Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Companies Face Big Data Legal Issues

Posted in Corporate & Financial Services

BigData_2267x1146_whiteThe power technology has in our lives seems to be increasing with each passing year, and the capabilities of our technology are greater than ever. As technology proliferates — not just through its reach into new markets, but also through the ever-greater number of devices most people in the developed world use on a regular basis — and as the devices themselves become increasingly powerful, there are both opportunities and risks.

This is true for businesses as much as it is for individuals. Although technology and the data it yields can provide substantial market advantages, it also puts companies at risk of running into legal trouble related to privacy, regulation and the responsibility to protect those represented by the data.

The key issue with big data from consumers’ point of view is privacy. As data is used in market research or provided to third parties, companies face the challenge of needing to sufficiently anonymize the data to avoid revealing customers’ identities. Unfortunately, making sure data is truly anonymous is very difficult, as a number of major companies, including AOL and Netflix, have learned the hard way.

Furthermore, consumers have to be assured that their personal data is not being misused or used without their consent. Typically, the best approach is to notify consumers ahead of time of the ways in which their data may be used and to obtain proper consent. This is often done through collecting a virtual signature or other type of consent on a privacy statement.

Proactive thinking is key

Another challenge companies face in regard to data collection is that, because technology is changing so rapidly, the regulatory system is in a constant state of flux. Not surprisingly, this makes it difficult for organizations to know for sure whether or not they are in compliance. Adding to the confusion is the fact that data must be physically stored, and often this happens in a number of different locations — each of which may have its own regulatory system in place. This is especially true when data is stored overseas.

Finally, there is the question of whether companies ought to proactively look to identify risks that could compromise consumers’ privacy before any problems actually arise. Many would say that looking for problems with data collection, anonymization and dissemination practices would be to the companies’ benefit, but even this may not be enough. In the event that there is a data breach and privacy is compromised, would a company then be considered liable? As the law changes, this question is on the minds of many corporate managers and business owners.

As technology continues to change and becomes ever more capable of revealing the most intimate and specific details about people’s lives, businesses and organizations are faced with the urgent need to ensure that they are well protected against the potential repercussions that could arise from the misuse of data. A skilled attorney can help with this process on an ongoing basis.

BoltNagi is a widely respected and well-established corporate and business law firm serving clients throughout the U.S. Virgin Islands.

Top Cyber-Security Issues for Finance and Law Firms

Posted in Corporate & Financial Services

Author_Hariom_Chaudhary_Advance_Ethical_Hacking_and_Cyber_Security_Boot_Camp_at_Delhi,_IndiaWith the signing of an executive order on February 13, 2015, President Barack Obama encouraged companies within various industry sectors to better combat online security breaches through the formation of organizations dedicated to the sharing of information related to threats. Although some industries — including the financial sector, through its Financial Services Information Sharing and Analysis Center — already have these types of organizations in place, many others do not.

 The legal industry is one such sector. However, for some time now, there has been discussion of forming an alliance between banks and law firms through the development of a legal industry counterpart to the FS-ISAC, that would allow the two industries to anonymously share information related to security threats and breaches. Given the close working relationship between the banking and legal sectors and the growing threat of cyber-attacks, enthusiasm for such a partnership is growing.

 Identifying and responding to threats

 Much of the concern stems from the fact that hackers have begun targeting larger law firms as sources of information related to major corporate clients, and that have company secrets, business strategies and intellectual property that represent attractive and valuable pieces of information. However, many such attacks are not reported because private firms simply are not required to do so.

 However, the urgency of combating cyber-attacks has grown as their frequency has increased. Furthermore, cyber-attacks on law firms and financial organizations have implications outside of those industries. Some recent attacks appear to be the work of hackers associated with the Chinese government. The potential that patents, trade secrets and even information related to military weapons systems may fall into the hands of these hackers hastens the resolve of legal and financial industry professionals to develop better and more collaborative approaches to dealing with cyber-security matters.

 Last summer’s security breach at JPMorgan, which made 83 million customers’ email addresses, mailing addresses and phone numbers available to hackers, also increased the urgency for the inter-industry partnership. Particularly when cyber-attacks make the news, as they did in the JPMorgan case and in recent data breaches at retail outlets like Target and Home Depot, it raises the specter of declining consumer confidence.

Also driving the legal industry’s interest in anonymously sharing information related to cyber-threats is growing interest on the part of banks in requiring better online security assurances from any law firms they might wish to retain. Some banks have gone as far as to require that any legal firm engaging in business with them should do no bank-related business on computers accessible through a public network.

