A limited liability company (“LLC”) is a popular type of U.S. business entity that is easy to form and manage. As a cross between a partnership and corporation, an LLC provides the benefit of both pass-through taxation and limited liability. While an LLC has lower state-required recordkeeping formalities than a partnership or corporation, when forming an LLC, business owners should take time to prepare a well written LLC operating agreement. This document should not only control how the LLC entity is structured and managed but also spell out the terms of relationship among its members / owners. This article answers questions about why having an LLC operating agreement is important and what terms it should contain.
What Is an LLC Operating Agreement?
An LLC operating agreement is a document that establishes the rules, structure, management and operation of each specific limited liability company, based on the specific needs of its members. LLC operating agreement is similar to articles of incorporation that govern the operation of a corporation. It helps LLC business owners’ asses the risk of their business and mitigate important issues before they arise. It should outline the structure for major financial and functional decision-making. Once signed, the document acts as a binding contract between the members that serves as a reference document during the life of the company.
Do I Need To File My LLC Operating Agreement With The State?
Unlike certificate of formation or articles of organization, an LLC operating agreement does not need to be filed with the state. Certificates of formation or articles of organization are public documents that are filed with the state to form the LLC. They contain important but basic information such as company name, whether it will be member or manager managed, the name and address of the registered agent and the name of the LLC organizer. By contrast, LLC operating agreement is a private document containing detailed information that is often confidential and may not be desired by the LLC owners to be shared with the public.
Am I Required By Law To Have An Operating Agreement For My LLC?
Although writing an operating agreement is not a mandatory requirement for most states, it is crucial to have a written operating document for members working through a limited liability company. Without a written operating agreement, management and ownership of the business will be handled in accordance with state’s default LLC rules. Most people do not want to run their business only according to the default rules of their state. While state default provisions address some operations of an LLC, a well written operating agreement can override statutory presumptions allowing owners to govern their internal operations according to their own rules and specifications. For example, in the absence of an operating agreement, some states may require that all profits in an LLC be shared equally by each partner, regardless of their respective capital contributions. A written LLC operating agreement should protect each individual member’s investment and reduce the risk of issues or misunderstandings that can arise between partners. LLC operating agreement should outline governance procedures, such as meetings and voting, specify the rules of succession and transfer of ownership interests.
Does a Single Member LLC Need an Operating Agreement?
Some states, including New York, Missouri, and California, require a limited liability company to have an operating agreement, even if it only has one member. When not required, a written agreement is strongly encouraged for protection of the member from various problems the LLC may encounter, including legal liability.
What Should be Included in an LLC Operating Agreement?
A typical LLC operating agreement is a 10-20-page contract document that provides guidelines for company operation and rules for the LLC members to follow. It should contain some of the following provisions:
- Whether the LLC will be managed by its members or managers
- How the LLC chooses to be taxed, how long it intends to operate, and where it is located
- How the management team will be selected
- Who and how will be making business decisions
- How meetings will be held and votes made (and what percentage will be required for approval of business decisions)
- The duties and responsibilities of the LLC members or managers
- Appointment of LLC officers and their duties and responsibilities
- Allocation of profits, losses, and tax liabilities
- The process of transfer of ownership interests
- The process of bringing in additional members
- Buyout and buy-sell provisions (when a member wants to leave and sell their share)
- Succession plans (including what will happen in the event of a member’s death)
- Events that could trigger the dissolution of the LLC
- When and how the LLC will be dissolved
- List of each member’s ownership interest
Can I Write My Own LLC Operating Agreement?
It is best to consult an experienced attorney and tax advisor for help with the financial and legal aspects of your LLC operating agreement. If you want to try drafting your own operating agreement, be sure to have a business lawyer review it before the members sign it. Avoid free templates because they may contain inappropriate jurisdictional requirements, omit critical terms and fail to properly address the desires of LLC members. Or worse, a free template could set forth the members’ rights in ways the members do not want. Some states require the use of specific terms or information that may be missing from a free template, leaving you open to liability. For example, failure to include detailed information and terms for resolution of business disputes or member disagreements may result in costly litigation.
Can an LLC Operating Agreement Be Amended?
The process of amending an LLC operating agreement should be provided in the agreement itself. When not stated in the agreement, the amendment process will be determined by the default rules of the LLC’s state of formation. Procedure for amending LLC operating agreements may vary. Some LLC owners may require amendment to be made by a unanimous vote of all members. It is also possible for an LLC to have an operating agreement that cannot be amended.
- An LLC operating agreement is a legal document that contains the terms of operations of a limited liability company
- It gives the business a plan to follow and brings clarity to its operation and management
- In some states, the operating agreement is required as part of establishing the business entity
- One size does not fit all LLC operating agreements
- An LLC without an operating agreement will be governed by the default state rules
Once your agreement is signed, keep a copy of it in a corporate notebook with your other important business documents. Don’t forget to review it frequently to ensure it still reflects the needs of the members and provides specific operational guidelines that take precedence over the default provisions of state law.
