Posts by John Tarley:
- Draws or distributions to owners;
- Payroll to full-time equivalent employees (payments made to independent contractors reported on a 1099 are not considered “payroll” because ICs are not “employees” and will not be calculated in your payroll). Also, the payment of state and local income tax on employee compensation counts in the “payroll” category;
- Payment for group health-care benefits, including insurance premiums; and
- Employee retirement benefits.
- you were the last employer for the employee, and
- that employee worked at least 30 days or 240 hours, and
- that employee was not terminated for cause.
- The employee must have been employed and earned a certain amount of wages. The Virginia Employment Commission publishes requirements for wages earned or time worked during an established period of time referred to as a “base period.”
- The employee must be determined to be unemployed through no fault of their own. An employee terminated for cause is not eligible for unemployment.
The Same Employer But a Different Result in this Virginia Supreme Court Case Regarding the Enforceability of Noncompete Agreements
April 23rd, 2020Over the course of the past 20 years, the Virginia Supreme Court has tweaked the law governing non-compete agreements. In its latest case, the Court came full circle by invalidating a noncompete agreement that used the same language the Court had upheld 20 years earlier in a case involving the same company.
As we have written before, trial courts will enforce noncompete agreements when the agreements (1) are narrowly drawn to protect the employer’s legitimate business interest, (2) are not unduly burdensome on the employee’s ability to earn a living, and (3) are not against public policy. Importantly, the employer has the burden to prove each of these elements. When evaluating whether the employer has met that burden, trials courts should consider the “function, geographic scope, and duration” elements of the noncompete restrictions. These elements are “considered together” rather than “as three separate and distinct issues.”
Further, if the noncompete agreement is too broad or otherwise unenforceable, a Virginia court will not rewrite, or “blue pencil” the agreement to make it enforceable. Therefore, it is important that you work with your business attorney to draft an enforceable non-compete agreement.
Republished by Blog Post Promoter
You obtained a PPP Loan? Here are some answers to questions you may have on spending the funds
April 23rd, 2020With the COVid-19 Pandemic, amongst the financial packages available to small businesses is the Payroll Protection Program (“PPP”). Small businesses must make themselves aware of the benefits of these loans. This blog post assumes you were able to obtain a PPP loan, and provides you with basic information you need to know, if you want your PPP loan to be forgiven (essentially converting the loan to a grant).
Please note that what follows is NOT legal or tax advice. These are simply my observations and notes based upon information I have gathered through an analysis of the CARES Act, an analysis of proposed regulations governing the PPP, and my attendance at numerous webinars given by tax and banking experts explaining the PPP.
YOU SHOULD CONTACT YOUR TAX ADVISOR AND BANK FOR PERSONALIZED INFORMATION FOR YOUR CIRCUMSTANCES. The purpose of this blog post is to provide you basic information that you can use to educate yourself about the PPP loans, so you can use that knowledge to ask more informed questions of your financial professionals.
First, if you were funded with a PPP loan, the period of time for calculating possible forgiveness of the loan is 8 weeks from the time you were funded. Therefore, if you were funded on April 20, 2020, your allowable expenses can only be calculated for the 8 weeks after that date.
Second, as the name suggests, the PPP is primarily to be used for payroll. At this point, it appears as though your business must spend at least 75% of the PPP funds on payroll in order to qualify as fully forgiven. Be advised that no employee (or owner) can be paid from the PPP loans at an amount greater than $100,000 per year, pro-rated over the 8-week period.
What constitutes “payroll?” Here are the current general guidelines, but there are more specifics that go beyond the scope of this blog post, so your particular situation may vary:
Third, besides payroll, you can use the PPP loan to pay your business’ lease or mortgage payments. Again, the 8 week period applies, and prepayment of future rent or mortgage probably will be disallowed in calculating the “forgiven” portion of your PPP loan expenditures.
Fourth, you can use the PPP loan proceeds to pay your business’ utilities expenses, as well as interest on any other debt obligations that were incurred before you obtained the PPP loan.
As you can see, the PPP loan can work for sole-proprietors, as well as small businesses with multiple shareholders/members. You are an employee of your small business, along with any other employees you may have.
Finally, so long as you follow the guidelines, your PPP loan will be forgiven if the proceeds are used for the program’s intended purposes (see above) over a period of time no more than 8 weeks from when your loan was funded. The bank where you obtained your PPP loan will make the determination of forgiveness, based upon your documentation and your expenditures. For any amount of the loan used that does not meet the PPP loan criteria, that amount will NOT be forgiven.
As a reminder, nothing in this blog post should be considered legal advice or tax advice, but instead is a very basic overview of how to spend your PPP loan proceeds. Contact your tax or financial advisers for your particular situation. But in any case, document every PPP expenditure you make to support your case to have the entire PPP loan forgiven.
At the end of the day, we know many of our small businesses cannot afford to seek out legal advice at this time, but it is vitally important that if we are to survive the financial crisis arising out of this novel Coronavirus pandemic, and we have to be willing to help each other out. As information is made available, we will keep you updated as best we can. Stay safe!
