Indiana Business Lawyer Blog

Indiana Employment Law and Indiana Corporate LawCorporation Mergers and Acquisitions May Subject Companies to I-9 Sanctions By: Jeremy L. Fetty

2012-02-06T15:36:42Z

During a corporate merger or acquisition, companies should inspect the I-9 Employment Eligibility Verification Form policies of the soon-to-be merged or acquired company, as failure to do so may expose the company to fines and penalties from Immigration and Customs Enforcement (ICE). Since November 6, 1986, employers have been required to use the I-9 form in order to verify that each employee hired is authorized to work in the United States.

]]> The complicating process of a merger or acquisition is increased when I-9 compliance is at issue, as an entity that desires to merge with or acquire another company inherits the other company’s I-9 violations. Such violations include both technical and substantive violations. Technical violations are less severe and usually involve the employee’s failure to enter a birth date or the employer’s failure to provide its business address. This violation could result in fines from $110 to $1100 per violation. On the other hand, substantive violations are more severe and include the employee’s failure to sign the I-9 form or failure to indicate immigration status. This violation may result in criminal prosecution and/or fines of $375 to $14,000 per hire.

To ensure that merging or acquiring another entity does not result in fines or criminal prosecution, due diligence should include examining the other company’s workforce and current systems and practices for I-9 verification compliance.

Jeremy Fetty is a partner in the law firm of Parr Richey Obremskey Frandsen & Patterson with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.

The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

City Negligence for Property Damage from Sewer Defects UnlikelyBy: Jeremy L. Fetty

2012-01-31T15:27:58Z

The Indiana Court of Appeals recently handed down two decisions regarding the liability of a city or municipality for damage caused to real and personal property as the result of a sewer defect. The cases examine when a city or municipality may be held liable for sewer malfunctions that cause property damage.

]]> In Ka v. City of Indianapolis, 952 N.E. 2d, 885 (Ind. Ct. App. 2011) the Kas sued Indianapolis (“City”) for negligence, among other torts, after the sewer line near their home became clogged, causing sewage to backup into the Kas’ basement. At trial, two experts asserted that the sewer line in question had been blocked due to structural damage that existed either since the sewer line was installed or damage that had developed over time. The court stated that the City would be liable for the subsequent property damage caused by the defect if the city knew or had reason to know of the defect. A City is only liable for defects in the City’s infrastructure if it had actual or constructive knowledge of such defects, meaning that the City could have discovered the defect by the exercise of ordinary care and diligence. In cases where the defect is hidden and not readily observable, liability will not rest with the City. In Ka, the court found that the City lacked actual or constructive notice of the damaged part of the sewer line, as the plaintiffs never had a problem with the sewer before, the City received assurances from engineers of the sewer’s structural soundness, and that the City contracted with a maintenance company to ensure the sewer’s proper use and function. As such, the court found that the City established that no genuine issue of material fact existed as to its constructive knowledge and affirmed summary judgment on behalf of the City.

Ka also involved a nuisance claim, which the court quickly dismissed. The court stated that because actions in nuisance are either to abate or enjoin an activity, summary judgment was appropriate in that case, as Kas’ claim had only premised an isolated instance and not one of continuing use of the property. Therefore, Kas were not seeking the abate or enjoin the City’s activity.

Next, in Farley v. Hammond Sanitary District, 956 N.E.2d 76 (Ind. Ct. App. 2011), residents complained of backed-up sewage in their basements after a severe storm. Hammond Sanitary District (HSD) asserted governmental immunity in its summary judgment, to which the lower court granted. The appellate court reversed summary judgment in favor of HSD, as the court found a genuine issue of material fact regarding the government’s immunity on the plaintiffs’ negligence claims. Specifically, issues of fact remained whether the flood was caused by a planning decision on how to run the sewer system, a planning function, or whether negligent maintenance was performed on the system, an operational function. Governmental immunity will exist when governmental acts are discretionary and such acts are determined to be discretionary using the “planning-operational” standard, where planning functions accord governmental actions immunity and operational functions do not. Because questions of fact existed surrounding the cause of the flood, as the facts allowed for multiple reasonable conclusions as to the element triggering governmental immunity, summary judgment was inappropriate.

As a result, cities or municipalities will not be held liable for unknown, either actually or constructively, defects or for malfunctions that are caused by a planning decision on how to run the sewer system.

