Author: JGL Law

We all realize the internet has caused paradigm shifts in the market place – possibly in ways never imagined.

Who are the movers and shakers? The winners and losers? One big question can only be answered after the roll out of the “Uber revolution”. As protesting cabbies revolted in the streets of France, French prosecutors arrested French Uber executives, which some believe was done to placate the longtime respected taxi drivers industry. Other countries are handling the estimated 50 billion dollar “service app” company with crisis responses as well.

As the legal battles continue, this note suggests that once the issue of legal status of the parties is “redefined” with respect to all, that the “Uber Factor” may be seen as one of the most ingenious inventions of our changing global economy in enhancing financial interests of those on the top as well as the bottom.

Redefinition of legal roles to conform to these global shifts will allow all to benefit while interacting in a civil forum. The “service app” may be a prototype for other service areas such as cleaning services, handyman services, and other contractual industries.

As we trial lawyers commonly do, I attend conferences and am often reminded how antiquated our State of Maryland is – where contributory negligence will still bar a negligence case if the Plaintiff is one percent (1%) at fault. However, I am not only impressed, but proud that Maryland has tried to get ahead of the “Uber Factor”. Governor Hogan signed the bill the General Assembly presented to him this 2015 session regulating Uber activity.

Many issues still remain, but, for now, the new statute appears to have at least satisfied both Uber fans and traditional cab drivers. The Maryland legislature came together on this bill and was able to preempt all the municipalities and counties who were attempting to regulate the issue themselves. The Public Service Commission will now regulate Uber and its drivers.

The Governor, by signing Senate Bill 868, an Act titled Public Utilities – Transportation Network Services and For–Hire Transportation, provided, in part, who is responsible for insurance, to what extent, coverages, licensing, prerequisites such as background checks, and many other regulations.

Let’s recall another agency: The Maryland Workers’ Compensation Commission, which regulates one of the largest economic engines in our state, constantly determines who is an employer and upon whom the financial liability falls. These definitions are not similar to tax definitions, and are based on the statutory scheme and many years of case law. The Commissioners listen to the facts and apply the law on a case by case basis. The case can be appealed to the Circuit Court for a trial de novo (a new trial), and further to the appellate courts.

Interesting questions arise: Are Uber drivers employees or independent contractors?  How will the Uber factor be decided?

Two states have made headlines in rulings on Uber cases, Florida and California. Just like FedEx, which fought for years to keep drivers as independent contractors, it could take a while to define these roles. As one article has predicted, “Uber may be making itself more and more attractive as a target with a very deep pocket.”

The California Labor Commissioners ruled recently on the side of the driver and against the “service app” company, Uber. The driver was determined an employee and not an independent contractor. (See McBride & Levine, Reuters Technology, June 18, 2015). This, of course, forces Uber to appeal since the ramifications could be enormous. Along with social security, would Uber be liable for Workers’ Compensation insurance?

A Florida labor decision also came down on the side of the driver as an employee. Meanwhile small Florida jurisdictions, such as Broward County, are trying to grapple with determining rights between taxi cab drivers and Uber drivers.

A turn back to Maryland – could we really be ahead of the nation? Has the new statute allowed the basis for the creation of a new “entity”, not bound by our old concepts of worker vs. employer? Or independent contractor vs. employee? (Could Creating a New Class of Worker Solve the Sharing Economies Labor Problem? Tristan Zier, CEO of Zenn99, June 19, 2015).

Can we imagine a set of legal constructs where both Uber and the driver are winners? We will need to create a new category where all fish learn to swim in the same bowl, large and small, and each party takes on certain responsibilities. In a recent article, Uber, Lyft, secure future in Maryland with passage of ride-share law, Baltimore Sun April 14, 2015, Kevin Rector states;

“This bill places ride-share companies under the oversight of the Maryland Public Service Commissioners, which already regulates taxi companies in much of the State. But it does so under a new regulatory framework for so called ‘transportation network services’ that the companies find less onerous than the structure applied to taxis.”

In Maryland, there is a body of case law that has defined the employer/employee relationship as to workers’ compensation; however, it largely depends on the factor of control. See Injured Workers’ Insurance Fund v. Orient Express Delivery Serv. 190 Md. App 438, 988 A.2d 1120 (2010).  It considers, for example:

1)  Does the Employer have “control” over the employee’s method, manner, and duties?

2)  Whether the parties contemplated an employer-employee relationship?

3)  The structure of the relationship including factors such as 1099, contracts and insurance?

However, with this new third “service app” category – could parties actually exempt themselves from the Commission’s jurisdiction? At present, if an employer has only one employee, he or she must have workers’ compensation insurance, but can officially exempt him or herself as owner. Could the statute or regulations go one step further and state that anyone who joins a “network services app” must exempt themselves from workers’ compensation coverage under the statute?

