Category: Disaster Relief or Recovery

Unlike a Fine Wine, Tax Issues Do Not Get Better with Age

In a recent decision, the New York State Tax Appeals Tribunal (“Tribunal”) upheld notices of deficiency issued by the New York State Department of Taxation and Finance (the “Department”) totaling approximately $15 million in additional tax, plus interest and penalties for tax years dating as far back as 2002. In the Matter of the Petition of Cushlin Limited, DTA No. 829939 (TAT Oct. 10, 2024). The notices of deficiency came on the heels of an audit that lasted a decade and at the end of which the Department computed additional corporation franchise tax due “based on the information it had available” inasmuch as the information provided by the company over the 10-year audit was “incomplete and/or unsubstantiated.” This case is a cautionary tale for taxpayers and a reminder that tax issues do not get better with age, and delaying or putting off addressing known issues only makes the situation worse in the end.

The company was a corporation organized under the laws of The Isle of Man and was in the business of acquiring and refurbishing three- and four-star hotels. The company also owned equity interests in 13 limited liability companies (“LLCs”) that were doing business in New York. In 2008, the Department began an audit of one of the LLCs and discovered that it had sold real property in New York but did not file a New York State partnership tax return. As a result of its ownership interest in the LLCs, the Department determined that the company was required to file New York corporation franchise tax returns on which it was required to report the gains and losses of the LLCs. The audit of the company initially covered the tax years 2002 through 2006 and was later expanded to include 2007 through 2009.

From 2010 through 2013, the company and the Department communicated multiple times, and the company repeatedly stated that it was preparing tax returns for the audit years for the LLCs and the company and that it required more time to prepare those returns. In 2013, the company provided the Department with draft tax returns for the company and the LLCs. In May 2016, after another three years passed without final tax returns being filed, the Department informed the company that it was assessing additional corporation franchise tax computed based on the amounts in the draft returns plus interest and penalties. In June 2016, the company filed final tax returns for all of the audit years, and the final returns reflected income and deductions that were larger than the amounts previously included in the draft returns.

The Department then issued three information document requests over the next two years that requested information substantiating the deductions claimed on the filed returns. In response to these requests, the Tribunal found that the company “provided only partial responses that lacked any externally verifiable substantiation” and repeated Department requests were “met with partial, inconclusive responses.” Finally, in 2018, the Department issued the notices of deficiency that assessed the amount of additional corporation franchise tax that the Department had previously computed using the company’s draft returns plus updated additional interest and penalties. The company appealed and the Administrative Law Judge (“ALJ”) sustained the notices finding: (1) that the company had failed to meet its burden of proving that the notices were incorrect; and (2) that penalties were properly imposed as the company also failed to demonstrate that its failure to file timely returns was a result of reasonable cause and not willful neglect.

The Tribunal agreed with the ALJ, concluding that there was a rational basis for the notices because “[w]orking without returns or supporting documentation more than six years after it began, the [Department] used the available information provided by petitioner, verified by other information contained in the [Department’s] own database, to arrive at a computation of tax due from petitioner.” Moreover, the Tribunal reasoned, the Department provided the company with numerous opportunities to substantiate the amounts that the company reported on its filed returns and the company’s failure to provide substantiating information left the Department with “little choice” but to “use another method to arrive at a determination of tax liability.” Finally, the Tribunal concluded that the ALJ correctly determined that penalties were properly imposed as the company did not meet its burden to demonstrate reasonable cause.

© 2024 Blank Rome LLP
For more on Deficiencies, visit the NLR Tax section

Shorter Path to Green Card: New USCIS Guidance for EB-1 Eligibility for Foreign Nationals With Extraordinary Ability

For foreign nationals with “extraordinary ability” in the sciences, arts, education, business or athletics, the path to a green card normally has a much shorter route. The EB-1 extraordinary ability category is a type of employment-based, first-preference visa that has several advantages for a “small percentage of individuals” positioned to prove their expertise within a specific area. As indicated by the elite immigrant visa category, an extraordinary amount of documentation is required to meet the high threshold for EB-1 eligibility.

To provide an example of the evidentiary criteria, this category reserved for individuals with extraordinary ability requires that individuals demonstrate extraordinary ability through sustained national or international acclaim. To do so, applicants must meet at least three of the 10 criteria, or provide evidence of a major one-time achievement, such as a Pulitzer Prize, Oscar, or Olympic medal. In addition, applicants must provide evidence showing that they will continue to work in the area of expertise.

More specifically, the applicant must provide evidence of at least three of the following:

  • Receipt of lesser nationally or internationally recognized prizes or awards for excellence
  • Membership in associations in the field which demand outstanding achievement of their members
  • Published material about the candidate in professional or major trade publications or other major media
  • Judgment of the work of others, either individually or on a panel
  • Original scientific, scholarly, artistic, athletic, or business-related contributions of major significance to the field
  • Authorship of scholarly articles in professional or major trade publications or other major media
  • Display of work at artistic exhibitions or showcases
  • Performance of a leading or critical role in distinguished organizations
  • Command of a high salary or other significantly high remuneration in relation to others in the field
  • Commercial successes in the performing arts

While U.S. Citizenship and Immigration Services (USCIS) has been consistent in detailing the criteria to be demonstrated, the specific evidence deemed acceptable has evolved over the lifetime of this visa category. Last September, USCIS updated its policy manual on employment-based first-preference (EB-1) immigrant petitions in the Extraordinary Ability classification. Specifically, USCIS provided examples of comparable evidence and the way in which USCIS will “consider any potentially relevant evidence.”

To further clarify the acceptable types of evidence, USCIS issued another policy manual update on Oct. 2. The most recent update provided additional clarification, stating:

  • “Confirms that we consider a person’s receipt of team awards under the criterion for lesser nationally or internationally recognized prizes or awards for excellence in the field of endeavor;
  • Clarifies that we consider past memberships under the membership criterion;
  • Removes language suggesting published material must demonstrate the value of the person’s work and contributions to satisfy the published material criterion; and
  • Explains that while the dictionary defines an “exhibition” as a public showing not limited to art, the relevant regulation expressly modifies that term with “artistic,” such that we will only consider non-artistic exhibitions as part of a properly supported claim of comparable evidence.”

These clarifications likely will provide more consistency in the adjudication process.

