Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

When Are Employees Required to Pay the Federal Minimum Wage?

Posted in Labor & Employment

Under federal law, employers must pay all employees a minimum hourly wage. The federal minimum wage is currently $7.25 per hour, but individual states and territories can implement their own minimum wages that are higher than the federal threshold. In the U.S. Virgin Islands, the minimum wage is $9.50 per hour as of June 1, 2017 although it is anticipated that it will increase it to $10.50 by the end of 2018.

Some jurisdictions have also passed living wage laws, which have higher minimums than even the state levels. Employers must pay the highest minimum wage affecting them, whether it’s federal, territorial or local.

While the minimum wage is an hourly rate, this does not mean employers must pay employees hourly wages. So long as the total amount paid divided by the number of hours worked at least equals the minimum wage, employers can also pay via salary, commission or wages plus tips.

Which employers are required to pay the federal minimum wage?

The Fair Labor Standards Act (FLSA) is the law that outlines minimum wage requirements on a federal level. While it covers most employers, there are a few that are exempt.

 

Typically, any business that has $500,000 or more in annual sales or has employees that do business between states and territories must abide by FLSA rules. This “interstate commerce” could include making phone calls or sending mail to another state or receiving it from another state, and not just actually physically visiting another state or territory.

Are any workers not covered by federal minimum wage laws?

Just because a business is covered by federal minimum wage laws does not mean all its workers are covered. The following are a few examples of workers who are not entitled to the federal minimum wage:

  • Independent contractors (only employees are guaranteed a minimum wage)
  • Outside sales staff, such as salespeople who work a specific route
  • Switchboard operators for phone companies with fewer than 750 stations
  • Workers on small farms
  • Employees of local newspapers with a circulation of less than 4,000
  • Newspaper deliverers
  • Employees of recreational or seasonal amusement businesses
  • Students, apprentices and trainees as defined by federal labor laws

 

Even if a business or employee is exempt from federal minimum wage rules, they might still be covered by territorial law. Thus, it’s important to be familiar with all of the wage and labor laws that could affect your business.

What about workers who receive tips?

If you have tipped employees, you are allowed to pay them less than the minimum wage that applies to your business, as long as the amount they receive including the tips adds up to at least the minimum wage. The law requires you to explain this policy to all employees.

For more information on your responsibilities as an employer when it comes to wages, consult a skilled U.S. Virgin Islands labor and employment attorney.

Ravinder S. Nagi is a shareholder and the Assistant Managing Attorney for BoltNagi. He is the chair of BoltNagi’s Litigation Department and the Labor and Employment Practice Group. He has represented numerous private and public companies in complex labor and employment cases of all types.

US Labor Department Rescinds ‘Joint Employment’ Rules

Posted in Labor & Employment

The U.S. Department of Labor recently announced that it would rescind the standard implemented by the Obama Administration that determined when companies are considered “joint employers” of contract and franchise workers.

The decision marks the first major shift in labor policy during the Trump Administration. In its statement, the agency said it withdrew a 2016 interpretation of the Fair Labor Standards Act (FLSA) that expanded the set of circumstances in which a business may be liable for wage law violations by contractors, franchisees and staffing agencies.

In previous years, companies were classified as joint employers if they hired and fired workers and set wages. Under the Obama administration, Labor Department officials said a worker’s level of “economic dependence” on the company should also play a role in joint employer classification.

This broader definition sparked debate in the business community. Many employers said the guideline would threaten franchise businesses and would cause more lawsuits against companies, even if they were not responsible for establishing work conditions.

The rollbacks continue

The removal of the joint employment rules came on the same day the Department of Labor withdrew guidance from 2015 that said under the FLSA, many workers are improperly considered independent contractors when they are actual employees. This would make those workers eligible for overtime, minimum wage and various other legal protections afforded to employees.

These interpretations and guidelines set forth by federal agencies are not legally binding, but they do influence enforcement. It was widely expected that the new administration would shift some labor policies when President Trump took office, with most of the changes resulting in less regulation and enforcement.

