Indiana Business Lawyer Blog

The health care reform package that went into law on Tuesday, March 23, 2010, most clearly will have substantial effects on the health care industry. However, the legislation will also have far reaching impact on employers. Although employers are not mandated under the health care reform package to provide insurance coverage to employees, the new legislation will penalize employers that do not offer coverage at all to the employees or do not offer coverage considered “good enough.” For example, employers with 50 or more full-time employees that do not offer insurance coverage will have to pay an assessment to the government to help offset the cost of health insurance if their employees are receiving help from the federal government to purchase their own insurance. Additionally, a tax will be assessed on employer sponsored, high-end “Cadillac” coverage, which is 40% of the “excess benefit” of plans that exceed the thresholds of $8,500 for individual coverage and $23,000 for family coverage under the original Senate bill. However, when the original Senate bill is combined with the reconciliation bill, the effective date of the tax provision will be changed from 2013 to 2018, and the original threshold will be raised to $10,200 for individual coverage and $27,500 for family coverage.

Continue reading "Indiana Employment Law: Health Care Reform (How It Can Affect You As An Employer)" »

How to Avoid the CBS Evening News

The next question is what can employers do to protect their employees or to avoid being in the headlines for the CBS Evening News? Employees should have zero tolerance policy towards workplace violence against or by employees, whether the violence originates inside or outside the workplace. Employers should establish a workplace violence prevention program and incorporate that into an accident prevention program, employee handbook, and/or standard operating procedures.

An employer should consider establishing and implementing a written workplace violence prevention program that includes and/or provides for the following:

§ Workplace Violence Policy Statement (statement should include that there is zero tolerance for work place violence and encourage reporting without retaliation)
§ Management commitment and employee involvement (involvement by all and system of accountability)¹
§ Worksite analysis (identify existing hazards)
§ Hazard prevention and control (practice controls and procedures in the event of a violent incident)
§ Training and education for supervisors and employers
§ Incident reporting, investigation, follow up
§ Recordkeeping evaluation program (OSHA 300 log and analyze impact)

Continue reading "Workplace Violence: How To Avoid Being on the CBS Evening News (Part 2)" »

Background

According to the Occupational Safety and Health Administration (“OSHA”), approximately 2 million American workers are victims of workplace violence each year. See www.osha.gov. In 2008, homicide was the third leading cause of fatal occupational injury in the U.S. and the second leading cause of death for females in the workplace. See Bureau of Labor Statistics, Census of Fatal Occupational Injuries Summary 2008, available at http://www.bls.gov/news.release/cfoi.nr0.htm.

The National Institute for Occupational Safety and Health (“NIOSH”) defines workplace violence as follows: “violence acts, including physical assaults and threats of assaults, directed towards a person at work or on duty.” See NIOSH, http://www.cdc.gov/niosh/about.html. OSHA expands the definition as follows: “Workplace violence is a physical assault, threatening behavior or verbal abuse occurring in the work setting. It includes, but is not limited to, beatings, stabbings, suicides, shootings, rapes, near suicides, psychological trauma, such as threats, obscene phone calls, and intimidating presence, harassment of any nature, such as being followed, sworn at or shouted at.” See OSHA, www.osha.gov.

Continue reading "Workplace Violence: How To Avoid Being on the CBS Evening News" »

House Enrolled Act 1065, signed into law by Governor Daniels, prohibits any person (meaning natural person or organization) from adopting or enforcing an ordinance, resolution, policy or rule that prohibits or has the effect of prohibiting an employee, including a contract employee, from possessing a firearm or ammunition locked in the employee’s vehicle out of sight at the employee’s job. Exceptions to the rule are numerous and varied, but include schools, domestic violence shelters, certain United States government facilities, nuclear regulatory facilities and property owned by public utilities that “generates and transmits electric power” or a department of public utilities created under 8-1-11.1 (consolidated city department of public utilities).