This article was co-authored by Tieranny Cutler, independent contract attorney.

© 2024 BARNES & THORNBURG LLP
For more on EB-1, visit the NLR Immigration section

Hurricanes and Earthquakes and Wildfires, Oh My!—Key Disaster Preparedness Considerations for Employers

A rash of recent natural disasters, from hurricanes to earthquakes to wildfires, serves as a timely reminder to employers of the potential for natural disasters to disrupt their operations and cause imminent hazards in the workplace.

Quick Hits

  • Natural disasters may be unpredictable and devastating, but employers can take steps to mitigate the impact of natural disasters on their businesses and workforces.
  • Employers may want to brush off and review their disaster-response plans and consider other legal implications for responding to natural disasters.

Tropical Storm Debby has reportedly caused at least six deaths since making landfall in Florida as a Category 1 hurricane on August 5, 2024. The storm is now progressing up the East Coast, dropping heavy rains and spawning tornadoes.

Meanwhile, on August 6, a 5.2-magnitude earthquake struck Southern California, sparking fears of another devastating major earthquake. Both come as wildfires continue to ravage the Pacific Northwest and Canada, with experts warning of the risk of more in the coming weeks due to a combination of seasonal lightning and dry forests.

Mid-August to mid-October is typically peak hurricane season, but hurricanes, earthquakes, floods, and wildfires can occur at almost any time and with little warning. Such natural disasters cause physical damage, disrupt business operations, and affect employees’ well-being.

Given these risks, employers may need to take proactive steps to ensure the safety of their workforce and the continuity of their operations. Here are some considerations for employers that need to prepare for and manage the impacts of these natural disasters on their workplaces.

A Comprehensive Disaster Plan

Many employers have already crafted well-thought-out emergency or disaster-response plans tailored to their organizations and workplaces. Employers may want to review and regularly update these plans, which may include:

  • Emergency Communication: A plan may establish and outline clear communication channels, ideally through multiple avenues, with employees before, during, and after an event. To be effective, an emergency communication plan relies on a current and complete roster of employees, including home addresses, cell phone numbers, and personal email addresses. Now might be a good time for employers to ensure that rosters include all personnel added since the list was created and that they account for all changes in employee data.
  • Evacuation Procedures: A plan may set safe evacuation routes and meeting points. The plan might also include a designated date to reenact these procedures on a recurring basis.
  • Employee Support: A plan may establish a check-in system to account for the status and whereabouts of all employees during and after a disaster.
  • Data Protection: Employers may want to ensure that important company information and data are protected, backed up, and accessible from remote locations. This aspect of the plan will likely require collaboration with a company’s IT group and may involve purchasing additional equipment or software.

Flexibility in Work Arrangements

Natural disasters may cause physical damage to workplaces, create hazards for travel or commutes, and cause other disruptions that make it difficult for some employees to be physically present in the workplace or to work their regular hours. Given these challenges, employers may want to consider implementing:

  • flexible work arrangements, including temporary remote work policies;
  • adjustments to work schedules to accommodate transportation or safety issues;
  • leave availability for certain employees who may be forced to deal with family or medical issues caused by a natural disaster; or
  • a temporary suspension of operations if possible and if safety cannot be guaranteed.

Legal and Insurance Considerations

Understanding the legal and financial aspects of managing natural disasters is critical for any employer in a disaster scenario. Employers may want to review insurance policies to understand disaster coverage and be prepared to promptly report damage from a natural disaster. Further, employers in certain regulated industries may need to contact regulatory agencies regarding the status of their operations.

Applicable Federal Laws and Regulations

Natural disasters and disruptions to employee schedules may implicate a host of federal laws and regulations, including the Worker Adjustment and Retraining Notification (WARN) Act, the Fair Labor Standards Act (FLSA), the Occupational Safety and Health (OSH) Act, and the National Labor Relations Act (NLRA).

  • WARN Act: Typically, the law requires employers with fifty or more employees to provide advanced notice of plant closings or mass layoffs, but the law has an exception for plant closings or natural disasters that are the direct result of natural disasters. Natural disasters are defined in the WARN Act regulations as “[f]loods, earthquakes, droughts, storms, tidal waves or tsunamis and similar effects of nature are natural disasters.” Employers are still required to provide “as much notice as is practicable, and at that time shall give a brief statement of the basis for reducing the notification period.”
  • FLSA: Employers are required to pay employees for all hours worked, and if time records are lost as a result of the disaster, then they must pay employees based on their regular hours or have employees self-report hours worked. The FLSA does not require employers to continue to pay nonexempt workers if they are not required to work, or are unable to work, following a disaster, but the law does require that exempt, salaried workers be paid for any workweek in which some work has been performed.
  • OSH Act: The law, enforced by the Occupational Safety and Health Administration (OSHA), requires employers to protect employees against “recognized hazards,” including those caused by natural disasters. Notably, employees have a right to refuse to work if they have a good-faith belief that they might be exposed to imminent danger.
  • NLRA: Labor protections for workers who engage in “concerted protected activity” apply to issues over working conditions impacted by natural disasters. Employers may have further obligations in cases of natural disasters under their collective bargaining agreements.
  • State Law: Some states, like Texas and California, prohibit employers from discharging or taking other adverse action against employees who leave work, or fail to report to work, due to their participation in an emergency evacuation order issued for the public. Specifically, the California law took effect on January 1, 2023, and prohibits employers from taking adverse action against employees  “for refusing to report to, or leaving, a workplace or worksite within the affected area because the employee has a reasonable belief that the workplace or worksite is unsafe” in the event of an emergency condition.

Next Steps

Natural disasters may be unpredictable and devastating, but employers can mitigate the impact on their businesses and workforces through proper planning. As such, employers may want to consider reviewing or developing disaster preparedness plans and policies to ensure they are ready to handle complications caused by any natural disaster.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more news on Disaster Preparedness in the Workplace, visit the NLR Labor Employment section.