 What becomes of the legal and financial industries’ potential partnership in combating cyber-attacks remains to be seen. That both sides appear to be taking the situation seriously, however, is good news for both industries, as well as for their clients.

BoltNagi is an established and respected corporate law firm serving businesses and organizations throughout the U.S. Virgin Islands.

What Makes the U.S. Virgin Islands so Business Friendly?

Posted in Labor & Employment

800px-Strand_St_Frederiksted,_U_S__Virgin_IslandsWhen most people think of the U.S. Virgin Islands, the images that come to mind are beaches, relaxation, a unique island culture and a relaxing, laid-back environment. However, for those in the business community, the Territory offers much more than just a great tourist destination. The fact is that the U.S. Virgin Islands is also a great place to do business.

 One of the key advantages of doing business in the Territory is its close association with the United States. Overall, the processes related to conducting business in the U.S. Virgin Islands do not differ much from processes throughout the U.S. mainland. In addition, doing business here doesn’t require using a different currency or worrying about a different tax system. In fact, the Territory uses the same tax forms, regulations and filing dates as the mainland, with the Government of the Virgin Islands retaining the ability to tax income made within its jurisdiction.

 Meanwhile, there are other tax benefits that make doing business in the U.S. Virgin Islands particularly attractive. Organizations looking to relocate to the territory can take advantage of the Economic Development Commission’s program, which offers a set of tax incentives to qualified businesses with a presence in the Territory. These companies must help meet the Economic Development Authority’s mission of encouraging the growth and development of the economy of the U.S. Virgin Islands.

 Among the benefits available to businesses in the EDC program are up to 90 percent reductions in corporate and personal income tax, exemption from business property taxes, reduced customs duty and even the ability to rent office and industrial space at significantly reduced rates.

 Strong public-private partnerships

 As exemplified by the EDC program, the U.S. Virgin Islands considers the productive partnership of the government and private organizations to be a benchmark of good economic policy for the territory. The Government of the Virgin Islands willingness to invest in private industry is just one more way in which the territory serves as an attractive place for businesses.

 Finally, doing business in the territory affords companies the opportunity to enjoy the benefits of leveraging the Territory’s well-educated labor force at their disposal. With an accredited university, quality educational system and a strong history of nurturing manufacturing and construction skills amongst its workforce, the territory offers a potential pool of employees that any business would be fortunate to have.

 Doing business in the U.S. Virgin Islands offers all of the benefits of the United States — and much more. If your company is considering opening up shop in the territory and you want to better understand the options and benefits available to you, consult an experienced business law attorney.

BoltNagi is a widely respected and well-established business law firm serving clients throughout the U.S. Virgin Islands.

Avoiding Harassment Claims Within Your Organization

Posted in Labor & Employment

Frustrated_man_at_a_desk_(cropped)Preventing and responsibly addressing claims of sexual harassment is a key component of maintaining a welcoming environment and a successful workplace. Sexual harassment can be defined as any unwanted advance or conduct that contributes to the creation of a hostile work environment. Under Title VII of the Civil Rights Act of 1964 and Title 24, Chapter 17, Virgin Island Code, sexual harassment is regarded as a form of discrimination.

 Because any type of unwanted conduct may be considered sexual harassment as long as someone feels uncomfortable, it can take on many forms — from direct verbal harassment to the posting of sexually suggestive materials in the office or online. A person need not even be the target of harassment to file a complaint, a fact that should give pause to anyone thinking they are only engaging in harmless banter.

 Not surprisingly, the fact that such an enormous range of actions and behaviors can fall under the umbrella of sexual harassment means that employers put themselves at considerable risk by failing to prevent it. The following are several key steps employers should take to reduce the possibility of sexual harassment occurring and appropriately respond to situations as they arise:

 Establish a clear policy toward sexual harassment: Putting a sexual harassment policy in writing in your employee handbook communicates to everyone in the organization that harassment will not be tolerated. An effective policy should include a definition of sexual harassment and procedures to be followed in filing and investigating claims. It should also clearly state the consequences of sexual harassment, which may include disciplinary measures and even loss of employment.

 Train everyone in your organization: Your staff members need to be able to recognize sexual harassment when it’s happening, and they should understand the procedures for reporting and investigating claims. Separate trainings should be held for employees and supervisors to address the specific procedures involved in handling sexual harassment claims, as their roles will be different from one another.

Assume that all claims should be taken seriously: One of the surest ways to implement a successful sexual harassment policy — and avoid having to deal with claims very often — is by making it clear that all complaints will be treated in a serious manner. Following through on this promise is essential to establishing a safe, positive workplace free of sexual harassment.

