Author: JGL

The Federal Trade Commission (FTC) recently announced a rule that bans non-compete agreements. Non-compete agreements contractually restrict workers from joining or starting a competing business after leaving their employment. These agreements commonly designate how long and where these controls apply. These agreements are used by employers across all sectors of the workforce, the FTC estimates that 30 million workers in the United States are subject to one.

It is anticipated the ban will promote competition, leading to approximately 8,500 new businesses created annually and increasing individual employee earnings by an average of $524 per year.

There are numerous legal concerns with the FTC’s rule. The Supreme Court previously held the FTC does not have jurisdiction over non-profit entities unless they provide substantial economic benefit to their for-profit members. Yet, the FTC said non-profit or tax-exempt status is not dispositive of whether the entity is subject to the ban, which makes application of the ban confusing.

The FTC already faces legal challenges arguing that only Congress can make a rule with such a significant economic impact. The rule as it currently stands will nullify thousands of contracts and may be unconstitutional for exceeding the FTC’s statutorily permitted powers. Pending Supreme Court cases are considering restraining the implicit authority of federal agencies like the FTC, rendering predictions for the outcome of the rule difficult. Ultimately, the Court may strike down the FTC’s rule as an unconstitutional exercise of power. The rule becomes effective around August 20^th, 2024, but is expected to be delayed by legal battles.

The article was written by JGL principal Brian Markovitz and Deborah Jaffe, who is a law clerk at the firm.

The US State Department and US Embassy in Hanoi sponsored a virtual program about public interest law for a Vietnamese delegation comprised of lawyers, judges and other officials.

JGL’s associate Virginia (Gia) Grimm joined by principal Veronica Nannis shared the basics of the False Claims Act work that JGL provides and tried to highlight topics and aspects of that law that would be most important to a country like Vietnam. They spoke for over an hour and answered audience questions. This delegation will travel to Washington DC in August, when Gia and Veronica hope to meet them personally.

I. Introduction

The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FINCEN) finalized an updated reporting rule (the Reporting Rule) implementing Section 6403 of the Corporate Transparency Act (CTA) in September of 2022.[1] The Reporting Rule was created, in large part, to combat money laundering by foreign nationals who use shell and front companies to obfuscate their financial gains. The Reporting Rule requires all “reporting companies” to provide detailed information about their “beneficial owners” with the goal of heightened transparency in the United States’ financial system.

The reporting requirements took effect on January 1, 2024 and require qualifying entities to disclose detailed information about their “beneficial owners” and “Company applicants.” Entities that existed prior to January 1, 2024 must file their Beneficial Ownership Information Report (BOIR) by January 1, 2025. Entities created after January 1, 2024 must submit their BOIR within ninety (90) days of creation. However, the Reporting Rule includes broad exceptions, discussed below, which exempt certain companies from its reporting requirements. Failure to provide the required information can result in significant civil and criminal penalties.

II. The Reporting Rule

a. What is a Reporting Company?

A “reporting company” is defined as a corporation, limited liability company, or other similar entity created by filing a document with the Secretary of State of a respective State, or a similar office with a State or Indian Tribe.[2] Entities created in a foreign country and registered to do business in the United States by filing a document with a Secretary of State, or similar office under the laws of a State or Indian Tribe, are also considered “reporting companies” under the Reporting Rule and are subject to its mandate.[3]

b. What entities are exempt from the Reporting Rule?

The Reporting Rule identifies twenty-three (23) exemptions which except certain entities from its reporting requirements. The exemptions are:

1. Security reporting issuers
2. Governmental authorities
3. Banks
4. Credit unions
5. Depository institution holding companies
6. Money services businesses
7. Brokers or dealers in securities
8. Securities exchange or clearing agencies
9. Other Exchange Act registered entities
10. Investment companies or investment advisers
11. Venture capital fund advisers
12. Insurance companies
13. State-licensed insurance producers
14. Commodity Exchange Act registered entities
15. Accounting firms
16. Public utilities
17. Financial market utilities
18. Pooled investment vehicle
19. Tax-exempt entities
20. Entities assisting tax-exempt entities
21. Large operating companies
22. Subsidiaries of certain exempt entities
23. Inactive entities

c. What information do reporting companies have to provide?

