This week, the U.S. Department of Labor issued revised administrative regulations regarding eligibility of workers to receive overtime.  This covers all employers subject to the Fair Labor Standards Act or who are working on federal contracts.  The revised regulations will:

* Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year). 
* Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability. 
* Strengthen overtime protections for salaried workers already entitled to overtime. 
* Provide clarity for workers and employers.

The final rule will become effective on December 1, 2016, giving employers more than six months to prepare.  The final rule does not make any changes to the duties test for executive, administrative and professional employees (i.e. “expect employees”) and not all business are “employers” under the Wage and Hour laws.

Employers will have the following decisions:

* Pay all eligible employees who are below the new threshold “time and a half” for overtime
* Limit worker’s hours to 40 hours per week
* Hire more employees to share the time
* Increase workers’ pay to a pay greater than the threshold

Some business organizations may challenge this regulation in court, but overtime laws are complex and when combined with increases by state and local “living wage” laws, the impact can be significant.  You may want to review your policies with us to ensure you are ready to comply with these requirements. ​

We, at MCGEEHAN PASCALE, PLC, have put together, as best we can, a limited liability company designed to carry out the purpose of your business and, most especially, provide limited personal liability for the members from company liabilities. There are recent court cases attempting to “pierce the corporate veil”, which is to disregard the limited liability in an LLC and impose liability for company debts onto the members.  As you move forward, it is up to you to do what you can to maintain your shield.  There also are increasing statutes seeking to hold owners of businesses personally liable for some obligations. The older body of law for corporations is clear on piercing the shield, but there is less law regarding the limited liability shield in an LLC.  The best way to protect yourself against this is:

  1.  Have an operating agreement. If it is not working, amend it.
  2.  Follow the procedures in the operating agreement, including having at least one annual meeting.
  3.  Maintain records (minutes) of important company actions.
  4.  Keep the company’s money in separate accounts from your personal accounts.
  5.  Do not pay personal bills with company money.
  6.  Make the capital contributions that are stated in the operating agreement.
  7.  If you give money to the company, document whether it is a loan, additional paid in capital, repayment of a loan to you by the company, etc.  If you take money from the          company, document whether it is a loan, withdrawal of capital, repayment of a loan from you to the company, etc.
  8.  Be formal in your dealings with those outside the company, that is always use your company name, sign everything using your company title, do not call each other a “partner”. Treat the company as you would a separate person with whom you are dealing.
  9.  Keep your capital in proportion to your company liabilities.
10.  Seek experienced legal advice when you have any doubt as to an action you are contemplating. 

​If you maintain you participation in MCGEEHAN PASCALE, PLC’S PRIORITY BUSINESS CLIENT PROGRAM℠, remember you have access to our No Charge Quick Calls (new topic, no reading, writing or research, less than 10 minutes), reduced hourly fees and experienced attorneys who are familiar with your business. Use this resource.

The 2016 Virginia General Assembly enacted HB 955 changing the Virginia Limited Liability Company Act.  It brings into the Act a new section on entity conversions (changing from one form of business structure to another), aligns LLC conversions with the Virginia Business Trust Act and provides for reorganization of an LLC in bankruptcy, as is provided for corporations.                                        

The House continued HB 130 that would have established a series LLC in which managers, members, or interests can differ as to rights, powers or duties. Series LLC are great for aligning assets with liabilities with respect to specific property or obligations.

MCGEEHAN PASCALE, PLC supports the enactment of HB 955 as it clarifies and removes discrimination against LLCs in the described matters.  MCGEEHAN PASCALE, PLC favors not enacting HB 130 this year.   For more than 25 years we achieved similar outcomes with a “Hershey® bar” structure of LLCs and a Virginia statute is desirable and can be less expensive.  Between 15 -18 states and territories enacted laws permitting series LLCs, but the Uniform Protected Series Act (“UPSA”) was updated in 2016 and the General Assembly should wait and study this more current version. 

One or more companies have sent to Virginia companies, including our clients misleading forms.  The companies are called “Virginia Council for Corporation”, “Corporate Records Service” and “Annual Business Services” and the forms are titled “2015 Annual Minutes” and “2015 Annual Records Solicitation Form”.  The Solicitation Form looks somewhat like the annual report form prescribed by the State Corporation Commission and mailed to corporations of record in the Clerk’s Office of the SCC.  Some corporations have confused the Solicitation Form for the Commission-prescribed annual report and sent money to these companies believing they have legally complied.   In the case of LLCs, legally, the form is wrong.

A search of the Commission’s business entity records in the Clerk’s Office revealed no information about a company with the name Virginia Council for Corporation”, “Corporate Records Service” and “Annual Business Services” or that they are authorized to do business in Virginia although they have a Richmond address.

These enterprises are commercial solicitations and they do not comply with state requirements.  The companies do not file an annual form with the state or pay the annual fee to the state. 

If you are in the McGeehan Pascale, PLC’s  Priority Business Client Program℠ and we are your registered agent, we receive and review the official state form and send it to you with instructions on filing it and paying the annual fee.  If we are not your registered agent, you will receive an official form from the state, but call us if there is a question whether it is a legal form.  We have looked into legal action for clients who believe they have been defrauded.  The cleverness of the form makes that difficult to prove fraud. But, if you have other questions go to https://www.scc.virginia.gov or http://www.oag.state.va.us to make a complaint.