Business groups and employer advocates have mostly praised the agency’s changes thus far, arguing that previous guidance on worker classification had too strong of an effect on all types of industries in the United States. They have opined that employers had to work extremely hard to be compliant with the FLSA and that most of the interpretations issued by the agency under the Obama administration were simply “enforcement traps,” hoping to lead to enforcement actions solely for the purpose of enforcement rather than creating a better business and employment environment.

Workers’ rights groups and unions, however, were troubled by the decision by the Labor Department. They believe the guidance made it easier for employers and workers alike to understand their rights and obligations.

Meanwhile, the National Labor Relations Board’s expansion of the definition of joint employment still exists, although it is under review by a federal appeals court. The NRLB standard has had more of an impact, as it is a legally binding definition.

For more information on the definition of joint employment and how it could affect your company, consult a knowledgeable employment law attorney in the U.S. Virgin Islands.

Ravinder S. Nagi is a shareholder of BoltNagi and Assistant Managing Attorney.  He is also Chair of the Labor and Employment Practice Group at BoltNagi, a widely respected and established labor law firm serving clients throughout the U.S. Virgin Islands.

Checklist for Your Estate Plan after a Major Life Event

Posted in Tax & Estate Planning

Anytime you go through a major life event or milestone, it is important you review your estate plan to ensure it is up to date and properly reflects your current life circumstances and goals. Whether it’s a marriage, a divorce, the birth of a new child, a new job or a big move, anything that you would classify as a significant adjustment to your life should prompt you to take another look at your estate planning documents.

The following is a quick checklist of reviews and changes you may need to make to your estate plan after a major life event:

  • Alter your will: Some events will cause you to want to make changes to your will. Examples include the death of a beneficiary, the birth of a new child, a marriage or divorce, the purchase of new (and valuable) property or the launch, purchase or sale of a business. Your will gives you the ability to leave property to chosen beneficiaries in the manner of your choosing.
  • Policy and account beneficiaries: Any insurance policies or accounts you have that require you to list a beneficiary-such as a life insurance policy or retirement account-should be up for review if you either get divorced from your chosen beneficiary or if a beneficiary passes away.
  • Guardianships: Whenever you have or adopt a child, it is important you review your will and add guardianship stipulations. This ensures your child will be protected and cared for according to your wishes in the event of your passing.
  • Business succession: Many business owners include succession plans in their estate planning arrangements. If circumstances have changed among your partners or if your chosen heir to your business is either no longer interested or available, it is time to revisit your documents and make some changes.
  • Estate executor: Your executor should be someone you trust completely to be organized and get the job done according to your wishes. If your executor passes away or if changing life circumstances make you feel someone else would be better suited to the role, then you should make those changes as soon as possible.

For more information on reviewing and making changes to your estate plan after a major life event, meet with a skilled estate planning lawyer in the U.S. Virgin Islands.

 

Steven K. Hardy concentrates his practice in estate planning at BoltNagi, a widely respected and established estate and trust planning law firm, serving clients throughout the U.S. Virgin Islands.

Checklist for Selling a Business in the US Virgin Islands

Posted in Corporate & Financial Services

After you and the buyer of your business have completed negotiating your purchase, it’s time to prepare for closing. By following some simple steps, you will be well prepared to sign on the many dotted lines involved in these transactions.

