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Hackensack Business and Commercial Law Blog

Low unemployment could lead businesses to new pool of employees

The unemployment rate in New Jersey was 6.1 percent in June, according to the U.S. Bureau of Labor Statistics. That is not quite the state's April 2007 rate of 4.2 percent, but neither is it the 9.8 percent reported in November 2009. We are heading in the right direction -- maybe.

The problem with low unemployment rates is that businesses have more competition for skilled workers, which in turn translates into higher recruiting and retention costs -- and that includes higher wages. A higher unemployment rate makes it a buyer's market, an advantage to businesses who are hoping to pay workers less or to hire workers for short-term assignments.

Slow turnaround for McDonald's signals bad news for franchisees

Whether you purposefully follow business news or not, chances are good you've heard some news about McDonald's in the last few months. From the addition of new menu items to the announcement a few months ago regarding wage increases for workers in its corporate-run restaurants, McDonald's has been busy recently trying to revitalize the now 75-year-old fast-food franchise.

But many aren't so sure the ploys are working, particularly franchise owners who often must eat the cost (no pun intended) of store remodels that have yet to return on their investment. In fact, in a recent poll of less than 1 percent of franchise owners, few were happy with the restaurant's efforts to turn things around.

DOL lays out 'realities' of classifying workers correctly p2

We are talking about a recent communication from the U.S. Department of Labor regarding the proper classification of workers as employees and independent contractors. DOL suspects that companies are deliberately misclassifying workers as contractors, because contractors are not subject to the protections afforded employees under the Fair Labor Standards Act.

The appropriate tool that companies should use is the "economic realities" test, a series of questions ("factors") devised and relied on by the courts. According to Administrator’s Interpretation No. 2015-1, the definition of an employee is much broader under the FLSA than it had been under the common law "control" test -- the test used before the FLSA and, interestingly, still used by the IRS.

DOL lays out 'realities' of classifying workers correctly

The U.S. Department of Labor released a communication this week -- Administrator’s Interpretation No. 2015-1 -- that should help employers to classify employees correctly. The difference between an employee and an independent contractor has been the subject of multiple disputes over the years, and the DOL believes that some employers are deliberately misinterpreting the law in order to save money and, importantly, to skirt labor laws.

The guidelines go back to the basics. When classifying workers as employees or contractors, look to the statute, the DOL says. Every classification should start with the Fair Labor Standards Act definition of the verb "to employ": to suffer and permit to work. Keeping the definition in mind, then, employers should apply what DOL refers to as a six-part "economic realities test."

What does it take to have a successful start-up?

Starting a business is not for the faint of heart. It takes, time, money and a whole lot of energy to a new business off the ground. Still, many entrepreneurs who fully invest themselves in a start-up end up faltering along the way. So, what does it really take for a new business to be successful?

Small gains for Bergen County businesses, and that's good

During the recession, business forecasters steadfastly maintained that small businesses would lead the recovery. Workers laid off from one job would start their own businesses, or Baby Boomers reaching retirement age would launch new ventures. Small businesses were the key to economic growth, and that was that.

Just how small are those businesses, though? There are different categories, with the smallest being one-person operations. These are called nonemployer establishments, and, while the businesses are smaller, nonemployer businesses outnumber companies with employees by far. Nationwide, about 75 percent of all businesses are nonemployer businesses.

Subway faces Jared quandary; how should franchisees react?

When the news broke this week that the FBI and Indiana State Police had raided Jared Fogle's home, businesses everywhere took note. Fogle has been one of the most prominent brand spokesmen in the country, a success story for Subway restaurants. His 245-lb. weight loss, achieved in party by making Subway sandwiches a regular part of his diet, helped to establish the franchise as a family-friendly, healthy choice among fast-food restaurants.

Subway executives may have been reviewing the relationship with Fogle before the raid. Fogle has not been arrested, nor, apparently, are charges pending against him. This action -- a search of Fogle's home and the seizure of electronics -- was a follow-up to the charges filed in May against the executive director of Fogle's foundation, Russell Taylor. Had the charges involved misappropriation of funds or consumer fraud, the matter may have been a footnote in the business pages. Taylor, however, has been charged with production and possession of child pornography.

How does a tax lien affect a commercial property sale? p3

We are finishing up our discussion of liens, tax liens against real estate in particular. How a lien affects a property sale depends in large part on who filed the lien. This is where the idea of priority -- who gets paid first -- gets a little more complicated. To paraphrase George Orwell, some lienholders are more equal than others, and tax liens are the most equal of all.

When a property holder falls behind on local or state taxes, the taxing authority -- let's say it's the county -- can file a lien against the property. The property owner can clear the lien by paying off the debt or working out a payment plan with the county. If the property owner does not pay or work out a plan, though, the county has a couple of options.

How does a tax lien affect a commercial property sale? p2

We are talking about liens and how they are enforced before we get into the particulars of tax liens. Please note that we are talking about basic principles. New Jersey has adopted a specific process for filing and enforcing different kinds of liens. Pennsylvania and New York will have their own processes, too. The differences are not minor, either. For example, New Jersey allows a contractor or subcontractor 90 days from the completion of the work to file a mechanic's lien against the homeowner. In Pennsylvania, the deadline is six months from the completion of the work.

In our last post, we explained that there are at least two ways for the property owner to take care of the lien. First, the owner may pay the amount due, even if the owner is not responsible for the original debt. The contractor did not pay the subcontractor, but the homeowner may have to pay it just to get rid of the lien.

How does a tax lien affect a commercial property sale?

It is important to understand liens in general before moving on to the subject of tax liens. Black's Law Dictionary defines a lien as "a legal right or interest that a creditor has in another's property." When you take out a mortgage to purchase a home, you are voluntarily placing a lien against the property; the lienholder is the lender, the security is the house.

When you renovate your office building, the general contractor is responsible for paying all of the subcontractors. If the general does not, though, those companies may file liens -- specifically, mechanic's liens -- against your property. You may never have had any dealings with the plumber or electrician, but your property is the tangible evidence of their work.

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