What’s happening in law and at MPL Law Firm.

In an effort to maintain ongoing communication with our clients and colleagues, here’s a look at our latest thinking on a variety of legal issues as well as what’s happening in the practice areas we serve.

U.S. DOT Drug and Alcohol Testing Program Changes

Posted by on Feb 6, 2019 in What's happening in law and at MPL Law Firm. | 0 comments

The U.S. Department of Transportation (“DOT”) recently published several changes to its drug and alcohol testing program.  The DOT published this final rule (82 FR 52229) on November 13, 2017, and made it effective Jan. 1, 2018.  These changes potentially impact municipalities who have DOT-compliant drug and alcohol testing programs for employees with CDL licenses or who work in safety-sensitive jobs where drug and alcohol use is closely monitored. The changes are not drastic, but depending upon your municipality’s testing program, there may be a few changes necessary.  Below is a brief summary of the rule changes: The standard five-panel drug test will now include testing for several opioids that are typically only obtained with a prescription.  If a municipality’s drug testing policy only narrowly states that opiates will be tested for, it may want to consider changing the word to opioids.  Feel free to contact our office if you want us to review your municipality’s drug testing policy regarding this wording change. Because the new rules include testing for substances often prescribed by a physician, any positive test will prompt the employee to have the opportunity to provide the facility with a prescription and/or doctor verification of a medical need.  If an employee is able to produce such documentation, the employer municipalities will not be notified of the presence of the drug (for health privacy reasons), but will simply be informed that the employee passed the drug test.  One additional rule change that may affect a few municipalities pertains to employers submitting “blind specimens”, which is a urine sample submitted for quality control purposes.  Blind specimens are no longer required. We suggest municipalities review their testing policy to see if they included language about blind specimens and if so, the policy should be amended.  Feel free to contact our office if you want us to review your municipality’s drug testing policy regarding blind specimens.  Although not a new rule, DOT re-emphasized that all DOT drug and alcohol testing must take place in a U.S. Department of Health and Human Services certified laboratory.  It is likely your municipality is already in compliance with this requirement, but we recommend you inquire of your testing facility to determine that it is an HHS certified...

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Should Volunteer Fire Companies Be Considered Employers Under the Fair Labor Standards Act?

Posted by on Feb 6, 2019 in What's happening in law and at MPL Law Firm. | 0 comments

Do FLSA Minimum Wage Rules Apply to Volunteer Firefighters? The U.S. Department of Labor recently published a letter (January 2018, letter number FLSA2018-16) addressing whether volunteer fire companies should be considered employers for the purposes of the Fair Labor Standards Act (“FLSA”) minimum wage rules under certain circumstances involving contracted paid firefighters and EMTs.  Although the specific questions addressed probably do not apply to many volunteer fire companies, we do stress one key area that should be avoided by volunteer fire companies—namely, if a volunteer fire company pays supplemental firefighters or EMTs through a contractor, then those same individual firefighters or EMTs should not be permitted to volunteer for that same volunteer fire company. By way of example, suppose Community Fire Company X pays a contractor called Emergency Medical, Inc., to supply some EMT services for Community.  Suppose John Doe is an employee of Emergency Medical and is paid by Emergency Medical to perform EMT services for Community. John Doe should then not be permitted to volunteer time at Community as an EMT or firefighter.  John Doe may still volunteer for other things at Community (for example, helping with bingo or chicken barbeque fundraisers), but any work as an EMT or firefighter could be subject to minimum wage standards of the FLSA. Volunteer fire companies and EMT organizations, along with municipalities that work with them, will want to be careful not to fall afoul of these FLSA...

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Act 43 of 2017 Article XXIV Fireworks

Posted by on Feb 18, 2019 in What's happening in law and at MPL Law Firm. | 0 comments

