Is It Time To End Removal To Federal Court?

To contact us Click HERE
When I try to explain diversity jurisdiction to my clients, most of their eyes glaze over. I’ll try to do it here without making you yawn. Diversity jurisdiction allows defendants to remove a case filed in state court to federal court if all defendants are from a different state than the plaintiffs. Say Mary Jane from Florida sues her employer, Evil Empire, LLC. They do have offices in Florida where Mary Jane worked, but they are incorporated and have their main offices in Texas. Diversity jurisdiction would allow Evil Empire to remove Mary Jane’s case to federal court even if all her claims were under state law.

Bizarre, right? But it happens all the time. It’s more complicated than what I just described, but that’s it in a nutshell. Diversity lets the employer forum shop and force employee-plaintiffs into a different court. Employers in many states (maybe justifiably) think federal court is a friendlier place for them.

The reasoning behind diversity jurisdiction is that local courts might be biased against non-local defendants. That was possibly true in 1789, when it was created, but is it true now? I’d bet not. I haven’t seen any studies comparing how out-of-state defendants fare in state court as compared to federal court, but with TV, the Internet, Skype, Twitter, and Facebook crashing down barriers, local prejudice has to be dissipating.

The other thing I’ve never gotten is that federal judges are also locals. A federal judge appointed in Iowa is going to be from Iowa. Does that mean we assume state judges are more biased than federal? I’m willing to bet that isn’t true. The state court judges I appear in front of don’t give a hoot where a defendant is from. I’ve never seen it be an issue. And juries in state and federal court are from the same group of people – all local.

I thought diversity jurisdiction was silly when I learned about it in law school (which may partly explain my less-than-stellar grade in Civil Procedure), and think it’s pretty ridiculous now.

So why did Congress just make it easier for defendants to remove cases to federal court? Normally, defendants have a year to remove, but this change lets them remove all the way up to trial under certain circumstances. That means an employee could go through the expense of conducting discovery and getting ready to go to trial, then have to start over in federal court. Good for the defendant with superior financial resources, very bad for the lowly employee.

Rather than allowing the federal courts to be used as a cynical ploy to cost employees more money, why not eliminate diversity removal altogether? If the purposes it served when enacted no longer exist, then let’s do away with it. Plaintiffs should be allowed to choose their forum within reason. If they file in a court that has jurisdiction and that’s the right venue, they should be able to proceed.

Allowing a last-minute removal is a gigantic waste of state and federal judicial labor and resources. It’s also a colossal money-suck of taxpayer dollars. Let’s get rid of diversity removal. If you agree, contact your member of Congress and tell them. I would encourage employee-side groups like NELA and unions to explore this issue.

Think I’m wrong? Tell me why you want your tax dollars spent this way.

Are Federal Judges Hostile To Employment Plaintiffs? Report Says Yes

To contact us Click HERE
The National Employment Lawyers Association (NELA), which is the employee-side lawyers’ organization, just released a study called Judicial Hostility to Workers’ Rights: The Case for Professional Diversity on the Federal Bench. The statistics confirm what every employment law practitioner knows already: federal courts are mostly a terrible place for employees:

• From 1979-2006, the plaintiff win rate for employment cases (15 percent) was lower than non-employment cases (51 percent).

• For cases going to trial, employment discrimination plaintiffs (28.47 percent) won less often than other plaintiffs (44.94 percent).

• Employees succeeded on appeal only 9 percent of the time, while employers won 41 percent of appeals.

Judicial Hostility, p. 4.

The report points to the lack of federal judges who, as lawyers, actually represented, you know, people. I don’t mean corporations, which are now considered by the same federal bench to be people. I mean living, breathing human beings.

Employees face all kinds of judge-created obstacles. The report cites a few (my colleagues and I could probably name a dozen more):

• “Stray Remarks” – Allows judges to disregard discriminatory statements made by supervisors or other employees as merely “stray remarks,” and therefore not evidence of discrimination

• “Business Judgment” – Permits judges to defer to an employer’s “business judgment” instead of carefully examining whether an asserted justification for an adverse employment action was pretext for unlawful discrimination. Some courts have gone so far as to accept the defendant’s asserted reasons for the adverse employment action being challenged, even when the employer’s explanation is harsh or unreasonable.

• “Self-Serving Witness” – Enables judges to presume the credibility of testimony from defense witnesses with a vested interest in helping employers avoid liability, while categorizing assertions by or on behalf of plaintiff-employees as purely “self-serving.”

Judicial Hostility, p. 5.

The report cites to one other factor peculiar to federal courts: summary judgment. The fact is that summary judgment standards in federal court result in very few employment cases actually making it to trial.

• Between 1979 and 2006, employees in discrimination cases won only 4 percent of pretrial adjudications – the bulk of which can safely be assumed to have been on defendants’ motions for summary judgment.

Judicial Hostility, p. 8.

The report recommends that the President appoint judges from diverse professional backgrounds. The lack of judges who have worked for non-profit organizations that assist the poor and judges who have represented plaintiffs in employment and civil rights cases certainly skews the bench to the employer side.

I have another suggestion. Congress needs to step in. When the bench creates obstacles, Congress can lift them. They’ve done it with the Lilly Ledbetter Fair Pay Act, the ADA Amendments Act, and the VOW to Hire Heroes Act. They can fix some more of these problems by making the standards for proving and winning discrimination cases clear; by laying out the burden of proof for both plaintiffs and defendants so it’s not open to hostile interpretation; and by eliminating the judge-created doctrines that make employment law cases ridiculously hard to win.

Do you want change? Contact your member of Congress. Send them this report. Tell them that it's their job to make sure hard-working Americans don't get short-changed in federal court.

Orange-Americans Unite: Stand Up For Yourselves!

To contact us Click HERE
           Did you hear the one about the 14 employees who were fired for wearing orange shirts? If you didn’t, you don’t live in the UK or Ghana or anywhere in the U.S., because the story made the international news. I think the story hit a chord with people everywhere because it was just so outrageous. You come into work one day, the boss is in a bad mood and fires you because she didn’t like your shirt that day.

            Management said they believed the shirts were a protest over working conditions, so they fired the employees involved. Some of the employees were quoted saying they didn’t intend to protest.

            What I thought was really interesting were the lawyers quoted who said, because Florida is an at-will state,  the employees could be fired for any reason. That's true some of the time. As I say in my upcoming book, employers can fire you because they didn't like your shoes that day. However I don’t agree with the assessment that these employees have no legal protection. Employees do have rights, even when they wear orange.

            I should confess at this point that I represent a group of the Orange-American employees who were fired. I won't go into all the underlying facts at this point. Let’s just say there’s more to the story.

            What I will do is discuss generally some circumstances where even Florida employees can’t be fired because their boss didn’t like their shirts:

            Religion: If the clothing has religious significance, the employer can’t fire employees for wearing it unless it can show serious concerns such as safety or security. Orange is a key color for the Protestant religion, so if the color was worn for religious reasons, firing because of wearing the shirts would be religious discrimination.

            Disability: If the clothing or color was worn due to a disability, such as a spine-adjusting device, then the employer would have to accommodate the disability unless it could show an undue hardship.

            Discrimination: If not all employees were fired for wearing orange, and the employees not fired were of a different race, age, sex, religion, national origin, etc. than the people fired, it could be discrimination.

