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You are invited to join us:

When: Sunday, September 16th, 2012: 12:30 – 3:00.
What: Antheil Maslow & MacMinn's Annual Client Appreciation BBQ.
Where: AMM's Doylestown Office, 131 West State St. Doylestown.
We hope you’ll join us to help celebrate our 20th Anniversary!

This is a fun event with BBQ lunch and offering a front row seat to the Doylestown Arts Festival and Bike Race. All of our clients and friends are welcome. We hope to get a great turnout to help us celebrate our 20th Anniversary Year!

 

Estate Planning and Elder Law practitioners in Pennsylvania routinely recommend to clients that they execute a Durable General Power of Attorney naming an agent to be empowered to act on their behalf as an essential estate planning instrument.  At a recent seminar presented, in part, by Montgomery County Judge Ott, he outlined what he considered the standard to determine capacity for the principal who is executing a Pennsylvania Power of Attorney.

The Principal must:

1. Understand the nature of the authority delegated to the Agent(s); and
2. Understand the nature of his or her assets to be delegated to the Agent(s); and
3. Understand the meaning of the Power of Attorney Notice now required for all Power of Attorneys.

The attorney should establish and document that all three of these standards have been met in order to avoid the instrument being overturned (invalidated, revoked) on the basis of incapacity, which could expose the attorney and/or the Agent to complications and possible liablility.

Antheil Maslow & MacMinn attorney Michael Klimpl has been appointed County Solicitor for Bucks County.  He has served as Acting Solicitor since the announced retirement of County Solicitor Glenn D.  Hains on January 3rd.  Michael has served as Assistant Solicitor for the County since 1984 and will now head Bucks' legal team of five government lawyers.

The Bucks County Solicitor’s Office serves as general counsel for the County of Bucks and  represents the Commissioners and all divisions and departments under the direction of the Commissioners.  The Solicitor’s Office defends lawsuits against the County, and initiates lawsuits brought by the County.  These include civil rights litigation and suits involving construction matters.

Solicitors prepare, review and/or supervise contractual obligations within the County. They handle state and federal compliance issues relating to the County, human resource/employee issues, real estate transactions from agreement through settlement, ADA observance and general employment law. The Solicitors advise on open space and agriculture preservation programs by evaluating properties, determining the scope and extent of easements, and reviewing appraisals.

The Office also coordinates and supervises all outside counsel and the activities of individual department solicitors.

Monday, May 06 2013 14:08

Rules Applicable to Summer Internships

Written by Bill MacMinn

With summer just around the corner, employers are inundated with requests by students for summer internships. If your company offers such opportunities, taking a few moments to review the applicable regulations will help assure that the program complies with the law.

It goes without saying that a paid intern is an employee and subject to all applicable state and federal employment laws including those pertaining to minimum wage and overtime. Even if the internship is unpaid, failure to follow Department of Labor guidelines could lead to legal liability under the Fair Labor Standards Act.

Department of Labor Guidelines

The Fair Labor Standards Act (the FLSA) provides, of course, that individuals in an employment relationship must be paid for services performed. When is an unpaid intern an employee? According to guidelines published by the Department of Labor, if the following factors are met, there is no employment relationship and the intern need not be paid:

The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

The internship experience is for the benefit of the intern;

The intern does not displace regular employees, but works under close supervision of existing staff;

The employer that provides the training derives no immediate advantage from the activities of this intern;

The intern is not necessarily entitled to a job at the conclusion of the internship; and

The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of these factors are met, the Department of Labor will conclude that an employment relationship does not exist under the FLSA. In such circumstances, minimum wage and overtime provisions do not apply to the intern.

Different rules apply for governmental agencies and non-profit organizations. Internships offered by governmental agencies, private non-profit food banks and non-profit organizations providing religious, charitable, civic, or humanitarian services are generally permissible so long as the intern volunteers his or her time freely and without anticipation of compensation.

A permissible unpaid internship will include some or all of these features:

  1. It is structured around a classroom experience as opposed to the employer’s actual operations;
  2. Academic credit is offered by a sponsoring institution;
  3. The internship provides the intern with skills that can be used in multiple employment settings as opposed to specific training in the employer’s operations;
  4. The intern does not perform the routine work of the employer;
  5. The employer is not dependent upon the work of the intern;
  6. Job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work.
  7. The internship is of a fixed duration established at the outset of the internship.