Department of Justice Ramps Up Investigations of Private Clubs that Received PPP Loans

As Varnum’s government investigations team has previously discussed, (link) the COVID-era Paycheck Protection Program (PPP) resulted in millions of businesses receiving emergency loans. The PPP’s hurried implementation, coupled with confusion among recipients over eligibility requirements, created an environment ripe for both fraud and the issuance of loans to ineligible recipients. Over the past few years, the Department of Justice (DOJ) has focused on fraud by among other things, opening civil investigations under the False Claims Act and bringing criminal charges against PPP loan recipients who misused loan proceeds on luxury items. But recently, the DOJ has shifted its focus to a new category of PPP recipients: social clubs that may have been technically ineligible for the loans they received.

The opportunity for improper loans to social clubs comes about because of a technical wrinkle in how Congress wrote the American Rescue Plan Act of 2021. In this Act, Congress made social clubs (i.e. golf clubs, tennis clubs, yacht clubs) organized under 26 U.S.C. § 501(c)(7) eligible for PPP loans. However, Congress incorporated an agency regulation that prohibited loans to “private clubs and businesses which limited the numbers of memberships for reasons other than capacity.” The result is that social clubs that limit their number of members for any reason besides capacity were technically ineligible for PPP loans.

In recent months, the DOJ has issued Civil Investigation Demands (CIDs) to clubs that it believes might not have been eligible for PPP loans. These CIDs are demands for documents and interrogatory answers and often relate to employment records, income statements, the membership admission process, prospective members’ applications, the club’s governance, and membership information. CIDs are expansive and the government can use the club’s answer in future civil or criminal proceedings.

Given the DOJ’s new focus, clubs should review their PPP paperwork now and consult with an attorney to determine whether their loan was properly issued. If the clubs find technical violations, proactively approaching the government through counsel may be beneficial. If a club receives a CID, it should immediately contact an attorney to begin preparing the appropriate response.

© 2024 Varnum LLP
by: Ronald G. DeWaard, Regan A. Gibson, Gary J. Mouw, Neil E. Youngdahl of Varnum LLP

For more news on Paycheck Protection Program Fraud Enforcement, visit the NLR Criminal Law / Business Crimes section.

Green Innovation Being Fast Tracked by USPTO

The USPTO now fast tracks applications involving greenhouse gas reduction technologies. The new Climate Change Mitigation Pilot Program targets impact on the climate by accelerating examination of patent applications for innovations that reduce greenhouse gas emissions. Qualifying applications may be advanced out of turn for examination (granted special status) until a first action on the merits—typically the first substantive examination—is complete. Advantageously, qualifying applications do not incur the petition to make special fee and is not required to satisfy the other requirements of the accelerated examination program.

The United States Patent and Trademark Office (USPTO) accept petitions to make special under this program until June 5, 2023, or the date when 1,000 applications have been granted special status under this program, whichever occurs earlier. “This program aligns with and supports Executive Order 14008, dated January 27, 2021, and supports the USPTO’s efforts to secure an equitable economic future, reduce greenhouse gas emissions, and mitigate the effects of climate change.” The new program takes steps toward working to incentivize and expedite clean energy technologies that will help reduce greenhouse gas emissions and mitigate the effects of climate change.

To qualify for the Program:

  • Patent Applications must contain one or more claims to a product or process that mitigates climate change by reducing greenhouse gas emissions, and be: (a) a non-continuing original utility non-provisional application; and (b) an original utility non-provisional application that claims the benefit of the filing date under 35 U.S.C. 120, 121, 365(c), or 386(c) of only one prior application that is either a non-provisional application or an international application designating the United States. Note: Claiming the benefit under 35 U.S.C. 119(e) of one or more prior provisional applications or claiming a right of foreign priority under 35 U.S.C. 119(a)-(d) or (f) to one or more foreign applications will not affect eligibility for this pilot program.

  • The application or national stage entry and the requisite petition form must be electronically filed by use of the Patent Center of the USPTO, and the specification, claims, and abstract must be submitted in DOCX format.

  • Applicants must file the petition to make special with the application or entry into the national stage under 35 U.S.C. 371 or within 30 days of the filing date or entry date of the application. The fee for the petition to make special under 37 CFR 1.102(d) has been waived for this program.

  • Applicants must use Form PTO/SB/457—which contains the petition and requisite certifications—to request participation in this program.

  • Petition filing limitations: Applicants may not file a petition to participate in this pilot program if the inventor or any joint inventor has been named as the inventor or a joint inventor on more than four other non-provisional applications in which a petition to make special under this program has been filed.

In a recent blog post announcing the Climate Change Mitigation Pilot Program, USPTO Director Kathi Vidal said, “It’s essential to protect these transformative energy innovations with intellectual property (IP). Innovation is a primary driver of the U.S. economy, and IP is the bridge between an idea and bringing that innovation to market. Industries based on innovation and the protection of intellectual property generate almost $8 trillion ($7.8 trillion) in GDP, and account for 44% of all U.S. jobs. Workers in patent-intensive industries earn almost $1,900 per week. That is 97% higher than the average weekly wage of workers in non-IP intensive industries.”

Vidal also said, “Startup companies that have a patent are far more likely to be successful in raising funding than those that have not secured intellectual property protection. When used as collateral, a patent increases venture capital funding by 76% over three years, and increases funding from an initial public offering by 128%, the approval of a startup’s first patent application increases its employee growth by 36% over the next five years, and after five years, a new company with a patent increase its sales by a cumulative 80% more than companies that do not have a patent.”

Moving forward to protect essential green energy transition technology can be helpful for future corporate and strategic goals. This new Climate Change Mitigation Pilot Program opens the door to accelerating potential patent protection for many of these developing technological fields.

Article By Jeffrey S. Whittle,  Karthika Perumal, Ph.D., Christopher Kent, Kevin J. Davis, Ph.D., and Samuel A. Savanich of  Womble Bond Dickinson (US) LLP

For more environmental, energy, and resources news, click here to visit the National Law Review.

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.

Fleeing Ukrainians to Get More Help From United States

The United States has joined many European countries that are opening their doors and offering humanitarian assistance to fleeing Ukrainians.

Ireland, Great Britain and Canada have all started private sponsorship programs for Ukrainians. That assistance is not necessarily a one-way street. Easing the way for incoming Ukrainians may help those nations deal with their own labor shortages.

Ukraine is known for its skilled workforce, including tech engineers, and some companies in Europe are specifically targeting jobs for Ukrainians, offering everything from language training to child care to attract the refugees. Even temporary employment agencies are involved and new companies are being founded for the purpose of matching Ukrainians to jobs across Europe – jobs that run the gamut from highly skilled tech work, to healthcare aids, to retail and hospitality positions.