            Concerted activity: The National Labor Relations Act (NLRA), which applies to most workplaces, not just unionized ones, says in Section 7: “Employees shall have the right to self-organization, . . . to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .” NLRA also makes it unlawful for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.” Even if an employee didn’t engage in concerted activity, they are protected under the NLRA. An employer who fires them for suspicion of engaging in concerted activity is in violation of the law. The NLRB said in one case: “The discharge of 4 employees . . .because of [the employer’s] belief, albeit mistaken, that the[y] had engaged in protected concerted activities is an unfair labor practice which goes to the very heart of the Act”

            There have been lots of cases where firing employees because management didn’t like their shirt were found to be unlawful: where AT&T workers wore shirts that said “Inmate #” on the front and on the back said “Prisoner of AT$T”; where employees wore shirts protesting the use of retirees to bust unions and some employees wore shirts saying, “Union ‘til I retire, then scab in!” and “When I retire I will not scab. I will go fishing”; where employees wore shirts with the employer’s logo, cracked, saying, “I survived the Midstate Strike of 1971-1975-1979”; and many more. In each case, the employees’ shirts were concerted activity protected under the NLRA.

            I won’t comment on which of these circumstances apply to my Orange-American clients’ cases – at least, not yet. But I will say this: it could happen to you. We’re all Orange-Americans. Every American who works for a living and can be fired, from the janitor to the CEO. Every American who thinks our jobs shouldn’t be yanked away without good reason. Every American who wants to complain about working conditions but is afraid. Every American who can lose not only their jobs, but their health insurance, for any reason or no reason at all. Every American who can be fired for wearing a color their boss doesn’t like, and can then be told they aren’t allowed to work in their chosen profession for a year or two.

            American workers do have rights, even in Florida; you just don’t have many. But you do have some rights, if only you know how to exercise them. You also have the right to vote, and to petition your representatives to change the law. In this economy, shouldn’t an employer have more reason than an intense dislike of the color orange to fire you?

            Orange-Americans unite: stand up for yourselves!

What the U.S. Chamber Of Commerce Doesn't Want You to Know About Your Workplace Rights

To contact us Click HERE
The National Labor Relations Board says almost all private employers must put up a poster informing you of your workplace rights under the National Labor Relations Act as of April 30,2012. It’s free. Employers can download it online and print it out. So they all put up their posters, or are working on it now, right? Nosiree.

They sued. At least, they got together under the umbrella of the U.S. Chamber of Commerce to sue. They got a temporary injunction in the DC federal courts to stop the rule. They really, really don’t want you to see this poster. It must really be subversive, huh?

Well, see for yourself. Here’s exactly what the U.S. Chamber of Commerce doesn’t want you to know about your workplace rights:

Employee Rights Under the National Labor Relations Act

The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity or to refrain from engaging in any of the aboveactivity. Employees covered by the NLRA are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA.


Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.


Under the NLRA, you have the right to:
• Organizea union to negotiate with your employer concerning your wages, hours, and otherterms and conditions of employment.• Form,join or assist a union.•Bargain collectively through representatives of employees’ own choosing for acontract with your employer setting your wages, benefits, hours, and otherworking conditions.•Discuss your wages and benefits and other terms and conditions of employment orunion organizing with your co-workers or a union.• Takeaction with one or more co-workers to improve your working conditions by, amongother means, raising work-related complaints directly with your employer orwith a government agency, and seeking help from a union.•Strike and picket, depending on the purpose or means of the strike or thepicketing.•Choose not to do any of these activities, including joining or remaining amember of a union.
Under the NLRA, it is illegal for youremployer to:
•Prohibit you from talking about or soliciting for a union during non-work time,such as before or after work or during break times; or from distributing unionliterature during non-work time, in non-work areas, such as parking lots orbreak rooms.
Under the NLRA, it is illegal for a union orfor the union that represents you in bargaining with your employer to:
•Threaten or coerce you in order to gain your support for the union.
Wow.That’s it, you say? What’s the BFD? Well, I think it’s mostly these provisionsbig employer doesn’t want you to see:
Discussing wages and benefits with coworkers: The poster says, “Underthe NLRA, you have the right to discussyour wages and benefits and other terms and conditions of employment . . . withyour co-workers or a union.” Yet many employers take desperate measures to makesure you don’t know what coworkers are making and what benefits they have. Someput out written policies or put restrictions in contracts. That’s flat-outillegal. If you have a contract or if your employer has a policy saying you can’tdiscuss wages and benefits with coworkers, you can file a ChargeAgainst Employer with NLRB right now. The other part they don’t want you toknow about here is your right to grouse about working conditions withcoworkers. You can grumble and complain during breaks, on Facebook, in Twitter,as long as you’re doing it with coworkers and they can’t fire or discipline youfor it.
Discussing work-related complaints and workingconditions with coworkers: The poster says, “Under the NLRA, you have the rightto take action with one or more co-workers toimprove your working conditions by, among other means, raising work-related complaintsdirectly with your employer or with a government agency, and seeking help froma union.” If you complain about conditions on your own and on behalf ofyourself, you aren’t protected. But you have the absolute right (assuming youaren’t a supervisor) to complain about working conditions on behalf ofcoworkers, to get together with coworkers to discuss and complain, and to gettogether to try to negotiate better working conditions. That is huge.
Employerslike to crack down on employees who complain. They want to create an atmospherewhere employees shut up and accept things as they are. Most of the time, it’sbest to keep your mouth shut. But sometimes, you have to speak up. If workingconditions are intolerable, if it feels like a prison, if you are being paidunfairly, if there’s a bully in the workplace, sometimes you have to speak up.You probably have the right to do so, as long as you aren’t a supervisor, andas long as you’re not alone.

What EEOC Wants You To Know About Using Criminal Records In Employment Decisions

To contact us Click HERE
The EEOC has issued a new guidance about how the use of criminal records in making employment decisions might be illegal discrimination. Why might using criminal records result in discrimination? EEOC says this about racial disparity and criminal records:

In the last twenty years, there has been a significant increase in the number of Americans who have had contact with the criminal justice system and, concomitantly, a major increase in the number of people with criminal records in the working-age population. In 1991, only 1.8% of the adult population had served time in prison. . . . By the end of 2007, 3.2% of all adults in the United States (1 in every 31) were under some form of correctional control involving probation, parole, prison, or jail. The Department of Justice’s Bureau of Justice Statistics (DOJ/BJS) has concluded that, if incarceration rates do not decrease, approximately 6.6% of all persons born in the United States in 2001 will serve time in state or federal prison during their lifetimes.

Arrest and incarceration rates are particularly high for African American and Hispanic men. African Americans and Hispanics are arrested at a rate that is 2 to 3 times their proportion of the general population. Assuming that current incarceration rates remain unchanged, about 1 in 17 White men are expected to serve time in prison during their lifetime; by contrast, this rate climbs to 1 in 6 for Hispanic men; and to 1 in 3 for African American men. 

EEOC cites problems such as inaccuracies, obtaining expunged records, that an arrest doesn’t mean guilt, and other severe problems that arise with the use of criminal records for employment decisions, yet they say 92% of all employers are using criminal background checks on some or all employees.

Here are just some of the ways using criminal records might constitute illegal discrimination:

Disparate treatment: If two people with similar criminal backgrounds apply for the same job and one is not interviewed, or is not hired, then EEOC can look at the race and national origin of the two applicants. If the employer is giving whites the benefit of the doubt but excluding blacks or Hispanics, as an example, this would be disparate treatment. If you are excluded from a job or terminated due to a criminal background, look around. If others of a different race or national origin with similar histories are hired or still employed, you might have a discrimination case.