In Edith A. Anderson Nursing Homes Inc. v. Walker, 232 Md. 442, 194 A.2d 85 (1963), the following functions were listed in consideration of an employer-employee relationship: (a) agreement; (b) wages; (c) power of dismissal; (d) power of control; (e) whether work is regular business of the employer; (f) whether parties believed they created such relation; and (g) whether work is done under direction or without supervision.

For example, an attorney for Uber could argue that in Maryland the legislature has spoken and no employer-employee relationship is recognized. They are basically partially regulated but they remain a “hook up” with absolutely no employer power over whether a driver decides to work.

An advocate for the driver may have to think twice. Does his client really want the Uber industry to be his employer? Perhaps not. However, if he or she wanted to be an employee, the attorney could argue that there are many controlling factors:

(1) Uber sets up rules for obtaining clients
(2) Uber requires a portion of every fee
(3) Uber sets the levels of employee statuses, i.e. X, SUV, Black (Limo or Sedan) 
(4) Uber can terminate drivers
(5) Uber requires the drivers to keep up a certain satisfactory rating by the passengers

In this writer’s imagination, the Uber phenomenon is one we will see replicated in many other areas as a “service app.” Furthermore, after recently interviewing a driver I had hired for functions in Maryland from an established car service, I got the impression that workers’ compensation, pardon the pun, “took a back seat” to anyone’s excitement with the “service app”.

This driver told me, “here’s my card, just call me when you’re ready- I’ll be doing Uber while I wait for you- do you mind?”

As an advocate for the working class for the past 30 years, I was impressed with his work ethic and his enthusiasm in earning perhaps another 120 dollars in his pocket over the next two hours rather than taking a nap!

I’m not the only one who believes a new business prototype has arrived.

Benjamin Franklin once wrote, “[i]n the world nothing can be said to be certain except death and taxes.”  Franklin’s point being that much like Snoop Dogg in the 90’s, before his unnecessary detours under other monikers, the Government gets its money. It’s got its “mind on [its] money and [its] money on [its] mind.” Snoop Doggy Dogg, Gin and Juice (Death Row Records 1993).  So, while you may say “until death do us part” in your wedding vows, not even the Grim Reaper can get you out of paying the Government if you owe it. 

This was the point in the recent decision U.S. ex rel. Robinson-Hill v. Nurses’ Registry and Home Health Corp., 2015 WL 3403054 (E.D. Ky. May 27, 2015).  In Robinson-Hill, two whistleblowers filed a False Claim Act[1] (“FCA”) complaint against Nurses’ Registry, a Kentucky corporation that provides home health care services.  Lennie House, the then-President, Chief Executive Officer, and sole owner of Nurses’ Registry and his wife, Vicki House, the secretary of Nurses’ Registry, were also named as defendants.  The allegations of fraud against the defendants consisted of upcoding the severity of patients’ medical conditions, as well as the length of time and amount of times patients needed treatments, to fraudulently inflate bills to Medicare.  The Government, subsequently after investigating, “intervened,” taking over the prosecution of the case. 

During the pendency of the case, Mr. House died.  The Government sought to substitute Mr. House’s estate in his stead as a defendant.  Defendant Nurses’ Registry and Mr. House’s estate opposed the estate’s substitution, “arguing that all of the claims asserted against Mr. House abate[d] with his death.”  Id. at *1.  This was using what essentially could be described as a “reverse Harold Angel/Johnny Favorite from Angel Heart”[2] defense for Mr. House’s prior, alleged sins.  

The court, while finding that the FCA was silent on whether death abated a claim, held that the appropriately-titled 28 U.S.C. § 2404, Death of defendant in damage action, applied.  28 U.S.C. §2404 states: “[a] civil action for damages commenced by or on behalf of the United States . . . shall not abate on the death of a defendant but shall survive and be enforceable against his estate as well as against surviving defendants.”  Despite such apparently-clear, statutory text, the question before the Court, nonetheless, was “whether the FCA claims asserted against Mr. House [we]re remedial or punitive in nature.”  U.S. ex rel. Robinson-Hill, 2015 WL 3403054 at *1.  If remedial, then 28 U.S.C. §2404 applied, and the estate would be substituted.  Id.

In ruling, the Court noted that “[a] remedial action is one that compensates an individual for specific harm suffered, while a penal action imposes damages upon the defendant for a general wrong to the public.”  Id. at *2.  In finding the FCA “remedial,” such that 28 U.S. §2404 applied, the Court noted a “highlight [of] the remedial nature of the FCA [was that r]ecovery under the FCA does not run to the general public.  Instead, the recovery runs to the United States and to the qui tam relators as compensation for damages.”  Id.  Therefore, the FCA is remedial, and the estate was substituted. 