Factors which indicate an employment relationship (and trigger the requirement to pay wages) include:

  1. The intern is engaged in the operations of the employer;
  2. The intern is performing productive work such as, for example, filing, clerical work or assisting customers;
  3. The employer uses interns in lieu of hiring additional employees or offering more hours to existing employees;
  4. The intern receives the same level of supervision as other employees;
  5. The intern is offered employment to begin immediately upon the conclusion of the internship, effectively transforming the “internship” into a trial period of employment.

Summer internships, paid or unpaid, provide valuable experience to students. Employers need only exercise some caution is structuring the internship to avoid running afoul of DOL regulations. The DOL Fact Sheet on summer internships is available at http://www.dol.gov/whd/regs/compliance/whdfs71.htm

John D. Trainer, Of Counsel for the Firm, has again been tapped to teach a five-week seminar on Estate Planning & Administration at Delaware Valley College’s Center for Learning in Retirement (“CLR”), beginning March 22, 2012 in Doylestown, Pennsylvania.  Trainer’s annual class provides presentations and discussions focusing on what criteria are considered necessary to prepare estate documents, in order to minimize federal and state death taxes.  Also covered are: recent repeal of the Federal Estate Tax and how this will impact estate planning; powers of attorney; the benefits of living wills; and processes involved in the administration of a decedent’s estate.  Timothy M. White, Esquire and Paralegal Sheila Kyle, also of Antheil Maslow and MacMinn, LLP, will instruct during the course.


Trainer, Of Counsel for Antheil Maslow & MacMinn, LLP, concentrates his practice in estate planning, estate administration, and elder law, and is a member and past president of the Bucks County Bar Association, a former member of the Disciplinary Board and Pennsylvania Bar Association House of Delegates, and serves on the Bucks County Estate Planning Committee.  He received a Bachelor of Arts from Bucknell University, and his Law Degree from Villanova Law School.

Tim White, a member of the Bucks County, American and Pennsylvania Bar Associations, an Associate with Antheil Maslow & MacMinn, LLP will teach one session dealing with Pennsylvania Inhertance Tax and Federal Estate Taxes.  Tim specializing in the areas of taxation, estate planning and administration, estate and trust litigation, family wealth preservation, business succession planning.  He received a Bachelor of Arts from Michigan State University, and his Law Degree and LL.M. Taxation from Temple University School of Law.   

Celebrating 20 years in business, Antheil Maslow & MacMinn, LLP is a full-service law firm with practice areas in Business & Finance; Death & Serious Injury;  Estates & Trusts; Health Care; Labor & Employment; Litigation; Nonprofits; Real Estate & Land Use; and Tax.  The Firm works with high net worth individuals, small to mid-sized, privately-held companies, nonprofits and heath care organizations in the Greater Philadelphia and New Jersey areas.  Antheil Maslow & MacMinn, LLP is headquartered in Doylestown, Pennsylvania.

Two guys are sitting at a bar discussing how they are going to quit their current jobs and start their own business. A lawyer sits next to them, overhears their happy ramblings and pipes in, as lawyers always do, that their mutual promise to devote 100% of their working energy to the new biz has to be reduced to writing. You know this joke, right?

Well, maybe not, and maybe it’s not such a knee slapper anyway. Under Delaware’s Limited Liability Company Act (the “Act”), a person may be admitted to a LLC as a member and may receive a LLC interest without making a contribution or being obligated to make a contribution to the LLC. If an interest in a LLC is to be issued in exchange for cash, tangible or intangible property, services rendered or a promissory note or obligation to contribute one or more of these items, however, the LLC’s operating agreement can and should, identify that obligation. The Act goes further and makes it clear that the operating agreement may provide that a member who fails to perform in accordance with, or to comply with the terms and conditions of, the operating agreement shall be subject to specified penalties or consequences, When a member fails to make any contribution that the member is obligated to make, the operating agreement can provide that such penalty or consequence take the form of reducing or eliminating the defaulting member’s proportionate interest in a LLC, subordinating the member’s interest to that of nondefaulting members, a forfeiture of that interest, or a fixing of the value of his or her interest by appraisal or by formula with a forced redemption or sale of the LLC interest at such value.

If only our clients made it easy on us by letting us write agreements with such detail! A more common scenario is the member who wants us to get rid of the 50% member, formerly a dear buddy, who walked out the door for whatever reason after a few months (or, even worse, walks in and plays on the computer all day doing nothing that needs to be done). Unfortunately, without an operating agreement that clearly identifies expectations with respect to contributions of services and remedies for breach, it is a challenge to argue the defaulting member forfeits his or her interest for failure of consideration as s/he might for failure to “pay” for the interest with cash or property.