Disparate impact: If the employer excludes everyone with a criminal background, that doesn’t mean they escape liability for discrimination. Because of the huge disparities among races in criminal records, even a decision that seems racially neutral might have an illegal impact. EEOC cites to Title VII, which says, “An unlawful employment practice based on disparate impact is established . . . if a complaining party demonstrates that an employer uses a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex, or national origin and the respondent fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity. . . .”

Arrest records: Because an arrest does not mean you’re guilty, use of an arrest record standing alone may not be used to deny an employment opportunity. However, the employer may make an inquiry as to whether the underlying conduct involved makes you unfit for employment. The EEOC gives, as an example, a principal who is arrested for sexual misconduct involving a minor. The employer may suspend him pending an investigation and interview witnesses and examine evidence to determine whether the evidence supports the charge. Because the conduct relates to his fitness to perform his duty, the employer may determine his version of events is not credible and terminate him. What the employer can’t do is consider any arrest as evidence of untrustworthiness and fire all employees arrested for any reason.

Convictions: Convictions are certainly evidence that you were guilty of a crime. However, EEOC requires that any inquiry about convictions be limited to “convictions for which exclusion would be job related for the position in question and consistent with business necessity.” In general, the factors the employer should consider are the nature and gravity of the offense or conduct; the time that has passed since the offense, conduct and/or completion of the sentence; and the nature of the job held or sought (called the Green factors). EEOC says the employer may use criminal convictions if:

a. “The employer validates the criminal conduct screen for the position in question per the Uniform Guidelines on Employee Selection Procedures standards (if data about criminal conduct as related to subsequent work performance is available and such validation is possible);” or

b. “The employer develops a targeted screen considering at least the nature of the crime, the time elapsed, and the nature of the job (the three Green factors), and then provides an opportunity for an individualized assessment for people excluded by the screen to determine whether the policy as applied is job related and consistent with business necessity.” 

Individualized assessment: In order to meet the second test for using convictions, the employer must give an opportunity for an individualized assessment of people excluded by the screen. the use of individualized assessments can help employers avoid Title VII liability by allowing them to consider more complete information on individual applicants or employees, as part of a policy that is job related and consistent with business necessity. This means they have to tell you that you may be excluded because of past criminal conduct, give you an opportunity to show the exclusion doesn’t properly apply to you, and then consider whether your additional information shows that excluding you would not be job related and consistent with business necessity.

Relevant information: Once the employer contacts you, some information they should consider if you present it are the facts and circumstances surrounding the offense, the number of convictions, older age either at the time of conviction or release from prison, evidence that you’ve performed the same type of work post-conviction with similar or the same employer with no additional criminal conduct, the length of your employment history before and after the offense, rehabilitation efforts such as education and training, character and other evidence regarding fitness for the particular position, and whether you are bonded. If you don’t respond, the employer can make its decision with the information it has. That means you should respond quickly and completely if you want a chance at the job.

Less discriminatory alternative: Even if the employer can show a business necessity and that excluding you because of your record may be job related, you might still be able to prove discrimination if you can show a less discriminatory alternative to the exclusion that serves the employer’s goals equally well.

Industries with restrictions: If the industry you’re applying for prohibits hiring or retaining employees with certain criminal convictions, then the employer may comply with the law, but if they impose any stricter exclusion they are still subject to potential discrimination claims.

Best Practices For Employers

EEOC’s recommendations are that employers review their practices to make sure they aren’t engaging in illegal discrimination. They suggest the following best practices for employers:

• Eliminate policies or practices that exclude people from employment based on any criminal record.• Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination. 
• Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct. 
• Identify essential job requirements and the actual circumstances under which the jobs are performed.
• Determine the specific offenses that may demonstrate unfitness for performing such jobs. 
• Identify the criminal offenses based on all available evidence. 
• Determine the duration of exclusions for criminal conduct based on all available evidence. 
• Include an individualized assessment. 
• Record the justification for the policy and procedures. 
• Note and keep a record of consultations and research considered in crafting the policy and procedures. 
• Train managers, hiring officials, and decisionmakers on how to implement the policy and procedures consistent with Title VII. 
• When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity. 
• Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended. 

If you think an employer or potential employer has discriminated against you based upon your criminal record, contact an employment attorney in your state to discuss your rights and options.

TAX COURT FURTHER LOOSENS THE STRINGS ON FORMULA GIFTS

To contact us Click HERE

The Internal Revenue Code provides for a tax on gifts. However, annual exclusion gifts of $13,000 per recipient and gifts that do not exhaust a donor’s available unified credit will not generate a current gift tax. Thus, donors often seek to make gifts that come within, but that do not exceed, the above exemptions and credits.

This can be difficult if the gift is of property and not cash, since the precise value of the gift may not be known. Therefore, donors will want to include terms to their gift that if the value, as determined by the IRS, exceeds what was expected, the amount gifted will be scaled back to come within the exemption or credit amounts. However, at least since the case of Commissioner v. Procter, 142 F.2d 824, 827-828 [32 AFTR 750] (4th Cir. 1944), donors have run a significant risk that the IRS and courts would not respect such arrangements.

In recent years, several favorable taxpayer cases have upheld somewhat complex arrangements that seek to accomplish such adjustments, such as Estate of Petter v. Commissioner, T.C. Memo. 2009-280 [TC Memo 2009-280], aff'd, 653 F.3d 1012 [108 AFTR 2d 2011-5593] (9th Cir. 2011) and Estate of Christiansen v. Commissioner, 130 , T.C. 1 (2008). The taxpayers in the favorable cases have melded the gift-giving with either gifts to charities or disclaimers. These elements were added in large part because established gift tax law for charitable gifts and disclaimers allows for the use of “formulas” to define the amount of a gift, and also to bring in third parties that will purportedly enforce the clause or that have favorable public policy elements (such as enhancing charitable gifting).

The Tax Court has now ruled in favor of a donor that used a formula gift, but did not include any charitable gifts or disclaimers. Such an arrangement is of course much easier to implement in a usual gift-giving scenario, and thus substantially lowers the bar for taxpayers who want to use formula gifts to avoid inadvertent gifts.

The case largely turns on the formula which defines the gift as a given dollar amount of property. Thus, while an initial property transfer based on the taxpayer’s estimation of value will be undertaken, the amount of property transferred will be readjusted if the subsequent appraisal, the IRS or the courts determine a different value. This is to be distinguished from a gift of a fixed amount of property, that will later involve additional transfers of property back or forth based on IRS valuations. Is there really a difference between the two? It is hard to say. What is clear is how to draw a qualifying transfer that the Tax Court likes: express the amount of property transferred as a formula, as a stated dollar value to be transferred. The only variable should be the finally determined value for the property that is to be transferred. The court found the following language from Petter to be central to this issue:

Under the terms of the transfer documents, the foundations were always entitled to receive a predefined number of units, which the documents essentially expressed as a mathematical formula. This formula had one unknown: the value of a LLC unit at the time the transfer documents were executed. But though unknown, that value was a constant, which means that both before and after the IRS audit, the foundations were entitled to receive the same number of units. Absent the audit, the foundations may never have received all the units they were entitled to, but that does not mean that part of the Taxpayer's transfer was dependent upon an IRS audit. Rather, the audit merely ensured the foundations would receive those units they were always entitled to receive.