Indiana Creditor’s Laws New Indiana Case Clarifying Notices of Sheriff’s Sale By: Jeremy L. Fetty

2012-01-26T15:19:45Z

In Surrisi v. Bremner, a 2011 Indiana Court of Appeals decision, the court held the Bill of Sale issued to the buyer (Bremner) invalid, as the Bill of Sale named business personal property which was not included in the Notice of Sheriff’s Sale.

Bremner, a creditor of the sellers (Surrisis), was the highest bidder at the Sheriff’s Sale and the sheriff issued a Bill of Sale that included business personal property that was not included in the Notice of Sale. The court noted that although the Agreed Judgment between the two parties stated the Sheriff’s Sale would include both real and personal property, the Notice of Sheriff’s Sale, praecipe of sale, and tax documentation, only listed the real property as being sold at the sale. Relying on a 2000 Colorado Court of Appeals decision, the court found that no notice of sale was given with respect to the business personal property, so such property could not have been sold at the sheriff’s sale. The court also stated that nothing in the settlement agreement prevented the business personal property from being sold at another sheriff’s sale, leading the court to further presume that only real property was to be sold at the Sheriff’s Sale in question.

Attention: Parr Richey Obremskey Frandsen & Patterson LLP Business Law Clients

2012-01-09T19:56:01Z

The National Labor Relations Board (NLRB) announced in a final rule in August a new poster requirement for both union and non-union employers that communicates employees’ rights to organize. Although originally effective November 14, 2011, the NLRB has delayed the implementation of this requirement until January 31, 2012 due to outcry from employer organizations.

Only “covered employers” must display the posters. Certain employers are exempt, such as agricultural, railroad, or airline employers and certain very small employers and retailers. If you are unsure of your requirement to post, please consult legal counsel. Noncompliance can be treated as an unfair labor charge.

To obtain a copy of the new poster, you may visit: https://www.nlrb.gov/poster

The poster should be placed in a conspicuous location where other notifications regarding workplace rights and employer rules are posted. In addition, a company that posts personnel policies, workplace notices, or similar information on an internal or external website should also include this poster in its online postings.

This article was written by Angela L. Gidley an associate in the law firm of Parr Richey Obremskey Frandsen & Patterson.

Pole Inspection Contracts -- Beware!

2012-01-05T15:05:28Z

Many co-ops use outside companies for pole testing and inspection. These companies often propose a form agreement with “standard” terms. Pricing is sometimes addressed in a separate letter with the base agreement remaining in effect for years.

Beware of standard terms proposed by some companies. For example, the contract utilized by one prominent company requires the utility to give it written notice within thirty days of any incident resulting in the breakage of a pole. Also the utility is required to retain the pole in storage for inspection by the company. Should the notice not be given or the pole not be preserved and the inspection company would later be sued on some theory, the contract requires the utility to bear the company’s defense costs and any liability that might result.

]]> Out-of-control vehicles occasionally strike roadside utility poles. The pole may or may not break, but serious injury or property damage often results. Sometimes the utility has no reason to expect that anything will come of it. But up to two years later a suit might be filed against the utility. The claim might be that the pole was decayed or brittle or that it was “oversized” and posed a dangerous obstacle to the motoring public. Sometimes it was placed “too close” to the roadway. The inspection company may also be joined in the suit, either by the claimant or the utility. If it has not given the required notice and taken steps to preserve the pole, the utility may face additional exposure for the company’s own costs and potential liability.

Over the past decade Indiana courts have allowed juries to consider injury claims against utilities arising from vehicle/pole collisions. Because utilities normally exercise prudence in placing, inspecting, and maintaining their poles, they often prevail in these cases. But if independent companies are being used for inspection and testing, remember that contractual terms are both important and negotiable. If the company wants the business, it may be willing to soften some of the harsh notice requirements. Once in effect, the agreed upon terms should be reviewed occasionally to ensure the utility performs as required.

This article was written by Kent Frandsen a partner in the law firm of Parr Richey Obremskey Frandsen & Patterson who often defends Indiana coops in liability suits.