The take away point here is that, much like Louis Cyphre in Angel Heart, who was simply trying collect upon the personal debt owed to him by Johnnie Favorite (Johnnie’s soul), not even death will allow you to cheat the Government on what it’s owed. 

If you have any questions about the False Claims Act or Medicare fraud, please contact me at bmarkovitz@jgllaw.com or 240-553-1207.

 

Former Employees’ Qui Tam Lawsuit Leads to Recovery For Taxpayers Against LB & B Associates, Inc. for Allegedly Creating a Fraudulent Minority Owned Business to Obtain Set- Aside Contracts

WASHINGTON – July 7, 2015 – LB & B Associates, Inc., a North Carolina-based facility management and maintenance government contractor, has settled a lawsuit for $7.8 million, resolving allegations that the company made false statements to the U.S. Small Business Administration (SBA) in order to obtain and retain Section 8(a) certification as a minority and woman-owned business. The certification resulted in the unlawful award of set-aside contracts for various government agencies to LB & B. The complaint was originally brought by Steven Sansbury and James Buechler, former project managers for LB & B.

The complaint also alleged that LB & B continued to falsely obtain set-aside contracts after it “graduated” from the 8(a) program by making false statements to enter into the “Mentor-Protégé” program of the SBA through fraudulent joint ventures with small businesses. 

The lawsuit, United States ex.rel. Sansbury and Buechler v. LB & B Associates, Inc., was filed in federal court in Washington, DC, by attorneys Jay P. Holland and Brian J. Markovitz, partners at the Greenbelt, Md.-based law firm Joseph, Greenwald & Laake, P.A. Sansbury and Buechler will receive 19.8 percent of the settlement as the relators in the qui tam action.

Sansbury and Buechler’s complaint alleged that LB & B improperly obtained and retained its Section 8(a) certification and the lucrative set-aside contracts by falsely representing that Lily Brandon, the majority owner of LB & B, controlled the day-to-day business operations of the company, when it was her husband, F. Edward Brandon, who had years of experience in government contracting, who actually ran the company. Since F. Edward Brandon was not qualified to receive any benefits under the SBA program, the complaint alleged that Lily Brandon was used so the company could receive set-aside contracts for which it was not eligible to receive.

“The 8(a) program was set up to help minority-owned and minority-operated businesses compete on a level playing field against more established and better financed companies,” said Holland, who served as lead counsel.

“The purpose of the 8(a) program is to help disadvantaged business and not to take opportunities away from businesses that truly need the leg up,” added Markovitz, who served as co-counsel. “Steve Sansbury and Jim Buechler bravely came forward and persevered through years of litigation to remedy the injustice they witnessed.” 

LB & B was required to certify annually to the SBA that it remained eligible for the Section 8(a) program from 1995 to 2004 and that Lily Brandon continued to control the operations of the company. The United States contended that those certifications were false. The government also contended that even after Lily Brandon resigned as president in 2005, LB & B continued to falsely market itself as a women-owned and women-operated business. 

Even after graduating from the 8(a) program, the relators’ complaint alleged that LB & B continued to benefit from SBA set-aside contracts by acting as a “mentor” in the SBA’s Mentor-Protégé program to smaller entities and entering into joint ventures with those companies. The program requires that the joint ventures be staffed and managed by the “protégé” entities, but instead they were staffed by LB & B employees.   

Holland also commented that “both the 8(a) and Mentor-Protégé programs serve vital and important public purposes. Taxpayer dollars are wasted when individuals evade the requirements of the programs to benefit themselves.” Holland praised Assistant United States Attorney Brian P. Hudak and Assistant Attorney General Linda McMahon, the attorneys who handled the case for the government, “for their determined pursuit of justice in this case. Mr. Hudak and Ms. McMahon stuck with us and our clients through years of litigation. They are public servants in the truest sense of the word.”    

Counsel for Sansbury and Buechler filed their complaint in District Court on Feb. 1, 2007, captioned as United States ex. Rel. Sansbury, et. al. v. LB & B Associates, Inc, et. al. Civ. No. 07-0251 (EGS – D.DC). The United States intervened on April 14, 2011, as to the Section 8(a) claims only, and declined to intervene as to the Mentor-Protégé claims. Sansbury and Buechler continued to pursue the Mentor-Protégé claims even though the government declined to intervene in those claims.  Both claims were litigated and the Court denied motions to dismiss both complaints in July 2014; the settlement covers the intervened and declined claims.  
 