Some additional important points and observations from this case include:

     a. The donees were family members of the donor. Thus, the court did not believe the family relationship alone would void the effective operation of the formula clause although this was not expressly discussed.

     b. While Petter included language regarding the policy of encouraging gifts to charitable organizations, that factor was not determinative to the acceptance of a formula clause. Here, there was no charity involved and the court expressly noted that this element of Petter was not a requirement to an effective formula gift.

     c. In drafting a formula and transfer arrangement, it should be clear that the donor’s intent was to transfer only a certain fixed dollar amount of property, and not to transfer a fixed amount of property that would be later readjusted.

     d. The properties transferred here were interests in a partnership. The IRS argued that since the capital accounts were adjusted to provide for the initial number of units transferred, that fixed the amount of the gift by state law and a later revaluation could not undo the gift. The court rejected this, both on legal grounds, and on the factual that it was not clear that the capital accounts had been adjusted for the gifts based on the initial transfer amount. What happens in a case when the capital accounts are formally adjusted based on the initially determined transfer amount so that the factual argument is not available to a taxpayer? Based on the language of the court, even in that situation it would appear that this would not create a basis for a taxable gift because of the legal argument that the capital accounts do not control.

Does this case mean that formula gifts can be undertaken now without charitable or disclaimer elements? Perhaps yes, but more conservative planners may still want to include the charitable or disclaimer elements for more certainty, at least until additional favorable precedent arises.

Joanne M. Wandry, et al. v. Commissioner, TC Memo 2012-88

A COMMON MISCONCEPTION ABOUT INCOME TAX TREATIES

To contact us Click HERE

The U.S. is a party to numerous income tax treaties with various countries. These treaties provide numerous special provisions that exempt or reduce certain types of income from taxation.

Many times, U.S. citizens will note provisions of a treaty that appear to reduce their U.S. income tax. This was the case for Christina Le Tourneau, who was a U.S. citizen residing in France who worked as a flight attendant on international flights. She read Article 15, Paragraph 3, of the U.S. – France treaty, which provides: “Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised as a member of the regular complement of a ship or aircraft operated in international traffic shall be taxable only in that State.” Since she was a resident of France, she sought to apply this provision to avoid U.S. income tax – asserting that only France had income tax jurisdiction over her income from that employment.

What Ms. LeTourneau did not understand is that these provisions will in most cases not operate to allow a U.S. citizen to avoid U.S. income tax on any of his or her worldwide income. Instead, such a provision will operate only to exempt a resident of France who is not otherwise a U.S. citizen or income tax resident from being taxed by the U.S. on this type of income.

Indeed, the treaty specifically includes the typical general exception to the treaty provisions benefitting U.S. citizens and resident aliens as to U.S. tax. Article 29, Paragraph 2 reads: “Notwithstanding any provision of the Convention except the provisions of paragraph 3, the United States may tax its residents, as determined under Article 4 (Resident), and its citizens as if the Convention had not come into effect.”

Thus, while tax treaties may provide many benefits to U.S. persons as to reducing income taxes imposed by the treaty partner country, treaty exemptions, exclusions and rate reductions will rarely apply to reduce U.S. income taxes otherwise imposed on them.

Christina J. LeTourneau, TC Memo 2012-45

DONEE GIFT TAX LIABILITY OF A TRUST–WHO MUST PAY THE TAX?

To contact us Click HERE

A donor makes a gift to a grantor retained income trust (GRIT). Gift tax is due on the gift, but is not paid by the donor. The IRS seeks to impose transferee liability on the gift recipient, and collect the tax liability from that recipient.  However, at the time the IRS seeks to collect, the trust has already terminated and paid its principal out to the remaindermen. Who, then, is responsible for the tax as a transferee? Is it the income beneficiary, the trustee, the remaindermen?

In a recent District Court case, the court determined that it was the income beneficiary who should bear the transferee liability. Is that the proper result? I don’t think so, but that is based on practical aspects since there does not appear to be much precedent on the issue.

Code §6901(a)(1)(A)(iii) imposes the transferee liability on the “transferee” of property. Presumably, the trust corpus would be used to pay the tax if the trust remained in existence. The court noted as much when it provided that “gift taxes should have been paid from the corpus of the trust at the time it became clear that the donor…would not pay them.”

If the trust has terminated, then who is the transferee? The court could see “no reason why the definition of a donee for a gift tax exclusion should differ from the definition of a donee for the purposes of gift tax liability.” The court found that for purposes of Code §2503(b) and annual gift tax exclusion, the beneficiaries of the trust are considered the donees. This narrows the field of transferees to the beneficiaries. This is then further narrowed to the income beneficiary and not the remainder beneficiaries since such gifts only apply to present interests and not future interests.

The court further noted that it was the income beneficiary who benefitted from the gift to the trust, per its income interest. The remaindermen held only an uncertain interest that could have been depleted, and thus should not be considered the donees.

Here are my concerns with holding the income beneficiary responsible:

a. The distinction between present and future gifts under Code §2503(b) should have nothing to do with who is a transferee in this circumstance. That distinction arises by the express language of Code §2503(b)(1) which excludes from its reach “gifts of future interests,” and thus only has relevance to determining the scope of the exclusion from taxable gifts.

b. Since the initial gift went into corpus, one would think that the remaindermen, who ultimately received the corpus, should bear the transferee liability.

c. At worst, the increase in income actually received by the income beneficiary attributable to the gift should be computed, as well as the amount of the gift distributed to the remaindermen as corpus (by some type of analysis of appreciation or depreciation in corpus that occurred after the gift was received and before the distribution out of the trust to the remaindermen). Then, the income beneficiary and the remaindermen should bear the tax liability pro rata to the amounts of the gift effectively received by each. Since the remaindermen end up receiving corpus attributable to the gift, why should they not have to bear some part of the gift tax liability?

d. What would have happened if the gift tax sought from the income beneficiary exceeded the additional income generated for the income beneficiary from the gifted property? The case gives no indication whether this occurred here. Presumably, the income beneficiary’s liability would be limited to this increase in income received, but the case does not tell us. And if that limit sets in, can the IRS then proceed against the remaindermen for the remaining portion of the tax? It would appear not, based on the theory of liability espoused by the court’s opinion.

By the way, did you know that if a donor has an unpaid gift tax liability, and made multiple gifts to multiple recipients, the IRS can collect the total gift tax from any one or more of them (up to the amount of the gift he or she received)? That is, each donee is potentially on the hook for all the gift taxes incurred by the donor that year, and not just for the taxes attributable to the gift that donee received (although the maximum amount of tax liability of a donee is limited to the value of the gift he or she received).

U.S. v. MacIntyre, 109 AFTR 2d Para. 2012-624 (DC TX 3/28/12)

NEED MORE THAN ONE TAXPAYER IDENTIFICATION NUMBER–TOO BAD FOR YOU!

To contact us Click HERE

Taxpayers are requiring to have a taxpayer identification number to file returns and provide to payors, so that their tax data can be adequately tracked and reported. While most U.S. individuals will use their social security number, entities (such as corporations, trusts, partnerships, and LLC’s) have to apply to the IRS for a number (an employer identification number, or EIN) using Forms SS-4.

In recent years, the IRS has helped the process by allowing for the issuance of EINs by fax, telephone, and online, in addition to the traditional mail method. This is helpful since many times a number is needed ASAP to file a return, provide to a payor, or open a bank or brokerage account.