Act 43 of 2017 Article XXIV Fireworks

Pennsylvania has now changed its fireworks law to clarify categories of what are commonly considered fireworks—namely “display fireworks”, “consumer fireworks”, and “novelty” fireworks. There is no remarkable change to the law concerning display fireworks and novelty fireworks.  The display fireworks are the large-scale fireworks displays used solely by professional pyrotechnicians.  These will continue to require permits issued by municipalities before any display fireworks can be set off within a municipality.  Also, there is no change in the law regarding things like sparklers and “toy caps”, which are always permitted at all times within Pennsylvania.  In fact, Pennsylvania does not consider these novelty items as fireworks at all. The biggest change is that the state has now created a category of “consumer fireworks” that prior to passage of the new law would have generally been illegal for Pennsylvania residents to buy or use within Pennsylvania.  The law has now legalized the purchase of these consumer fireworks for all people 18 years of age and older. Further, consumer fireworks may be legally used within Pennsylvania, provided they are set off at least 150 feet from an occupied structure.  Significantly for municipalities, however, the state law gives no clear opportunity for municipalities to regulate the use of consumer fireworks, and their unlawful use will be handled through the police and the regular criminal justice system. We suggest municipalities refer residents to the police for any complaints they might have about possible dangerous or unlawful use of consumer fireworks.  Municipalities may, however, continue to regulate noise and nuisances within their confines, so some indirect regulation of fireworks may be possible under other types of ordinances. Finally, the new law sets forth requirements for the sale of consumer fireworks, requiring a permit from the Department of Agriculture.  Before anyone may sell consumer fireworks at a location, they must apply for and receive annually a permit from the Department of Agriculture.  The Department of Agriculture also will conduct inspections of the sales locations to determine they are safe and compliant with the law. It would seem prudent for municipal code enforcement officers to ask to see the license from the Department of Agriculture prior to issuing a use and occupancy permit from the municipality. **UPDATE** Act 43 of 2017 Article XXIV Fireworks Several large fireworks sellers challenged the constitutionality of Act 43 on multiple grounds in a case called Phantom Fireworks of Easton v. Wolf.  The Commonwealth Court recently ruled on the case, and although the court rejected many of Phantom Fireworks’ arguments, the court did find that the language in the law pertaining to “Temporary Structures” to be unconstitutional. Act 43, among other things, provided that consumer fireworks sales in temporary structures were governed by the safety standards established by the National Fire Protection Association (NFPA).  The court held that these provisions of Act 43 were unconstitutional because they improperly delegated away from the legislature (and to the NFPA) the authority of regulating the temporary structures. As a result of this improper delegation, the court struck any language in Act 43 that was impacted by the temporary structures regulations.  Because of the way Act 43 is written, it now appears that selling consumer fireworks may only be permitted in permanent structures, making selling them in tents or other temporary structures to be illegal at all times.  Recall that consumer fireworks are the category of fireworks that for many years had been illegal for Pennsylvania residents to buy, but that Act 43 had now made legal. Other “fireworks” that are not classified as consumer fireworks (like those that had been legal for purchase prior to...

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Creating a Business Plan for a Small Business

Posted by on Jan 15, 2019 in Business Law | 0 comments

You have a fantastic idea for a small business you believe could succeed. How do you bridge the space between idea and success? Writing a small-business startup plan will help you implement a workable, manageable approach to running your new adventure. Use this outline for a small-business plan you can harness for success. Health Care for Your Small Business Your health care options will depend on how many employees you have at your company. If you have fewer than 50 employees, you do not have to offer health benefits to your employees. However, you will need to figure out how to cover your own health insurance, and you may also want to provide some type of option for your employees. Remember that in order to get the best talent working for you, you will have to offer benefits such as health care. Attracting top-quality workers will help your business stay competitive. The government offers group health care options you can explore at Healthcare.gov. Following Government Regulations for Your Small Business The government imposes a number of conditions on small businesses to ensure they operate fairly and no one gets an undue advantage. While not every government regulation will apply to you, you should ensure your business provides for: Workplace safety and health in compliance with Occupational Safety and Health Administration guidelines Proper overtime pay and minimum wages Hiring practices in compliance with Equal Employment Opportunity Commission Legal permissions for work by non-U.S. citizens Proper family and medical leave in businesses with at least 50 employees Staying within environmental and advertising regulations for small businesses Paying Federal Income Taxes for Your Small Business All businesses registered in the United States must pay federal taxes. The type you will pay varies according to several things, including whether you own an S-corporation, sole proprietorship or something else. Research the tax requirements for your business structure so you know what to expect. Your company will file a federal return and will also pay employment taxes if you have anyone on your payroll. If you make purchases through your company, you may be responsible for excise taxes. Local and State Tax Compliance for Your Small Business In addition to federal taxes, Pennsylvania businesses must pay state and local taxes as well. In other states, this may not be the case. Taxes can be one of the most complex and confusing areas for small-business owners to deal with, so read up on changes to tax codes and ask other local proprietors for their insights into remaining in compliance with local codes. Economy Considerations for Your Small Business Does your business idea require any overhead? For instance, you may need to rent warehouse space or lease a retail location in a pricey downtown area. You must calculate manufacturing and transportation into your business plan. In addition, you should keep abreast of economic conditions and adjust your plan as needed. If economists are predicting a recession, for instance, it may not be the best time to expand your business or move to a new location. By keeping up with forecasts and tweaking your plan regularly, you may encounter fewer unpleasant surprises with your money. Get Assistance Writing a Small-Business Plan Coming up with a small-business startup plan may seem daunting with all these factors coming into play. Do you need assistance with this important undertaking? MPL Law can help you with your financial plan for your small business. Contact our office today to set up a...