Additional information via the Westlaw Journal:

Although a celebrity like Caitlyn Jenner has the status, resources and geographical advantages to overcome potential discrimination concerning healthcare and elective medical procedures, many of the other estimated one million Americas who identify themselves as transgender continue to face obstacles.

Those challenges are apparent in the complaint recently filed with the District of Columbia Office of Human Rights against a DC hospital by a transgender woman who claims a doctor refused to perform breast implant surgery because of her gender identity. The case also could be groundbreaking due to the potential First Amendment/religious liberty issues involved, according to a leading DC civil rights attorney.

“Assuming the accusations are true, this could be a real battleground on the First Amendment,” said Brian J. Markovitz, a partner with Joseph, Greenwald & Laake.

Markovitz said that, if true, Medstar Georgetown University Hospital’s refusal to perform the procedure – as a Catholic hospital, yet open to the public – could be a violation of the DC Human Rights Act that protects against discrimination. In addition, Markovitz says, the case may be unique in its involvement with transgender issues combined with an elective hospital procedure, as well as the potential political influences and possible impact of the Home-Rule Act, which requires U.S. Congressional approval of many laws in DC, which lacks a state legislature.

“If the hospital defends itself on First Amendment grounds, this could get pulled into federal court, and then you might see this interesting debate involving medical procedures and religious exemptions for hospitals,” Markovitz said. “The chances of this case eventually heading to the Supreme Court may be slim, but if the parties involved are diligent enough, I could see it happening.”

The Maryland General Assembly met this past winter for its annual ninety day session and proposed legislation, heard testimony regarding proposed legislation, and enacted new law. 

This year there were 61 proposed bills regarding Family Law and Domestic Violence, 13 of which resulted in enacted legislation (for a full list of proposed Family Law and Domestic Violence bills, see here).

The enacted legislation ranges from merely ceremonial (for example, House Bill 346 which changes all references in the law to a circuit court and juvenile “master” to “magistrate”) to having a serious impact on individuals seeking a divorce (Senate Bill 472 allows individuals, in certain circumstances, to forgo the one year separation period now required for an absolute divorce if the parties mutually consent to the divorce).

MARYLAND’S INSTANT DIVORCE

Many individuals seeking a divorce in Maryland will be happy to learn of the newest ground for divorce, mutual consent, as a result of Senate Bill 472 (available here). However, there are important limitations on those who may obtain a divorce on this ground, which may rule out many prospective litigants.  In order to obtain a divorce based on mutual consent, the parties cannot have any minor children, the parties must have a written agreement resolving all issues relating to alimony and property (and neither party has filed any pleading to set aside the settlement agreement prior to the divorce hearing), and both parties must appear at the uncontested divorce hearing. 

As financial constraints often prevent the parties from physically separating, this ground for divorce, which is silent as to the general requirement of physical separation, will be very attractive to many individuals with limited funds. However, it is not clear exactly how many people will be able to take advantage of this new ground for divorce, as Senate Bill 472 is not clear on whether the parties must be separated at the time of the uncontested divorce hearing or if the parties can obtain a divorce while still residing under the same roof. 

MARYLAND REDUCES ITS RESIDENCY REQUIREMENT

House Bill 1185, available here, will also be of particular interest to individuals seeking a divorce that may have resided in the DMV area for many years, but are new residents to the State of Maryland. Residents of the DMV are so accustomed to crossing state lines on a regular basis that they may not realize that a move just up the street from Tenleytown in the District to Chevy Chase, Maryland will cause the clock to begin ticking in Maryland regarding the residency requirement for the filing of divorce. Previously, an individual had to reside in the State of Maryland for a year before they could file for divorce. House Bill 1185 allows an individual to file for divorce in Maryland after residing in the State for six months. 

LIMITED ATTORNEY’S APPEARANCE RESURRECTED

Maryland Rule 2-131(b), available here, permits a family law attorney to enter his or her appearance on a client’s behalf for a limited purpose. The new rule would allow litigants to hire an attorney to provide limited services, and therefore, at a seemingly limited cost. This may be most enticing to individuals who would normally not be able to afford to retain counsel to represent them in their divorce litigation. For example, in theory, a client could hire a divorce lawyer to argue a certain motion in a case in front of the court, to attend mediation, or, with leave of court, the attorney may act on the client’s behalf with regard to a specific issue or a specific portion of a trial or hearing. 

However, it is not clear how exactly this type of arrangement would work in practice, especially in the area of family law, where so many of the issues are intertwined (for example, the court’s determination of custody directly impacts the court’s decision regarding the use and possession of the marital home). An arrangement for a limited appearance also has the potential to mislead both the attorney or the client regarding the scope of the attorney’s role and may not be the bargain the client anticipated, if expectations are not clearly defined before the commencement of the representation. The rule requires that the client sign an Acknowledgment of Scope of Limited Representation and that this Acknowledgment be filed with the court along with the attorney’s notice of appearance. Although the rule includes an example Acknowledgment, it would behoove both the attorney and client to create a more detailed and comprehensive agreement to prevent confusion down the line. 