Those businesses or persons who form multiple entities may now suffer the inconvenience of being able to obtain only one EIN per day. When a Form SS-4 is submitted, it requires information on a “responsible party” for the entity. More precisely, a “responsible party” is subject to this once-a-day limit. The responsible party generally is the principal officer, partner, or member as to a business entity or a grantor, owner, or trustee as to a trust.

The IRS notice on this is posted on the IRS website for the instructions for the Form SS-4 and reads:

Attention

Limit of one (1) Employer Identification Number (EIN)
Issuance per Business Day

Effective May 21, 2012, to ensure fair and equitable treatment for all taxpayers, the Internal Revenue Service (IRS) will limit Employer Identification Number (EIN) issuance to one per responsible party per day. This limitation is applicable to all requests for EINs whether online or by phone, fax or mail. We apologize for any inconvenience this may cause.

“Fair and equitable?” I am not sure what that means. And what do they mean as to mail? Does it mean I can’t mail them on the same day, or they can’t arrive at the IRS at the same day, or the IRS can’t process them on the same day? What will the IRS do – mail them back without issuing them so I don’t know there is a problem until weeks after I mailed them, or put them in a pile to do one a day? How is the taxpayer to know what is occurring with their mailed in applications? The whole situation is Kafkaesque – the government is requiring entities to get an EIN, but then refusing to issue them.

What happens if multiple entities are formed and a tax return deadline is looming? Or if it is necessary to open and operate bank accounts?

Now perhaps there are multiple responsible parties for the multiple entities  - that could allow for multiple applications on the same day. But if that is not the case, these taxpayers may have some problems.

Note that the “responsible party” is not the same as a Third Party Designee who can apply for a number on behalf of an entity. Those designees can still apply for up to five numbers a day – however, if the entities they are applying for have the same responsible party they presumably will have the same one-a-day limit for those entities.a

CONSULTING PAYMENTS TO A RELATED ENTITY DID NOT AVOID UNREASONABLE COMPENSATION ISSUES

To contact us Click HERE

An accounting firm operated as a C corporation. The firm paid substantial fees to three related entities created by the founding shareholders of the firm. The fees were so high as to reduce the net income of the firm to a  de minimis amount in one year, and a loss in the next.

It is common for C corporations to pay compensation to shareholders to avoid double taxation. C corporation income is taxed twice – first at the corporate level, and then the shareholders are taxed on after-tax dividends. If compensation is paid to a shareholder, there is only one level of tax – the shareholder pays tax on the compensation and the corporation gets a deduction for the payment. Because of this advantage, the IRS and the courts will limit compensation payments to “reasonable compensation,” and characterize payments to shareholders in excess of reasonable compensation as dividends (which generate no deduction for the corporation).

While one cannot tell from the case, the above C corporation may have attempted to disguise unreasonable (and thus nondeductible) payments to shareholders as deductible consulting payments to the entities of the founding shareholders – although there is a suggestion that this arrangement was instead entered into to hide the payments to founders from the employees of the firm. Whatever its rationale, the IRS challenged the payments on the basis that  the consulting firms actually performed no services. That fact alone disqualified the payments as being deductible compensation services. The founders also indicated that the payments were also in payment of services performed by the founders for the accounting firm, but this did not hold up factually. Further,  even if that was the case, the payments were still so high as to flunk the independent-investor test for what qualifies as reasonable compensation. Thus, the trial court found, and the appeals court affirmed, that over $800,000 in payments over the years were disguised dividends and not deductible by the firm. This resulted in substantial income taxes and penalties being imposed on the firm.

The appellate court was puzzled why the accounting firm continued to operate as a C corporation over the years, instead of as an LLC, partnership, or other pass-through entity that would not suffer from these double taxation exposures. But that was not the most remarkable feature of the situation – the court noted:

That an accounting firm should so screw up its taxes is the most remarkable feature of the case.

Mulcahy, Pauritsch, Salvador & Co., Ltd. v. Comm.,  109 AFTR 2d 2012-XXXX (05/17/2012 CA7)

As Ozzie Guillen Learned the Hard Way, There’s No Free Speech in Corporate America

To contact us Click HERE
The Miami Marlins suspended new Manager Ozzie Guillen for saying: “I love Fidel Castro,” and "I respect Fidel Castro. You know why? A lot of people have wanted to kill Fidel Castro for the last 60 years, but that mother-f***er is still here."

First it was reported as a suspension without pay, but it turns out it’s a suspension with pay. He had to apologize for his remarks.No question; his remarks offended most of the community his employer serves. While you may not think they were that bad, trust me: the Cuban community was offended. If you don’t follow Cuban politics, just imagine someone saying they admire the KKK, Hitler or Bin Laden and you’ll get the drift.

Did he mean to offend? Probably not. Were the company’s customers upset? Absolutely.Still, some folks expressed shock that an employer could punish an employee for espousing his opinion. “What about the First Amendment?” they cried.

I’ve said it in my book and I’ll say it again. There is no free speech in corporate America. The First Amendment protects us from government action, not the actions of private companies. That means you can be fired because your private employer doesn’t like what you said (or what you wore), with very few exceptions.

Mr. Guillen got off easy compared to Brooke Harris, who was fired from her job as a teacher in a charter school for teaching about the Trayvon Martin case. Why the difference? Guillen probably has a contract saying he can only be fired for cause. Martin probably has no contract to protect her, and her state, like every state in the union but Montana, is an at-will state, meaning she can be fired for any reason or no reason at all.

Not all speech is unprotected. Here are some circumstances where your speech might have some legal protection:

Concerted activity: If you get together with coworkers or take action on behalf of at least one other coworker (not just on your own behalf) to protest or try to change working conditions, you may be protected under the National Labor Relations Act (NLRA). NLRA says in Section 7: “Employees shall have the right to self-organization, . . . to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .” NLRA also makes it unlawful for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.” Neither Mr. Guillen nor Ms. Harris fits here.

Objecting to discrimination: If you object to illegal discrimination based on race, sex, religion, national origin, disability, pregnancy, age, or some other protected status, you are protected against retaliation by Title VII, the federal law prohibiting discrimination. Ms. Harris might have fit into this category if she were objecting to discrimination by her employer, but it doesn’t apply to objecting to other types of discrimination.

Political affiliation: Some states, counties and cities have laws prohibiting discrimination based on political affiliation. Mr. Guillen’s remarks might have fit within this category if his local government or state had such a prohibition. Had he been in the county just north of Miami, Broward County, there is an ordinance prohibiting such discrimination. Would he have filed a complaint? Doubtful. He kept his job and lost no money.

Objecting to illegal activity: If you’re objecting to an illegal activity of your employer, you might be a protected whistleblower. That certainly doesn’t help either Mr. Guillen or Ms. Harris.

Activity outside work: Some states and localities prohibit employers for firing or disciplining employees for activities outside work. However, even those laws have exceptions for activity that affects the employer’s reputation or the ability of the employee to do their job. There’s little doubt that Guillen’s comments both reflected on the Marlins and affected Guillen’s ability to get his job done, as demonstrated by the multiple protests that occurred.

Contract: This is what probably saved Mr. Guillen. If you have a contract saying you can only be fired for cause, then check what is says constitutes “cause.” Offending 70% of the customer base may well be cause (but it might not). It all depends on how it was drafted. Best read up before you give any press interviews if you think you’re protected.

Before you spout off at work (or anywhere) about something your employer might deem offensive, remember how little protection you have.

