obtain a FinCEN identifier?

        i.            Does a reporting company need to update its BOI report if a beneficial owner or company applicant updates the information associated with their individual FinCEN identifier?

N. 4. Are third-party service providers required to maintain records validating that they are authorized to file on behalf of a reporting company?

In case you have not filed as of yet, we have an information page for your reference.  Please reach out to your professional business advisors if you have any questions. 

Here are a few other items of interest:


As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.   

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.   

WHAT IS A LAND DEVELOPMENT?

The question of when does an improvement become a land development subjecting it to a subdivision and land development ordinance was answered in Smith et al. v. Ivy Lee Real Estate, LLC et al., (Pa Cmwlth. Ct., 299 CD 2021, November 7, 2024).

The Smiths filed a lawsuit to stop the adjacent property owner from converting a residential use into a pizza shop and an apartment unless the owner complied with the township’s subdivision and land development ordinance [“SALDO”]. The lower court rejected the Smiths’ claim and they appealed to the Commonwealth Court.  The Commonwealth Court affirmed the lower court.

In 2015, Ivy Lee Real Estate began work to convert a single-family residence into a pizza shop on the first floor and an apartment on the second floor.  The township did  not have a zoning ordinance, but it did have a SALDO. The Smiths were informed by the township’s solicitor that a land development plan was not required because the conversion done by Ivy Lee Real Estate was not a land development as defined in the SALDO.  The solicitor and lower court found that the improvements to the property were internal to the building, and that there was no division or allocation of land or space among two or more existing occupants (both the pizza shop and apartment were rented by the son of the LLC’s owner).

The Commonwealth Court agreed with this analysis. Quoting the Pennsylvania Supreme Court, the Commonwealth Court determined that not every improvement is a land development.  The case law typically involves a division of a tract of land into smaller parcels for the construction of either residential or commercial buildings that impact government concerns such as sanitary sewer, water, storm water management, parking, streets and curbs and sidewalks.  For example, land development does not include constructing: a roof over a patio; a swimming pool; a cell tower; or, a billboard. The fact that Ivy Lee Real Estate improved its existing residential building to include a pizza shop and an apartment does not qualify as land development and, therefore, it did not have to comply with the Township’s SALDO.  

Our experienced municipal attorneys can help you navigate the complicated world of land development in Pennsylvania.

EASE(ment) ON DOWN THE ROAD

Private easements can create problems when one party wants to expand or enlarge the use of that easement. This was the issue in Smith et al. v. Ivy Lee Real Estate, LLC et al., (Pa. Cmwlth. Ct., 299 C.D. 2021, November 7, 2024).

This case involved a 50-foot wide unimproved private lane called June Street. The trouble began when Ivy Lee Real Estate converted a single-family residence into a pizza shop on the first floor and an apartment on the second floor. The Smiths were adjacent property owners, and filed a lawsuit wanting an injunction to prevent Ivy Lee Real Estate from using June Street for its pizza shop business. Mr. Smith testified that he grew up in the neighborhood, and June Street was used by the neighbors to get and from their properties. Mr. Smith also testified that there was never any commercial traffic using June Street or customers parking on June Street until the pizza shop was opened. On cross examination, Mr. Smith admitted that his aunt and cousins had operated a trucking company located behind his property. The trial court found that the prior use of June Street was mainly for private personal vehicles, and that the increased commercial traffic and wear and tear on June Street caused by the increased traffic exceeded the use of the right-of-way. However, the trial court did not grant a total ban on the use of June Street by the pizza shop, but did impose several limitations on its use. The Smiths wanted a complete ban on the pizza shop’s use of June Street and appealed to the Commonwealth Court.

The Commonwealth Court reviewed the law dealing with the expansion of the use of an easement. First, an easement is limited by the use under which it is granted. Second, if an easement is used for any purpose inconsistent with that grant, then the grantee becomes a trespasser to the extent of the unauthorized use. Third, an easement for the benefit of a particular piece of ground cannot be enlarged or expanded.  But, reasonable increases in the use of the easement are permitted. The Commonwealth Court agreed that Ivy Lee Real Estate’s use of June Street did not cause an unreasonable burden warranting a total ban. The Commonwealth Court pointed out that the Smith’s relatives also had used June Street for their commercial trucking company business. The Commonwealth Court noted that the restrictions imposed by the trial court would lessen any harm to June Street by the pizza shop. In this case, Ivy Lee Real Estate did not “exponentially explode” the use of the easement far past any normal or reasonable evolution of June Street.

The takeaways from this case are that the prior use of a private right-of-way is critical in determining how it can be used in the future. Also, it is very important to be as specific as possible when asked to grant an easement on your property. The more precise you can be on the dimensions and use of the easement, the better protection you have to restrict the expansion of that easement in the future.  Our real estate lawyers are ready to assist in determining the use of a private right-of-way, or in drafting or reviewing easement agreements.    

Are They Buying In or Selling Out?

We spent the last two weeks talking about a company’s mission and vision.  These concepts are important because they serve as the basis for the development of your company’s culture.  This culture is what drives your organization to success.  It is the “buy in” by your team of this culture which ensures that all company activity meets or exceeds the goals and objectives of the organization.  Some of the most successful organizations over time have an easily identifiable culture and that starts from the top. So, how do you develop yours? 

Below are some great articles to jumpstart your process:

When it comes to developing a company culture, is your team buying in or selling out? 

I will leave you with this quote on culture from the Zen Master: 

“The strength of the team is each individual member. The strength of each member is the team.” ― Phil Jackson

On another note, please go check out Joel Berg’s daily updates at BizNewsPa.  He is bringing innovative and impactful business news to you every day.  

Lastly, make sure you go and vote on Tuesday.  As a resident in Pennsylvania, which is kind of a swing state if you haven’t noticed, we really would like to get back to our normal advertising.  

Here are a few other items of interest:


As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.   

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.