In an attempt to prevent older Americans from outliving their assets in retirement, the federal government passed The Setting Every Community Up for Retirement Enhancement Act of 2019 in December 2019. Known as the SECURE Act, this law was approved as an end-of-year appropriations act and tax measure that helps out many Americans. Learn more about the SECURE Act and how it may impact you.
Understanding the SECURE Act
There are several major components to the SECURE Act, but the overarching intent was to help American workers as they save for their retirement. According to the U.S. Bureau of Labor Statistics, only half of the workers in the United States even participate in their workplace retirement plan, and those who do participate fall far short of contributions necessary to retire with adequate investments. The SECURE Act is an attempt to encourage employers who previously have not established a retirement plan to begin offering this important employee benefit.
Major Provisions of the SECURE Act
The SECURE Act changes many of the established rules regarding retirement plans offered by employers in the United States.
- Small businesses will now find it easier to set up 401(k) retirement plans by increasing the cap where they can enroll workers in “safe harbor” retirement plans.
- A maximum tax credit of $500 per year will be allowed to employers who create a SIMPLE IRA plan or 401(k) Plan that includes automatic enrollment for employees.
- Small businesses will be able to sign up part-time employees who work 1,000 hours or have worked for three consecutive years with 500 hours of service.
- The SECURE Act encourages employers to include annuities as options in retirement plans.
- Participants will be able to wait until 72 years of age, instead of 70 ½ to take required minimum distributions from their retirement plans, allowing them to save longer for retirement
- Student 529 savings accounts can be used to repay qualified student loans, up to $10,000 annually.
- Penalty-free withdrawals of up to $5,000 will be allowed to defray the cost of having or adopting a child.
- The removal of a provision known as the stretch IRA (Individual Retirement Account) which allowed non-spouses that inherit retirement accounts to stretch out distributions over their lifetimes. Instead, a full payout will be required within 10 years of the death of the original IRA account holder.
How these new changes will impact the retirement savings and lives of Americans remains to be seen, however, what is certain is that most workers in the United States simply do not have enough put away to live comfortably in retirement. Time will tell whether these new federal regulations will help that number grow larger.
Contact an Experienced Business Attorney
If you are a small business owner, you may be wondering how the new SECURE Act can impact your ability to offer a retirement plan for your employees. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and all of the correct forms filed on time.Read More
What You Need to Know About the New AB5 Law
In September 2019, California Governor Gavin Newsom signed into law the AB5 bill. This “gig worker bill” could potentially reclassify millions of workers in California who are independent contractors and make them employees instead. The legislation is far-reaching and affects more companies than simply Uber and Lyft; it affects and impacts a substantial number of California companies using independent contractors. While many employers are in a bit of a state of panic, the following is a brief guide to help you understand this new law.
In order to reclassify an independent contractor as an employee, California’s Supreme Court developed a three-pronged test, called the “ABC Test” in the Dynamex case. This test will presume that a person is an employee, not an independent contractor unless these criteria are met:
- The worker is free from control and direction in the performance of their services; and
- The worker is performing work outside the usual course of the business of the hiring company; and
- The worker is customarily engaged in an independently established trade, occupation, or business.
It is important to note that all three of these prongs of this test must be met to establish a worker as an independent contractor and not an employee. Ultimately, this law expands the decision made in the Dynamex case to any person working under the California State Labor and Unemployment Insurance codes.
Why AB5 is So Important
AB5 is significant because it would require many employers to completely reclassify many of their workers as employees instead of independent contractors. This means that they would be entitled legally to benefits such as minimum wage, expense reimbursement, family leave under the FMLA, paid sick leave, unemployment insurance, and workers’ compensation. Employers are required under the law to pay for half of the social security taxes of employees, as well. These benefits could cause many employers to go out of business as their costs could rise astronomically.
Many California companies may be exempt from this new law, and most are furiously researching to determine if they can avoid dealing with these burdensome new classifications for their workers. The bad news is that a company must meet 12 specific requirements (and some referral agencies need to meet 10 specific requirements) in order to be exempt from AB5. The requirements are strict and frankly, difficult to satisfy. However, many lobbyists worked hard and as a result, there are over 50 types of businesses that are exempt from this law. Some of the businesses excluded from AB5 include doctors, dentists, lawyers, accountants, marketing professionals, hair stylists, payment processing agents, stockbrokers, travel agents, graphic designers, veterinarians, aestheticians, insurance agents, real estate agents, engineers, commercial fisherman, grant writers, fine artists, and human resource administrators. Additionally, if a freelancer makes fewer than 35 submissions a year to a company, then he or she may be exempt and classified as an independent contractor. However, 35 submissions a year is unrealistically low, and many freelancers will lose their entire income if they work steadily for a company on a regular basis.