Employers are watching more and more closely. They want your Facebook password. They watch what you post on Twitter. They read your email messages at work. They look at the websites you visit. Soon, they’ll be asking to read your diary. Heck, if it’s on your work computer, they’ve probably already read it. Will they start asking for an extra copy of your house key? I predict some employer will do this within the next couple of years.

Watch what you say, and especially what you email, text or post, even while you’re at home. If you’d be embarrassed to see it on the front page of the company newspaper, you probably shouldn’t put it on your Facebook page.

There’s no free speech in corporate America. Big employer is watching.

Donate A Kidney To Your Boss? That’s A Firing

To contact us Click HERE
Debbie Stevens, gave her kidney to a man on the donor list so her boss could secure a match. Was she rewarded? Promoted. Nope. This is corporate America. You can be fired even if you literally give a piece of yourself for your job.

 Instead of rewarding her, the boss started pressuring her to come back to work even though she didn’t feel well and was still recovering. Once she got back, they took away her overtime, demoted her, and transferred her 50 miles from her home. She hired a lawyer to try to resolve the matter. The lawyer wrote a letter, and she was fired.

 I know I’ve talked about at-will employment and being able to legally fire employees for any reason or no reason at all. Does that mean you can be fired after you donate your kidney to your boss? Not necessarily. Here are just some of the claims she might have: 

Discrimination: If the employer failed to accommodate her recovery and then retaliated when she needed extended time off, she might have a claim under the Americans With Disabilities Act. Under that law, the employer must grant a reasonable accommodation, including extended leave, unless it can show an undue hardship. Retaliating against her after her return with a pay cut, demotion and transfer would also likely be a violation. 

Family and Medical Leave: If she was out for 12 weeks or less, then she’s likely entitled to recover under the Family and Medical Leave Act, which requires that she be restored to the same or an equivalent position once she returns from leave. Unless there were substantial cutbacks while she was gone, they’ll have a hard time arguing the position was equivalent. Even a distant transfer without a demotion is probably not considered equivalent. If she was out 12 weeks and one day or more, she’s probably out of luck on FMLA claims. 

Fraud: Did the boss promise continued employment or even favoritism if she gave of herself? Maybe. If that happened, she might claim fraud. 

Breach of contract: If the boss offered her anything specific, such as continued employment or a promotion, in exchange for the transplant, there might be a breach of contract claim. Although contracts in exchange for body parts may well be against public policy and unenforceable.

Personally, I think the courts should allow her to repossess. But since the recipient wasn’t involved in all this, she’s probably out of luck with that. In a perfect world, the court would have the power to make the company find her a replacement kidney to make her whole.

This isn’t even the worst firing I’ve ever heard of, but it’s up there. The employer should be ashamed, but I’m sure they’ll fall back on the old canard of at-will employment.

 To borrow from Joseph Welch (a victim of McCarthyism), I have to ask the employer what I hope the jury will ask: At long last, have you left no sense of decency?

Top Reasons Why Kick The Boss Is One of the Top Apps

To contact us Click HERE
My 13-year-old thought I’d want to know about a hot free app available for my iPhone: Kick the Boss. Knowing what I know about the current state of employment law, is it any wonder that an app allowing you to kick, punch, burn, stab, and flick your boss until he’s gone, and rewarding you with more powers each time you inflict pain on him is one of the most popular games in America?

No doubt about it: the hostility between worker and employer is growing by leaps and bounds. Employers consider employees disposable and treat them like the enemy. Employees no longer think of their jobs as the place they’ll work for life. They know that isn’t going to happen.

If you’re a boss who is surprised at this level of hostility, just think about what’s been going on. No wonder your employees want to kick you around in the virtual world. For employees, here are just some of the reasons why you may want to set your boss on virtual fire.

 Facebook passwords: Some companies are demanding Facebook passwords from applicants and employees. There’s no sense of any entitlement to privacy in the corporate world. They want to read your posts and even your private messages. 

Reading email: Companies read your emails if you access them at work. Some even use keylogging software to get your passwords and access your most intimate conversations. Use your work computer or work phone to check your messages? Forget privacy. Think front page of the company newsletter. 

Criminalization of employment: Employers are coming after employees and former employers with criminal charges, because ruining you financially just isn’t enough anymore. They want your freedom. It’s one thing if an employee stole or embezzled. But these new cases are meant to intimidate employees who leave and work for competitors. The Computer Fraud and Abuse Act and trade secrets theft are some of the ways employers are trying to criminalize employment law. If employers have their way, they’ll be able to toss you in jail if you quit. Give it another 10 years and maybe the’ll get their way. 

At-will firing: Recent cases have shown employees getting fired or disciplined after donating a kidney for their boss, because the employer didn’t like the color of employee shirts, because the employee expressed an unpopular opinion on their own time, and for teaching about discrimination. The fact that your employer can fire you because she woke up in a bad mood or got a terrible cup of coffee adds to the hostility you might be feeling about your work. 

Pensions and benefits: Employers are curtailing and playing with benefits. Pension plans get cut or eliminated; health insurance goes to the cheapest plan or is cut. When you’re fired, you lose your health insurance because we’re one of the only industrialized Western countries that ties health insurance to work. 

No free speech: You can be fired for criticizing your boss, complaining about ethics and unprofessionalism, reporting a coworker for embezzlement, and for saying anything your boss doesn’t like about politics or world affairs. Zip it if you want to keep your job. 

Unemployment discrimination: They can refuse to hire you in most states due to the fact that you’re unemployed. Quit? Good luck finding something out there. 

Credit discrimination: Lose your job and get bad credit as a result? Corporate America doesn’t want you anymore. They think if you’re poor you’ll steal from them. They don’t realize you might work harder if you really need the work.

I say go ahead and kick your boss, virtually, that is. It’s good to get out a little bit of frustration, and beats the heck out of going to jail because you took a real 2x4 up against his head. If you’re thinking about beating up the boss, please don’t.

If you’re so frustrated you are thinking about doing real violence, get the heck out of there. Start looking while you still have a job. The jerk isn’t worth your freedom.

Employment Law Blog Carnival Mother’s Day Edition

To contact us Click HERE
This month’s Employment Law Blog Carnival has lots of posts with great career tips - so good, your mother might give them to you. Although Mother’s Day has passed, it’s never too late to take guidance from mom.

Here’s the best employment law advice a mother can give, in the best employment law blogs a mother could want. 

Don’t Talk To Strangers

Instead of going on reality shows to meet strangers in a misguided attempt to find love, you meet the best mates doing what you enjoy. In Jon Hyman’s post, The Bachelor as discrimination? Publicity stunt lawsuit undermines legitimate discrimination claims, things didn’t go so well looking for love in all the wrong places. If only they’d listened to mom . . . 

Behave Yourself

If you didn’t behave as well as mom wanted (or if your employees didn’t), you might want to read Daniel Schwartz’s post, EEOC Releases Important Guidance on Use of Criminal and Arrest Records By Employers and John Holmquist's post, Asking the question: the EEOC's enforcement guidance on arrests and convictions.

Don’t Make Rude Gestures

Adam Whitney’s post, You’re Damned if You Fire an Employee Who Gives You the Finger tells you what you can (and can’t) do with an employee who loses a finger or flips you the bird.

Work Out Your Problems

John Fullerton's post, FINRA Rule 13803: Compelling Arbitration Claims to be Filed in Court, tells about yet another way employers and employees may work out problems.

If You Can't Say Anything Nice, Don't Say Anything

Ari Rosenstein and Eric Meyer talk about the downsides of social media in Social Media: Useful Tool or Employment Pitfall? and Report: Employees share WAY more Facebook info than they think
If only the people in their posts had listened to Mom.