Signing an LLC operating agreement should be made after a consultation with an attorney and a tax adviser because it involves consideration of issues regarding tax, liability, management, continuity, transferability of ownership interests, and formality of operation. Business attorneys at FILIPPOV LAW GROUP, PLLC can help you prepare a well written operating agreement that meets the needs of your business and wishes of your LLC owners. Email us at email@example.com with your questions or to schedule an appointment.
This article is intended as an information source for existing and future clients of FILIPPOV LAW GROUP, PLLC and should not be construed as legal advice. Readers should not act upon information contained in this post without professional counsel. The materials presented in our blog, “tweets” and legal articles may not reflect the most current legal developments, verdicts, or settlements. These materials may be changed, improved, or updated without notice. FILIPPOV LAW GROUP, PLLC is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.
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The U.S. Department of Labor’s Occupational Safety and Health Administration published a new emergency temporary standard to protect more than 84 million workers from the spread of the coronavirus on the job.
Under this emergency temporary standard (“ETS”) employers with more than 100 employees (firm or company-wide) must develop, implement and enforce a mandatory COVID-19 vaccination policy, unless they adopt a policy requiring employees to choose to either be vaccinated or undergo regular COVID-19 testing and wear a face covering at work.
The ETS requires employers to do the following:
- Determine the vaccination status of each employee, obtain acceptable proof of vaccination status from vaccinated employees and maintain records and a roster of each employee’s vaccination status.
- Require employees to provide prompt notice when they test positive for COVID-19 or receive a COVID-19 diagnosis. Employers must then remove the employee from the workplace, regardless of vaccination status; employers must not allow them to return to work until they meet required criteria.
- Ensure each worker who is not fully vaccinated is tested for COVID-19 at least weekly (if the worker is in the workplace at least once a week) or within 7 days before returning to work (if the worker is away from the workplace for a week or longer).
- Ensure that, in most circumstances, each employee who has not been fully vaccinated wears a face covering when indoors or when occupying a vehicle with another person for work purposes.
The ETS does not require employers to pay for testing. Employers are also not required to pay for face coverings. The ETS does require employers to provide paid time to workers to get vaccinated and to allow for paid leave to recover from any side effects.
Employers must comply with most requirements within 30 days and with testing requirements within 60 days from November 5, 2021.
There has been a lot of confusion concerning the Final Rule introducing Part 795 of CFR Title 29 and expressly adopting the long-standing economic realities test for evaluating independent contractor status under the Fair Labor Standards Act (FLSA). Under the proposed rule, the U.S. Department of Labor (DOL) narrowed the interpretation of the independent contractor status under the FLSA.
The FLSA requires covered employers to pay their non-exempt employees at least the Federal minimum wage for every hour worked and overtime pay for every hour worked over 40 in a workweek and keep certain records regarding their employees. A person who performs services for an individual or entity as an independent contractor is not considered as an employee under the Act. Thus, the FLSA does not require employers to pay an independent contractor either the minimum wage or overtime pay, nor does it require that person to keep records regarding that independent contractor. Courts and the DOL, however, require an evaluation of the extent of the worker’s economic dependence on the potential employer and have developed a multifactor test to analyze whether a worker is an employee or an independent contractor under the FLSA.
The Final Rule attempted to limit the economic realities inquiry into whether the worker is considered to be a pseudo employee or an independent contractor to the following five factors (as opposed to the previous tests used by the DOL, IRS and federal courts):
- The Control Test. This test confirms the independent contractor status if the individual exercised “substantial control over key aspects of the performance of the work,” such as setting their own schedule, selecting their own projects, or having the ability to work for others. Control would not be demonstrated by requiring the individual to:
- comply with specific legal obligations;
- satisfy health and safety standards;
- carry insurance;
- meet contractually agreed-on deadlines or quality control standards; or
- comply with other similar terms typical of contractual business relationships.
- The Individual’s Opportunity for Profit or Loss. This test takes into consideration of the individual’s exercise of initiative or management of their investment or capital expenditure. The ability to affect earnings only by working faster or more hours would not support independent contractor status.
- The Specialized Skill Test. The DOL considered the extent the work required specialized training or skill that was not provided by the company compared to work that required no specialized training or skill or only that which the worker relied on the company to provide.
- The Working Relationship. Independent contractor status would be supported by a working relationship that was sporadic or definite in duration.
- Whether the work was a component of the company’s integrated production process. This factor was distinguishable from the concept of importance or centrality to the company’s business.
These proposed five factors were not exhaustive, and no single factor was dispositive, but the degree of control and opportunity for profit or loss were typically given greater weight as the “most probative” “core factors”. If both core factors supported the same classification, independent contractor or employee, there was a “substantial likelihood” that the classification was appropriate.
