Our Insights

Update: U.S. Department of Labor Withdraws Guidance on Independent Contractors and Joint Employment

On June 7, 2017, the U.S. Department of Labor (DOL) announced that it was withdrawing the Obama-era DOL 2015 and 2016 informal guidance memorandums on independent contractors and joint employment also referred to as joint employer. These memorandums were “Administrator’s Interpretations” meant to provide guidance as to how the law and related regulations with respect to independent contractors and joint employment should be interpreted and applied to employers.
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IRS Deems Pet Visitation is for the Public Good

If you have spent time in a hospital you may have seen pets walking through the hallways en route to patient visitations.  Pet visitation programs are often organized and coordinated by charities established solely for the purpose of providing pet visitation.  The charities work with hospitals and other healthcare providers to offer pet visitation services to patients.  Some hospitals organize their own pet visitation programs. A recent IRS ruling (PLR 201719018, May 12, 2017) concluded that a pet visitation program organized by a medical research and educational institution qualified as a charitable purpose of the institution.
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Nonprofits and Executive Compensation

Nonprofit organizations are often surprised that their executive compensation practices can be subjected to Internal Revenue Service (IRS) scrutiny. Executive compensation is more than an executive’s salary, compensation includes an executive’s retirement plan, any deferred compensation, and other fringe benefits. Over the past several years, the IRS has increasingly investigated the executive compensation practices of nonprofit organizations. In addition, nonprofit executive compensation is a common risk-area flagged for audit by the IRS.  IRS scrutiny of excessive executive compensation is not just a concern of large nonprofits with substantial resources but for small nonprofits as well. Continue reading “Nonprofits and Executive Compensation”

Developing Open Source Software Not an Exempt Purpose

You may be familiar with open source software. If you are, you know it is software people can modify and share because its design is publicly accessible. Would efforts to develop open source software qualify as an exempt purpose under tax law? It’s not commercial and it benefits the public, right?

Not according to the IRS. Continue reading “Developing Open Source Software Not an Exempt Purpose”

Amateur Sports League’s Tax Exemption Revoked

It’s common this time of year to see amateur baseball teams facing each other in a game full of rivalry and friendly competition. Amateur sports teams are often organized as nonprofits and may qualify for tax exemption. In a recent case the IRS revoked the 501(c)(3) tax exempt status of an organization that operated an amateur baseball league for adults (“League”) (PLR 201717044, April 28, 2017).  The IRS concluded that the League was not organized or operated for exempt purposes.To qualify for exemption under Section 501(c)(3) an organization must be organized and operated for exempt purposes.  Exempt purposes include educational and charitable activities. Continue reading “Amateur Sports League’s Tax Exemption Revoked”

Pilot Program Updates Trademark Registrations with New Technology

What do phonograph records, cassette tapes, CDs, and downloadable mp3 files have in common?  They are all products whose trademarks are registered in class 9 (class 9 covers scientific and electronic goods).  They also embody sound recordings on media that are in varying stages of obsolescence.  Forty years ago, a record company may have sold music on phonograph records but today sells them as downloadable mp3 files.  The product, music, is the same – only the format has changed. Continue reading “Pilot Program Updates Trademark Registrations with New Technology”

Copyright Office Announces Requirements for DMCA Protections

The Digital Millennium Copyright Act (DMCA) provides valuable liability protections for service providers and website operators.  The DMCA protects service providers and website operators from liability for copyright infringement due to content posted by third parties.  To take advantage of the DMCA’s safe harbor protections, website operators must designate an agent to receive notices of claimed copyright infringement (DMCA Agent).  The name, address, phone number, and e-mail address of the DMCA Agent must be posted on the website and also submitted to the Copyright Office. Continue reading “Copyright Office Announces Requirements for DMCA Protections”

Federal Emergency Motion Blocks Enforcement of FLSA’s New Overtime Rules

On November 22, 2016, the Federal Eastern District Court of Texas granted an emergency motion for a preliminary injunction to prevent the Department of Labor (DOL) from enforcing the new Federal Labor Standards Act’s (FLSA) overtime rules set to take effect on December 1, 2016. Since the district court ruling enjoined the implementation of the overtime rules nationwide, employers do not have to comply with the proposed overtime rules that would have doubled the minimum salary requirements for the so-called “white collar” exemption to required overtime pay.

Employers should be aware, however, that the ruling was a preliminary injunction. It will only remain in effect until the merits of the case are resolved by the federal District Court, Fifth Circuit Court of Appeals, or the U.S. Supreme Court.   Continue reading “Federal Emergency Motion Blocks Enforcement of FLSA’s New Overtime Rules”

Keeping Tabs on Independent Contractors

Is your organization classifying its independent contractors correctly?

The misclassification of independent contractors as employees continues to remain at the forefront of the enforcement agendas for both the Internal Revenue Service (IRS) and the Department of Labor (DOL). In addition, as of this writing, 37 states have entered into formal memoranda of understanding with the DOL to jointly pursue worker misclassification. Many employers, both small and large, continue to struggle with how to properly classify their workers. The potential costs to an employer who misclassifies an employee as an independent contractor can be significant. For example, if an employer issues Form-1099 to a worker considered to be an independent contractor who is later determined to be an employee by the DOL, the employer may be required to pay back-wages, liquidated damages and attorney’s fees. He may also be liable to the IRS and Social Security Administration for unpaid taxes and other penalties.        Continue reading “Keeping Tabs on Independent Contractors”