Study Hard

Sometimes, no matter how hard you study, you won't do well. That's because there's something wrong with the test. In Jacksonville Firefighter Litigation Shows Perils of Using Improperly Validated Tests, George Leonard tells how one test went terribly wrong, and advises employers how to make sure promotion and hiring tests won't be thrown out.

A great example of someone who should have studied harder is in Mark Toth's How to Hire If You Want to Get Fired. Learn what not to do when interviewing candidates in a hilarious what-not-to-do video. Personally, I hope you all interview like this. It will make my job on the employee side way easier.

Mind Your Own Business

Philip Miles and Jessica Miller-Merrill tell us about legislation to keep employers from snooping into employee's passwords in SNOPA - Proposed Federal Legislation on Employer Social Networking Password Requests and US Bill Would Make Employer Requests for Facebook Access Illegal.
MYOB, nosy employers.  

In Reviewing Private Social Media Accounts as a Candidate Screening Tool: Dangerous, even with Policies & Procedures, Shaun Reid warns of the dangers of not listening to mom's good advice about snooping.

Family Is The Most Important Thing

In 6 Steps to Avoid Family Responsibilities Discrimination Claims, Dawn Lomer advises employers how to avoid getting in trouble when employees put family first.

Don't Lie

Mom's advice is particularly good when your lie ruins things for everyone else. If you lie about your need for Family and Medical Leave, you make it harder for everyone who really needs it.  Robin Shea does a terrific analysis of when an employer can fire an employee for lying about FMLA leave in When can an employer fire an employee for medical leave fraud?

Don't Hit

Mom would not be proud of all the boss-directed violence in the game I talk about in my post, Top Reasons Why Kick The Boss Is One of the Top Apps. Or maybe she'd be glad you have an outlet instead of violence.

90% of Life is Showing Up

Okay, that wasn't mom, it was Woody Allen. But as a mom, I tell my kids this all the time. Randy Enochs tells us about the importance of showing up to work, even with a disability, in 9th Circuit Discusses "Attendance" as Essential Function of Job in ADA Claim. [Note to faithful readers - no, you aren't hallucinating. This is a late edition to the ELBC, but a very worthwhile one. Mom would say, "Better late than never." I'm glad Randy decided to show up at ELBC!]


Be an Overachiever

I saved Robert Fitzpatrick for last because he definitely did mom proud this week. He asked me to post three of his posts in ELBC. Bob, you're putting us all to shame. Here they are:

(1) Proposed FederalLegislation to Prohibit Employers from Requiring or Requesting Access to SocialMedia of Employees or Applicants(2) No Settlement Negotiations Privilege

(3) USERRA and the Escalator Principle

There you have it: all my favorite employment law bloggers in one handy spot. If you read them all, not only will mom be pleased you did your homework, but you'll come away with lots of useful knowledge (unlike when I studied the law against perpetuities).

From everyone here at the Employment Law Blog Carnival, here's hoping you had a wonderful and happy Mother's Day! If you follow all the tips and advice in these blogs, you'll spend way less time in court and have more time to spend with mom.

What the U.S. Chamber Of Commerce Doesn't Want You to Know About Your Workplace Rights

To contact us Click HERE
The National Labor Relations Board says almost all private employers must put up a poster informing you of your workplace rights under the National Labor Relations Act as of April 30,2012. It’s free. Employers can download it online and print it out. So they all put up their posters, or are working on it now, right? Nosiree.

They sued. At least, they got together under the umbrella of the U.S. Chamber of Commerce to sue. They got a temporary injunction in the DC federal courts to stop the rule. They really, really don’t want you to see this poster. It must really be subversive, huh?

Well, see for yourself. Here’s exactly what the U.S. Chamber of Commerce doesn’t want you to know about your workplace rights:

Employee Rights Under the National Labor Relations Act

The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity or to refrain from engaging in any of the aboveactivity. Employees covered by the NLRA are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA.


Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.


Under the NLRA, you have the right to:
• Organizea union to negotiate with your employer concerning your wages, hours, and otherterms and conditions of employment.• Form,join or assist a union.•Bargain collectively through representatives of employees’ own choosing for acontract with your employer setting your wages, benefits, hours, and otherworking conditions.•Discuss your wages and benefits and other terms and conditions of employment orunion organizing with your co-workers or a union.• Takeaction with one or more co-workers to improve your working conditions by, amongother means, raising work-related complaints directly with your employer orwith a government agency, and seeking help from a union.•Strike and picket, depending on the purpose or means of the strike or thepicketing.•Choose not to do any of these activities, including joining or remaining amember of a union.
Under the NLRA, it is illegal for youremployer to:
•Prohibit you from talking about or soliciting for a union during non-work time,such as before or after work or during break times; or from distributing unionliterature during non-work time, in non-work areas, such as parking lots orbreak rooms.
Under the NLRA, it is illegal for a union orfor the union that represents you in bargaining with your employer to:
•Threaten or coerce you in order to gain your support for the union.
Wow.That’s it, you say? What’s the BFD? Well, I think it’s mostly these provisionsbig employer doesn’t want you to see:
Discussing wages and benefits with coworkers: The poster says, “Underthe NLRA, you have the right to discussyour wages and benefits and other terms and conditions of employment . . . withyour co-workers or a union.” Yet many employers take desperate measures to makesure you don’t know what coworkers are making and what benefits they have. Someput out written policies or put restrictions in contracts. That’s flat-outillegal. If you have a contract or if your employer has a policy saying you can’tdiscuss wages and benefits with coworkers, you can file a ChargeAgainst Employer with NLRB right now. The other part they don’t want you toknow about here is your right to grouse about working conditions withcoworkers. You can grumble and complain during breaks, on Facebook, in Twitter,as long as you’re doing it with coworkers and they can’t fire or discipline youfor it.
Discussing work-related complaints and workingconditions with coworkers: The poster says, “Under the NLRA, you have the rightto take action with one or more co-workers toimprove your working conditions by, among other means, raising work-related complaintsdirectly with your employer or with a government agency, and seeking help froma union.” If you complain about conditions on your own and on behalf ofyourself, you aren’t protected. But you have the absolute right (assuming youaren’t a supervisor) to complain about working conditions on behalf ofcoworkers, to get together with coworkers to discuss and complain, and to gettogether to try to negotiate better working conditions. That is huge.
Employerslike to crack down on employees who complain. They want to create an atmospherewhere employees shut up and accept things as they are. Most of the time, it’sbest to keep your mouth shut. But sometimes, you have to speak up. If workingconditions are intolerable, if it feels like a prison, if you are being paidunfairly, if there’s a bully in the workplace, sometimes you have to speak up.You probably have the right to do so, as long as you aren’t a supervisor, andas long as you’re not alone.

Creation of Callahan Witherington

To contact us Click HERE
I have been asked on a numerous occasions what brought about the partnership between myself and Patrick.  People are often surprised to hear that Callahan Witherington came about due to a similar history.  Not the history that most people think of with new business partners (that being that we went to law school together or were both associates at the same firm) but rather a history that is shared by many attorneys in this new world legal market.  That is the history of being associates at an established firm.