What can a Business in California do Now?
If you currently hire independent contractors, your best course of action is to visit with an experienced employment attorney. While the new AB5 legislation is new, you should make a proactive effort with regard to the classification of any of your independent contractors as soon as possible. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and help you with your next steps.Read More
As a business owner, you create contracts that specify certain expectations and requirements agreed to by both parties. When one party purposefully makes a false statement to get another party to sign a contractual, legally-binding agreement, this is known as fraudulent misrepresentation. Understanding what constitutes fraudulent misrepresentation can help you determine if you should seek recourse regarding the false statements in your contract.
What is Fraudulent Misrepresentation?
Fraudulent misrepresentation is actually a type of civil action that arises from contract law. When one person lies to another or makes a misrepresentation of any material fact that persuades or induces the other party to sign a contract, it can be considered grounds for a fraudulent misrepresentation lawsuit in California.
The following elements are required to prove fraudulent misrepresentation in a court of law:
- A false representation or lie was made by one party.
- That misrepresentation was related to a material fact or component or the transaction.
- The party making the misrepresentation did so with malice, meaning they did so with the knowledge that the statement was false, or with a reckless disregard regarding the truth of the statement.
- The misrepresentation or lie was made as a direct attempt to induce the other party to sign the contract.
- The other party relied on the misrepresentation and used it to make a decision to sign the contract.
- The misrepresentation was the cause of any injury suffered by the other party.
Examples of Fraudulent Misrepresentation
It is important to note that a fraudulent misrepresentation typically regards an actual fact, not someone’s opinion, intention, or some future occurrence. Some examples of fraudulent misrepresentation in contracts can include the following:
- A completely false statement
- A partially true statement, in which the other part is a misrepresentation that affects a material fact of the transaction
- The omission of some details that would create a misunderstanding or false belief by the other party
- Remaining completely silent, or the failure to disclose material issues that would affect the contract, or that are legally required to be stated according to the law.
Remedies and Damages for Fraudulent Misrepresentation
If you discovered that your contract included fraudulent misrepresentation by the other party, you may have suffered financial or other types of damages. Oftentimes, the court will allow the harmed party to rescind the contract and make it voidable. However, making a contract void does not always bring complete restitution to the victim of fraudulent misrepresentation. Therefore, monetary damages are also awarded by the court. However, in order to bring a claim, you must have suffered actual damages, and the severity of those losses will be used by the courts to determine remedies regarding your case.
Contact an Experienced Business Attorney
Fraudulent misrepresentation in a contract can cause catastrophic financial losses. Courts take these cases very seriously, and there are significant legal consequences. If you have been a victim of fraudulent misrepresentation, contact business law attorney in La Jolla, Law Office of Kris Mukherji at (858) 442-5747. We can help you with your business law and business contract needs, and also help you if you find yourself a victim of fraudulent misrepresentation.
If you are considering buying someone else’s business, there are many important legal and financial issues to consider. Research needs to be done regarding the financial health of the company, along with ensuring that all state or federal contracts are filed on time to ensure the legality of the sale. The entire process of purchasing a business can be complex and challenging. Here is a due diligence checklist of serious items to consider requesting, obtaining, reviewing carefully before buying a business.
- Articles of Incorporation
- Certificate of Good Standing from the Secretary of State
- Minutes of Meetings
- Organizational Chart
- Listing of Shareholders
- Agreements regarding shareholders rights and responsibilities
- Listing of all states where the company does business, owns or leases property, and/or maintains employees.
- Annual reports
- Audited financial statements
- Auditor’s notes to the financial statements
- Analyst reports if available
- Schedules of all accounts receivable and payable, inventory, indebtedness and contingent liabilities
- Description of any depreciation or amortization methods and accounting practices
- Analyses of fixed and variable expenses, as well as gross margins
- Company’s general ledger
- A description of internal control processes.
