The Department of Labor recently issued a final rule raising the minimum wage for employees working on new covered federal contracts to $10.10 beginning on January 1, 2015. A “new” contract is one that results from a solicitation issued on or after January 1, 2015, or that is awarded outside of the solicitation process after January 1, 2015. On January 1, 2016, and annually after that, the minimum wage will be increased in an amount determined by the Secretary of Labor.
Violation of the new Department of Labor rules on minimum wage for covered federal contractors can lead to serious penalties including the withholding of payments due to the contractor to pay wages due to employees and, potentially, debarment. The Department of Labor notes that the new minimum wage requirements will affect approximately 200,000 workers in the United States.
If you sell products over the internet, it is important to be aware that you are going to be subject to the laws and regulations of the state that you are located in, the states that you are selling in, and certain federal laws. There are going to be laws that govern your relationship with the persons who are buying your product, and there will be laws impacting you from a tax perspective so you are going to want to become familiar with each. It’s extremely important to give a lot of attention to your website terms and conditions. There are certain things that you can cover in those terms and conditions. You cannot get out of the application of different federal and state laws in those terms and conditions, but you can engage in certain aspects of control.
The IRS has announced the inflation adjusted limits applicable to retirement plans for 2015. Some of the key adjustments for defined contribution plans (including 401(k), 403(b), 457 and profit sharing plans) include:
The maximum salary deferral limit is raised from $17,500 to $18,000
The additional catch-up contribution deferral limit is raised from $5,500 to $6,000
The maximum annual addition to the plan (excluding catch-up contributions) is raised from $52,000 to $53,000
The maximum covered compensation for an employee is raised from $260,000 to $265,000
The compensation threshold to be considered a “highly compensated employee” (absent a top-paid group election) is raised from $115,000 to $120,000
A copy of the IRS release with additional adjustments affecting retirement plans is available here.
An employee is somebody that you pay wages to, you withhold taxes from them, and you provide them benefits. An independent contractor is one where you pay them a set amount of money and they have to withhold their own wages.
In a business, it is important to be able to recognize when can I pay someone as an employee versus when can I pay them as an independent contractor. There are a lot of different tests depending on certain questions:
Do I have to provide workers comp?
Do I have to pay unemployment?
Do I have to withhold taxes from them?
Generally, I say to people that if you control what they do and tell them you have to be in my office and use my computer, you have to be here at 8 o’clock, you have to leave at noon, that sounds like an employee. And generally if you say to them, “Go get this done sometime over the next couple of weeks,” that sounds like an independent contractor. But really, you have to look at the facts and circumstances to make that determination every time.
Minority shareholders have the same rights that every shareholder has. Generally, that means they have the right to access books and records of the company, financial information, and they have the right to attend shareholders meetings and they have the right to vote on things. When you are a minority shareholder, the majority shareholders and the officers and directors of the company might actually owe you more fiduciary duties than they would owe to other shareholders. There are some legal protections if you are the small guy to make sure that that majority shareholder can’t do too much for their own personal benefit to your detriment.
The U.S. Court of Appeals for the Eighth Circuit has reversed a prior decision of the U.S. Tax Court and found that Conservation Reserve Program (CRP) payments made to non-farmers constitute rentals from real estate for purposes of §1402(a)(1) and are excluded from the self-employment tax.
The Tax Court previously ruled in favor of the IRS and found that a non-farmer who inherited rental farm ground, signed a CRP agreement with the federal government and engaged agents to perform the landowner’s requirements under the agreement was in the trade or business of farming and was therefore subject to self-employment tax on the CRP payments.
The Eighth Circuit reversed the decision and determined that prior IRS guidance and court cases have found that a non-farmer should be distinguished from an farmer active in the farming operation and applied that distinction to the present facts.
The law that governs every contract is usually the law that the contract says. In most agreements, there will be a provision in it that says if we get into a dispute, here is the law that is going to apply. If the contract does not say that, then there is a little bit of a problem. Every state has some laws and there are federal treaties with other countries, and those laws and treaties are supposed to work out whether it is the law of your state or whether it is the law of the foreign jurisdiction that is going to apply.
The important thing to think about is if you are going to do business with a company in another country, you really need to make sure that in your contract, you specify what law is going to apply and what jurisdiction lawsuits are going to happen in so that if there is a dispute, you know how it can get resolved.
The UCC is a set of uniform laws that have been developed as kind of a recommendation for the states to apply and adopt for their states. It stands for Uniform Commercial Code and it covers different commercial matters like sales of goods, secure transactions and negotiable instruments. It is not the law but it is a recommendation of what the law should be. Some form of the UCC has been adopted in all 50 states.
A business broker agreement usually means that you have hired someone to sell your business for you. So you sign an agreement with them that will say, “I want to sell it for this amount of money and I’m going to give you a period of time to go try to sell it, and if you do sell it, then I have to pay you a commission.” You would hire a business broker just like you would hire someone to sell your house; it is very similar, but in those agreements, you really have to be careful to specify exactly what you are selling and exactly what are you paying a commission on.
Handshake agreements are another way of saying a verbal contract or an oral agreement and, generally the answer is yes, they are binding. If you and another person agree to something and exchange some kind of consideration, somebody pays money or somebody does something, then generally that is enforceable and you can make them continue. Now there are a lot of exceptions to this depending on the size of the agreement and what it’s for, but generally when you agree with somebody that you are going to do something, you have to do it.