U.S. employers are generously offering humanitarian aid and donations to help Ukrainian refugees, but now those employers may be able to offer jobs to displaced Ukrainians seeking refuge. The Biden Administration will open various legal pathways that could include the refugee admissions program (which can lead to permanent residence through asylum, but is a long process), visas, and humanitarian parole (a temporary solution). The focus will be on Ukrainians with family in the United States or others considered to be particularly vulnerable. Approximately 1,000,000 people of Ukrainian descent currently live in the United States.

The administration originally believed that most Ukrainians did not want to flee to the United States because it was too far away from other family members who have remained in Ukraine. Secretary of State Antony Blinken had stated that the priority was to help European countries who are the dealing with huge waves for migration instead. But advocates have been arguing that the administration could create special status for Ukrainians to allow them to enter the U.S. or stay with family members.

In early March, the Biden Administration established Temporary Protected Status (TPS) for Ukrainians who have been in the United States continuously since March 1, 2022, but that did not help those who are still abroad. Visitor visas are hard to come by because applicants for visitor visas need to be able to show that their stay will be temporary and that they have a home to return to in Ukraine, and such temporary nonimmigrant visas may not meet that criterion or be practical in most of these situations. Moreover, consulates abroad are already overwhelmed and understaffed due to COVID-19.

While small numbers of Ukrainians have made it to the United States by finding private or family sponsors, this new policy should at least open the doors to some Ukrainians and likely make it possible for U.S. companies to hire some of the incoming refugees. They will need and want employment, but they will also need support.

Article By Forrest G. Read IV of Jackson Lewis P.C.

For more immigration-related legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

Law Firms Respond to Russia’s Invasion of Ukraine: How the Legal Industry & the Public Can Help

On February 21, 2022, Russian President Vladimir Putin ordered ground troops into the eastern Ukrainian provinces of Donetsk and Luhansk. Invading under the guise of establishing independence for the region on February 24, Russia started bombing key points of interest around the country, including the capital city of Kyiv. At the time of writing, the skirmishes remain ongoing, with Russia expanding its invasion force as the days go on.

The ramifications of Russia’s war are widespread. In Ukraine, infrastructural damage is considerable, an estimated 2 million civilians are evacuating or have been driven from their homes. The death toll remains uncertain at this time, but the Ukrainian health ministry estimates that hundreds of citizens have been killed as a result of the violence. Globally, financial markets are in a state of rapid flux, seeing huge rises in inflation, a strained supply chain and plummeting stock prices.

Law firms in the United States and abroad have responded to the conflict by offering pro bono services in anticipation of resultant legal complications and organized means by which money can be donated to Ukrainian humanitarian efforts.

How Have Law Firms Responded to Russia’s Invasion of Ukraine?

In some instances, firms have also closed offices in Ukraine to protect workers, and severed ties with Russian businesses. Law firms that have closed offices in Ukraine include Dentons, CMS and Baker McKenzie, which have closed offices in Kyiv.

“Dentons has established a taskforce to monitor and manage the crisis situation, with a primary focus on protecting our people,”  Tomasz Dąbrowski, CEO of Dentons Europe, told the National Law Review. “We are in regular contact with our team in Kyiv and are providing our colleagues and their families with any possible assistance, including transport, relocation and accommodation assistance in the neighboring countries. Furthermore, we have seen a wave of kindness and generosity from our people across Europe, who have volunteered to provide accommodation in their homes for Ukrainian colleagues.  Furthermore, in addition to the financial support our Firm is providing to our Ukrainian colleagues, we have also received financial donations from around the world to help them resettle.”

Many law firms have announced they are closing offices in Russia, including Squire Patton Boggs, Latham & Watkins Freshfields Bruckhaus Deringer, Akin Gump Strauss Hauer & Feld and Morgan Lewis & Bockius, among others. Norton Rose Fulbright announced March 7 that they are winding down their operations in Russia and will be closing their Moscow office as soon as they can, calling Russia’s invasion of Ukraine “increasingly brutal.”

“The wellbeing of our staff in the region is a priority. We thank our 50 colleagues in Moscow for their loyal service and will support them through this transition.”

Norton Rose Fulbright said they “stand unequivocally with the people of Ukraine,” and are taking steps to respond to the invasion.

“Some immediate actions are possible and we are taking them. We are not accepting any further instructions from businesses, entities or individuals connected with the current Russian regime, irrespective of whether they are sanctioned or not. In addition, we continue to review exiting from existing work for them where our professional obligations as lawyers allow. Where we cannot exit from current matters, we will donate the profits from that work to appropriate humanitarian and charitable causes,” the statement read. “We are working with our charitable partners in every region to raise funds to help the people of Ukraine, as well as providing pro bono support to those Ukrainians and others who are being forced to relocate.”

Law firms have also stepped forward to offer pro bono assistance to those affected by the Russian invasion of Ukraine.

Law Firms Offering Pro Bono Assistance to Ukraine

Akin Gump Partner and Pro Bono Practice leader Steven Schulman explained how the legal industry is collaborating and working to provide assistance:

“So what we often do in these crises, we will self organize, [and] say who’s a point person who knows what’s going on, and then we will share information so that again, we’re lightening the load on the legal aid organizations.”

Another law firm offering assistance to Ukraine is  Covington & Burling, which the country hired to help pursue its claim against  Russia at the International Court of Justice (ICJ). Specifically, Ukraine asked the court to order Russia to halt its invasion. Covington filed a claim on behalf of Ukraine to the ICJ.

Nongovernmental organizations (NGOs) are providing emergency aid in Ukraine, as well as in neighboring countries, such as Poland, Hungary, Slovakia and Romania to help people displaced by the war as they come across the border, Mr.Dąbrowski said. These organizations are providing food, water, hygiene supplies and other necessities, and urgent psychological counseling. Specific NGOs on the ground in Ukraine include Mercy Corps, Fight for Right, Project HOPE, Hungarian Helsinki Committee, and  Fundacja Ocalenie, among others.