The proposed rule also provided several illustrative examples, including a tractor-trailer owner-operator, an app-based home repair service worker, home renovation and repair services worker, a seasonal resort housekeeper, a part-time editor, and a freelance journalist.
The DOL intended for employers, employees, and courts to use the interpretations to better understand employers’ obligations and employees’ rights under the FLSA while rescinding any conflicting prior administrative rulings, interpretations, practices, or enforcement policies were expressly rescinded. (29 C.F.R. §§ 795.100 to 795.120.)
The rule was first published on January 7, 2021 and was scheduled to take effect on March 8, 2021. However, in a Final Rule published on March 4, 2021, the DOL under the Biden administration delayed the effective date until May 7, 2021 but later announced a withdrawal of the independent contractor Final Rule effective May 6, 2021. The agency did not propose new rulemaking.
Employers should consult employment counsel concerning developments affecting independent contractor classification under the Biden administration, including any new rulemaking.Read More
The SBA made major modifications to its original COVID Economic Injury Disaster Loan (EIDL) program, expanding the cap for federal disaster relief loans designed to better serve and support small business communities. The latest update to the EIDL program increased the cap for loans from $500,000 to $2 million, offering 24 months of deferment, and expanding flexibility to allow borrowers to pay down higher-interest business debt. Low-interest loans can now be paid back over 30 years. Funds from this program may be used for any operating expenses, including purchasing equipment and making payments on debt.
The key changes to the EIDL program include:
Deferred Payment Period: The SBA will ensure that small business owners will not have to begin COVID EIDL repayment until two years after loan origination.
30-Day Exclusivity Window: To ensure businesses have additional time to access these funds, the SBA will now implement a 30-day exclusivity window to approve and disburse funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 will go into effect starting October 8, 2021.
Expansion of Eligible Use of Funds: In addition to an increased cap of $2 million, COVID EIDL funds will now be eligible to prepay commercial debt and make payments on federal business debt. New eligible business expenses include payments on all forms of business debt, including loans owned by a federal agency, including SBA, or a small business investment company (SBIC) licensed under the Small Business Investment Act.
Simplification of affiliation requirements: To ease the COVID EIDL application process for small businesses, the SBA has established more simplified affiliation requirements to model those of the Restaurant Revitalization Fund.
These enhancements to the COVID EIDL program will now allow businesses greater flexibility in seeking support from the over $150 billion in available COVID EIDL funds. The SBA is ready to receive new applications immediately from small businesses looking to take advantage of these new policy changes. Now is the time for businesses to take advantage of SBA’s EIDL and other financial lending programs.
How to apply
Eligible small businesses, nonprofits, and agricultural businesses in all U.S. states and territories can apply. Please visit www.sba.gov/eidl to learn more about your eligibility and application requirements. The last day that applications may be received is December 31, 2021. All applicants should file their applications as soon as possible.
For additional information on COVID EIDL and other recovery programs please visit www.sba.gov/relief. Small business owners may also call SBA’s Customer Service Center at 1-800-659-2955 (1-800-877-8339 for the deaf and hard of hearing) or email DisasterCustomerService@sba.gov for additional assistance. Small business owners may also contact SBA’s Resource Partners by visiting www.sba.gov/local-assistance.Read More
There is no way around it: as the summer is coming to an end, business owners know it’s time to complete their business compliance checklist for their limited liability company (LLC) or corporation. Failure to achieve this can lead to fines, penalties, and possibly even the dissolution of your company. Now is a good time to contact your business attorney and tax advisor to ensure that you’re on the right track towards year end compliance.
There is an array of business decisions that can sometimes trigger a year-end compliance item. For example, if you’re operating a corporation and have made changes to your Articles of Incorporation, you may have to file an amendment with the state of formation. Sound daunting? Use the following End-Of-Year Business Compliance Checklist to ensure that it won’t be.
Let’s get started with verifying if you have met all of your licensing requirements. Certain licenses must be renewed annually, while others might even need to be canceled. Whether your business requires a federal license or permit depends on your business activities that are regulated by a federal agency. License and permit requirements and fees depend on the agency issuing the license or permit. If you started a new business, be sure to check if any of your business activities are listed with US Small Business Administration and look up the issuing agency for details on the business license cost. By contract, if you are shutting down a company location, you must cancel your business licenses at both the state and municipal levels. On the other hand, if you participate in a merger or acquisition or add a new product or service, you may be required to apply for additional licensing such as a local business license.
Dissolutions and Withdrawals
If your business hasn’t been running smoothly and you believe it’s time to close, simply ceasing all production and business activities isn’t enough. You must file “Articles of Dissolution” or a “Certificate of Termination” to properly dissolve a business in the state of formation and withdraw from all states where it has been registered. Doing so before the end of the tax year eliminates the need to file a partial-year tax return for the following year and may reduce other tax liabilities as well.