While I continue to look out for case law in support of the idea of forfeiture in the context of LLCs, a recent Kansas case did address alternative remedies for breach of obligations with respect to contributions of cash.   In Canyon Creek Development, LLC v Fox, the court struggled with the appropriate remedy available to a LLC when a member failed to satisfy a required capital call. The defaulting member, Fox, argued that he should not be held personally liable for the nonpayment of a post-formation capital contribution where the only remedy set forth in the operating agreement was a reduction of his ownership interest. Interpreting a statute that appears to be similar to the Act, the court ultimately agreed with Fox, making a distinction between the initial contributions (which could be in the form of cash or services, measured by their “net fair market value”) and later capital infusions which had to be in cash (unless the manager otherwise consented). The court concluded that the statutory default rule that a member is obligated to perform any promise to contribute cash or property or perform services, even if a member is unable to perform, supports the proposition that a member may be required, at the option of the LLC, to contribute an amount of cash equal to the agreed value of any initial, unmade, contribution. The court stated this was the law even where the LLC may have other rights against the noncontributing member under the operating agreement or other law. Turning to subsequent capital calls, however, the court found it significant that the remedy of cash damages, the most fundamental remedy for breach of contract, was conspicuously absent from the provisions of the operating agreement. Thus, the court concluded that the failure to include such a fundamental remedy as damages when a member fails to contribute additional capital after the LLC’s initial capitalization was not an oversight, but rather expressed a clear intent that damages are not recoverable from a member who failed to contribute additional capital after the venture was up and running. In the Fox case, the right to reduce the breaching member’s LLC interest was all that the LLC could do to punish the breaching member. No divorce, but better than a non-collectable judgment for a sum certain from my perspective.

 

 

Friday, March 16 2012 16:07

Court Refuses to Enforce Noncompete

Written by Patricia Collins

In a recent case that may not bode well for the enforcement of noncompete agreements in Pennsylvania and New Jersey, the Virginia Supreme Court reversed twenty years of Virginia precedent relating to noncompetes, agreements pursuant to which an employee agrees not to compete with an employer for a period of time after the termination of employment. Until this recently, Pennsylvania, New Jersey and Virginia had similar laws relating to noncompetes. Historically, courts in all states have not looked favorably on such agreements, and have used various tools to limit or deny enforcement of noncompetes. Prior to the court’s decision in Home Paramount Pest Control v. Shaffer, the law in Virginia was similar to Pennsylvania law: a Court could re-write overbroad noncompete agreements so that the document was consistent with the employer’s protectable interests. In Home Paramount Pest Control, the court stated that it would no longer re-write such provisions, and that it was free to refuse to enforce a noncompete that was overly restrictive.

The former employee in Home Paramount Pest Control signed a noncompete agreement that prohibited him from competing with his former employer’s fumigation business in any manner, in any geographic area where he worked for Home Paramount Pest Control for a period of two years after his termination. Prior to this case, it was well settled that if the court found the restrictions of the noncompete broad, it could rewrite the document and enforce more reasonable provisions. The court generally exercised its re-writing power to limit the geographic or temporal scope of the document, or to find that specific conduct did not violate a noncompete if the employer could not articulate a protectable interest in prohibiting the conduct, even where the clear language of the agreement prohibited the competitive conduct. Generally speaking, “protectable interest” means that the employer has provided something to the employee that it has the right to protect, such as access to trade secrets, or specialized training. If the restriction on future employment did not match a protectable interest, the court would not enforce the restriction.  

In Virginia at least, this is no longer the case. The Virginia Supreme Court noted that it had “incrementally clarified” the law relating to noncompetes so dramatically over the past two decades that it was free to find the noncompete unenforceable in this case. Most interestingly, the court focused on language that lawyers generally believe is good drafting. The agreement in question contained a list of prohibited activities designed to address every conceivable kind of competition, as well as the ubiquitous “in any capacity whatsoever” catch-all for good measure. The court found that the employer could not articulate a protectable interest that would justify such a sweeping prohibition. Specifically, the court was looking for a nexus between the employee’s job duties, and the prohibitions imposed by the noncompete.