While only time will tell how these legislative changes will impact litigants filing for divorce in Maryland, it appears that the legislation is attempting to ease and expedite what is often a difficult and confusing process for many individuals.

Are you thinking about taking the plunge and renovating your home? Have you been looking around the house thinking, “Wow this floor sure is showing its age,” or “This kitchen used to be fabulous… in 1987,” or “Now that we have the money, why don’t we add that sunroom we always dreamed of”? Maybe you are a young contractor, ready to spread your wings and open your own company. If so, to successfully navigate your exciting new undertaking it is important to understand the nuances of the Maryland home improvement laws.

In the first part of this series on the legal implications of home improvement, I will provide an introduction to home improvement law and discuss the initial contract negotiating phase of a renovation project.

To protect homeowners, the Maryland General Assembly created the Maryland Home Improvement Commission (“MHIC”) and gave it the power to regulate home improvement.[1] What exactly is home improvement? Home improvement is defined as:  “the addition to or alteration, conversion, improvement, modernization, remodeling, repair, or replacement of a building or part of a building that is used or designed to be used as a residence or dwelling place or a structure adjacent to that building” and “an improvement to land adjacent to the building.”[2] Thus, “home improvement” may even encompasses certain “improvements” that may not be obvious, such as installing a permanent hot tub, window tinting, storm windows, and even certain types of cleaning and waterproofing. On the other hand, work done to commonly owned areas of condominium complexes or to buildings that contain more than four residences is not considered “home improvement.”[3]

The MHIC has outlined substantial requirements to protect the homeowner from unscrupulous contractors. The MHIC requires that all contractors be licensed[4] and that all home improvement contracts contain certain language. For example, all contracts must contain the contractor’s MHIC license number[5] and the MHIC phone number.[6] One of the MHIC’s newest requirements compels all home improvement contracts presented after July 31, 2013 to state:

(1) Formal mediation of disputes between homeowners and contractors is available through the Maryland Home Improvement Commission;

(2) The Maryland Home Improvement Commission administers the Guaranty Fund, which may compensate homeowners for certain actual losses caused by acts or omissions of licensed contractors; and

(3) A homeowner may request that a contractor purchase a performance bond for additional protection against losses not covered by the Guaranty Fund.[7]

If a home improvement contract contains an arbitration clause, the clause must comply with specific state regulations.[8] 

When negotiating the terms of your project, be sure to remember that a contractor may not accept more than 1/3 of the contract price as a deposit or down payment and may not require or accept any payment until the contract is signed.[9] Depending on the size of the job, the contract may also lay out what is called a draw schedule. A draw schedule provides certain benchmarks or targets for the contractor. As the contractor achieves these benchmarks, he or she is entitled to additional payment. From the contractor’s perspective, draw schedules are a vital mechanism to provide structured funding for jobs that may otherwise be too costly for the average contractor. From the homeowner’s perspective, the draws keep a contractor moving forward by providing immediate incentive to get to the next phase. Negotiate these targets to efficiently get the job done.

Finally, discuss with the contractor whether “time is of the essence.” While a contract must give a general estimate of time for completion[10] there is generally no penalty if the job drags on. A “Time is of The Essence Clause” provides a firm date for completion. It legally signals that if the job is not substantially complete by a certain date, the homeowner will be damaged in some way. Such a contract term often pairs with a “liquidated damages” provision. For home improvement contracts, “liquidated damages” is a predetermined monetary value of the harm caused by the delay.

Home improvement is an exciting and stressful undertaking. It invariably requires significant investments of time, money, and energy. When presented with a home improvement contract take your time, review it in its entirety and even visit the MHIC website. If you have any questions or need advice contact your attorney.

On June 12, 2015, Jay Holland will participate in a panel discussion at the Maryland State Bar Association’s 2015 Annual Meeting in Ocean City, Maryland. The education session entitled “Blowing the Whistle: Handling Retaliation Cases Under Federal and State Law” explores the various anti-retaliation and whistleblower laws that apply in the workplace. Mr. Holland joins distinguished panelists, Brian Frosh, Maryland’s Attorney General and Ariana Wright Arnold, Shareholder at Jackson Lewis P.C. 

For more information on the event or to register online, visit the MSBA Annual Meeting website.