Indiana Municipal Law - Clarification on the Requirements of a Public Lawsuit By: Jeremy L. Fetty

2011-12-06T18:11:37Z

The Indiana Court of Appeals clarified the requirements necessary for a lawsuit to be considered a public lawsuit in Buse v. Trustees of the Luce Township Regional Sewer District, 953 N.E.2d 519 (Ind. Ct. App. 2011). In this case, a group of property owners filed suit against the Spencer County Sewer District to block it from laying a sewer line adjacent to the plaintiffs’ properties, which already had functioning septic tanks. The Sewer District argued that this lawsuit should be considered a public lawsuit under Indiana Code § 34-6-2-124. This statute was designed to end costly serial litigation against municipalities that could threaten to block nearly every proposed action of a municipality. The trial court found the plaintiffs’ lawsuit to be a public lawsuit since the allegations in the complaint directly or indirectly questioned the validity and construction of public improvements. This finding would have required the plaintiffs to post a surety bond in the amount of $9,000,000 (the amount of a grant the county received to defray construction costs) within ten days or the trial court’s order or the case would be dismissed.

]]> In reversing the trial court’s order, the Indiana Court of Appeals determined this action to be a private lawsuit. The court looked to a similar Indiana Supreme Court case, Dible v. City of Lafayette, which stated, “the [landowners] have not brought suit in their capacity as taxpayers (requirement for public lawsuit).” 713 N.E.2d 269, 247-75 (Ind. 1999). The Indiana Supreme Court also stated that “an action by an individual landowner seeking to protect his or her private interest in property does not constitute the basis for a public lawsuit.” The court of appeals thought the critical factor between a public and private lawsuit is whether the property owners seek to protect public or private interests. In finding this lawsuit to be private, it found the trial court did not conclude the plaintiffs filed their suit under their capacity as citizens or taxpayers. In addition to the plaintiffs not suing in their capacity as taxpayers, the plaintiffs’ allegations sought to invalidate the Sewer District’s plans as applied specifically to them, not as applied to the public in general. The court felt the convergence of private and public interests was not enough, by itself, to convert an otherwise private action to a public lawsuit. Implications of public importance in a lawsuit are not enough to satisfy the statutory requirement.

Indiana Municipal Law - Update on the Specificity Required in Zoning DecisionsBy: Jeremy L. Fetty

2011-11-29T16:37:45Z

The specificity requirements of Indiana zoning decisions were discussed in The Kroger Co. v. Plan Commission of Plainfield, 953 N.E.2d 536 (Ind. Ct. App. 2011). In that case, Kroger wanted to construct a gas station next to its retail store. Kroger submitted a zoning petition seeking approval to begin construction, but the Plan Commission denied Kroger’s petition. Kroger sought judicial review. Both parties filed motions for summary judgment, with the trial court granting the Plan Commission’s motion for summary judgment. Kroger appealed, arguing that the denial did not satisfy the specificity requirement of the Zoning Enabling Act and also arguing that the Commission’s findings were not sufficient to support the denial of Kroger’s petition to construct a gas station.

]]> The court looked at the language of the Plainfield Zoning Ordinance and concluded that it did contain the needed specificity “to provide landowners with fair warning as to what the governing body will consider when formulating its decision.” The court did determine, however, that the Planning Commission, in this instance, did not provide sufficient findings to inform Kroger why its proposed plan did not satisfy the zoning requirements. The Commission stated the proposed development was not appropriate to the site, was not consistent with the intent and purpose of the ordinance, and would create a safety hazard. The Commission failed to “clearly explain,” though, why the plan was not appropriate, why it was against the intent and purpose of the ordinance, and why it was a safety hazard. Without this needed information, Kroger would not have the opportunity to amend its proposed plan in a way that could potentially comply with the ordinance. The court also took time to remind the Commission that approval of such a petition meeting the zoning requirements constitutes “a ministerial as opposed to a discretionary act.”

Clarification of the Administrative Employee Exemption of the FLSA

2011-11-04T15:42:25Z

Recently in a Seventh Circuit Court of Appeals case, Verkuilen v. Mediabank, LLC, the court analyzed the administrative employee exemption to the Fair Labor Standards Act (“FLSA”). 646 F.3d 979 (7th Cir. 2011). Penny Verkuilen was an account manager for Mediabank, which “provides computer software to advertising agencies.” An account manager’s job is to “go out, understand [the customer’s requirement], build specifications, [and] understand the competency level of [the] customers.” Penny spent much of her time on the customers’ premises, training their staff on the software and answering any questions that came up.