Reporting companies must provide the entity’s full legal name, address, jurisdiction of formation, and taxpayer identification number, or foreign equivalent. Reporting companies are also required to disclose the identity of each of its “beneficial owners.” A “beneficial owner” is “any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of” the reporting company.[4]

An individual exercises “substantial control” of a reporting company if they are a senior officer, have authority to appointment or remove a senior officer, directs or has substantial influence over important decisions regarding the business, its reorganization or dissolution, expenditures or investments, termination of business lines, compensation schemes, execution of contracts, or amendments of governing documents.[5] Individuals who own subsidiaries of a “reporting company” can qualify as a “beneficial owner” based on their ownership share and title, and the obligation to comply with the Reporting Rule is not diluted simply because they do not have a direct ownership in a “reporting company.”

An entity must report the full legal name, date of birth, address, and unique identifying number and image of a US passport, state driver’s license, or other eligible identification document for each of its “beneficial owners.” Entities created after January 1, 2024 are required to provide the same information for its “company applicants,” which are the individuals who filed the documents with the Secretary of State, or similar office, in order to create the reporting company.

Reporting companies must also provide their “FinCEN Identifier” if they have one. A FinCEN identifier is a unique number issued to an individual or reporting company upon request. An individual or reporting company is not required to obtain a FinCEN identifier, but if they do, they may only receive one, single FinCEN identifier. Reporting companies must update their BOIR if relevant information changes between reporting periods.

d. Are there penalties for noncompliance?

The Reporting Rule authorizes significant fines for reporting companies who willfully fail to adhere to the Reporting Rule’s requirements, or willfully attempt to provide false or fraudulent information. This includes civil penalties of up to $500 for each day that the violation continues.[6] The Reporting Rule also authorizes criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. [7]

III. Conclusion

The Reporting Rule requires a broad swath of entities to report the identity of their beneficial owners and authorizes significant fines for entities that fail to do so. While reporting companies that existed prior to January 1, 2024 have until January 1, 2025 to comply with the Reporting Rule, every company who qualifies should file their BOIR as soon as possible to avoid the imposition of criminal and civil penalties.

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[1] 30 C.F.R. Part 1010.380, 2022-21020.pdf (govinfo.gov).

[2] Id. at § 1010.380; 31 U.S.C. § 5336(a)(11).

[3] Supra, note 1 at § 1010.380(c).

[4] Supra, note 1 at § 1010.380(d).

[5] Id. § 1010.380(d)(1-7).

[6] Id. at § 1010.380(g).

[7] Id.

For most people familiar with the Fair Labor Standards Act, 29 U.S.C. 201 et seq., (FLSA), it is about protections for overtime pay, minimum wages, or prohibitions on child labor. Yet, no less important is the 2023 amendment to the FLSA, signed into law by President Biden, the Providing Urgent Maternal Protections for Nursing Mothers Act, simply known as the PUMP Act.

The PUMP Act requires for most employers (essentially all of them with 50 or more employees) that nursing employees be provided reasonable break times and a private place, that isn’t a bathroom, to express breast milk at work. This right extends until one year after the birth of the applicable child.

As this is a relatively new law, numerous questions are being decided by the courts. These questions include: What is a reasonable amount of time to express milk? How many times can an employee take a break to pump on any given workday? What is a sufficiently private area for the mother to pump?

While not legally required, as employers can make space available on an as-needed basis, having private, secluded space(s) for mothers is a best practice as it sets expectations and allows employers and employees certainty about where to pump.

Employees who believe they have not been afforded their appropriate rights under the PUMP Act can either contact the U.S. Department of Labor’s Wage and Hour Office (1-866-4USWAGE) to file a complaint or file a complaint in court.

On April 23, 2024, the Federal Trade Commission (FTC), voted (3 to 2) to essentially stop employers from issuing new non-compete agreements for most workers in private industry.

Non-compete agreements are agreements that employees sign that prohibit them from changing jobs or working for competitors. These agreements, with rare exceptions, are not something that employees want to sign, but something they must sign as a condition of their employment in order to get a job.

A court challenge is expected by the Chamber of Commerce, among others. This matter could well land before the Supreme Court. If it does, the National Labor Relations Board’s prohibition on employers forcing employees to waive their rights to participate in class actions through mandatory arbitration agreements, the Court will probably strike down the rule. The good news for those that live in a handful of states and the District of Columbia is that there are either complete bans on non-compete agreements or they are restricted to certain high-income earners. Before signing any such agreement, please check to see if you are in one of those jurisdictions.