Oftentimes, the last thing on the mind of someone about to embark on a divorce is how to best posture his/herself in the event of contentious litigation. However, considering this position may be essential to the ultimate outcome of the divorce. Indeed, by commencing divorce litigation, the parties are essentially asking the Court to enter their homes, and decide, among other things, who is the better parent, who has the greater need for economic support, and who owned what property and when.

What makes preparing for divorce particularly unique is that the Court cannot glean these things merely by the claims of the parties, but must do so by reviewing the tangible evidence presented. For this reason, during the divorce process, the parties will engage in discovery whereby each party is obligated to produce documents and answer questions at the request of the other. These documents often include banking and credit card statements, emails, text messages, employment records, and other information. In the event that these documents are not in the possession of the producing party, the requesting party can subpoena them directly from the source (e.g. banks, employers, cellular carrier, etc.).

Each document will tell the Court a story about you and your spouse—whether you’re a big spender, whether your spouse is a hands-on parent, and a host of other personal details. Today’s world of text messaging, tweets, emails and status updates now offers the court a wealth of information about you. While this can be extremely useful in helping you create and dictate your own narrative, these new mediums can just as easily be used against you.

By taking a few simple and easy steps, you can begin to form your own narrative and control, to an extent, how the court may view you in relation to your case. Whether you’ve been considering a divorce for a significant period of time or have been blindsided by some marriage-ending event, the following are ways this digital age can work for you instead of against you:

1. Curb Your Texts and Emails: Even in the most amicable divorce, feelings will likely be running high on both sides. Unfortunately, getting a divorce often brings out the worst in even the most even-tempered people. That bitterness and resentment oftentimes finds its way into day-to-day communication. In today’s world, this means emails and text messages.

Written communications between you and your spouse, or you and your children (if they are old enough to email and text), are generally admissible evidence and can make its way into the court’s record. This is particularly true in matters involving custody. As such, this is not the forum to rant to your spouse about their shortcomings or to admit to all of yours. Written communication should only be for necessary matters. They should also be short and pertinent to the subject of the message.

Communication between you and your spouse should not run contrary to your ultimate goals in the divorce as well. For example, if you are requesting joint custody of your child(ren), but there are emails consistently showing that you and your spouse cannot get along or agree or that you continuously send bitter text messages to him/her, your position will be significantly undermined.

2. Change All of Your Passwords: In relationships, we share many things with our spouses, including personal information such as passwords. After all, what is a password when we share our homes, children and lives? However, as with many other things on this list, this information can and likely will be used against you. A spouse with access to your personal accounts can be more dangerous than any identity-thieving hacker. They can read emails to and from your family law attorney and potential witnesses. He or she can monitor movement in your personal accounts and credit card purchases. In the most extreme cases, they can even falsify text messages and emails, seemingly sent from your phone, email account, or on social media.

Upon realizing and accepting that divorce is inevitable, begin that separation by once again becoming a private person. Your soon-to-be-ex spouse should not have access to your computer, phone, tablet, email, social media accounts and banking/credit card accounts. As an extra precaution you may consider opening a new email account, solely for the purposes of communicating with counsel or your spouse during divorce proceedings.

3. Temporarily Disable Social Media Accounts: We all currently live in a culture where we are constantly available to everyone all of the time. We can share our opinions, major life moments, and day-to-day annoyances almost instantly. This constant need to share every detail of our lives can spell disaster in a divorce. In the same way that a disparaging email to your spouse can make you look uncooperative, a rant on social media, where your audience can be hundreds of mutual friends and acquaintances, will only serve to make you look like the dreaded “bad guy” in the relationship.

While most people can resist ranting about their ex on social media, they are certainly not out of the woods. Social media is also an excellent way for others to track your ongoing actions, even if you remain completely inactive on the site. For example, a spouse seeking pendente lite (temporary) alimony who posts, or gets included in, pictures on Instagram or Facebook of their latest Hawaiian vacation, “checks-in” at high-end restaurants or is pictured wearing a new $300 accessory will undoubtedly hurt their claim of “need”. Even if these were gifts from third parties or a single splurge in an otherwise frugal period, you do not want to draw any negative attention on your spending habits.

As such, it is strongly urged that all social media accounts be temporarily disabled pending the conclusion of the litigation.

4. Do NOT Delete Any Accounts: Although temporarily disabling your accounts is a great way to mitigate your exposure on social media, your accounts are still evidentiary in nature. The destruction of evidence, called spoliation, either in anticipation of, or during litigation may leave you vulnerable to the Court making a negative inference against you, even if what was deleted was relatively minor.

In the event that a social media account cannot be temporarily disabled, the account should not be deleted, but merely allowed to remain inactive. Moreover, for some, it is important that they remain active on at least some social media websites for one reason or another. For example, many use professional websites, like LinkedIn, as a source of networking and job hunting. However, be mindful that any information there that is contrary to representations made to the Court may be used against you. Therefore, you must insure that your profile is an accurate reflection of exactly how you want to be perceived by the Court professionally.