]]> The Seventh Circuit stated that to be considered to work in an administrative capacity, the employee needed to be paid more than $455 a week (Penny satisfied this requirement) and her “‘primary duty’ must require both ‘the exercise of discretion and independent judgment with respect to matters of significance’ and ‘the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.’” Judge Richard Posner indicated that the “primary duty” requirements were vague, but he saw what the provisions were getting at: paying someone overtime wages does not coincide with an employee that works significantly “off the employer’s premises, where he can’t be supervised and so if entitled to overtime would be tempted to inflate his hours.” Id. at 981. Put another way, Judge Posner felt that the purpose behind this provision, prohibiting overtime wages for employees who (1) spend much of their time off work premises and (2) who receive little employer supervision, was to prevent employees from being tempted to inflate the amount of hours worked (hours which the employer likely could not verify one way or the other). This capacity as an administrative employee also may involve an employee’s need for independent judgment relating to the business.

The court found Penny to be the “picture perfect example” of someone not intended to receive overtime pay. She spends much of her time away from Mediabank’s office overseeing the software that clients receive. In finding that Penny’s job should be considered that of an administrative employee, in which FLSA’s overtime wage requirement would not apply, the Seventh Circuit found that her “primary duty was directly related to the general business operations both of her employer (in a consulting role) of the employer’s customers.” Id. at 982-83.

For employers, this has several implications. When an employee exercises independent judgment and discretion, has fluctuating hours, is paid above the required wage of $455 a week, and spends a significant amount of time away from the employer’s office performing non-manual work, that employee may be performing as an administrative employee in the eyes of FLSA, for which overtime pay is not required. Before making a decision whether or not a work is entitled to overtime as an administrative employee, employers need to examine the FLSA’s requirements carefully to avoid employee lawsuits for unpaid wages.

We’re Watching: Employees May Be Lawfully Terminated for Facebook Comments

2011-10-27T20:46:50Z

This past summer, the National Labor Relations Board (“NLRB”) issued a series of decisions regarding whether employees were unlawfully discharged for making comments about their employment on Facebook. In all of the cases, the NLRB determined that the employees’ comments were not protected under the National Labor Relations Act. In each case, the NLRB found that the employee’s comments were not considered “concerted activity,” a protected activity where employees may sustain an allegation of unlawful discharge if they are fired for talking with other employees seeking to induce some action regarding their employer.

In Martin House, an employee of a residential facility for homeless and mentally ill patients was fired after making comments on Facebook regarding patients. (Case 34-CA-12950) 2011 WL 3223853 (N.L.R.B.G.C. 2011) . While on duty, the employee had a short online “conversation” on Facebook with a friend. In it, the employee said of a patient, “I don’t know if shes laughing at me, with me or at her voices . . . I don’t need to restrain anyone, we have a great rapport . . . .” The employee was fired shortly after the employer was made aware of the comments, with the employer citing reasons of protecting patients from stigma and protecting their privacy. The NLRB said these comments were not “concerted activity” because the employee did not discuss her comments with co-workers. Co-workers also did not respond to her posts. She was “merely communicating . . . about what was happening on her shift.” For these reasons, NLRB determined she was not unlawfully discharged.

]]> In JT’s Porch Saloon & Eatery, Ltd., an employee alleged he was unlawfully discharged for making comments on Facebook complaining about the restaurant and bar’s tipping policy for bartenders. (Case 13-CA-46689) 2011 WL 2960964 (N.L.R.B.G.C. 2011). He had a Facebook conversation with his step-sister, calling customers “rednecks”, stating “he hoped they choked on glass as they drove home drunk,” and complaining that he did “waitresses’ work without tips.” The employee was fired about a week later because of the Facebook posting. The NLRB concluded that these comments were not protected “concerted activity” He did not discuss his comments with other employees and there was no attempt to “initiate group action” about the company’s tipping policy. He was “merely” answering a question from his step-sister.

Finally in Wal-Mart, a customer service employee was fired after posting comments on Facebook about her manager. (Case 17-CA-25030) 2011 WL 3223852 (N.L.R.B.G.C. 2011). He stated, “Wuck Falmart! I swear if this tyranny doesn’t end in this store they are about to get a wakeup call . . . .” Two employees commented, one asking what happened and another offering encouragement. The employee later went on to complain about the behavior of an assistant manager. The NLRB determined that the employee was not unlawfully discharged; that despite the comments by co-workers, the employee did not engage in protected “concerted activity.” The NLRB characterized the comments as nothing more than an “individual gripe,” and not an attempt to induce action by other employees.