As the year comes to an end, it’s important to check up on your reporting requirements. Corporate legal requirements mandate that you hold an annual meeting for the election of board directors. At the board meeting you may also elect new company officers. Your company secretary should take minutes of each meeting and file them in the company minutes book. Most businesses now store their records electronically. However, traditionally business owners have used a loose ring binder called a minute book (sometimes referred to as a corporation kit or corporate record book) to store meeting minutes and written consents of the board of directors, members, shareholders, the governing documents, a share transfer ledger, and the share certificates. Businesses that want to store paper copies can buy a minute book from a service company or create its own. A company must keep records of:
- Books and accounts.
- Minutes (including written consents) of all proceedings of the owners, shareholders, board of directors, and any committees.
- The original issuance of shares or membership/partnership interest by the company.
- Each ownership transfer that has been presented to the company for registration of transfer.
- The names and addresses of each current and past owner.
- The number and class or series of shares or ownership interest certificates issued by the company held by each current and past owner.
If a taxable entity required to make its franchise tax payments a franchise tax payment or extension must be made in a timely manner or a no tax due report must be filed. In addition, it is essential that you meet all other annual report requirements, including filing delinquent reports for businesses that ceased operations during the year.
Changes in companies are not uncommon, but there are steps that must be taken in order for these changes to be legally approved. For example, if you own a limited liability company and want to switch LLC management from member-managed to manager-managed, you must file an amendment with the state of formation. Or if you own a corporation and want to change its name, you must file an article of amendment in order for the change to be legally effective.
Registering with Workforce Commission
If you are an employer subject to your locate state’s Unemployment Compensation Act, you must register with that state’s workforce commission. For example, Texas Employers must register with the Texas Workforce Commission (TWC) within ten days of becoming subject to the Texas Unemployment Compensation Act (see Texas Workforce Commission: Determine Whether You Need to Establish an Unemployment Tax Account and Texas Workforce Commission: Unemployment Tax Registration).
Intellectual Property Protection
The end of year is a good time to consider filing for any necessary intellectual property protection, including:
- a state trademark with the secretary of state (see Texas Secretary of State: Trademarks FAQs);
- a federal patent or trademark with the US Patent and Trademark Office; and
- a federal copyright with the US Copyright Office.
Your business might be eligible for beneficial tax incentives and credits. Information on these incentives and programs can be found at the state agency level. For example, for Texas businesses:
- Texas Business Incentives and Programs Overview has information on tax incentives and credits, including those relating to property taxes, the environment, manufacturing, data centers, research and development, and business relocation.
- Tax-Related State and Local Economic Development Programs provides a summary of economic development programs prepared by the Comptroller.
- Tax Relief for Pollution Control Property Program applies to a facility that uses certain property or equipment to control pollution.
For general information on Texas state taxes, see Comptroller: Taxes.
Other advice and assistance to businesses is available through the following agencies and programs:
- The US Small Business Administration (SBA). Programs the SBA offers include:
- 8(a) Business Development Program, an SBA program designed to help small, disadvantaged businesses;
- Historically Underutilized Business Zones (HUBZone) Program, a program designed to help small businesses in distressed urban and rural communities gain access to federal procurement opportunities;
- Women-Owned Small Businesses (WOSB) Federal Contracting Program, a program designed to provide greater access to federal contracting opportunities for WOSBs and Economically Disadvantaged WOSBs; and
- Service-Disabled Veteran-Owned Small Business (SDVOSB) Program, a program designed to provide SDVOSBs with exclusive competition to federal procurement opportunities.
- SCORE, a non-profit association for the benefit of entrepreneurs and small businesses.
- The Minority Business Development Agency, a part of the US Department of Commerce.
- The Chamber of Commerce (local, state, or national).
Business Expansion into Other US States
If you’ve been having a particularly successful year, maybe your business is expanding to new US state territories. This comes with its own set of business qualification requirements. Although state requirements vary, qualification to do business in other states typically involves:
- checking the company’s name availability and, if required, choosing a name for the company or corporation to use in that state that complies with the state’s requirements;
- identifying a registered agent and office in the state;
- preparing and filing any necessary documents, such as a certificate of authority. This document usually requires information similar to the certificate of formation that the corporation submits to service of process in that state;
- paying fees; and
- fulfilling the state’s applicable reporting requirements, such as filing annual reports.
Failure to register your foreign activities can result in fines, loss of access to state courts, and other penalties. Therefore, when you expand your business into other states territories, it’s important for you to follow proper business law protocols.
If you are doing business internationally, your compliance responsibilities may extend around the world. Make a point of performing routine checks on your global entities, ensuring that their licensing is not expired or outdated. Keep in mind that compliance regulations differ from country to country, even down to the municipal level. Therefore, it is essential to conduct research and ensure that you are abiding by the country’s laws and regulations.