 It is almost impossible to completely eradicate the risk of sexual harassment from any given workplace. But by establishing, clearly communicating and strictly following procedures for preventing and handling sexual harassment claims, you can at least make your work environment safer and more welcoming for your employees.

BoltNagi is a well-established and respected business and employment law firm serving clients throughout the U.S. Virgin Islands.

Kennedy Funding Financial Pulls Out of US Virgin Islands Market

Posted in Real Estate

220px-Charlotte_AmalieDue to frustrations with the foreclosure process, Kennedy Funding Financial, a prominent international lender with a sizable footprint in the Caribbean region, has decided to stop lending in the U.S. Virgin Islands for an undetermined amount of time. Considerable bureaucratic red tape has made it increasingly difficult to take action on properties with tenants who have defaulted on their loans, resulting in a situation in which even attempting to protect and preserve those properties becomes next to impossible.

 The primary source of trouble with the foreclosure process is a backlog of cases as they make their way through the courts. The Territory requires all foreclosures to proceed through the court system, with property owners forced to file suit to initiate the process.

 Kennedy Funding CEO Kevin Wolfer, in announcing his firm’s decision, emphasized that the move is based solely on issues with the foreclosure process, rather than any disillusionment with the Territory itself. In fact, he said that, should the U.S. Virgin Islands reform its foreclosure process, Kennedy Funding would absolutely consider returning to the Territory in the future.

 Other U.S.-based lenders, facing the same difficulties in completing foreclosures quickly and efficiently, have taken similar steps to get out of the lending market in the U.S. Virgin Islands. Wolfer emphasized this growing trend in announcing Kennedy Funding’s departure, and called on the Government of the Virgin Islands to act quickly to right the situation, lest the Territory continue to struggle financially and become less attractive in the regional real estate market.

 Currently, 32 U.S. states and the District of Columbia already operate mostly or entirely outside of the judicial system when it comes to foreclosures. Because the lender does not have to file a lawsuit to foreclose on a property, it allows the foreclosure process to proceed with court delays.

 St. Thomas attorney Tom Bolt, Chair of the U.S. Virgin Islands Uniform Law Commission and counsel for several banks, noted that there is ongoing discussion relative to the impediments to credit on the Territory due to the current law on foreclosure. Legislation to provide for non-judicial foreclosure is pending and hopefully will be introduced in the 31st Legislature. It would preserve the safeguards for owner occupied residential property through the judicial system.

BoltNagi is a widely respected and established business law firm serving clients throughout the U.S. Virgin Islands.

Governor Mapp Considers Cuts, Revenue Generation to Close Budget Shortfall

Posted in Community Affairs

In a recent appearance before the Senate Finance Committee, the financial team of new Governor Kenneth Mapp shared that the Government of the Virgin Islands, with projected revenues falling well short of the $737.6 million appropriated this year, has found itself with a $133 million budget shortfall for the current fiscal year. With just under $3 million currently in the bank, the Government is “nearing the brink of financial collapse,” as Mapp put it in his first State of the Territory Address.

There are essentially two ways of dealing with the massive shortfall: through additional budget cuts and looking at more ways to generate revenue. The likelihood of needing to implement both approaches is high.

Cutting costs at this stage typically involves making some combination of large, complex cuts and smaller, simpler ones. While many of these possible cuts are likely to cause headaches and frustration, they do present real ways of trying to handle the shortfall. For example, among Governor Mapp’s financial team’s suggestions were imposing greater restrictions on travel, cutting down on telecommunication and rental expenses, reprioritizing the hiring of various General Fund positions and improving the drawdown of federal funds. One factor that will also help save money is the V.I. Water and Power Authority’s upcoming shift from oil to propane, which is expected to help curb energy costs.

Meanwhile, because the funds required cannot be made up exclusively through reductions, the financial team also offered some recommendations for generating additional revenue. For example, taxes on vehicle mileage and Internet transactions, imposing a 10 percent graduated income tax surcharge, shifting some of the burden of paying health insurance premiums away from the Government and increasing customs duties were all suggested options. Not surprisingly, there was hesitation among members of the Legislature of the Virgin Islands regarding the prospect of raising taxes.

Not all of the financial news in the Territory is grim. Although projected revenues are far short of where they need to be, they are nevertheless up 26% over last year. Individual and corporate income taxes, real property tax, gross receipts tax and trade and excise taxes are all poised to see increases. This signifies encouraging levels of economic growth in the Territory, albeit not enough to offset the current shortfall.