While these cases indicate that employers can fire employees for comments they make on Facebook, these cases also serve as a warning for employers. Although none of these cases found the comments to be “concerted activity,” a finding of such activity could likely lead to a determination that there was an unlawful discharge. If an employee is talking with co-workers about their employer on Facebook, that employer, if it comes upon the comments, needs to be extra careful in analyzing the nature of the comments before making any employment decisions based on those comments.

Attorney Kent Frandsen's golf achievements featured in USGA article

2011-09-27T16:46:25Z

Parr Richey Obremskey Frandsen & Patterson attorney Kent Frandsen recently advanced to the second round of the 2011 USGA Senior Amateur golf championship. Prior to commencing his second round play, Michael Trostel/USGA, featured a great article on Mr. Frandsen and his various golf achievements throughout the years. Please click here to read the full article at the USGA website. (Image attributed to Steven Gibbons/USGA)

Indiana Employment Law: Are Your Workers Properly Classified? (Part 2)

2011-09-15T15:30:05Z

Review of the IRS 20-Factor Test

The 20 factors identified by the IRS and reported in the publication Joint Committee on Taxation, Present Law and Background Relating to Worker Classification for Federal Tax Purposes (JCX-26-07), May 7, 2007 are as follows:

1. Instructions: If the person for whom the services are performed has the right to require compliance with instructions, this indicates employee status.

2. Training: Worker training (e.g., by requiring attendance at training sessions) indicates that the person for whom services are performed wants the services performed in a particular manner (which indicates employee status).

3. Integration: Integration of the worker’s services into the business operations of the person for whom services are performed is an indication of employee status.

4. Services rendered personally: If the services are required to be performed personally, this is an indication that the person for whom services are performed is interested in the methods used to accomplish the work (which indicates employee status).

5. Hiring, supervision, and paying assistants: If the person for whom services are performed hires, supervises or pays assistants, this generally indicates employee status. However, if the worker hires and supervises others under a contract pursuant to which the worker agrees to provide material and labor and is only responsible for the result, this indicates independent contractor status.

6. Continuing relationship: A continuing relationship between the worker and the person for whom the services are performed indicates employee status.

7. Set hours of work: The establishment of set hours for the worker indicates employee status.

8. Full time required: If the worker must devote substantially full time to the business of the person for whom services are performed, this indicates employee status. An independent contractor is free to work when and for whom he or she chooses.

9. Doing work on employer’s premises: If the work is performed on the premises of the person for whom the services are performed, this indicates employee status, especially if the work could be done elsewhere.

10. Order or sequence test: If a worker must perform services in the order or sequence set by the person for whom services are performed, that shows the worker is not free to follow his or her own pattern of work, and indicates employee status.

]]> 11. Oral or written reports: A requirement that the worker submit regular reports indicates employee status.

12. Payment by the hour, week, or month: Payment by the hour, week, or month generally points to employment status; payment by the job or a commission indicates independent contractor status.

13. Payment of business and/or traveling expenses: If the person for whom the services are performed pays expenses, this indicates employee status. An employer, to control expenses, generally retains the right to direct the worker.

14. Furnishing tools and materials: The provision of significant tools and materials to the worker indicates employee status.

15. Significant investment: Investment in facilities used by the worker indicates independent contractor status.

16. Realization of profit or loss: A worker who can realize a profit or suffer a loss as a result of the services (in addition to profit or loss ordinarily realized by employees) is generally an independent contractor.

17. Working for more than one firm at a time: If a worker performs more than de minimis services for multiple firms at the same time, that generally indicates independent contractor status.

18. Making service available to the general public: If a worker makes his or her services available to the public on a regular and consistent basis, that indicates independent contractor status.

19. Right to discharge: The right to discharge a worker is a factor indicating that the worker is an employee.

20. Right to terminate: If a worker has the right to terminate the relationship with the person for whom services are performed at any time he or she wishes without incurring liability, that indicates employee status.