House Enrolled Act 1065 authorizes individuals to bring a civil action against any employer or other person who has violated this statute by attempting to enforce an ordinance, regulation or policy against firearms locked in an employee’s vehicle. A civil action can result in actual damages, costs, attorney fees and an injunction against the employer. The statute, however, specifically prohibits the jurisdiction of the court for an action against an employer who complies with the statute (presumably an action brought by an individual who is harmed by an employee who brings a firearm to work although that section is not clear).

The statements contained herein are for informational purposes 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.

In July of 2009, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued guidelines on employee severance agreements titled “Understanding Waivers of Discrimination Claims in Employee Severance Agreements.” Frequently, employers offer departing employees money or benefits in exchange for waiving liability for all future claims connected with the prior employment relationship, likely including discrimination claims as well as claims brought under the civil rights laws which the EEOC enforces.

The EEOC guidance states that a waiver in a severance agreement will generally be valid when the employee “knowingly and voluntarily consents to the waiver.” To determine whether the employee actually did know of and voluntarily waived his or her potential discrimination claims, most courts look beyond the language of the contract and consider the totality of the circumstances in order to determine whether the employee knowingly and voluntarily waived his or her right to sue. The following factors have been used by courts to determine the totality of the circumstances: (1) whether it was written in a manner that was clear and specific enough for the employee to understand based on his or her education and business experience; (2) whether it was induced by fraud, duress, undue influence or other improper conduct by the employer; (3) whether the employee had enough time to read and think about the advantages and disadvantages of the agreement before signing it; (4) whether the employee consulted with an attorney or was encouraged or discouraged by the employer from doing so; (5) whether the employee had any input in negotiating the terms of the agreement; and (6) whether the employer offered the employee consideration that exceeded what the employee already was entitled to by law or contract and the employee accepted the offered consideration.

Continue reading "Indiana Business Law and Indiana Employment Law - EEOC Issues. Guidance on Waiving Discrimination Claims in Employee Severance Agreements." »

In a case of interest to Indiana business lawyers, Abdalla v. Qadorh-Zidan, the Indiana Court of Appeals addressed issues relating to corporate and limited liability company (“LLC”) fiduciary duties owed to former shareholders and members with respect to preparation of tax returns for time periods prior to members and shareholders’ relationship being terminated. In this case, the Court held that LLCs and corporations owe a fiduciary duty to former members and shareholders regarding preparation of tax returns for periods prior to former members and shareholders’ separation from the company’s incorporation when these tax returns are prepared for time periods where former members and shareholders were associated with the corporation and LLC. The Court recognized that shareholders in a closely held corporation owe each other fiduciary duties, and fiduciaries must deal fairly, honestly and openly with the corporation and fellow stockholders and must not be distracted from their performance of such duties by personal interests. The Court in this matter held that former shareholders of a corporation and members of an LLC are entitled to inspect books of the corporation or LLC with respect to tax records and information relating to transactions that occurred prior to the termination of their interest in the corporation and/or LLC.

Abdalla v. Qadorh-Zidan, 913 N.E.2d 280 (Ind. Ct. App. 2009).

Jeremy L. Fetty is an associate 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.

Indiana farm business owners and Indiana lawyers should be aware that the Indiana Court of Appeals recently held that a farmer’s mycelium drying business constituted a nuisance.¹ In Bonewitz, the farmer’s neighbors complained that the mycelium drying business caused foul odors, noise and vibrations from delivery trucks, sawdust particles blowing onto their property, and gas and sawdust ash emissions from the dryer.² The neighbors sought monetary damages as well as a permanent injunction, but the trial court only ordered the farmer to discontinue unloading raw sawdust outside to mitigate the blowing sawdust.³

Under Indiana law, nuisance is defined as “whatever is injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property, so as essentially to interfere with the comfortable enjoyment of life or property.”⁴ Indiana courts have stated that the competing interests of landowners must be balanced in deciding whether an activity constitutes a nuisance.⁵ Indeed, “reasonable use of one’s property may be a defense to a nuisance action” if the activity only causes “incidental injury” to a neighboring landowner.⁶ However, even a lawful business may constitute a nuisance if it causes harm that is greater than the neighbor should bear under the circumstances.⁷