Houston Business Attorney
This has been a difficult year for everyone, and while this checklist may appear overwhelming, it is manageable with the proper help. Furthermore, be aware that failing to comply with various federal, state, and municipal regulations can result in fines, loss of good standing, and other consequences. It’s a good idea to avoid these repercussions for your company by consulting with a business attorney or a tax advisor to discuss your plans for completing your very own compliance checklist.Read More
HB 2116 passed both chambers and will become effective as law on September 1, 2021. This bill extends the prohibition on uninsurable duty to defend clauses to all contracts for engineering and architectural services and would require the ordinary, reasonable standard of care in all contracts.
After numerous discussions and negotiations between the owners, contractors, architects, and engineers, Texas legislature has limited the duty to defend clauses in contracts for architectural or engineering services. More specifically, contractors, architects, and engineers encouraged the Texas legislature to limit the liability and indemnification provisions in certain construction contracts for engineering or architectural services related to an improvement to real property. More specifically, they argued that including a duty to defend clause in a contract for engineering and architectural services is unfair because such contract provision would require an engineer or architect to pay the owner’s legal bills before any determination of liability, or even after a finding of no liability. Furthermore, they urged the legislature to agree that such duty to defend provisions in a contract for professional services with an engineer or architect are uninsurable. As design professionals, engineers and architects carry professional liability insurance, which protects against any action brought against the engineer or architect arising out of their services and work. The commercial general liability insurance policy carried by most engineers and architects does not protect against an action that arises out of their respective services. Therefore, a professional liability insurance policy does not cover against the costs of defense for someone other than the engineer or architect, and consequently if an engineer or architect signs such a contract, they would be paying out of pocket.
As a result, the HB 2116 by Rep. Matt Krause & Sen. Beverly Powell now voids a provision in a contract for engineering or architectural services to the extent that it requires a licensed engineer or architect to defend another party against a claim arising from the owner’s negligence or breach of contract. It further limits the right of reimbursement of the owner’s reasonable attorney’s fees in proportion to the engineer or architect’s liability and disallows it in a contract for design-build services in which an owner contracts with a single entity to provide both design and construction services.
The bill further eliminates the owner’s right to allocate a construction risk to the party in the position to best defend the plans and specifications provided to the owners. The bill allows the owner to be added as an additional insured on any of the engineer or architect’s insurance coverage to the extent that additional insureds are allowed under the policy. The compromise further exempts contracts in which the owner contracts with an entity to provide both design and construction services, as well as a covenant to defend a party, including a third party, against a claim for negligent hiring of the architect or engineer. Finally, the bill adds §130.0021, CPRC, prohibiting a contract for engineering or architectural services from requiring an engineer or architect to perform professional services to a level of professional skill and care beyond that which would be provided by an ordinarily prudent engineer or architect with the same professional license under the same or similar circumstances. It should be noted that Sections 130.002(d) and 130.0021, Civil Practice and Remedies Code, as added by this Act, apply only to a contract entered into on or after the effective date of this Act.
HB 2116 becomes an Act and takes effect September 1, 2021.Read More
On June 14, 2021, Pandemic Liability Protection Act was signed into law by Texas Governor Greg Abbott. The Texas Pandemic Liability Protection Act (PLPA) has several provisions, including the COVID-19 liability protection for health care providers, businesses, educational institutions, non-profits, religious institutions and schools that follow certain safety protocols. Texas, with the adoption of this law, joined dozens of other states across the country that have enacted statutory liability protections for businesses and other organizations for claims arising out of or connected with a pandemic.
Provisions for protections against business liability in alleged exposure claims, contain exceptionally high thresholds for plaintiffs asserting claims for COVID-19 related injuries. Under the PLPA, an individual with a COVID-19 related injury must show that either the employer or other entity: a) knew but failed to warn of or remediate a condition that was likely to result in the exposure of an individual to the disease or b) knowingly failed to implement or comply with government-promulgated standards, guidance, or protocols intended to lower the likelihood of exposure to COVID-19.
To demonstrate that a business or organization knew of and failed to warn an individual of a condition that was “likely to result in the exposure” to COVID-19, the claimant must show that the business or organization (a) had control over the condition “likely to result in the exposure” to COVID-19; (b) had a reasonable opportunity and ability to remediate the condition or warn of the condition before the individual came into contact with the condition; and (c) knew that the individual in question was “more likely than not” to come into contact with that condition.
To show that a business knowingly failed to implement or comply with government-promulgated standards, guidance, or protocols, the claimant must show that the business or organization had both the opportunity and ability to comply with those standards; refused to implement or acted with “flagrant disregard” of those standards; and that the standards that were not implemented or complied with did not conflict with some other government standard that the defendant satisfied.