Steps To Consider If You Anticipate an Audit

1. Review your contracts. What are the terms and conditions of any contract you have with right of way crews or pole inspection companies or similar independent contractors you may have engaged for similar purposes? What do such contracts say about the twenty factors above?

2. Consider why you treat independent contractors as such and review any supporting documentation. Have you ever sought an opinion of counsel regarding status of certain workers? What steps have you taken to make sure you can qualify for the “safe harbor” provisions of Section 530 of the Code?

3. Organize your documentation and be ready for the obvious questions. Do you have a person in charge of “contract control”, so that you can easily identify all independent contractors you have engaged both currently and in the past, and produce all relevant contracts, proof of payments, descriptions of the work performed, etc.?

Michael L. Schultz is a partner at the Indianapolis office of Parr Richey Obremskey Frandsen & Patterson LLP. He concentrates his practice on civil litigation and routinely handles a wide variety of employment related disputes, representing employees and employers, as well as commercial and residential property damage cases where property owners seek recovery from insurers and third parties. He also has litigated extensively in the areas of civil rights, personal injury, toxic torts, unincorporated associations, contract disputes, and workers compensation.

The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.

Indiana Employment Law: Are Your Workers Properly Classified?

2011-09-12T14:53:52Z

Brief Overview of the Issue

Deficits are high, and taxes need to be higher to pay the high costs of government. But raising taxes is politically difficult. So, where can the IRS look to increase revenues? The “tax gap”.

The Tax Gap Misclassification Solution

On February 4, 2009, “TIGTA” (Treasury Inspector General for Tax Administration) issued a report and recommendation noting, among other things, that the IRS has not done a comprehensive study of work misclassification since 1984. In that year, the IRS had estimated that misclassified employees accounted for understatement of FICA, federal withholding, and unemployment taxes of approximately $1.6 billion. According to the TIGTA report, that underpayment is now estimated to be around $2.72 billion. This is one of the reasons that the TIGTA report recommended that the IRS should conduct a study (meaning audits):

Recommendation 2: The Deputy commissioner for Services and Enforcement should consider conducting a formal National Research Program reporting compliance study for employment taxes that includes measuring the impact of worker misclassification on the tax gap.

]]> This is why the IRS is conducting audits; the Service is studying worker classification in an effort to find misclassified workers and recover funds otherwise lost to the Tax Gap. Under this research effort, which will go through 2012, the IRS has begun to audit 6,000 employers at a rate of 2,000 per year.

The primary focus of the audits will be to determine whether workers are correctly classified as employees or independent contractors. Of course, other issues can arise during such an audit, such as whether employees deemed exempt from wage and hour laws should be considered non-exempt. If an employee has been underpaid because of incorrect treatment as exempt rather than non-exempt, then that employee’s taxes have been underpaid too.

Contractor or Employee?

There can be serious consequences if an employer misclassifies a worker who is really an employee as an independent contractor. Of course, identifying misclassified employees is a primary thrust of the ongoing audits. If an employer classifies an employee as an independent contractor and has no reasonable basis for doing so, the employer may be held liable for employment taxes for that worker. If there is no reasonable basis, the employer loses the benefit of the relief provisions in Section 530 of the Internal Revenue Code.

Review of Section 530 Relief Requirements

If you meet the Section 530 Relief Requirements, you will not owe employment taxes for misclassified workers. You must meet all three requirements.

Reasonable Basis
-You reasonably relied on a court case about Federal taxes or a ruling issued to you by the IRS;

-Your business was audited by the IRS at a time when you treated similar workers as independent contractors and the IRS did not reclassify those workers as employees. (You may not rely on a audit commenced after December 31, 1996, unless the audit included an examination for employment tax purposes of whether the individual involved should be treated as an employee)

-You treated the workers as independent contractors because you knew that was how a significant segment of your industry treated similar workers; or

-You relied on some other reasonable basis (advice of attorney or accountant who understood the facts about your business)
Substantive Consistency

In addition to the above, you must have treated the workers and any similar workers as independent contractors in the past. If you treated similar workers as employees, then Section 530 relief is not available.
Reporting Consistency

In addition to the above, you must have filed all required federal tax returns, including information returns, consistent with your treatment of each worker as not being an employee. So, for example, if you treated a worker as an independent contractor and paid her $600 or more, you must have filed Form 1099-MISC for her. For any year you failed to file the required information returns, no relief is available under Section 530.