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Buyer Beware of Working Capital Adjustments

Posted by on May 31, 2018 in Business Law | 0 comments

Buyer Beware of Working Capital Adjustments

Most stock transactions have a working capital adjustment.  Some buyers love them, some buyers hate them.  Without them a seller can often game the system to their benefit.  Many seem fair at the time, but unless well-planned they can result in unexpected purchase price adjustments post-closing when no one is in a mood to revisit the deal.  We have several tips for an effective working capital adjustment:   Know the balance sheet you will use. Reviewing the balance sheet and breaking down the components of the calculation will help your client understand the adjustment and how it will work.  Running some projected calculations will help identify flaws in the process.   Use a known balance sheet for the adjustment. Be specific that the balance sheet used in the calculation will be prepared consistent with past practice and custom.   When selecting the components of the working capital adjustment differentiate between operating and non-operating liabilities as well as the party benefitted by the liability. If the seller already received all the benefit of a liability, the seller should pay the liability from the purchase price proceeds and it should not be included in any working capital target calculation.   Write strong definitions based on the specific components of the adjustment again tying those components to past practice and custom. “Trade Payables” are obviously not the same as “Current Liabilities,” but often those details are lost on the drafter.   Provide a clear process for performing the working capital calculation and a clear process to resolve disputes. Make sure the timelines work and there is adequate time to lodge disputes.  Build in a small amount of time to negotiate a resolution so there is a chance to diffuse an escalating situation.   Consider an escrow based on a closing day estimate if the working capital of the target is prone to significant fluctuations which may require a big payment.   Make sure the working capital adjustment works within the limitations of any buyer financing or intercreditor agreements. Many times a post-closing payment of any kind to the seller before a payment to the lender will violate the terms of a loan agreement or intercreditor agreement.  The adjustment then has to be carved out of those covenants. Most deals have working capital adjustments.  A well-drafted and well-planned adjustment can protect a buyer’s working capital expectations in the deal.  However, to work effectively adequate time and attention must go into the provision. Andrew J. Miller, JD, CM&AA® advises buyers and seller of main street and middle market companies in private mergers and acquisitions.  He is recognized as a Certified Mergers & Acquisitions Advisor® by the Alliance of Mergers & Acquisitions Advisors, an organization focused on the private middle market.  He can be reached at (717) 845-1524, or *protected email*. Learn More About Andrew J. Miller, JD, CM&AA® > Learn More About Business Law:    Employee’s Management Status and the Creation of a Fiduciary Duty Amendments to UCC Article 9 Effective July 1, 2013 Member-Managed or Manager-Managed Limited Liability Company (LLC): What’s the Difference? Andrew Miller Completes Certification to Become a Certified Mergers & Acquisitions Advisor ® LLC or Corporation: Which is right for you?   Last Updated November 8,...

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Should I buy Assets or Stock?

Posted by on May 26, 2018 in Business Law | 0 comments

Should I buy Assets or Stock?

The most fundamental question for a buyer acquiring a business is whether to buy assets or stock. Most buyer-side accountants and many lawyers have the same gut response: Always asset. An asset acquisition can limit liabilities and provide tax benefits of asset basis step-up. But the devil is always in the details. Asset sales also carry much inherent operational risk. For most buyers it means setting up all new bank accounts, vendor accounts and re-hiring employees. For insurance brokers, it can mean having to re-apply for appointments which may be based on seniority that is now lost. For contracting firms it may mean obtaining new bonding and licensure. For healthcare providers it may mean applying for a new provider number which often requires a six-month holding period for approval during which time the practice cannot bill or collect. In some states, bulk sales tax also applies to some of the transferred assets. Sometimes these challenges are easily overcome, such as when the acquisition is purely for the assets, not the going concern business. But other times a stock acquisition with appropriate due diligence may be far more seamless and simple without exposing operational risks during the transition. Risk can be properly managed if the buyer does through due diligence, gets adequate representations and warranties from the seller and demands an adequate holdback or escrow to fund indemnities for breaches by the seller. The same tax benefits as an asset sale can also be achieved in a stock sale by using Section 338(h)(10) elections or similar tax treatments for partnerships and disregarded entities. Andrew J. Miller, JD, CM&AA® advises buyers and seller of main street and middle market companies in private mergers and acquisitions. He is recognized as a Certified Mergers & Acquisitions Advisor® by the Alliance of Mergers & Acquisitions Advisors, an organization focused on the private middle market. He can be reached at (717) 845-1524, or amiller@mpl-law.com. Learn More About Andrew J. Miller, JD, CM&AA® > Learn More About Business Law:  Pennsylvania Benefit Corporations  Buyer Beware of Working Capital Adjustments  The Tax Cuts and Jobs Act of 2017 Makes Bonus Depreciation Even More Useful  Using the Section 338(h)(10) Election  Legislative Update on Mechanic’s Lien Law of 1963     Page Updated November 8,...

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