Merely asserting that a business owner knew of and failed to warn of a condition that was “likely to result in the exposure” to COVID-19 and knowingly failed to implement or comply with government-promulgated standards, guidance, or protocols, is not enough to bring a claim. In addition, the claimant must provide “reliable scientific evidence” demonstrating that failure to warn of the condition was “likely to result in the exposure” to COVID-19 or failure to comply with government standards, guidance, or protocols was “the cause in fact of the individual contracting the disease.” Said “reliable scientific evidence” must come in the form of an expert opinion or report that states facts and provides scientific basis for the assertion that the alleged harm actually caused the claimant to contract COVID-19. The expert report must be provided no later than 120 days after the defendant files an answer (although the deadline may be extended by an agreement). The defendant has 21 days after service of the expert report or after or the defendant files its answer (whichever is later) to challenge the sufficiency of the expert report. If the court finds the expert report to be insufficient, it may grant 30 days to cure the deficiency. However, if a sufficient report is not timely produced, the court, on defendant’s motion, must dismiss the case with prejudice and award reasonable costs and attorney’s fees. PLPA allows no discretion on this requirement.
PLPA is an important protection tool in limiting employer liability in COVID- related lawsuits
The law does not create a private cause of action and applies only to claims filed on or after March 13, 2020 for which a final judgment has not yet been issued. PLPA further states that there is currently no certainty regarding how long the pandemic will last and, thus, does not contain a sunset provision. Instead, it provides that the law will remain in effect until a state of disaster no longer exists. On June 7, 2021, Governor Abbott extended the state’s COVID-19 Disaster Declaration through the end of June 2021.
Texas employers with pending COVID-related claims should consult with their employment law counsel to determine whether PLPA or workers’ compensation program can eliminate liability for worker illnesses or for COVID- related conditions.
The intent of this article is to provide general information on employee benefit issues. It should not be construed as legal advice and, as with any interpretation of law. Employers should seek individual legal advice for application of this new law to their company circumstances.
The information in this article is current through June 2021. However, due to the changing nature of the COVID-19 pandemic, the facts stated in this article may change.
©2021 FILIPPOV LAW GROUP, PLLC | All rights reserved.Read More
This Act applies to employers with greater than 50 but fewer than 500 employees and to all government employers. The legislation further gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the bill’s paid leave requirements if those requirements would jeopardize the viability of the business.
Yesterday the U.S. Senate passed the Families First Coronavirus Response Act, H.R. 6201 and President Trump signed the bill into law. The bill’s provisions become effective within 15 days, which means employers must act swiftly to amend policies and train employees to ensure that employee leaves are administered in accordance with the new law. Below is a summary of the key provisions of the legislation that may impact your company.
|Effective for one year after April 3, 2020.|
|Emergency Paid Sick Leave (two weeks)||Employers must pay $511.00 per day (not to exceed $5,110 per week) to employee who takes sick leave for the following reasons:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
Employers must pay $200.00 per day (not to exceed $2,000 per week) to employee who takes sick leave for the following reasons:
|Emergency Family and Medical Leave Expansion Act||First 10 days of Public Health Emergency Leave must be
1) paid at $200 per day (not to exceed $2,000 per week); or,
NOTE: The employer may not require an employee to take unpaid leave or to substitute vacation leave for these first 10 days.
After 10 days of Public Health Emergency Leave, the paid Public Health Emergency Leave continues at a rate of no less than 2/3 of the employee’s usual rate of pay but no more than $200 per day and $10,000 in total.
|Tax Credit||A refundable tax credit equal to 100 percent of all qualified paid sick and Public Health Emergency leave wages paid by an employer for each calendar quarter is allowed against the tax imposed by Internal Revenue Code section 3111(a) (the employer portion of Social Security taxes).|
The intent of this article is to provide general information on employee benefit issues. It should not be construed as legal advice and, as with any interpretation of law. Employers should seek individual legal advice for application of these rules to their company circumstances.
The information in this article is current through March 19. However, due to the changing nature o the COVID-19 pandemic, the facts stated in this article may change.
©2020 FILIPPOV LAW GROUP, PLLC All rights reserved.Read More
For many people, buying a home is the largest financial transaction they will make during their life. There are several steps you can take in advance to increase the likelihood that your real estate closing will go well and does not have to be canceled and rescheduled. To protect your rights and best interests before you sign a contract at the closing, it is critical to ask an experienced Houston real estate attorney to review the contract.
How to Ensure a Smooth Real Estate Closing: The following key areas help ensure accuracy prior to the closing date.
Get Conditional Approval before Making an Offer: Loan pre-approval creates a realistic expectation of the offer price range. Buyers who have been pre-approved by a lender are usually able to finalize their loan application faster than those who have not been pre-qualified.
Review Contract Documents: If the information on any document is found to be incorrect, even a simple misspelling, it can delay or even necessitate the rescheduling of a closing. Ask to see all paperwork in advance and check and recheck every piece of information until it is verified.
Down Payment: Transfer the down payment to the closing agent a few days in advance to eliminate the possibility of a last-minute problem at the bank. An alternative to transferring the funds is to bring a certified or cashier’s check to the closing.