However, NGOs need cash donations in order to keep providing aid. Mr.Dąbrowski detailed what pro bono work Dentons is doing, and how the firm is supporting NGOs:

“Our Positive Impact team is in touch with numerous NGOs and lawyers from our firm to identify opportunities for pro bono legal advice, mainly in the countries which share a border with Ukraine.  We are already working with NGOs in Poland and Hungary which are helping Ukrainian refugees displaced by the war. We are assisting with issues related to employment law, contracts, establishment of charitable foundations, etc… We are also in discussions with an international relief agency which is looking to set up operations within Ukraine.

While men between the ages of 18 and 60 are currently prohibited from leaving Ukraine, as of March 10, 2022, the conflict has created one of the largest refugee crises within the last few decades.

“We have activated our registered charitable foundation to collect donations from our people around the world to support Ukrainian families – and particularly children –  displaced by the war, including some of our own people from Kyiv.  So far, our colleagues from around the world have donated or pledged close to €300,000,” Mr.Dąbrowski said. “We have already distributed €60,000 of that to eight NGOs in Poland, Hungary and Romania, which are providing emergency aid, food and water, hygiene supplies, transportation, medical and psychological care, shelter and schooling to Ukrainian civilians fleeing from the war”

Concerns with immigration and refugee asylum is the next expected complication. In the short-term, the Department of Homeland Security is prioritizing Temporary Protected Status (TPS) designations for those already in the U.S.

For the public, there are a number of actions to take to support Ukrainians. However, those wishing to help should make sure to do their research before making any donations in order to ensure the funds end up in the right hands.

How Can Members of the Public Help Ukraine?

Possible scam organizations and outreach programs are common during international crises, so it’s important to know the signs of fraudulent charities. Some best practices for providing support include:

  • Giving directly to an organization rather than through shared donation links on social media

  • Being wary of crowdfunding efforts

  • Doing a background check on an organization and its donation claims using Charity Watch, Give.org, and Charity Navigator.

Some examples of charitable organizations focused on Ukraine relief include:

Informational resources for those affected are provided below:

Conclusion

Law firms and the public alike have stepped up to offer assistance and financial help to those most affected by the Russian invasion. Law firms cutting ties with Russian businesses and closing offices in Russia shows that the legal industry is standing behind Ukraine as the conflict continues to escalate.

In upcoming coverage, the National Law Review will be writing about how law firms are helping clients handle Russian sanctions, as well as the immigration implications of refugees displaced by the war in Ukraine.

*The quotes and input of interviewees reflect the latest information on the Russian invasion of Ukraine as of March 7, 2022. Readers can find the latest legal news from around the world on The National Law Review’s Global Law page.*

Article By Chandler Ford, Jessica Scheck, and Rachel Popa of the The National Law Review / The National Law Forum LLC

Copyright ©2022 National Law Forum, LLC

Once COVID-19 is Contained– Visioning What’s Next For Offices and White Collar Businesses

When you push a pause button on a computer, it shuts down. When you push a pause button on a human, as is occurring now in the midst of the Coronavirus pandemic gripping most of the world, we do not rest. We think, refresh, imagine, and try to adapt to a new world order once the pandemic abates. Darwin surmised that it is not necessarily the strongest or smartest that survive. Rather, the survivors succeed in being flexible and adapting to new environments. Zhou Enlai, when asked by Henry Kissinger what impact the French Revolution had on China, reflected “it’s too soon to tell.”  Given the pressing necessity to re-connect our lives and economies, while at the same time staying healthy and safe, we do not have the luxury to reflect. Rather, we must plan for a future that is being quickly thrust upon us, or existing trends accelerated, at warp speed. This article imagines how that new world order might impact our office’s finance department. The survivors will successfully be flexible and adapt.

A recent paper on fifteen major pandemics and armed conflicts since the thirteenth century postulated that the major after-effects of those events lasted over forty years. Real rates of return were more substantially depressed during the period ravaged by pandemics, more so than due to wars, due to the significant precautions and adjustments business and society took after pandemics but not after wars. The postulate is that after wars, most countries just rebuild and, while they may have changed institutional frameworks, do not reassess ways of doing business and conducting their day to day lives.

This article offers possible post-Coronavirus changes to our office environment. While many alterations such as modifications to social relationships, office structure, technology, marketing, and the role of government are inevitable, this article will focus on new approaches to financial management and legal focus. To paraphrase Winston Churchill, I hope these thoughts may help us not waste this crisis and prepare for a brighter future.

Financial Management in Companies After COVID-19

The monetary seismic aftershocks of the pandemic will reverberate our financial management in many ways, some of which are noted below.

More Cash on Hand

The social disruption caused by abruptly coasting at full employment one moment and, in a flash, jolting to a 14.5% unemployment rate profoundly alters the loyalty workers have to their employer (or former employer). While most intellectually always recognized that the office was a business and not a true social and family organization, no one could have foreseen the sudden radical separation of workers from either their jobs or office environments or both.  Repairing that emotional and physical trauma will take time.  One way to gradually restore the pre-pandemic security workers felt in their office environments is to provide a better sense of community overpay as a lure to attract and retain employees. Alternatively, businesses could set aside a “rainy day reserve fund”, on top of the usual 401(k) and other retirement plans, where a portion of an employee’s pay, or company profits, could be placed in a fund to which it is used only to retain employees in situations where mass layoffs were warranted. An employee would receive his or her share of the funds upon retirement or being terminated in such a circumstance if they were not used before then.

Obviously, these funds are not a panacea but a means to dedicate some resources and provide some comfort to workers concerned for their employers and their own financial security. Moreover, businesses might manage their finances more conservatively and always agree to have some minimum level of cash, say a three months reserve, to assuage employees that it can stay afloat for some reasonable period of time in case another disaster strikes.  Further, businesses may consider not living too close to the edge and consider keeping on hand at least two to three months’ reserve to pay rent, payroll, utilities, and other critical fixed costs. This might be prudent fiscal discipline even in good times and a munificent marketing tool to give employees some comfort that they will not be reflexively jettisoned at the first sign of a downturn.

Focus on Higher Level of Health, Cleanliness, and Safety

Office environments may soon stress their focus on and sensitivity to health, cleanliness, and safety.  This necessity will significantly increase employer costs.  Return on investment on intensifying the cleanliness and sanitization of the office is not quantifiable.