Continue reading "WHEN DOES AN INDIANA FARMING BUSINESS CONSTITUTE A NUISANCE?" »

Lenders who take possession of collateral based on a default on a loan are often concerned about ensuring that the sale of such collateral would be found to be commercially reasonable by a court if challenged. Of interest to Indiana creditors and Indiana creditor lawyers, the Indiana Court of Appeals recently had the opportunity to address commercially reasonable sales in Moore v. Wells Fargo Constr. 907 N.E.2d 1038 (Ind. Ct. App. 2009). In Moore, the lender provided a company with an approximately $558,000 loan for the refinance of an excavator. However, to secure the loan, each of the principals of the company also executed a security agreement and personal guaranty for the indebtedness. When the company defaulted on the loan, the lender took possession of the excavator, which it planned to sell to satisfy a portion of the outstanding debt. The lender sent a Notice of Disposition of Collateral to both the company and a principal against whom the lender planned to pursue a deficiency action against. The lender had some difficulty selling the excavator, but it provided notice to both the company and the individual each time it attempted to sell the excavator. Eventually, the excavator was sold for $54,000, although an earlier higher offer had been countered by the lender, and the lender filed a deficiency action against the individual. After a decision in favor of the lender, the individual argued that the sale of the excavator had not been conducted in a commercially reasonable manner. Id. at 1039.

In determining the commercial reasonableness of the sale, the Court referred to its prior decision in Walker v. McTague, where the court recognized that the Uniform Commercial Code does not define commercially reasonable sale. Id. at 1041 (quoting Walker v. McTague, 737 N.E.2d 404, 410 (Ind. Ct. App. 2000)). In Walker, the court noted that where a fair sale price is not obtained, price alone is not determinative, and the court will consider “whether there were legitimate causes for the low price or whether the low price was caused by the secured party’s failure to proceed in a commercially reasonable manner” as well as “whether the collateral is sold on a retail or wholesale market . . . the number of bids received or solicited . . . that the time and place of the sale is reasonably calculated to bring a satisfactory turnout of bidders.” Id. (quoting Walker, 737 N.E.2d at 410. The Court also noted that the court in Walker recognized the factual nature of such determinations. Id. (citing Walker, 737 N.E.2d at 410).

Continue reading "Indiana Creditor Rights: What Constitutes A Commercially Reasonable" »

The Internal Revenue Service (IRS) and Department of the Treasury have promulgated final regulations impacting tax-exempt organizations with gross annual receipts that generally do not exceed $25,000. The final regulations, and removal of temporary regulations, became effective July 23, 2009. The regulations are applicable to annual periods beginning after 2006.

In 2006, the Pension Protection Act was passed, including a requirement that the Treasury Secretary promulgate regulations regarding the time and manner in which certain tax-exempt organizations must file annual electronic notification. The regulations that followed amend the Income Tax Regulations (26 CFR Part 1, section 6033(i)(1)), which relate to requirements for notification by entities that are not currently required to file an annual information return under section 6033(a)(1).

After establishing temporary regulations in 2007, and twice revising the regulations in the same year, the regulations were again published in the Federal Register. The IRS and Department of the Treasury responded to four comments regarding the published regulations, confirming that there is no de minimis exception which would allow organizations with minimal income to avoid reporting under the rule, that all submissions must be made electronically, and that the regulations do not apply to Qualified State and Local Political Organizations. In addition, the IRS and Department of the Treasury stated the intent of the regulations is to provide the public with accurate information about tax-exempt organizations. The agencies noted that if an organization is the subordinate of a parent organization and is already included on the parent organizations return, the subordinate organization need not submit separate notification.