Expedite Loan Documents: If the closing agent doesn’t receive the loan documents in time, your closing may have to be rescheduled. To avoid delay, Buyers should also assemble their bank statements, pay stubs, tax returns and other documents to fast track their loan approval. Most lenders post checklists online. Ask both the closing agent and the lender in advance if they have everything they need, including bank statements and tax returns. Lenders frequently ask for additional information at the last minute. Call the day before your closing to confirm that everything is ready for the closing date. On the day of closing, verify with your closing agent that the loan documents have been received. If not, ask what is causing the delay and if there is anything you can do to help speed things up.
Title Trouble: To avoid last minute title trouble, get your own copy of the preliminary title report (completed after escrow opens) to review. Your title company will inform you of any problems they find during the title search. Be sure to purchase title insurance to protect yourself against title defects. If a title dispute arises during a sale, the title insurance company may be responsible for paying specified legal damages, depending on the policy.
Title Commitment Insurance: Is issued prior to closing and demonstrates the title company’s willingness to issue title insurance under conditional terms. It further provides coverage for the property. Conditional terms will list potential issues, exceptions, and exclusions covered within the terms. It is essential to review any items listed with the title agent and confer with the policy so there are no surprises down the road. The terms available for negotiation include property descriptions in Schedule A, exceptions listed in Schedule B, and the Exclusions. If an item is “excepted” on the marked-up title commitment, it will appear on the final policy and the owner’s title and bank’s mortgage will be subject to the exception (example, a utility easement to PPL).
Title Insurance: Protects you from financial loss due to defects in the title to real estate. Protection extends to claims filed prior to the purchase of the property. Texas does not require perspective buyers to purchase title commitment or title insurance. However, a lender will require a loan policy of title insurance. Should you purchase title insurance, it will remain in effect for the duration of ownership of the land, including the owner’s heirs. However, if you opt for the lender’s loan policy, you are only covered for the duration of the loan. There are three things that should be done before closing: 1) Determine what endorsements the bank will require; 2) Review the title commitment; and 3) Ask for copies of the exceptions and review them.
Final Walk-Through Problems: Make sure any repairs the seller has agreed to make are completed before closing. Do the final walk-through inspection the day before closing, or sooner. If you find any problems with the home during your final walk-through, tell your agent immediately so he or she can work towards a solution.
Consult a Real Estate Attorney: Consulting a real estate attorney can take care of many of these pre-closing tasks for you and coordinate parties and documents so that the closing can go smoothly.
Conclusion: Prior to proceeding to a real estate closing, it is important you prepared properly for the meeting to avoid delays. It is advisable to review all documents with an experienced attorney to ensure you are covered in the event of a claim against your title.
Filippov Law Group, PLLC provides a full range of services in the area of real estate law, with a primary focus on protecting the rights of property owners engaged in buying or selling residential or commercial property. We represent clients in matters related to the purchase and sale of real estate and litigation, including:
Purchase and Sale of Real Estate
Real Estate and Litigation Services
• Drafting and negotiating real estate contracts;
• Negotiations and contract executions;
• General consultation, including the interpretation of various real estate purchase contracts and those promulgated by the Texas Real Estate Commission;
• Representation of individuals and entities at the closing table to assist in the review of closing documents prepared by title companies; and
• Preparation of documents, including deed for condominium projects, special warranty deeds, purchase agreements, deeds with vendor liens, deeds of trust, notes, and lien releases, and general warranty deeds.
• Sales and purchase agreements of residential and commercial property;
• Subdivision development law;
• Fraud litigation;
• Landlord-tenant dispute resolution;
• Construction defect litigation;
• Title and document review, attend closings on behalf of either buyer or seller;
• Commercial property lease agreements;
• Title transfers resulting from the probate of wills or the distributions of various types of trusts;
• Letters of Intent.
There are many factors that can affect and delay your real estate closing. Have an experienced attorney review your documents today to avoid any undue delays.
The attorneys at FILIPPOV LAW GROUP, PLLC. have the experience and answers to the questions you face regarding real estate closing questions and issues. Contact us today for a no-obligation assessment of your overall legal needs. Call us at (832) 305.5529 or email our managing member at firstname.lastname@example.org to schedule your appointment.
This blog is intended as an information source for existing and future clients of FILIPPOV LAW GROUP, PLLC. and should not be construed as legal advice. Readers should not act upon the information contained in this blog without professional counsel. The materials presented in our blog, “tweets” and legal articles may not reflect the most current legal developments, verdicts, or settlements. These materials may be changed, improved, or updated without notice. FILIPPOV LAW GROUP, PLLC. is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances. © Copyright 2018 FILIPPOV LAW GROUP, PLLC.Read More
What is a Registered Trademark?
