Alerts & Newsletters

USCIS has announced implementation of the H-1B electronic registration process for Fiscal Year 2021 Cap Season. Under this new process, employers seeking H-1B workers subject to the annual numerical cap, or their authorized representatives, will be required to complete a registration process that requires only basic information about their company and each requested worker. USCIS will provide guidance on how to use the system and prepare registrations before opening it for the initial registration period.

Before 2019 comes to a close, it may be worthwhile to review the state of your tax, estate, and charitable giving plans. Along with the typical end-of-year considerations, it is important to remain aware of the effects of the 2017 tax act (informally called the “Tax Cuts and Jobs Act of 2017,” and herein the “2017 Tax Act”) that altered many longstanding rules and assumptions.

On November 5, 2019, the U.S. Department of Justice (DOJ) Antitrust Division announced the establishment of a Procurement Collusion Strike Force (PCSF) to deter, detect, investigate, and prosecute criminal schemes that undermine the integrity of the government procurement process. Now, more than ever, government contractors should be vigilant and anticipate heightened scrutiny of their interactions with competitors,  particularly in the bidding process. The PCSF aims to both identify potential bid-rigging, price-fixing, and other collusive conduct, as well as provide input to government programs to eliminate antitrust-related vulnerabilities in their acquisition procedures.

Hackers delight in targeting U.S. companies during the holiday season triggering a year-end spike in cyber-attacks. This year we can expect that threat actors across the globe will remain online throughout the holiday season, looking to capitalize on the distraction of the holidays and the increased internet traffic that comes with online holiday shopping. Accordingly, companies should remain alert to the possibility of a cyber-attack, especially ransomware attacks, which have more than doubled this year alone. Organization’s should consider taking certain steps to help manage and mitigate risk.

On October 28, 2019, the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Justice (DOJ) issued a Memorandum of Understanding (MOU) to provide clarity and quell lenders’ fears about liability for mortgage lending errors under the False Claims Act. Specifically, the MOU explains that HUD’s Mortgage Review Board will be the primary entity: (1) to take actions against non-compliant Federal Housing Administration lenders and (2) to evaluate whether the alleged violations of the False Claims Act should be referred to DOJ.

The U.S. Department of Homeland Security published a final rule on January 11, 2019, introducing electronic registration requirement for employers seeking to file H-1B cap-subject petitions. The final rule went into effect on April 1, 2019, though the electronic registration requirement was suspended Fiscal Year 2020 to allow USCIS to complete user testing and ensure the system and process are fully functional. On November 8, 2019, USCIS announced a final rule that will require a $10 registration fee for petitioners seeking to file H-1B cap-subject petitions.

The U.S. District Court in Portland, Oregon, issued a 28-day temporary restraining order in an unusual weekend session just before the “Presidential Proclamation on Suspension of Entry of Immigrants Who Will Financially Burden the United States Healthcare System” was to go into effect on November 3, 2019. Judge Michael H. Simon agreed to “freeze things the way they are” so a determination can be made on the merits of the case. A hearing on a preliminary injunction has been set for November 22, 2019.

The third quarter continued the torrid pace of M&A volume for our clients—we closed a total of 18 transactions, a substantial increase over the third quarter of last year. The average deal size increased as well from $29M to $62M. The industries covered included alcoholic beverages, amusement parks, automotive, pharmaceuticals, apparel, aerospace and defense, information management, car rental and dental service organizations. Our largest driver of deal volume was the dental service organization sector, in which we closed eight transactions alone.

Last week, businesses and privacy professionals saw two major steps taken in preparation for the long-awaited California Consumer Privacy Act (“CCPA”), which goes into effect January 1, 2020. California Governor Gavin Newsom signed the pending amendments to the CCPA into law, while California Attorney General Xavier Becerra released the initial draft of the CCPA’s accompanying regulations. Together, the Amendments and Regulations provide additional clarification, limited exemptions for employee information, and guidance to CCPA compliance.

Yesterday, in a closely-followed case, the Supreme Court decided not to hear an appeal brought by the Domino’s pizza chain, which sought to overturn the Ninth Circuit Court of Appeal’s decision that entities selling online must make their websites and apps accessible to people with disabilities. The decision is considered a major win for disability rights advocates, who have been arguing that the Americans with Disabilities Act (“ADA”) applies to websites, digital platforms, and other non-physical spaces. The Supreme Court’s refusal to address the issue leaves the law unsettled both as to brick-and-mortar retailers who also have websites/apps (like Dominos) and e-commerce-only businesses.

Governor Gavin Newsom signed A.B. 5 on September 18, 2019. This legislation is expected to have a greater impact on California employers than any law enacted in decades. Every industry using independent contractors, from agriculture to entertainment, could be impacted. Although some lobbying groups succeeded in obtaining qualified exemptions, the vast majority of the several million workers currently classified as independent contractors (ICs), will need to be reclassified. The law also may have repercussions in other states causing them to implement similar legislation.

As investor interest in qualified opportunity zones (“QOZ”) grows, both qualified opportunity funds (“QOFs”) and investors should be aware of the benefits of organizing QOFs as C-corporations. C-Corporation QOFs may take advantage of the reduced corporate income tax rate of 21 percent and the benefits under Section 1202 of the Internal Revenue Code (the “Code”).  