The task now before the legislative and executive branches is to agreement as to where cuts might be made, as well as where additional revenues may be generated.

 BoltNagi is a well-established and widely respected government relations law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Intellectual Property Commonly Overlooked in Business Valuations

Posted in Corporate & Financial Services

2015_intellectual_property_flickr_Robert_NunnallyThe process of business mergers and acquisitions can be time-consuming and complex, and sometimes the move needs to happen so quickly that key items are ignored, given a short shrift or are just forgotten altogether. This is often the situation with intellectual property, which can be an extremely valuable aspect of a company’s operations.

Why is intellectual property so often overlooked during the business valuations that occur as part of mergers and acquisitions? First, the focus is often on the parts of the business that actually make money. Another issue is that exactly what constitutes intellectual property is not always clear to everyone involved.

Most people, when they consider intellectual property, probably think of its definition in the arts, in which a copyright protects the products of artistic creation. However, in business, trademarks, patents, trade secrets, industrial designs, marketing plans and materials in print and online can all be considered intellectual property.

Intellectual property holds real value

The problem with failing to account for intellectual property in business valuation is that this property, while often not technically a moneymaker on its own, can still make a huge difference in a company’s revenues. Consider a marketing plan, for example — it doesn’t generate revenue by itself, but it provides definite value to the business. During mergers and acquisitions, when a full accounting of all of the companies’ assets is necessary, it is important that intellectual property is included in the process.

Because intellectual property holds such value for a company, a well-respected valuation analyst should examine it. In determining the value of intellectual property, several factors should be taken into consideration. Among these are the uniqueness of the asset and the amount of money the asset has generated in the past, along with what it might be expected to generate in the future. Not surprisingly, determining the financial benefits related to a trademark or a simple business website can be extremely complex and demands the involvement of an experienced valuation analyst or a skilled business attorney.

When your company is preparing for a merger or acquisition, no matter which side of the deal you’re on, it’s critical to ensure that all intellectual property is accurately and totally accounted for. To make sure this aspect of the process goes smoothly and nothing gets left out, it is a wise idea to seek counsel from an experienced intellectual property lawyer. This is the best choice for your company, as well as the most surefire way to make sure your intellectual property is treated with the care and attention it deserves.

BoltNagi is a widely respected and established corporate and business law firm serving clients throughout the U.S. Virgin Islands.

Legal Steps to Leaving Your Business in a Will

Posted in Tax & Estate Planning

2015_business_card_wikipediaWhen you own a business, you may become be so consumed with running it from day to day that you don’t really think much about what will happen to it after you are gone. While preparing for one’s own passing is often unpleasant to consider, particularly if you have reason to expect to live for many years to come, it’s still important to make sure you have legally documented your wishes — for the good of you, your beneficiaries and your business.

One of the key reasons to make sure your will covers your business is that, if it does not, your close family members may end up inheriting your business, whether or not they want to and regardless of whether you had other plans for your company.

Even in cases in which your children are minors, they could still inherit your business, and without an adult in place to take care of its operations, your business may essentially dissolve when you pass away. Particularly if your business is valuable, a failure to provide for its future in your will doesn’t just hurt your business, it also negatively impacts your family.

Executors can help protect your investment

Because of the risks involved with not leaving your business in a will, ensuring you’ve put everything in place ahead of time is essential, and it’s one of the best ways of providing security for your business and your loved ones. Among the key steps in preparing your will, as far as your business is concerned, is naming an executor to handle decision-making related to the company after your death. This is crucial because, without an executor in place (or if you don’t have a will in the first place), the court will appoint an executor.

To ensure your business is transferred or sold according to your wishes, you want to be certain that the person in charge understands your wishes and their duties. The risks associated with a court-appointed executor are too great to leave anything to chance.

Another task you may need to complete is to consider restructuring your business. If you are the sole proprietor, your business cannot simply be left to somebody else in your will. To avoid having your life’s work disappear after you’re gone, it may be necessary to restructure your business as a closely held corporation. As a separate entity, a corporation continues to exist after you die, and you can leave your controlling interest to a person of your choosing. Although your estate will still be taxed on the value of your share, this approach at least allows your business to continue to operate without you.

The process of preparing a will and establishing what you want to become of your business in the event of your passing is often complicated, stressful and just about the last thing many business owners want to address. That’s why it is so important to go through the process with an experienced business attorney, whose knowledge of the process and understanding of estate planning and business law can help you reach your goals and give you the peace of mind you need for the future.

BoltNagi is a well-established and widely respected business law firm serving clients throughout the U.S. Virgin Islands.