The importance of the registered trademark is lost on many business owners. This is because the majority does not understand what a trademark stands for or has a very vague idea of the meaning of it. A trademark is a symbol, word, or words representing a company or product legally registered or established by use. A trademark embodies the business’ goodwill and reputation. The more reputation grows, the more valuable the brand represented by a trademark, will be. Similar to property rights, a trademark can be bought, sold, licensed or used as a security interest to secure a loan. Furthermore, a trademark never expires for as long as it is used for commerce in the United States.
In the United States, multiple layers of legislation protect a registered trademark. Primarily, trademarks are protected under the Lanham Trademark Act. The US Patent and Trademark Office is a federal agency that enforces Lanham Act and regulates the registration process. The registered trademark symbol (®) provides notice that the preceding word or symbol is a trademark or service mark that has been registered with a national trademark office.
At the state level, a trademark is protected by common law principles of unfair competition. Common law protection is limited in scope and only extends to the territory where the mark is used.
Why Register a Trademark?
The main benefit of registering a trademark on the federal level is the enforcement of the trademark rights granted by the Lanham Act. Statutory causes of action that could be brought by the owner of a trademark include: infringement (unauthorized use), counterfeiting (use of a substantially undistinguishable mark from the registered mark), trademark dilution (use of name that is likely to reduce public’s perception of a famous mark which signifies something unique), false advertising (false designation of origin, for example), passing off (false representation with intent to induce to believe that the goods or services are those or another).
It is important to understand that even without a registration the trademark is somewhat protected. State trademark registration is an alternative option available for business owners. Though state registration generally grants rights no greater than one could obtain under common law, the process is quick, easy and it does have certain benefits. It secures the mark’s placement in trademark reports and provides a notification to the third parties. If the business is at an early stage and there are no plans to go nationwide, the protection granted by the state is enough for a purely local business.
Federal registration allows the owner to have indisputable evidence of validity and ownership rights of the mark. Furthermore, under federal registration, a trademark falls under federal court subject matter jurisdiction over infringement and other trademark claims without showing diversity or minimum amount in controversy. Statutory remedies available for federal trademark infringement claims include treble damages and recovery of attorney’s fees. In addition, federal trademark provides grounds for registering the mark in foreign countries.
It is important to note that even if it may seem your business meets all the requirements for trademark, the registration of a mark is not guaranteed. Officers of the USPTO consider all federal trademark applications. It usually takes up to a year to finalize the process.
When to File a Trademark Registration
Trademark registration is important for business owners who are serious about their business and their brand. Every step you take to grow your business is an investment in your brand and you should secure it. To gain maximum legal protection, we recommend filing a trademark application soon after you start doing business. The trademark process takes more than 6 months so it’s best to get started early.
What Should be Included in the Trademark?
Any type of device used to identify the source or origin of a product or service can be registered as a trademark. It could be words, phrases, symbols, designs. Some trademark could also include, under certain circumstances, sounds, smells, colors and shapes. The main benefit of having it registered, is that it provides an exclusive right to the registered owner to use the trademark in connection with products and services covered by the mark. This helps to distinguish the origin and quality of the goods or services that may originate from different sources.
Requirements for Federal Trademark Registration
Initial requirements for the federal trademark protection include usage in the stream of commerce and distinctiveness. Furthermore, it shouldn’t include any deceptive terms or immoral language, and there shouldn’t be any similarities or confusion with other registered marks.
While the process of filing a trademark application may seem to be quite easy at the first, it can be a tedious process. The most tedious part of the process is the so called “trademark clearance”. An applicant has to conduct a very thorough search (Federal Trademark Register search, state trademark registers, various public sources) and proceed with a very detailed analysis to eliminate possible conflicts and issues with the application. An applicant or an attorney assisting with the application needs to evaluate if the proposed mark qualifies for trademark protection and federal registration. Conducting trademark clearance on initial stages helps to avoid or reduce investment in a trademark that is already unavailable.
A recent study which analyzed 25 years of USPTO data shows that applicants who used an attorney to file their trademark applications were 50% more likely to get their marks approved than those who applied without legal representation.
How does your company protect its trade secrets? Are you putting the effort in to have policies and procedures in place prior to disclosing trade secrets to employees, contractors, vendors, clients and business partners? Don’t wait until after someone infringes on your trademark to seek legal advice. Our firm can help you achieve trademark registration by ensuring all the requirements are met for filing.
If not, contact us today for a no-obligation assessment of your overall legal needs and risk management program. Call us at (832) 305-5529 or email us at email@example.com to schedule an appointment.
This blog is intended as an information source for existing and future clients of FILIPPOV LAW GROUP, PLLC and should not be construed as legal advice. Readers should not act upon the information contained in this blog without professional counsel. The materials presented in our blog, “tweets” and legal articles may not reflect the most current legal developments, verdicts, or settlements. These materials may be changed, improved, or updated without notice. FILIPPOV LAW GROUP, PLLC. is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances. © Copyright 2017 FILIPPOV LAW GROUP, PLLC