The following is a checklist for selling your business in the U.S. Virgin Islands:

Before closing day

  • Schedule the closing (ideally, your closing appointment should be early enough in the day to allow parties to get to banks and government offices afterward)
  • Finalize the purchase price; it should reflect all your negotiations and agreements
  • Prepare corporate documents, tax forms and equipment sale lists; get organized with all the documents you will need to have on hand at closing
  • Prepare to transfer all contracts and agreements
  • Prepare your loan documents (these documents could include promissory notes, security agreements, financing statements and various guarantees)
  • Prepare to transfer your business lease
  • Inventory and prepare to transfer all work that is currently in progress
  • Prepare the bill of sale
  • Prepare the closing sheet (this lists the purchase prices and all the costs that will be paid by or credited to the buyer and seller)
  • Prepare the purchase and sale agreement
  • Prepare succession agreements

On closing day

  • Review and sign the purchase and sale agreement
  • Review and sign all the loan documents on hand
  • Review and sign all documents for lease transfers, vehicle ownership transfers, franchising, succession and any other documents involved in transferring your business and its assets to the new owner (s)
  • Review and sign the bill of sale
  • Review and sign all non-compete, employment and consulting agreements
  • Review and agree to the closing sheet
  • Review and sign all forms that transfer patents, copyrights, trademarks and intellectual property
  • Review and sign any IRS forms, asset acquisition statements and other such documents
  • Receive the payment for the purchase price-either in full or for a significant down payment, depending on the terms you have already negotiated with the buyer for payment

To learn more about what you can expect out of the sale of a business and closing day, contact a trusted corporate planning attorney in the U.S. Virgin Islands.

 

Tom Bolt is Managing Attorney of BoltNagi, a widely respected and established business and corporate law firm that serves clients throughout the U.S. Virgin Islands.

Covering All Your Legal Bases When Selling a Business

Posted in Corporate & Financial Services

Selling a business is a major undertaking both in terms of the logistical elements and because of all the legal issues you must consider. The following are just a few of the legal challenges that could arise during the sale of a business:

  • Issues with unpaid tax, especially property tax;
  • Dealing with outstanding debts;
  • Issues with business succession;
  • Handing confidential information, such as trade secrets, copyrights and employee information; and
  • Continuing a relationship with previous business contacts, vendors and partners.

It is important to note that just because a business gets sold does not mean that it will close its doors. A retiring business owner may choose to sell a company to a business partner, friend or relative under the condition that it continues to operate in the months and years to come.

No matter the circumstances of the sale, however, you must fulfill certain filing requirements. All the parties involved in the sale must file with local authorities to inform them of the change in ownership, and additional papers may be required for the sale to be approved.

In some cases, you may have to go through additional steps for the sale of the business to be official. The local government could send an inspector to examine the business property before the final sale occurs, and if they uncover any violations, it could be the responsibility of the new owner to address them. An example of such a violation would be the use of toxic materials in the building. If the seller is aware of this issue, it is his or her responsibility to inform the buyer before the sale is finalized.

How an attorney can help

Without the assistance of an experienced corporate law attorney, the sale of a business becomes nearly impossible to navigate in a smooth and legally compliant manner. Every sales contract is different, which means you need a knowledgeable professional on your side to guide you through the process and teach you about how the law affects your situation and goals.

A business law attorney can help you throughout all phases of a business sale, drawing up the contracts and ensuring all elements of the transfer comply with the law. Buyers of a company may also greatly benefit from working with attorneys, as their knowledge and experience will prevent buyers from signing their name on a deal that is one-sided or otherwise unfair.

It is important to comply with all federal and U.S. Virgin Islands territorial rules regarding the sale of a business. If you have any questions about the steps you need to go through to sell your company, work with a skilled commercial transaction lawyer.

 

Nash Davis is a member of the Corporate, Tax & Estate Planning and Real Estate and Financial Services Practice Groups at BoltNagi, PC, a respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.

‘Means Test’ Determines If You Are Eligible to File for Chapter 7 Bankruptcy

Posted in Corporate & Financial Services

How do courts determine who is and is not eligible to receive a bankruptcy discharge under Chapter 7? The answer is the “means test,” a simple way of determining whether one’s income level is low enough to qualify for a discharge. People who do not pass the means test may still be eligible to file for Chapter 13 bankruptcy and arrange a repayment plan, but will not be eligible to eliminate their debts under Chapter 7.