These attributes, always taken for granted and never really promoted in attracting and keeping workers, may now catapult to the forefront to comfort workers’ anxieties. For example, disinfectant wipes and hand soap can become omnipresent.  Coffee machines, soda machines, food dispensers, and other purveyors of sustenance as well as countertops, printers, copiers, file cabinets will be wiped after every use. The issue of how to open the washroom door without touching the doorknob may be solved by replacing doorknobs, counter space, copier buttons, coffee put handles with virus-free coatings. We might increase the scope of services our cleaning services providers to enhance disinfecting.  A CFO will just have to bite the bullet and sign off on these vital necessities heretofore considered excessive.

Office Design and Use

Costs will increase to reconfigure office space design so workers feel safer. For example, office pools or closely clustered desks may be rethought or need to be reconfigured to assured proper ventilation. Plexiglas dividers between office pool carrels and facing the open halls should be considered. Chairs for visitors in offices may need to be spaced out or removed to discourage proximity. Conference rooms, cafeterias, and other gathering spaces may also need to be redesigned so people keep at an appropriate distance while at the same time enjoy some social interaction and forge some sort of community.  HVAC and other ventilation systems may change to assure more optimal air circulation and toxin filtration. Meetings may be limited to a few attendees in person, spaced appropriately apart, with the other participants connecting by video. Just as we submit ourselves to baggage searches at airports, perhaps there could be random, or even routine, temperature checks either at building security or random tests at the office. Further, just as we pass a scanner to gain entrance to our elevator banks, perhaps we will all pass heat detectors to gauge whether we have a fever.  All this comes at a cost, again, unquantifiable to gauge the impact on return on investment.

Higher Level of Fee Earners in Relation to Assistants

The pandemic may finally accelerate the trend toward converting labor to capital.  Fee earners’ embrace of producing documents and other ways to become more self-sufficient have already increased the ratio of fee earners to assistants from maybe 1.5 or 2 to 1 ten years ago to 3 to 3.5 to 1 now. Needing to physically space assistants out more, perhaps alternate those working from home and at the office, combined with increasing proficiency of at office and at home fee earners suggest the trend is likely to accelerate to maybe 5 to 1 in the not too distant future. Some of the replaced assistants could become retooled to fee earning work, such as quasi paralegal work, especially as legal fees continue to increase with apparent inelasticity.

Office Space

The cost of office space will be another financial aspect under greater elasticity and change. The cumulative effect of more people working remotely and less office staff suggests the need for less overall office space and thus less cost.  The size of offices has trended toward the small size in recent years, with an average size of around 140 square feet. Some are suggesting the downward trends will continue unabated, perhaps to 125 square feet per office. A countervailing offset to that trend, however, may be the requirement for more space due to the need for greater distance between and among workers and conferees and perhaps fewer employees out of the office by virtue of not traveling as much.  Even if office sizes are smaller or the same, the trend toward office hotels and using more conference rooms where proper distancing is desired is likely to continue.

Wellness Programs

This will be yet another unquantifiable but necessary cost of the new office environment. Taking an interest in the health of the office environment is but one component of health and safety. Another is the employee’s personal health. Wellness programs have proliferated in recent years, as well as access to gyms and health clubs. These trends will only accelerate, provided that gyms and health clubs can provide sufficient comfort regarding cleanliness and social distance.

Technology Costs

Expenditures for technology are likely to increase but consider that technology pricing usually declines over time with scale and adoption so perhaps that will not be as dramatic. The crucial need for workers to be connected all the time everywhere and possibly need to be remote for long periods of time underscores the recognition that it is not prudent to be miserly with tech spending. The need for broadband, cabling, wi-fi, bandwidth, data storage, data compression, backhaul, caching, routers, hubs, processing power, internet of things, bits and bytes will be the lubricant to this generation reducing if not replacing the role of oil in previous generations. Remote working will increase the risk of hacking and the heightened need for secured networks fortified against cyber theft and introductions of malware. Further, the adoption of more sophisticated applications of technology such as AI and machine learning will accelerate. AI and machine learning will enable corporate and litigation document review more efficiently and conducted at remote locations. The need will intensify to support the seemingly insatiable demand for video and broadband service.

Decreased Travel and Entertainment Costs

Greater technology use may decrease other costs such as travel and ultimately the need for office space as more people regularly and systematically work remotely. Business trips, tradeshows, and even meals and entertainment are Petri dishes for breeding microbes. Sitting in a crowded basketball arena, constantly passing beers down the twenty seat row and then passing the germ-ridden money back to the vendor, or standing up at a theatre every time a patron wants to brush by you to get to her seat conjures up frightful images of too little social distancing. Recent income tax code revisions diminished deductions for some of these items and, unless reassessed, will only contribute to this declining tactic.

Higher Insurance Premiums

The cost of providing health care, not just to pay for all the Coronavirus cases but to underwrite future pandemics, will undoubtedly lead to higher insurance premiums. How employers share these increased costs with their employees is not only a financial matter but also a policy choice of the type of “safe” workplace image the employer desires to portray. Further, insurance premiums for business interruption coverage may also increase, even if the policyholder does not purchase pandemic coverage.

Higher Levels of Inventory

The 2000s introduced a virtual revolution in the efficiency of supply chains and improved just in time inventory management.  Purchasing managers could keep inventory lean and mean, knowing that replacements were just an order refill click away. Not anymore.  The confluence of trade wars, increased nationalism and now the pandemic have shattered the smooth functioning of inventory replenishment and certainty of seamless restocking. Not having to keep several months’ supply of Lysol wipes and other cleaning supplies, not to mention other basic necessities like copy paper and printer ink, saves countless dollars in working capital.  Concerns for delays and shortages have the opposite effect on working capital management and increases the cost of capital as well as decreases the businesses’ cash flow which is allocated to building inventory.

Migration to More Certain and Fixed Revenue Streams

To mitigate, if not avoid, the vicissitudes of hourly billing, professional service firms may consider more monthly fixed retainer models. This steady income, in good times and bad, could soften the slings and arrows of unpredictable cataclysms (assuming the clients stay solvent or do not renegotiate). The willingness of clients to pay fixed monthly retainers, however, may be problematic and, even if it is agreed to, may be reassessed at the first whiff of a downturn anyway. Ironically, many clients who had previously suggested a fixed cost arrangement with flat monthly retainers have recently started to see the benefits of a variable cost structure, which frees up monthly burdens during challenging times.