5. Stop All Recreational Drug Use: With the recent decriminalization of marijuana in some jurisdictions, and the outright legality of it in others, recreational use of marijuana, and the societal shift toward how certain drug use is viewed in general, has just recently entered the realm of legal ambiguity. It may be the case that you and/or your spouse used marijuana, either individually or together, without it ever being an issue. However, once litigation has begun, particularly if visitation and/or custody are at issue, your actions and behaviors will be put under the scrutiny of the court. A divorce proceeding is simply not the appropriate arena in which to test whether the local judiciary will be as tolerant as some legislatures.

While some may argue that, at least when it comes to the use of marijuana, we are entering a more liberal era, drug usage, whether illegal, decriminalized or legal should stop immediately upon a filing for custody of visitation. Though your spouse may have never raised the issue before, it is still fair game and will likely only hurt your case if you continue to use it.

In the face of all of the turmoil and stress that comes along with a divorce, you must remember to stop and think before hitting the “send” button. Remember this important rule: never send, post or submit anything you wouldn’t want the presiding judge to later read. 

Eve Shuman, Esquire has practiced family law exclusively since graduating from Cornell Law School in 2010, and is experienced in a wide variety of matters, including prenuptial and postnuptial agreements, divorce, property distribution, child custody, parental access, spousal and child support, and interstate custody disputes.  Ms. Shuman is an attorney in JGL’s Family Practice Group in the Rockville Office.  She may be reached by email at eshuman@jgllaw.com.  

Christopher FitzPatrick, an associate in Joseph Greenwald & Laake’s Medical Malpractice Group, was elected the new President of the James C. Cawood, Jr. American Inns of Court in Annapolis. He will serve as President from July 2016 until July 2017.

An association of lawyers, judges and other legal professionals, the American Inns of Court was established to build and foster professional relationships. Members of the association span a wide spectrum of the legal profession. From law students to Supreme Court justices, members discuss fundamental and current legal issues, share experience and advice, and mentor those who are new to the profession.

As President, Mr. FitzPatrick will continue to further the traditions of the James C. Cawood, Jr. American Inns of Court as they pursue professional development, ethical inquiry and collegial relations.

Greenbelt, Md – Joseph, Greenwald & Laake is pleased to announce that Rama Taib-Lopez has joined the firm as an associate in the firm’s Family Law Practice Group. 

“We are very pleased to welcome Rama to the firm,” said Burt M. Kahn, managing director of Joseph, Greenwald & Laake. “She brings a fantastic combination of compassion and experience to better serve our family law clients.”

Prior to joining Joseph, Greenwald & Laake, Taib-Lopez served as a clerk for a Domestic Relations Magistrate at the Circuit Court for Baltimore City and practiced family law, immigration law, and criminal defense in Annapolis, Maryland.

She earned her bachelor’s and law degrees from the University of Maryland. 

If you own a business, there’s a good chance you’ve been faced with the independent contractor vs. employee dilemma. The decision isn’t always an easy one to make and since an incorrect designation can have significant negative consequences, it’s best not to decide in haste or purely on the basis of economics. Here are some things to consider the next time the issue comes across your desk:  

First, while economics often argue in favor of an independent contractor designation, you do not get to “choose” whether your hire is an independent contractor or an employee. They are one or the other based on the job they were hired to do and the method in which they are required or permitted to do it.

Second, as noted above, the ramifications of improperly designating an employee as an independent contractor can be significant and far reaching. An improper designation can result in the business being held liable for unpaid Federal and state withholding taxes, overtime and minimum wage obligations, all of which could generate penalties and interest. Moreover, an improper designation can affect eligibility for employment benefits and may lead to a disqualification of certain benefit plans.

Finally, there is no single, definitive standard for determining whether someone is an employee or an independent contractor. The analysis can change depending on which governmental agency is involved. For example, the Internal Revenue service has factors they consider determinative which are not necessarily the same factors that will be considered by the state agencies in charge of wage and hour or unemployment matters. While the various factors tend to hover around the same basic central themes, they are not identical. So what’s the conscientious business owner who just wants to get the decision right supposed to do? In Maryland anyway, they might want to consider starting with the test that is used by several state agencies, often referred to as the “ABC Test.” Unfortunately, in this case ABC is not an acronym, so the letters don’t actually help in remembering what’s involved with an independent contractor test. Still, with only three factors to consider, the ABC Test is relatively straightforward, making it a good place to begin. Under the ABC test, you are hiring an employee unless all three of the following are true:

A. The individual performs the job free of control and direction;

B. The individual is engaged in an independent business of the same nature; and

C. The work is outside of the usual course of business of the employer or performed outside of any place of business of the employer.