The U.S. Department of Labor has announced its Final Rule increasing the minimum salary level employees need to be paid in order to be deemed an exempt white collar employee, provided the employees otherwise meet the applicable duties and salary basis tests. The rule has been long-awaited since the predecessor Obama administration-era rule was enjoined by a Texas federal court in 2016. The appeal of that case has been on hold, allowing the Department time to consider a new rule that would more likely survive a legal challenge. The new rule will go into effect on January 1, 2020, giving employers a little more than three months to evaluate compensation programs and make sure they are in compliance with the new rule.

Michigan is moving rapidly toward promulgating health-based drinking water standards for perfluoroalkyl and polyfluoroalkyl substances (PFAS). In March 2019, Michigan’s governor directed the Michigan PFAS Action Response Team (“MPART”) to form a Science Advisory Workgroup “to review both existing and proposed health-based drinking water standards from around the nation to inform the rulemaking process for appropriate Maximum Contaminant Levels (MCLs) for Michigan by no later than July 1, 2019” and directed what is now the Department of Environment, Great Lakes, and Energy (EGLE) “to immediately file a Request for Rulemaking to establish enforceable MCLs for PFAS in our drinking water supplies.” The governor commanded that proposed regulations be completed “on an accelerated schedule with input from stakeholders by no later than October 1, 2019.”

On September 9, 2019, the U.S. Court of Appeals for the Eleventh Circuit issued an important decision for health care providers, especially those in the hospice industry. In U.S. v. AseraCare, Inc., No.16-13004, Slip. Op. (11th Cir. September 9, 2019), the Court held that a “reasonable disagreement between medical experts” about prognosis for a terminally ill patient, without more, cannot establish falsity. Slip. Op. at 3.

As the first of several deadlines under the Qualified Opportunity Zone (“QOZ”) program rapidly approaches, investors still on the sidelines are discovering that time is running out on the ability to take advantage of the full suite of tax benefits under the program. December 31, 2019 marks the last day in which investors may roll over capital gains into Qualified Opportunity Funds (“QOF”) and obtain a 15% reduction in the amount of the deferred gain.

The second quarter continued the brisk M&A activity for our clients. During the second quarter, we closed 18 transactions. Although this number of closed deals represents a drop-off from the first quarter during which we closed 21 deals, it represents a more than 45 percent increase over the second quarter of 2018. The real headline item for this quarter, however, was deal size. Average deal size increased by 46 percent to $35M when compared to the first quarter.

The City of Chicago recently enacted the “Fair Work Week Ordinance,” requiring that many businesses provide workers with up to two-weeks advance notice of their work hours and schedules. The FWW Ordinance becomes effective on July 1, 2020, and will require employers to set most employee schedules at least 10 days in advance. The Ordinance is expected to have a significant impact on industries where “variable” schedules are most common, including the hospitality, retail, and food and beverage industries. Employers operating in Chicago should consider formulating a plan to ensure compliance of the Ordinance.

UPDATE III: Judge Agrees to Delay San Antonio Paid Sick Leave Ordinance

At a hearing this morning, Judge Sol Casseb entered the Agreed Order submitted by attorneys for the City and the businesses that filed suit regarding their agreement to delay the effective date of the PSL ordinance from August 1 to December 1. Entry of the Agreed Order eliminated the need for a hearing on the businesses’ request for an injunction prohibiting the ordinance from going into effect on August 1 and should, hopefully, allow sufficient time for the Texas Supreme Court to determine whether it will consider the enforceability of the City of Austin’s PSL ordinance, which case is currently pending before the Supreme Court.

With the State of Illinois’ recent legalization of recreational cannabis, municipalities have started to debate whether to “opt in” to allow such businesses. While municipalities cannot prohibit the use of recreational cannabis, they can decide whether recreational cannabis businesses are allowed to operate within their boundaries. Many have already begun to weigh the pros and cons and are moving toward decisions.

The United States Patent and Trademark Office announced it will implement a rule requiring U.S. counsel for foreign-domiciled trademark applicants and registrants effective August 3, 2019. The new rule applies to all trademark owners with a foreign address. For any new filings after the effective date, licensed U.S. counsel must be designated.

The U.S. Supreme Court recently released its opinion in North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, largely vindicating the understanding of most estate planners: A state cannot tax the income of a trust where the only connection to the state is the presence of the trust’s discretionary beneficiary.

Governor Gretchen Whitmer and the Michigan Department of Agriculture and Rural Development (MDARD) announced MDARD’s decision to allow for commercial solar energy development on land currently enrolled in the Farmland and Open Space Preservation Program, commonly known as PA 116. This new policy creates a substantial opportunity for solar developers with respect to land in the State of Michigan. Currently, there is an estimated 3.4 million acres of farmland enrolled in PA 116 which presents a significant opportunity for new solar energy development in Michigan.

Among the many benefits of investing in a qualified opportunity fund (QOF) is the deferral of tax on current capital gains. Specifically, if an amount equivalent to a current capital gain is invested in a QOF within 180 days of the realization event, the tax generally will not come due until the earlier of the year in which the QOF investment is disposed of or 2026. As an added benefit, there may be a reduction in the amount of the capital gain subject to tax (up to 15 percent) when the tax bill comes due.