Possibly Lower Rent Costs

With more workers working remotely, less space will be needed. Of course, that need for lesser space may be offset by the required spreading out of personnel in the workspace, so maybe this will equalize itself.

More Zealous Monitoring of Cash Collection Cycle

Liquidity in the form of prompt receipts from clients and moderately stretched payments to vendors is essential to keep a business afloat and well-capitalized. Certainly, during any challenging economic set of circumstances, the cycle becomes elongated. The experience during the pandemic reinforced slavish devotion to the basic principles that Cash is King or Queen. I would expect businesses to pursue this truism more slavishly to avoid defaults or delayed payments from customers. Prudent financial management will require retainers, staying replenished, as well as security deposits and not permit advancing significant costs. Interest for late payments, late payment fees, early pay discounts, retainers, good relations, friendly but prompt reminder calls and follow-ups, credit card auto-pay, and abrupt cessation of work are some tactics a business could be quicker to pursue to avoid being used by their customers as a bank.

Increased Taxes

While the author is not an economist, the trillions of dollars of government stimulus, amounting to over 14% of our GDP, should be inflationary (although TARP and other excessive stimulus in 2007-08 did not lead to inflation). Increased taxes are a conventional tonic to drown deficit spending. This could both lead to great use of the multitude of income and estate tax planning services but at the same time decrease business activity. Financial managers will need to deal with greater tax claims on owners’ income and creative ways to minimize the bite.

Increased Regulation

The pandemic has unleashed a torrent of legislation addressing crucial pillars of our economy and business. These include lending, labor, employment, and executive compensation. Most of the legislation was written hurriedly to deal with the impending political and fiscal crisis and the need for interpretation and well as compliance creates work for the service industry.  Regulation always imposes cost, whether in the form of taxes or personnel or advisors to address the rules.

More Downtime Due to Pandemic Alerts

This pandemic will scar the psyche of many for decades to come and with the inevitable passing of stories down to the succeeding generations. Given the great disruptions a pandemic inflicts, the memories of which may become exaggerated and shibboleths as the years progress, and given the perceived slow and the less than energetic response the federal government provided, future leaders will view the efficient, competent and rapid response to even a whiff of a pandemic to be the prism through which their competence is judged. Therefore, the government will be expected to react with alacrity, not panic, and competence. Just as governors of states in hurricane regions lead efforts to warn citizens in advance of an impending hurricane and exhort them to board up their houses and head for higher ground, future national leaders, and even some state leaders, may closely monitor outbreaks of illnesses in faraway lands, just as we now monitor the formation of tropical depressions in the Caribbean, and perhaps prepare citizens and businesses well in advance. This may result in more precautionary business closures, some warranted and some like the putative hurricane that thankfully never develops or veers off course. Very few will blame a government for shutting down the office too soon rather than keeping it open too long. While we as a society balance economic health against physical health, this pandemic has slightly tilted the balance toward the latter. Therefore, business and financial models will need to add a closure cost and downtime “vacancy rate” lost revenue expense to prudently and conservatively prepare for this eventuality.

Some might say that all the talk of major transformational shifts due to the COVID-19 pandemic is an overreaction. After all, pandemics are rare black swan events.  Ideally, there will soon be a vaccine.  In theory,  there may already be a treatment. Many die every year during the flu season. Society has to balance health and safety against a booming productive economy. All of this is true. However, in the past twenty years, we have had several worldwide pandemics, like SARS, MERS, H1N1, avian flu, Ebola, to name a few. We have also had societal and business altering events like 9/11 and the financial pandemic in 2007-8. Some might even observe that these “black swans”, being not so rare, are more like “black ducks”.

Ignoring the trends of spreading diseases in a rapidly globalized world, as well as the likely occurrence of other truly unforeseeable occurrences, is to ignore the need to properly address the ramifications of these events and perhaps recognize ways to improve our ability to mitigate disruption in the future. While no one has a crystal ball, the possible responses to the pandemic may lead to profound changes or accelerate existing trends in our office environment in a broad panoply of areas, not the least of which includes those discussed above. Our future office and work environment, particularly in how we model our financial responses, will be as profoundly different in the future as was our country before and after the last world war. Once the Genie is out of the bottle, it is difficult to put back in.

The opinions and views stated herein are the sole opinions of the author and do not reflect the views or opinions of the National Law Review or any of its affiliates.

© The National Law Forum. LLC
ARTICLE BY Fred Tannenbaum Partner at Gould Ratner and The National Law Review’s Guest Contributors.
For more on COVID-19 recovery, see the National Law Review Coronavirus News section.

Sweeping Executive Order on Deregulation Seeks to Spur Post-Pandemic Economy

President Trump signed an Executive Order (Order) this week to alter or eliminate regulations that the Administration maintains hamper economic recovery as the nation emerges from the COVID-19 pandemic.

The Regulatory Relief to Support Economic Recovery Order calls on agencies across the federal government to use emergency authorities provided under the Administrative Procedures Act to swiftly rescind, modify, waive or provide exemptions from regulations and other requirements that inhibit job creation and economic growth.  It further calls on agencies to consider permanently rescinding or modifying any regulations that were temporarily halted in response to COVID-19. The Order notes that it does not change agencies’ statutory obligations.

The Order also directs enforcement discretion by agencies for businesses that make good-faith attempts to follow agency guidance and regulations during the pandemic.  It establishes the following “principles of fairness” that are to be followed in enforcement and adjudication:

  • The Government should bear the burden of proving an alleged violation of law; the subject of enforcement should not bear the burden of proving compliance.
  • Administrative enforcement should be prompt and fair.
  • Administrative adjudicators should be independent of enforcement staff.
  • Consistent with any executive branch confidentiality interests, the Government should provide favorable relevant evidence in possession of the agency to the subject of an administrative enforcement action.
  • All rules of evidence and procedure should be public, clear, and effective.
  • Penalties should be proportionate, transparent, and imposed in adherence to consistent standards and only as authorized by law.
  • Administrative enforcement should be free of improper Government coercion.
  • Liability should be imposed only for violations of statutes or duly issued regulations, after notice and an opportunity to respond.
  • Administrative enforcement should be free of unfair surprise.
  • Agencies must be accountable for their administrative enforcement decisions.