On April 10, 2024 JGL Principal Drew LaFramboise filed a civil rights case on behalf of the Estate of Gordon Casey against The United States of America, the U.S. Secret Service, and individual U.S. Secret Service employees and officers.

The lawsuit alleges that Gordon Casey, age 19, was shot to death on April 20, 2022, by officers of the U.S. Secret Service in the backyard of the Peruvian Ambassador’s residence in Northwest Washington, DC. Mr. Casey was unarmed and holding only a decorative “Tiki Torch” when he was shot to death. The complaint, which you can read here, alleges violations of Mr. Casey’s Fourth and Fifth Amendment rights, as well as assault, battery, intentional infliction of emotional distress, negligence, negligent training and supervision, and wrongful death.

View the complaint here (PDF)

With Spring around the corner, families across Maryland are eagerly anticipating the arrival of spring break. For many, it’s a time to unwind, explore new horizons, and create cherished memories with family. However, for divorced families, navigating spring break can present unique challenges and considerations. As a Maryland family law attorney, I understand the complexities that can arise during this time and offer some valuable insights to ensure a smooth and enjoyable spring break for all involved.

Plan Ahead, Communicate, and Collaborate

The key to a successful spring break for divorced families lies in effective communication and planning. Start the conversation early with your co-parent to discuss spring break plans, including travel arrangements, schedules, and any concerns or preferences. Collaborate on creating a detailed itinerary that accommodates both parents’ schedules and allows for quality time with the children. This is the best opportunity to understand expectations and resolve differences related to those expectations.

Be Flexible and Accommodating

Flexibility is paramount when co-parenting, especially during holidays and special occasions like spring break. Unexpected changes may arise and so your willingness to adapt plans accordingly is important to foster co-parenting. Keep an open mind and prioritize the best interests of your children, even if it means making compromises along the way.

Consider Alternating Years or Splitting the Break

If feasible and depending upon your agreement, consider alternating spring break plans each year or splitting the break between both parents. This allows children to spend meaningful time with each parent and fosters a sense of balance and fairness. Work together to establish a schedule that works for everyone involved, taking into account travel time and other logistical factors.

Focus on Creating Positive Experiences

Regardless of the circumstances, prioritize creating positive experiences and lasting memories for your children during spring break. Embrace the opportunity to bond as a family, explore new destinations, and engage in meaningful activities together. Keep communication channels open with your children and the co-parent to facilitate a smooth break.

Ensure Compliance with Court Orders and Custody Agreements

Before discussing any spring break plans, review your court orders and custody agreements to ensure you understand the terms and that your plans will be in compliance with legal requirements. Adhering to these agreements is essential to avoid potential conflicts or legal repercussions down the line. If modifications are necessary, seek guidance from a qualified family law attorney to navigate the process smoothly.

Seek Professional Guidance if Needed

If you encounter significant challenges or disagreements with your co-parent regarding spring break plans, don’t hesitate to seek professional guidance from a Maryland family law attorney. Experienced legal counsel can provide valuable advice, mediation services, and representation to help resolve conflicts and ensure your rights are protected.

Spring break can be a joyful and enriching time for divorced families with proper planning, communication, and cooperation. By prioritizing the well-being of your children and approaching the break with a spirit of collaboration, you can create memories that will last a lifetime.

Timothy O‘Brien has been selected by The Daily Record as one of Maryland’s Power Players for Estate & Trusts Law.

JGL Principal, Jeffrey Greenblatt, is featured on the cover of The Daily Record Maryland Family Law Update.

Read his cover story here.

JGL Principals Matthew Bryant, Timothy O’Brien and Reed Spellman scored an important victory in the Appellate Court of Maryland on February 28, 2024. The court adopted the concept of “equitable adoption” which allows a child to inherit where the parent treated the child as their own but never actually adopted. This major case will be cited across the country, and is similar to a previous JGL victory several years ago, where the court held for the first time that inequitable conduct by a spouse in procuring a marriage can cause them to be disinherited.

View the decision here (PDF)

Former JGL Attorney Levi Zaslow has been appointed to the Baltimore City Court by Governor Wes Moore.

Click here to read the article featured in The Daily Report (PDF).

HB 419 is designed to enhance employee rights and consumer rights.

You can read the full testimony here.