(Part 1 of 2. Part 2 will be posted on 9/15)

Indiana Employment Law: Indiana’s Immigration Bill is Now in Effect . . . Mostly

2011-07-13T15:23:59Z

Effective July 1, 2011, Indiana’s much disputed Senate Bill 590 became law. This bill has been hotly contested since its inception for its harsh response to illegal immigrants in Indiana and those who employ them. Certain provisions are still being litigated in court. Although the bill has been watered down from its most extreme provisions, it still contains many changes to Indiana’s existing law. The hallmark of this Bill is the E-Verify Program, a program electronically verifying the work authorization status of newly hired employees. As of July 1, 2011, all state agencies, political subdivisions, businesses seeking more than a $1000 grant from a state agency or political subdivision, and all contractors and subcontractors entering into or renewing a public contract are required to enroll in and participate in this program for all new hires. Some businesses falling within the purview of participation in E-Verify also have to sign an affidavit stating they do not knowingly employ an unauthorized alien. Many also have to provide documentation of their participation in E-Verify. If businesses with public contracts do not comply with this new program and requirements, that contract will be terminated after thirty days, or as soon as is feasible, if this violation is not remedied. The business will then be liable for actual damages. The government may also file a civil action for reimbursement of unemployment insurance benefits paid to an employer that knowingly employed an unauthorized alien.

]]> Senate Bill 590 also modifies the labor law, criminal law, and tax law in Indiana. All laborers over the age of eighteen cannot work in day labor employment, defined as having no employment agreement specifying the term of employment to be more than three working days, unless they complete an “attestation” that the person is a citizen, national, or an otherwise lawful alien. Police may now file a complaint with the Immigration and Customs Enforcement if they think someone has violated this provision. Criminal offenders will now be evaluated upon arrest as to their citizenship or immigration status. A person’s unlawful status can also now be considered in setting bail. Regarding setting bail under federal immigration law, an unlawful alien may be released from custody only by posting: (1) a cash bond equal to the bail (2) a real estate bond with net equity at least two times amount of bail, or (3) a surety bond in full amount of bail. One new protection for illegal aliens is that police cannot request citizenship or immigration status if that person has contact with the police only as a victim or witness of a crime or for reporting a crime. Many of these new criminal provisions do not apply to religious organizations, health care providers, and other similar organizations. SEA 590 prohibits several state tax deductions and credits for services provided by an individual who is an unauthorized alien. These penalties are not applied, however, if that business is enrolled in the E-Verify program.

Two provisions of SEA 590 have been blocked from enforcement through a preliminary injunction by United States District Court Judge for the Southern District of Indiana, Sarah Evans Barker. On June 24, 2011, she preliminarily enjoined two provisions as potentially violating the fourth amendment and due process rights and potentially being preempted by federal law. The first provision authorizes police to make a warrantless arrest when there is a removal order by an immigration court, a detainer or notice of action from the Department of Homeland Security, or if there is probable cause to believe the person has been indicted for or convicted of one or more aggravated felonies. The second provision being enjoined creates a criminal infraction for any person or business that knowingly or intentionally offers or accepts consular identification, identification documents issued by a foreign government, for any purpose. Until further notice these provisions are not currently valid laws.

To read the new provisions laid out in Senate Bill 590, click here.
http://www.in.gov/legislative/bills/2011/SE/SE0590.1.html

To read the preliminary injunction order, click here.
http://indianalawblog.com/documents/ImmigrationPreInj.pdf

Indiana Utility Law: When Does a Company Become a Public Utility?

2011-06-29T15:32:48Z

Indiana utility lawyers took note on June 9, 2011, when the Indiana Court of Appeals issued a decision in United States Steel Corporation versus Northern Indiana Public Service Company (NIPSCO) addressing the issue of when a company becomes a public utility.¹ The dispute arose after ArcelorMittal acquired property within U.S. Steel’s large-scale northern Indiana operation and began to purchase certain utilities from U.S. Steel, namely electricity and gas.

]]> After failed negotiations, NIPSCO filed a complaint with the Indiana Utility Regulatory Commission (IURC) seeking a determination of whether U.S. Steel violated Indiana law and NIPSCO’s tariffs in selling electricity and gas to ArcelorMittal. The IURC determined that U.S. Steel was acting as a public utility in selling electricity and gas to ArcelorMittal, violating Indiana law with respect to electric service areas and NIPSCO’s tariff by reselling gas.