Under the final regulation, 26 CFR § 1.6033-6, tax-exempt entities under § 501(a) that are not required to file annual information returns as described in § 1.6033-2(a)(2) must submit electronic notification containing the legal name of the organization, any assumed business names, mailing and web address, tax identification number, name and address of principal officer, evidence of ongoing basis for exemption under § 6033(a)(1), and any additional information required for processing. Excluded from this requirement, however, are certain employer-created qualified pension, profit-sharing, and stock bonus plans, as defined in § 401(a) and certain religious and apostolic organizations, as defined in § 501(d). Additionally exempt are organizations that are tax-exempt under § 501(a) that are required to file, do file, or are not required to file returns under § 1.6033(a)(1).

By submitting the electronic notification, an organization acknowledges it is not required to file a return under § 1.6033(a) because its annual gross receipts do not normally exceed $25,000. The regulation contains requirements for record maintenance, as provided in § 1.6001. If the organization submits a complete Form 990 or 990-EZ, however, the requirements of annual electronic notification will be deemed satisfied. The final regulation does not relieve an organization from any other filing requirements.

The notification must be filed based on the annual accounting period of the organization; however, if the organization does not have an annual accounting period, notice shall be filed on the basis of the calendar year. Electronic notification must be submitted on or before the 15th day of the 5th calendar month after the close of the period for which the notification is being submitted.

The statements contained herein are for informational purposes 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.

Have you been approached by a wind energy company soliciting your land for inclusion in a new wind farm proposed for the area. If you have, the promised compensation may look good for the fairly small acreage committed for the structures and related equipment. You may have been given a draft agreement for review and execution. It will likely be long and complicated, but the company representative may describe it as “standard” or in line with what other companies are offering. Don’t accept that at face value; these leases often vary widely from company to company and from project to project. You may be intrigued, and even interested, but what should you do next?

The attorneys at PARR RICHEY have represented landowners in several Indiana counties in lease negotiations with several wind energy companies. In so doing we have learned much about these companies, how these projects work, and what they are typically willing to agree to in assembling the land needed for a viable project. We do not represent any wind energy companies, so our interests are aligned with those of landowners.

There is strength in numbers, and normally better terms can be leveraged through coordination with other landowners in your area. Your group should check with your neighbors, the local Extension Agent, or your County’s planning director to learn as much as you can about the proposal and its status. Perhaps more importantly, check on the company’s experience and track record in bring projects on line. Much information is available on the Internet about these companies and wind farms in general. Does your county have an ordinance permitting or regulating these projects? How likely is this company to move forward with a project if enough land is obtained? Or is it merely attempting to assemble lease rights for parcels that it can later sell to another wind company?

Continue reading "Parr Richey’s Advice to Wind Energy Landowners –- Beware, The Written Documents Are Crucial! " »

The Internal Revenue Service (IRS) and Department of the Treasury have promulgated final regulations impacting tax-exempt organizations with gross annual receipts that generally do not exceed $25,000. The final regulations became effective July 23, 2009. The regulations are applicable to annual filing periods beginning after 2006.

In 2006, the Pension Protection Act was passed, including a requirement that the Treasury Secretary promulgate regulations regarding the time and manner in which certain tax-exempt organizations must file annual electronic notification. The regulations that followed amend the Income Tax Regulations (26 CFR Part 1, section 6033(i)(1)), which relate to requirements for notification by entities that are not currently required to file an annual information return (Form 990) under section 6033(a)(1).

Under the final regulation, 26 CFR § 1.6033-6, tax-exempt entities under § 501(a) that are not required to file annual information returns as described in § 1.6033-2(a)(2) must submit electronic notification containing the legal name of the organization, any assumed business names, mailing and web address, tax identification number, name and address of principal officer, evidence of ongoing basis for exemption under § 6033(a)(1), and any additional information required for processing. Certain employer-created qualified pension, profit-sharing, and stock bonus plans, as defined in § 401(a) and certain religious and apostolic organizations, as defined in § 501(d) are not subject to the regulation. By submitting the electronic notification, an organization acknowledges it is not required to file a return under § 1.6033(a) because its annual gross receipts do not normally exceed $25,000. The regulation also contains requirements for record maintenance, as provided in § 1.6001. If the organization submits a complete Form 990 or 990-EZ, however, the requirements of annual electronic notification will be deemed satisfied. The final regulation does not relieve an organization from any other filing requirements.