Since the ABC test takes a conservative approach, if your circumstances satisfy the test, your work is likely done and you can feel confident that your new hire is an independent contractor. If you don’t satisfy all three of the requirements of the ABC Test, it does not necessarily mean you have an employee- employer relationship; but if you don’t meet the standards of the ABC Test, you should not even consider designating a new hire as an independent contractor without analyzing the situation and the applicable law in more detail.

For more information on legal questions effecting your business, contact JGL’s business lawyer, Jerry Miller.

 

Got an innovative idea? Starting a new business?  Decided to incorporate? Now what?!

One of the first decisions a budding entrepreneur encounters when starting a new business is where to incorporate their new venture.  In my corporate and business law practice, I tend to point clients in one of two directions, either their home state (the state where the business operates), or Delaware.  For this article we will assume the home state of the entrepreneur is the State of Maryland.

I frequently hear from clients that their “friend” told them they MUST incorporate their new business in Delaware.  Many entrepreneurs will state they were told Delaware has lower incorporation costs, tax benefits, and a sophisticated body of corporate law. Some of these statements are true, while others depend on your specific situation.

Let’s weed through the noise and analyze the factors for the basis of incorporating a business in Maryland or Delaware.

First, let’s examine the costs.

Costs to Incorporate[1]

State of Maryland

• Initial Fee: $100.00 filing fee plus $20.00 fee for organization/capitalization
• Annual: $300.00 Personal Property Tax

State of Delaware

• Initial Fee: $89.00
• Annual: Minimum of $175.00 Delaware Franchise Tax

Additional Fees if incorporating in Delaware but operating a business in Maryland

State of Delaware

• Annual: $50.00-$219.00 depending on company (Note that Delaware requires an in-state registered agent for filings and to receive service of process)

State of Maryland

• Initial Fee: $100.00 Foreign Business Qualification fee
• Annual: $100.00 Name Registration fee
               $300.00 Personal Property Tax

Examining the fees alone, initially, it may be slightly less expensive to incorporate in Delaware rather than Maryland; however, I encourage my clients to look at the long term picture. The fees a Maryland business that is incorporated in Delaware would pay at the outset are higher considering they must still register with the Maryland State Department of Assessments and Taxation as a “Foreign Business,” receive approval to operate in Maryland and pay a qualification fee of $100.00.   Additionally, on an annual basis, a Maryland business that is incorporated in Delaware must pay Delaware a franchise tax of at least $175.00 as well as Resident Agent fees that range from $50.00 to $219.00. However we are not done yet; in addition to the Delaware fees, annual fees charged by the State of Maryland include a name registration fee of $100.00 and a personal property tax of $300.00.  Many readers may respond with the question, “but don’t I make up for these additional incurred costs as a Delaware corporation by not having to pay Maryland corporate income taxes?” This is a common misconception. Yes, Delaware has no corporate income tax but a business operating in Maryland while incorporated in Delaware will pay and continue to pay Maryland corporate income taxes every year. 

Body of corporate law  

The best argument for incorporating in Delaware is the same reason that the majority of large U.S. corporations, publicly traded or privately held, are incorporated in the State of Delaware: they have a special court system, known as the Chancery Court, with judges that oversee a well-developed body of business law.  Many large corporations prefer this system because they are frequently involved in complex litigation, which in Delaware is decided by Chancery Court judges rather than juries.  Additionally, Delaware’s vast corporate legal precedents (created by previous litigation) are attractive for investors because it has a clear standard for what fiduciary duties a Board of Directors owes to the corporation. However, just because Delaware is a business-friendly state doesn’t necessarily make it right for you.

Thoughts to consider

One of the main considerations for where to incorporate depends on the financing of the new venture.  If an entrepreneur plans on raising money in the near future, you can bet a venture capital company is going to dictate where you incorporate your business. The old adage, “Whoever has the gold makes the rules,” will generally apply with deals involving venture capital companies.  However, if you plan to fund your new business by applying for financing from a bank, by applying for an SBA loan, or by simply bootstrapping as your grow, then incorporating in Maryland may be a better option as you will be able to avoid the additional costs associated with Delaware corporations.

When starting your own business, always think about the logistics of operating a business. For the average business, starting a company in Delaware can be much more burdensome than the benefit is worth.  I would rather have an entrepreneur focus on the business instead of worrying about the additional hassle (and costs!) associated with incorporating in Delaware.  

* Please note that each business situation is different. You should always seek legal advice before making a decision about where to incorporate when starting a business.