In the good old days, the court would simply have revised the agreement to remove whatever restrictions were too broad, such as the “in any capacity whatsoever” language. Or, the court may have found that there was no protectable interest in prohibiting the employee from engaging in his current employment. But the Virginia Supreme Court refused to do so, noting that incremental changes in the law required a different result. I will not bore the reader with the court’s very interesting discussion of how the doctrine of stare decisis applies to the case, except to note that the court recognized its decision as a departure from well-settled law.

While this case does not apply in Pennsylvania or New Jersey, many states have seriously limited the enforceability of noncompetes. We are making sure to discuss these issues with our clients, and draft noncompetes as narrowly as possible.   We are also thinking creatively about other solutions to the problem of competition, trade secrets and specialized training, such as non-solicitation provisions. The Virginia Supreme Court has given us new reasons to draft carefully.

 

We are celebrating our 20th Anniversary year!  It has been our great privilege to provide high quality legal services to clients over a broad spectrum of practice areas.  Founded on March 1, 1992, the Firm has been active in the Central Bucks County community by sponsoring charitable activities and other programs.  The Firm's attorneys serve on the boards of several local nonprofits and participate in a number of local organizations.  AMM has grown along with the community, and our practice has broadened over the years with the addition of a highly skilled, experienced and knowledgeable professional staff.

Please take a moment to view our 20th Anniversary video in celebration of this important Milestone.

AMM are proud sponsors of the Big Brothers Big Sisters of Bucks County Bowl for Kids Sake Fundraising events happening throughout the county.  This is Big Brothers Big Sisters of Bucks County’s premier fundraising event, where people get together with friends, family, and co-workers and have a fun time bowling in support of our mentoring programs in our community. Big Brothers Big Sisters of Bucks County works to help broaden children’s perspectives and help them learn how to make good choices. 

We want to encourage others to join the effort, whether you start a team, become a corporate sponsor or make a donation, its a great organization and a great feeling to help local youth on the path to fulfilling their potential and succeeding in school and life.

 

 

Wednesday, February 15 2012 16:15

An Unexpected Adversary for Private Companies: the SEC

Written by Joanne Murray

It is not uncommon for a minority shareholder to cry foul when the corporation is sold and the shareholder believes he received less than fair value for his shares. Such claims often result in shareholder oppression suits, with the majority shareholder accused of having breached a fiduciary duty to the minority owner. Now it seems that controlling shareholders of even privately held corporations have another potential adversary: the Securities Exchange Commission. The SEC recently sued Stiefel Laboratories and its then-controlling shareholder and CEO Charles Stiefel, alleging that they defrauded current and former employee shareholders out of more than $110 million by buying back shares in the company at undervalued prices prior to the sale of the company to GlaxoSmithKline PLC.

The complaint alleges that the defendants misled the employee shareholders, who had acquired the shares as part of a stock bonus plan, by concealing material information about the potential acquisition of the company by GlaxoSmithKline. Information regarding several offers from private equity firms to acquire stock in the company at a higher price than the valuation provided to employees was also allegedly withheld from employees. The complaint further asserts that the valuation that the company provided to employees was prepared by an unqualified accountant who used flawed methodology. Adding insult to injury, a 35% discount incorporated into the valuation was not disclosed to the employees.

The complaint cites, among other things, the company's repurchase of 800 shares from employees at a price equal to $16,469 per share in the months leading up to the sale to GlaxoSmithKline, which acquired the company for $68,000 per share. As a result of the reduced number of outstanding shares, the remaining shareholders (consisting mostly of Stiefel family members) received a windfall.

The SEC warns that privately held companies and their officers should be aware that federal securities laws are intended to protect all shareholders, regardless of whether they acquire their shares in a private transaction such as a stock bonus plan or on a public market. Corporate officers in corporations with stock bonus plans should take care to obtain appropriate valuations to support stock repurchases from accredited professionals using commonly accepted valuation methodologies. Stock option plans and corresponding summary plan descriptions should be carefully reviewed, with a particular focus on their stock repurchase provisions. All material facts must be fully disclosed to plan participants in a timely manner.

To avoid post-transaction cries of foul play from former shareholders, we often include “tail” provisions that allow the former shareholders to enjoy the same economic benefit of a major company transaction such as a sale or merger that follows the sale of their shares. Such provisions are usually of limited duration (e.g., twelve months). This protects the company and senior management from claims like those raised by Stiefel Laboratories employees after the expiration of the tail period.