Finally, the Order instructs agencies to provide pre-enforcement rulings, permitting businesses to ask an agency for a determination on whether some proposed conduct in the business’s response to COVID-19 is allowable.

IMPLICATIONS AND OUTLOOK

The Order is consistent with the longstanding stated desire by the Administration to reduce regulatory burdens.  It has the potential to alter the regulatory landscape across a wide array of industries. The Order could impact virtually any regulation from the numerous government agencies that promulgate rules, including financial regulations, environmental protections, and agricultural production and distribution guidelines, among many others.

In addition to ordering the rescission or modification of current regulations, the White House is calling on agencies to speed up the rulemaking process, including moving proposed rulemakings to interim final rules with immediate effect. This will likely draw resistance and possibly litigation from organizations that have already opposed the Administration’s approach on regulatory reforms.

The Order’s provisions on pre-enforcement rulings supersedes the provisions contained in Section 6 of Executive Order 13892, which establishes principles for using guidance in civil administrative enforcement, in an effort to provide faster compliance feedback to companies looking to reopen so they can proceed with the confidence that doing so will not trigger violations of the governing laws or regulations.

The “principles of fairness” detailed above seek to provide another level of legal cover for regulated entities. However, the extent to which the Order would provide protection for businesses against pandemic-related liability would be limited.  This has been a particularly challenging issue among lawmakers as the next legislative response package is developed.  While Senate Majority Leader Mitch McConnell (R-KY) has stated that liability protections for business must be included in the next relief bill, House Speaker Nancy Pelosi (D-CA) opposes such provisions.

Although it remains to be seen how agencies will respond to the Order, it is likely that they will look to the businesses and industries they regulate to assist them in identifying regulations that should be rescinded or modified.

© 2020 Van Ness Feldman LLP

For more on government regulations, see the National Law Review Administrative and Regulatory law section.

Best Practices for Commercial Property Owners/ Operators: Phase One of Reopening the Economy

The Federal Coronavirus Task Force issued a three-stage plan last week to reopen the economy, where authorities in each state – not the federal government – will decide when it is safe to reopen shops, schools, restaurants, movie theaters, sporting arenas and other facilities that were closed to minimize community spread of the deadly virus. Once phase one is adopted in certain states, businesses that reopen will need to be prepared to take certain precautions to meet their common law duty to provide and maintain reasonably safe premises.

Phase One

The first stage of the plan will affect certain segments of society and businesses differently. For example, schools and organized youth activities that are currently closed, such as day care, should remain closed. The guidance also says that bars should remain closed. However, larger venues such as movie theaters, churches, ballparks and arenas may open and operate but under strict distancing protocols. If possible, employers should follow recommendations from the federal guidance to have workers return to their jobs in phases.

Also, under phase one vulnerable individuals such as older people and those with underlying health conditions should continue to shelter in place. Individuals who do go out should avoid socializing in groups of more than 10 people in places that don’t provide for appropriate physical distancing. Trade shows and receptions, for example, are the types of events that should be avoided. Unnecessary travel also should be avoided.

Assuming the infection rate continues to drop, then the second phase will see schools, day care centers and bars reopening; crowds of up to 50 permitted; and vacation travel resuming. The final stage would permit the elderly and immunologically compromised to participate in social settings. There is no timeline prescribed, however, for any of these phases.

Precautionary Basics

Once businesses are reopened during phase one, there are several common sense and intuitive safety practices that business owners/operators must absolutely ensure are in place to meet their common law duty to provide a reasonably safe environment for those present on their premises.

The guidelines issued by the CDC are the core protocols that form the baseline for minimal safety precautions: persistent hand washing, use of masks/gloves and strict social distancing.

Additional Measures

Given the highly infectious nature of the virus, the fact that it is capable of being transmitted by asymptomatic people who are nonetheless infected, and the apparent viability of transmission through recirculated air or via HVAC systems without negative pressure (per a recent report from China about transmission from one restaurant customer to several others via the air circulation system), there is nothing that reasonably can be adopted that will effectively and readily ensure that a business is completely free of someone who is infected and capable of spreading the virus.

As such, additional measures are advisable beyond the CDC protocols, such as robust cleaning/hygienic regimens/complimentary wipes and hand sanitizer for common areas, buttons and handles; and the necessary protections for employees who interact with the public (e.g., shielding and protective gear for checkout clerks at the supermarket or lobby desk/check-in personnel in hotels and office buildings). In addition, it would not be unreasonable or unduly intrusive to check the temperatures (via no-touch infrared devices) of those entering the premises. In the absence of available portable, instant and unobtrusive virus testing methods, temperature readings are the most practical and reasonable precautionary measure beyond the CDC baseline deterrents.

Conscientious and infallible implementation of maintenance, housekeeping and hygiene protocols for the commercial, hospitality, retail and restaurant industries also will be critical to mitigate potential liability claims for negligently failing to provide an environment reasonably safe from the spread of coronavirus.

Advisability of Warnings

Aside from conspicuously publicizing – via posted signage or announcements – the CDC guidelines relating to persistent hand washing, use of masks/gloves and strict social distancing, the need to warn of the potential for – or a history of – infections generally is not considered to be necessary or essential unless there is an imminent threat of a specific foreseeable harm.

Unless there is a specific condition leading to a cluster of infections within a particular property (unlikely given the ubiquity of the disease and community spread, but the reporting would be to the CDC or local health authorities in such an instance), or an isolated circumstance that can be identified to be the source of likely infections to others who proximately were exposed, there is no need or obligation under existing law or regulatory guidelines to report generally that someone who tested positive for the virus may have been on a particular property.

Moreover, unless the business is an employer who administers a self-funded health plan (who are thus charged with the duty to maintain “protected health information”), businesses that are not health providers are not subject to HIPAA; as such, concerns about HIPAA violations are misplaced to the extent that the identity of someone who is infected is somehow disclosed or otherwise required to be disseminated by a business not otherwise charged with the duty to maintain “protected health information.”

A Coordinated Approach

While the CDC’s guidelines are important, they are not exclusive. Businesses planning to reopen also should consider regulations and guidelines from a number of other sources, including OSHA and state and local departments of public health.

© 2020 Wilson Elser

For more on reopening the economy, see the National Law Review Coronavirus News section.