The decision of the IURC was appealed, and the Indiana Court of Appeals found (1) U.S. Steel was not acting as a public utility in selling electricity to ArcelorMittal, (2) U.S. Steel did not violate Indiana’s Service Area Assignments Act by selling electricity to ArcelorMittal, and (3) U.S. Steel was acting as a public utility in transporting natural gas to ArcelorMittal, violating NIPSCO’s gas tariff.

¹United States Steel Corp. v. Northern Indiana Public Service Co., No. 93A02-1006-EX-632 (Ind. Ct. App., June 9, 2011).

Angela L. Gidley is an associate at Parr Richey whose practice focuses on utility law and business and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.

Indiana Municipal Law and Indiana Utility Law - Indiana Court of Appeals Affirms Ruling that Town Ordinance Regulating the Sale or Lease of Natural Resources was invalid. (Part 2)

2011-04-22T15:14:42Z

Avon attempted to argue that Indiana Code §36-1-2-23 permits it to regulate the water in the Park because groundwater is a watercourse or body of water within the meaning of the statute. Indiana Code §36-9-1-10 states that a watercourse “includes, lakes, rivers, streams, and any other body of water.” Further, Avon argued that the Township and WCCD’s plan to sell the groundwater constituted a “business use” under Indiana Code §36-8-2-7, which authorizes “a unit [to]…regulate any business use of a water course.”

]]> After the Court reviewed multiple Indiana statutes and common law, the court determined that the underground water at issue did not constitute a watercourse because it did not have well-defined banks, a bottom, a channel, or a flow along a definite course. Further the Court found that the Park’s aquifers and groundwater did not fit the definition of watercourse under Indiana Code §36-9-1-10, which specifically defines watercourse as including only bodies of water like lakes, rivers, and streams. Therefore, the Court held that because an aquifer is not a watercourse, Avon did not have the authority to restrict what the Township and the WCCDD choose to do with the Park’s groundwater.

Avon also claims that the Ordinance is a valid exercise of the police power embodied in the Home Rule Act and therefore it has the authority to limit the withdrawal of the groundwater for the protection of its residents. Avon relies on the Indiana Supreme Court’s language in City of Crown Point v. Lake County, 510 N.E.2d 684 (Ind. 1987), which states, the “Home Rule Act does not bar unites from enforcing against other political subdivisions those regulations of general applicability which are specifically authorized by statute.” Avon argues that its right to regulate the water supply arises from its statutory authority to regulate watercourses.

The Court agreed with Avon’s contention that towns are allowed to exercise powers that are explicitly granted by statute. However, in this case, the Court found that there was no statute that grants a town the authority to regulate groundwater in aquifers. Therefore, the Court held that the Ordinance was invalid with regard to groundwater.

Avon next argued that it has the right to grant or deny the Tonship’s exercise of its power, under Indiana Code §36-1-3-7. The Court rejects this argument and finds that the Park Resources Statute, Indiana Code §36-10-7.5-7, specifically states that the Township can decide what to do with the Park’s water. The Court held that Avon does not have any right to “review or regulate the exercise of powers.”

The next issue on appeal was whether the trial court erred in concluding that the Ordinance violated Indiana Code §36-1-3-8(a)(7), which states “a unit does not have the following…(7) The power to regulate conduct that is regulated by a state agency, except as expressly granted by statute.” The Indiana Court of Appeals found that the Department of Natural Resources (DNR), as stated in Indiana Code §14-25-7-14(D) has the authority to regulate groundwater and if a property owner, including a governmental agency, desires to withdraw more than a certain amount of groundwater, they must obtain a permit from the DNR. The Court held that because the power to regulate is granted exclusively to the DNR, the Ordinance violates Indiana Code §36-1-3-8(a)(7).

Lastly, the Court held that Avon does not have the right to interfere with the Township and WCCD’s common law right to use the groundwater in its aquifers as it sees fit where there has been no regulation by the State.

Town of Avon v. W. Cent. Conservancy Dist., 937 N.E.2d 366 (Ind. Ct. App. 2010)

Jeremy L. Fetty is a partner at Parr Richey whose practice focuses on corporate law, utility law, municipal law, and labor and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.