USVI Labor Relations Act Includes Regulations on Employee Breaks

Posted in Labor & Employment

2015_break_pixabayFor business owners and employees alike, one of the most frequently debated aspects of the average workday involves the negotiation and scheduling of employee meal breaks and brief resting periods. Many workers cherish their break time, while others may be indifferent — and it can create complications for employers when attempting to schedule their staff members for the day. Some employers take a very casual approach to break time, whereas others prefer not to take any chances and have everything scheduled down to the minute.

Perhaps not surprisingly, the U.S. Virgin Islands Labor Relations Act outlines the specifics of the law as it concerns both mandatory rest periods and meal breaks. For every four hours of continuous work, an employee is entitled to a paid break of at least 10 minutes. This break may not take place at the beginning or end of a shift, and it cannot be tacked onto a meal break.

Failure to provide a short break entitles an employee to make up his or her break time either on the same workday or the same pay period. Otherwise, for every break period not provided, the employer must pay the worker for a half-hour’s work at the regular pay rate.

Requirements and exceptions

It is important to note that 10-minute breaks do not have to be provided under the following conditions, provided they exist simultaneously:

  • The employee is at least 18 years old
  • The employee is working alone in a retail or service business
  • The employee is allowed to briefly leave his or her post to use the restroom

Meanwhile, a 30-minute meal break is required for any employee working seven or more continuous hours. This break may take the form of uninterrupted mealtime or an “on-duty” meal, during which time the employee continues to work in the event that the job demands it. The burden is on the employer to prove that such circumstances exist.

There are some exceptions to the law. For one, employees may forego any break if they so choose. However, the burden of proof is on the employer if there is a dispute, so business owners need to be able to verify that an agreement with the employee was in place.

There are also some situations in which employers may be exempt from providing mandatory breaks. For example, if providing breaks would negatively affect the business while also not harming employees, an employer may apply to the Commissioner of Labor for an exemption. The Commissioner of Labor, meanwhile, may exempt certain categories of employers from having to allow breaks.

Although the law is fairly straightforward, it’s still a good idea for employers to fully understand how it applies to their businesses. Employers with questions or concerns related to mandatory employee meal breaks and rest periods should seek the counsel of an experienced labor law attorney to avoid any confusion or compliance issues.

BoltNagi is a widely respected and well-established employment law firm serving businesses and organizations throughout the U.S. Virgin Islands.

USVI Government Employees to Contribute More to GERS

Posted in Community Affairs

2015_retired_flickr_Steven_Depolo

Tier II government employees saw a small increase in their contributions to the Government Employees Retirement System (GERS) starting February 5. The 1% increase follows a similar measure for Tier I employees that took effect January 1. These increases are part of a plan to boost funding for the GERS, which was poised to collapse within a decade without major changes.

Under the new plan, Tier I and Tier II employees’ contributions will increase 1% per year for the next three years, ultimately arriving at 11% for Tier I employees and 11.5% for Tier II employees. Meanwhile, the government’s contribution will be increased just once, from 17.5% to 20.5% — a rate that will be in effect for five years.

According to an August study, GERS has an unfunded liability of $1.84 billion, due to a growing number of pensioners and a decreasing number of current employees paying into the system. This situation would ultimately lead to insolvency by 2025 without legislative action. Contributing to the dire situation has been the sluggish economy, as well as the “Economic Stability Act of 2011”, which encouraged government employees to take early retirement and reduce the Government of the Virgin Islands’ payroll. This had the added effect of increasing the monthly benefits paid out from just under $8.4 million in 2011 to nearly $9.3 million in 2013.

Due to some challenges within the central government, the Virgin Islands Personnel Division was unable to adjust the contribution rate for some employees after the first of the year, but assured workers that the adjustment would be made by February 5. Eventually, GERS will need to collect funds from employees whose contributions were not adjusted on time, but the plan for doing so remains to be implemented.

Additionally, increased contributions were also approved for Tier II hazardous duty employees, as well as senators and judges. Hazardous duty employees will eventually contribute 13.625% to GERS, while senators and judges will increase their contributions to 14%.

With these new increases in employee contributions, GERS is believed to be safely solvent through 2032, although with the ratio of active employees to retirees currently at 1 to 1.2, there is still much concern that the system will continue to experience difficulties striking a sufficiently stable balance between the money coming in and the money going out.

The recent action of the Legislature of the Virgin Islands certainly helps, but whether it will be enough — and whether the benefits of the legislation will last as long as expected — remains to be seen.

BoltNagi is a widely respected and well-established government relations firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.