You do not necessarily have to be completely penniless to qualify for Chapter 7 bankruptcy. Even if you earn a significant monthly income, you could still qualify if your expanses and debts vastly outweigh that income.

How the Chapter 7 means test works

The means test exists to limit the ability to receive a Chapter 7 bankruptcy discharge to only those who need it the most. Through the means test, you deduct certain monthly expenses from your current monthly income, which is determined by the average income you earned over the previous six months. The resulting figure is your “disposable income.” The lower your disposable income, the better chance you’ll have at securing a Chapter 7 bankruptcy discharge.

The only people who file for bankruptcy who need to take the means test are those who have mostly consumer debts versus business debts. When taking the means test, you will first determine if your income is higher or lower than the median figure in your area.

If you earn less than the median income, then the test is over—you may file for Chapter 7 bankruptcy. If you earn more than the median, however, you may not be eligible to file for Chapter 7 if you would have enough disposable income to repay some of your debts. If your level of disposable income reaches a certain amount, you will fail the means test and may need to file for Chapter 13 bankruptcy instead.

The target median income level for your specific case depends on the size of your household and where you live.

Passing and not passing the means test

Even if you pass the means test, you still may need to determine if filing for bankruptcy is the right decision for you. Passing the test simply means that you are legally able to receive a discharge of your debts. You should first consider all the alternatives available to help you determine what the best path forward is for you.

If you do not pass the Chapter 7 means test and still wish to file for bankruptcy, Chapter 13 is an option. Under Chapter 13, you can pay off at least some of your debts via a court-sanctioned repayment plan, which typically lasts between three and five years.

To learn more about bankruptcy and its alternatives, consult a trusted U.S. Virgin Islands financial services attorney.

 

Tom Bolt is Managing Attorney at BoltNagi, a respected and established financial services law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Checklist for Starting a New Business in the US Virgin Islands

Posted in Tax & Estate Planning

Owning your own business can be extremely rewarding, but getting it started is often a daunting prospect. Our team of experienced business attorneys has assembled a simple checklist of the steps you need to take to get your new company up and running.

Below are the key steps to start your new business in the U.S. Virgin Islands:

  • Create your business plan: Your business plan will be the general overview of how you plan to build your new company. It contains information such as a description of your company, a market analysis, marketing and sales information, how your business will be organized, necessary funding, financial projections and how your business will stand out in the market.
  • Choose a location: If your business needs a physical location, such as an office or retail space, select a customer-friendly spot and make sure it complies with zoning requirements.
  • Seek financing: Take out loans, apply for grants and seek investors and venture capital to get the money you need to begin your operations. Note that almost anyone who gives you money is going to want to see a detailed business plan, again highlighting the importance of that first step.
  • Determine your business structure: Will you establish your business as a partnership, sole proprietorship, LLC, corporation or S corporation? The structure you choose will have a considerable impact on numerous areas of your operations.
  • Register the name of your business: You will need to register your business name with the Corporate and Trade Name Division of the Office of the Lieutenant Governor.
  • Register for taxes: Obtain a tax identification number, along with various insurance policies, such as workers’ compensation, disability and unemployment.
  • Obtain business licenses: Get all the licenses you will need to operate your company. There are both territorial and federal regulations you will need to consider to determine which permits and licenses are needed.
  • Begin hiring employees: If you will be bringing on employees immediately, make sure you understand all the legal steps you must follow to hire them.
  • Seek assistance: Get in touch with our local Small Business Administration office to find out how the agency can assist you. You should also constantly take advantage of free training and counseling services, both during the business formation process and after your business has officially launched. There are numerous programs available to help startups and small businesses find their footing and eventual success in their markets.

These are just a few of the most important steps to take as you start your new company. For more information on what tasks you need to accomplish while starting your new business, contact a skilled U.S. Virgin Islands business law attorney.

 

Steven K. Harday is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a widely respected and well-established business law firm serving clients throughout the U.S. Virgin Islands.