Our Experience

Now, let me start this out by saying that I can only speak for myself as to the experiences I had as an associate at a very well established regional law firm (although I expect that Patrick would mirror my comments).  First off, I want to be clear that my time with my former firm was extremely valuable.  It was time that I needed as a young attorney to learn how to practice law without all of the additional stresses of law office management.  It gave me an opportunity to work under and with some of the most brilliant legal minds I have yet to come across.  My firm opened my legal mind to new challenges and opportunities.  I do not regret a minute I spent at my firm.

However, a time comes when most associates realize that the firm, by its very nature, is rigid.  It has to be rigid in order to ensure the collective success and stability of the firm.  This was especially true with my firm.  When I left they were marching towards 300 attorneys and close to 1,000 staff.  A firm of this size does not have the ability to allow young associates to move too far from the center in any regard.  This understanding coupled with the desire to build a practice that excited and challenged me ultimately led to the decision that it was time to tackle a new challenge.

Challenges of Creating a New Law Firm

When time came for Patrick and I to create this new firm we worked hard on what we wanted to accomplish on a long term basis.  We identified ourselves as modern attorneys who had been restrained by the necessary inflexibility of our old firms.  We wanted to create a firm that was dynamic, fluid and very responsive to the needs and demands of our clients.  We wanted a firm that could evolve and stay relevant in the modern world.  It is often the case that the law firm structures which created the large firms of today (including our former firms) are dated and unoriginal.  We recognized that our clients wanted something new in their law firm.  This includes simple things (such as our new website www.cwfirm.com and even our offices) but more importantly it includes the fashion in which we practice.

Business Litigation

We have adopted a firm model that is focused on firmly planting our roots in legal markets that are typically ignored.  We want to assist our community members in the development, cultivation and growth of their new businesses.  And if, due to some unfortunate circumstances the need for business litigation arises our clients appreciate the efficiency and economy of a flexible firm such as ours.  Further, from an estate planning and tax standpoint we want to take the same approach to our client's family.  Our firm has a desire to provide extremely competent legal services to those who are looking ahead and planning for new opportunities.  The benefit of this model is that we don't limit ourselves to one class of clients.  One of the biggest complaints I had about my previous firm was that they were not interested in new clients under a certain dollar amount.  Again, I know this is probably a product of size but it missed the point in my estimation.  Several large dollar clients were once clients who would have been brushed away by these firms.  We are here to help the large dollar clients in a more cost effective manner and assist those to be large dollar clients as they make that progression upwards.

We Hope to Get to Know You!

I have failed at my attempt to briefly describe the creation of Callahan Witherington.  I hope this helps you understand what type of firm we have created and what type of firm we are committed to maintaining.  So, if your in the neighborhood drop by the offices or visit our website.  We would love a chance to meet you and show you what Callahan Witherington is all about.

CWFirm and SCORE - A Great Partnership

To contact us Click HERE
Months ago we decided that we wanted to develop a program where we could provide our legal services to entrepreneurs launching new and exciting companies here in Nashville in a cost reduced/free structure.  We discussed this idea for weeks and weren't able to get much traction on the logistics of such a program.  Then, by a stroke of luck, I was invited to be a guest at a local Kiwanis luncheon where I heard about SCORE (very exciting non-profit agency).  I researched SCORE on through their website and asked around.  It seemed like this agency would be a perfect match for what Patrick and I were hoping to accomplish.

I reached out and we were warmly received by Johnny Orr and the whole SCORE family.  We told Johnny a bit about our desire to lean on our experience in corporate representation and suggested that our plan would fit nicely into the SCORE structure.  We were invited to attend the monthly SCORE luncheon to discuss our plan with all the SCORE members.  We are thrilled to say that the luncheon presentation went great.  There was an extended question and answer period where all of the members asked us specific questions regarding our vision and ideas for helping their SCORE clients.  At the conclusion of the meeting we left without any business cards and at least two meetings with current SCORE clients who are working diligently to get their respective business off the ground.

This relationship with SCORE will further our goals of redefining what a law firm can do for it's community.  We are excited to get in on the ground level with new entrepreneurs as they continue to build the necessary business base here in Nashville.

DJC

CWFirm Attorneys Mentoring Law Students

To contact us Click HERE
Recently, David and I were invited to become charter members of The Belmont University College of Law American Inn of Court.  (An American Inn of Court is a collection of judges, lawyers, law professors, and law students organized for the purpose of improving the skills, professionalism, and ethics of the bench and bar.) 

We were excited about the opportunity to be founding members of the organization, especially when we learned that we would be serving as mentors to first-year law students.  We each were partnered with two students who we will mentor throughout their time at the Belmont College of Law.  We look forward to helping the students make the transition into law school and make connections within the local legal community.  We have also invited the students to visit our offices and accompany us to court one day this fall.   
We were introduced to our law student mentees at a kick-off reception during first-year orientation at Belmont last month.  We were impressed with both the students and the school.  We look forward to growing CWFirm’s relationship with The Belmont College of Law through the American Inn of Court. PDW

What is a Trust?

To contact us Click HERE
Patrick and I hosted a law clinic a few weeks ago for employees of a local business.  Several of the employees took advantage of this one on one meeting format and asked some really great questions about a variety of legal areas.  One area that seemed to come up frequently was personal estate planning. Within that broad area of law a smaller subset continued to appear.  That had to do with the purpose and use of trusts in personal estate planning.  I was surprised at some of the conceptions that were held by the employees as to the purpose of trusts, the appropriate candidates for trusts and so on.  In the next several weeks I found myself explaining to a least a dozen other people what a trust truly is and what some of the general benefits of a trust might be.  This got me thinking that it might be time to update the blog with a summary of these discussions.

First off, what is a trust?  Well, a trust, in the simplest terms is a way to divide title of property between two different entities.  In order to do divide title you have to in fact have two separate entities.  The first entity is the trust itself.  A trust is a document that is drafted (can have oral trusts but that is way beyond the scope of this article) usually by an attorney.  In that document you will designate the trustee of the trust.  This person, bank or trust company will be tasked with holding legal title to all property within the trust.  The trustee will hold such legal title for the sole and exclusive benefit of the beneficiaries of the trust (this is the second entity).  Within the trust document the creator of the trust (called the grantor or trustor) has the ability to place certain parameters on most every aspect of the trust property from investment, distributions and ultimately termination and final distribution of the trust assets.  The trustee is required to hold the property and administer the property in accordance with these terms.  And as mentioned above, the trustee can only administer such property for the sole and exclusive benefit of the designated beneficiaries of the trust.

So, in essence what you have at the end of the day is a division of ownership between two entities.  The trustee holds legal title to the property of the trust.  The beneficiary of the trust holds beneficial title to the trust property.  For most every asset that we own in the normal course of life has these two titles unified.  For example, I hold legal title to my car along with beneficial title.  Those titles are unified in one person.  This division of ownership within the trust is an important feature that will be discussed in a future blog article (Asset Protection with a Trust).  But at this point I am more interested in simply discussing the structure of a trust.

A trust instrument can allow for endless numbers of different scenarios.  The grantor is allowed to serve as trustee and beneficiary (there may be some tax reasons why this would not be a desired structure, but it is permitted for a trust to be recognized as legal), the grantor can establish a trust for the sole benefit of his children, or spouse, or even a pet.  More than one trustee can serve and the directions that can be placed upon such trustee are also countless.  The trustee can hold legal title to any asset and can act on behalf of the trust with respect to those assets almost seamlessly.  The flexibility of trusts makes them very interesting and powerful documents that often have a place in the estate plans of a larger percentage of the population that generally thought.  Trusts have been thought to only be useful tools for the ultra-rich.  This could not be further from the truth.