Republished by Blog Post Promoter
Comments Off on You obtained a PPP Loan? Here are some answers to questions you may have on spending the funds
Residential construction and mechanic’s liens; how you can protect your mechanic’s lien rights
April 23rd, 2020
Courtroom
With the downturn of the housing industry, we have seen a dramatic increase in the number of construction disputes, especially in residential construction. Owners are battling with the contractors, and subcontractors are trying to get paid by somebody. These cases lead inevitably to litigation.
The property owners and the building contractor should have a written contract. However, the subcontractors sometimes find themselves in a difficult situation, unpaid by an insolvent building contractor. It is usually then that we will receive a call from a subcontractor asking about their mechanic’s lien rights. Unfortunately, it may be too late for that subcontractor to preserve their mechanic’s lien rights because they failed to provide proper notice at the outset of the work performance. This blog post provides a brief overview of the notice requirements for subcontractors to preserve mechanic’s lien rights. Read the rest of this entry “
Republished by Blog Post Promoter
Homeowner cannot be forced to join a voluntary HOA
April 23rd, 2020In a case from the Chesterfield Circuit Court, the circuit court judge determined that a homeowner could not be forced to pay association dues to a voluntary association. This result is not surprising.
Republished by Blog Post Promoter
Builders and Owners: Have your residential construction contract reviewed before you sign it
April 23rd, 2020
Construction litigation has become a time-consuming and expensive area of legal practice. Even in residential construction, attorney and expert fees, and other costs of the lawsuits can rise high into five figures. Unfortunately, in many instances, better planning and attorney review at the beginning may have prevented the bitter litigation that ensued.
Construction Contracts
Republished by Blog Post Promoter
What are Condominium Instruments?
April 23rd, 2020In our last blog we discussed Governing Documents for homeowners associations. Condominium communities also have governing documents. However, the terminology we use to refer to these documents is “Condominium Instruments. “
What comprises the Condominium Instruments?
Republished by Blog Post Promoter
What happens when your business partner wants to leave? Do’s and Don’ts
April 23rd, 2020It’s a simple fact of business life that you and your company’s fellow shareholders or members will not always see eye-to-eye. Furthermore, our personal lives change and that effects the level of willingness in which some participate in a business venture.
As in any relationship, businesses also reach that awkward stage in which a shareholder or member wants to leave his current business venture and start something new. We have discussed starting your business and provided guidelines for setting forth the rules for governing your business. This article addresses some of the difficulties that arise during the “break-up period.” For the purposes of this article, we will use the terms “shareholder” and “member” interchangeably, as well as the terms “director” and “managing member.”
Republished by Blog Post Promoter
Why you should have a buy-sell agreement with your business partners
April 23rd, 2020
As we have previously noted, if businesses are analogous to marriages, then the start-up of businesses begins with the “honeymoon” stage in which the business partners believe that they have similar visions of the company’s rosy future. Things change.
The list of “things that change” is long including the death, retirement or disability of your business partner; you or your business partner wanting to sell your interest in the company; or one of you wanting to add another business partner. What do you do then? Read the rest of this entry “
Republished by Blog Post Promoter
Immigration and Employers – Remember your I-9 Forms
April 23rd, 2020There are many issues for entrepreneurs starting and operating their small businesses. In that light, immigration is not just a national issue involving major companies. Small businesses must be aware of government requirements, too.
Since 1986, the Immigration and Nationality Act has required employers to to verify that its employees are able to accept employment in the United States. Consequently, the I-9 form was developed. Every employee must complete an I-9 form at the time of hire. Employers are required to ensure the form is completed within three days of hire. Furthermore, even if the company engages contractors, the company could be liable if it knows the contractor employs unauthorized workers. Obviously, criminal penalties await those who fraudulently fill out the I-9 form, but civil penalties also can be levied against companies who fail to keep proper records, even if the employee is legally authorized to work in the United States.
As always, ask your attorney to make sure that your company’s legal issues are covered so that you can focus your energy on growing your business.
Tarley Robinson, PLC, Attorneys and Counsellors at Law
Williamsburg, Virginia
Republished by Blog Post Promoter
When might a Virginia business be liable for unemployment compensation?
April 23rd, 2020In the Greater Williamsburg area, many small businesses face seasonal layoffs when the summer tourism season ends. For small businesses, these layoffs lead to questions regarding unemployment compensation. In this blog post, we will discuss the issue of when an employer can be liable for the unemployment compensation for a terminated employee.
Generally speaking, an employee terminated by you may be otherwise eligible for unemployment benefits, chargeable to your company if:
The basic qualifications for unemployment compensation are:
Once you have been determined to be the “employer” liable for unemployment compensation, you are responsible for all the benefits payable to that former employee. Unless extended benefits have been approved, the maximum benefit is 26 times the weekly benefits payable to the employee.
The weekly benefits are found in a table at Virginia Code § 60.1-602. This table is regularly updated, it tells you how much a person would receive per week in unemployment, based upon the amount they made when employed. For example, if a person made $6,300 in the prior twelve weeks when employed, he would receive $125 per week in unemployment, and a total of $3,250, if he were employed for the entire 26-week period.
The possibility of being liable for unemployment compensation worries many small business owners. Discuss the issue with your business attorney so that you can plan properly for your employment needs.
Tarley Robinson, PLC, Attorneys and Counsellors at Law
Williamsburg, Virginia
Republished by Blog Post Promoter