How Does Durable Power of Attorney Work?

Posted in Tax & Estate Planning

A durable power of attorney is one of the simplest and most reliable ways to allow someone else to manage your finances if you are incapacitated and unable to act on your own accord. If you do not arrange for durable power of attorney, it’s likely your family will have to go to court to be able to take control of your finances. This can be a messy, time-consuming and expensive process.

You may grant power of attorney to your chosen agent to allow that person to act in any of the following ways:

  • Buy, sell, pay taxes on or maintain any property you own
  • Invest your money into stocks, bonds or mutual funds
  • Use your assets to pay your bills and other everyday expenses
  • Purchase or sell insurance policies and annuities
  • Collect Medicare, Social Security or other government benefits
  • File and pay your income taxes
  • Operate certain aspects of your small business
  • Handle transactions with any financial institutions with which you have an account
  • Hire an attorney to represent you in court
  • Manage your retirement accounts
  • Claim property you inherit or to which you are otherwise entitled

When does financial power of attorney take effect?

You have some options when it comes to your power of attorney arrangement. You may draft the document so that it goes into effect immediately after being signed. In this case, you should specify you wish your power of attorney to be “durable,” meaning it will stay in effect if you become incapacitated.

You may also draft your power of attorney to go into effect only upon your incapacitation, in what is known as a “springing” power of attorney arrangement. This keeps all your financial affairs solely in your control unless you are unable to handle them in certain circumstances. You may outline these circumstances when you draft the document, as well.

When does financial power of attorney end?

A durable power of attorney arrangement will automatically end upon your passing. At that point, your agent no longer has the authority to handle your financial matters unless he or she has also been named the executor of your estate, which is an entirely different responsibility for which you must arrange in your estate plan.

Durable power of attorney may also end in several other situations, including:

  • You revoke it: You may revoke durable power of attorney at any time, so long as you are of sound mind to do so.
  • You get divorced: In some circumstances, if your spouse is your agent, his or her power of attorney is automatically revoked when your divorce is finalized. You should double check with the court to make sure this is the case, however.
  • The court invalidates your arrangement: A court may declare a power of attorney document to be invalid in some circumstances, such as if you lacked the required mental competence to sign it or if you were a victim of undue influence or fraud.
  • Your agent cannot be found: If your agent is unavailable for any reason, your document could be found invalid. You should name an alternate agent to prevent this problem from arising.

 

For more information on granting power of attorney, work with an experienced U.S. Virgin Islands tax and estate planning attorney.

 

J. Nash Davis is an Associate Attorney in the Corporate, Tax & Estate Planning Practice Group at BoltNagi, a widely respected and well-established trust and estate planning law firm assisting clients throughout the U.S. Virgin Islands.

Protecting Your Business and Personal Devices in the Wake of WannaCry

Posted in Corporate & Financial Services

A major cyberattack recently hit about 200,000 computers across more than 150 countries, with an especially considerable effect on individuals with older computers and operating systems, as well as large organizations and universities.

The attack was performed via malware that has since become known as “WannaCry,” which was created and published by a hacker group called Shadow Brokers. It developed the malware from tools that were originally created by the U.S. National Security Agency— one of the reasons it was so effective.

In the attack, the system would lock down certain files and then demand $300 in Bitcoin, a digital currency, within six hours to receive instructions to restore those files. The attack resulted in more than $40,000 being paid out, according to Bitcoin transaction tracking company Elliptic. The hackers have not yet been caught.

Mitigating the impact of a potential attack

In the wake of such an event, it is important to remind all users of the importance of digital and device security. Below are a few steps you can take to protect all your personal and work devices and the information stored on them.