The notification must be filed based on the annual accounting period of the organization; however, if the organization does not have an annual accounting period, notice shall be filed on the basis of the calendar year. Electronic notification must be submitted on or before the 15th day of the 5th calendar month after the close of the period for which the notification is being submitted.

The statements contained herein are for informational purposes 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.

This past May, the Indiana Court of Appeals ruled on a breach of a non-compete agreement case addressing whether a former employee’s covenant not to compete with his past employer was enforceable under Indiana law and determined the proper measure of damages for a breach of this agreement.

Coffman, an employee of Olson & Co., an accounting firm (“Olson”), signed a non-compete Agreement in 2005, which specified that in the event of termination of employment, he would not directly or indirectly compete for Olson’s clients in the firm’s geographical area for a period of two years. The Agreement did not restrict employees from seeking accounting jobs elsewhere. The Agreement specified that if Coffman chose to provide accounting services for any of Olson’s clients during the two year period following termination of employment, he must pay Olson an amount equal to two times the amount of that client’s most recent twelve month billings. He must also notify the firm of his relationship with these clients in writing, and if Coffman failed to notify Olson of his intent to perform services for prior employees, the amount due to Olson shall be three times that client’s most recent twelve month billing.

Coffman terminated his employment with Olson on September 1, 2006 and formed his own accounting Limited Liability Company soon after. Seventeen of his clients terminated their relationship with Olson and hired Coffman to perform accounting services. Coffman did not notify or compensate Olson, and Olson soon thereafter filed suit alleging breach of the non-compete agreement.

Continue reading "Indiana Business Law - Non-Compete Agreement: Former Employer Has Protectable Interest in Customer Goodwill; Proper Measure of Damages for Breach of Non-Compete Agreement is Lost Net Profits as Liquidated Damage Clause was Unenforceable" »

Recently, the Indiana Supreme Court decided that a business that loses customer traffic due to a State highway expansion project is not entitled to compensation.¹ In State of Indiana v. Kimco of Evansville, Inc., the State took, by eminent domain, a strip of land in front of a shopping center to expand a state highway.² As a result, southbound drivers could not longer access the shopping center through one of the main entrances and the shopping center lost the ability to widen or change the main entrance in the future.³ The State paid the shopping center for the strip of land, but refused to compensate the shopping center for "consequential damages" resulting from the reduced customer flow.⁴

The Court held that under Indiana law, the physical taking of the strip of land and the State's "coincident roadway improvements" were two distinct governmental actions.⁵ In this case, the reduction in customer traffic to the shopping center did not qualify as a taking.⁶ The Court acknowledged a compensable taking would have occurred had the state project highway completely eliminated all points of access to the shopping center.⁷ However, in this case, the highway project did not eliminate access to the main entrance for northbound drivers and there was another access point for southbound drivers.⁸ Finally, the Court explained that commercial property owners do not have property rights in the "free flow of traffic" past their properties nor do they have a right to "unlimited access" to adjacent property at any point along a State highway.⁹ Thus, the State's "coincident roadway improvements" that reduced customer flow and revenues to the shopping center did not constitute a compensable taking.¹⁰

Erin Casper Borissov is an associate at Parr Richey Obremskey Frandsen & Patterson LLP, with offices in Indianapolis and Lebanon practicing in the areas of energy and telecommunications law and corporate law.

The statements contained herein are matters of opinion 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.

¹State of Indiana v. Kimco of Evansville, Inc., 902 N.E.2d 206, 208 (Ind. 2009).
²Id.at 208.
³Id.at 214.
⁴Id.at 209.
⁵Id.at 216.
⁶Id.at 214.
⁷Id.at 214.
⁸Id.at 214.
⁹Id.at 214-15.
¹⁰Id.at 216.