Corporate Physical Assets, Real Estate and Intellectual Property
- A listing of all assets and the locations of all assets and equipment.
- Listing of any sales or purchases of major equipment
- All real estate transactions
- All trademarks, trade names, copyrights, patents, and patent applications
- All trade secrets and the methods used to protect them
Corporate Employees and Benefits
- Listing of all employees
- Employee handbook
- Schedule of all employee benefits, including sick leave, vacation leave,
- Summary Plan Descriptions and Plan Documents for any ERISA covered retirement benefits plans
- Employee Stock Ownership Plan documents
- Any government investigations either closed or pending
- Collective bargaining agreements
- Any discrimination or harassment lawsuits
- Any labor disputes
- Workers compensation policy, along with any workers’ compensation claim history
Corporate Environmental Issues
- Environmental permits, licenses, and audits
- A listing of hazardous substances, and disposal methods
- A description of the Company’s disposal methods.
- Any EPA investigations either closed or pending
- All federal, state, local, and foreign tax returns.
- Any IRS investigations either closed or pending.
- Employment tax filings, excise tax filings or any tax liens.
- Any and all contracts, loan agreements, distribution agreements, or other contracts that would pertain to any internal or external aspect of the business.
Other Important Questions to Ask
Ultimately, if you are attempting to purchase a business in California you are wanting to ensure that the business is a sound financial decision. Consider asking the following additional questions.
- Is the business currently profitable? How long has the business been profitable?
- What are the largest customers of the business? How long have they been customers? What percentage of sales do they make for the company?
- Will there be any significant changes between now and the time of sale?
- Are there any pending transactions that would take a substantial amount of money to resolve?
- Is the company involved in any kind of litigation?
- Have there been any articles or press releases related to the company in the past several years?
Contact an Experienced Business Attorney
If you are considering buying a business, this checklist is really just the start. Understanding the legal and financial aspects of purchasing another person’s company can be overwhelming. Contact business law attorney in La Jolla Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and all of the correct forms filed on time as you begin the process of buying a new business.
If you have a child who was born with mental or physical disabilities or a child who became disabled later in life and needs someone to manage his or her affairs, you have special and unique estate planning needs. Planning for your child’s financial future is important, and parents want to make sure that their special needs child will be well taken care of when they are gone. A Special Needs Trust (SNT) is one option to consider for your special needs child to help guarantee that his or her health and welfare needs are taken care of after you die. However, there are both advantages and disadvantages to the creation of this type of trust. Listed below are some pros and cons of a Special Needs Trust.
SNTs are typically essential for any special needs person that is unable to independently handle and manage their finances. Some of the advantages of a SNT include the following:
- Your child will still be eligible for government programs like SSI and Medicaid, and the SNT will help fund services and care over what the government will provide.
- All funds are used for the care of the child with the disability. (Your child will not be influenced or taken advantage of by an unscrupulous person looking for financial gain.)
- The funds are tax-deductible.
- The funds are never available for any creditors to pay a judgment, they can only be used for the care of your child.
As with anything, there are also some disadvantages or challenges to creating a SNT for your child, which include the following:
- The cost is high. An SNT has an annual fee, as well as a fee to establish, which can make it financially unaffordable to create for some people. There are minimum amounts required to establish an SNT.
- Your child will lack independence. Your child will have to request funds from a trustee who has complete discretionary control over whether to release the funds or not based on the terms listed in the trust. Some children can feel frustrated due to the lack of independence.
- Some funds must be used to pay back Medicaid in the exact amount that Medicaid paid on the person’s behalf. This can completely wipe out the trust after the child’s death, or when the trust is terminated legally.
You will also need to make a decision regarding who the trustee will be of your SNT for your child. Oftentimes, a trustee is a professional, but the family will also choose a family member to serve as a co-trustee to ensure that their wishes are being followed. The trustee should have the best interest of your child in mind. You also have the option to pay for an audit and have a monitoring service on your trustee after you pass away.
Contact an Estate Planning Attorney
There are many different types of trusts and estate planning tools to choose from. An experienced attorney can ensure that you pick the right vehicle to take care of your special needs child when you are gone, ensure that the trust language is created accurately, and make sure that the trust is broad enough to meet the ever-changing needs of your child as they grow. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help you determine if a Special Needs Trust is the right kind of trust for your family.