  • Back up all data: You should make regular backups of all your files, data and programs. At least once a month is a good baseline, but weekly is a better option to ensure you will not lose too much in the event of a ransomware attack.
  • Make regular updates to antivirus software: New malware is constantly being created to exploit vulnerabilities in networks and devices. Thus, antivirus software must regularly be updated so your computer is able to address any potential viruses that attempt to attack it. Microsoft and other large software companies also release patches for other programs that address known vulnerabilities.
  • Regularly update your operating system: Windows, for example, has regular updates it releases. If you get a message on your computer telling you there is a new update and you must restart to install it, do not delay for long—these updates are critical for preserving the security of your computer and all the data on it. If you are using an older operating system, continue updating to a new one to ensure you have access to the security features and updates you need to stay protected. Windows 8.1, for example, will have limited support as of January 2018, making an upgrade to Windows 10 highly advisable.
  • Have processes in place to address cyberattacks: It is important to be prepared for any cyberattack that could affect you or your business. Have a company-wide policy that addresses steps to take in the event of an attack, and make sure your employees are familiar with them.
  • Consider security of outside partners or vendors: Even if you are not directly hit by a cyberattack, your company could still be affected if one of your key suppliers or vendors becomes a target. When looking for such partners, make sure they are prepared to handle any potential cyberattacks.

If you have any questions about cybersecurity and the legal liability associated with it, consult a dedicated attorney in the U.S. Virgin Islands.

 

Ravinder S. Nagi is Assistant Managing Attorney at BoltNagi, a respected and well-established intellectual property and business law firm that serves clients throughout the U.S. Virgin Islands.

Federal Lawmakers Look to Repeal Estate Tax

Posted in Tax & Estate Planning

Throughout the 2016 campaign, then-candidate Donald Trump repeatedly voiced his distaste for the estate tax, which he and the others who oppose it have taken to calling the “death tax.”  Although no legislation to repeal the tax has been proposed in Congress over the past few months, it certainly seems likely that lawmakers will try to move forward with a measure sometime soon.

The “death tax” pejorative refers to the idea that the tax is effective upon the death of the estate owner. Critics of the estate tax say this essentially means that people’s estates lose money simply because they pass away, unfairly preventing their heirs from inheriting the full value of those estates.

It’s worth noting that the estate tax affects only a small percentage of wealthy American families, and contrary to some criticisms, it has no discernible impact on most owners of small businesses.

According to data from the Tax Policy Center, there are only about 20 small businesses and farm estates in the country that paid any estate tax in 2013. Those that were affected paid an average rate of just 4.9 percent of the estate’s total value.

President Trump has said that “a lot of families go through hell over the death tax,” but additional information from the Tax Policy Center reveals that there were only about 4,700 total taxable estates in 2013. To that end, approximately one in 550—out of the 2.6 million people who died that year—had to deal with the estate tax at all.

In addition, approximately 90 percent of the amount of money collected from the estate tax is paid by the top 10 percent of income earners, with the richest one-tenth of a percent paying more than 25 percent of all estate taxes. As one can see, it’s an issue that largely is only relevant to the very wealthy.

What happens if the estate tax is repealed?

President Trump has already hinted to his plans if the estate tax were to be repealed. Under this plan, beneficiaries would pay a capital gains tax on any assets they sell based on the original cost of those assets. In some circumstances, this tax could be quite low. If, for example, someone purchased a share of Apple stock at a low price years ago, and that stock is now worth significantly more, the tax would still be based on the original price.

Therefore, while there is a slight trade-off involved, wealthy people currently affected by the estate tax would likely come out paying less under Trump’s plan.

The problem proponents of the estate tax have with this is that the tax affects so few people that repealing it does not make much sense. The tax currently generates extra revenue without the need to implement more taxes on lower- and middle-class Americans.

If you are interested in how a repeal of the estate tax could affect you, your business and your estate planning process, meet with a skilled U.S. Virgin Islands estate planning lawyer.

 

Steven K. Hardy is Chair of the Corporate, Tax & Estate Planning Practice Group at BoltNagi, a respected and established tax and estate planning law firm serving individuals and businesses throughout the U.S. Virgin Islands.