According to a recent article, the Virginia town of Blacksburg received $27,000 in taxes for four months of Airbnb rentals after it signed an agreement with the vacation rental company. Sounds like a win for localities, right?
VF&N’s municipal attorney Martin Crim says differently.
“Blacksburg is getting $6750 per month in transient occupancy taxes from AirBnB, but had to give up the right to have information on individual hosts to get it,” Martin explains. “This means that Blacksburg can’t, for example, determine if the right amount of taxes is being paid, or determine if a property is being used in violation of its zoning ordinance or the Uniform Statewide Building Code. I’m surprised that the Town would agree to that trade-off.”
Since its controversial passage in 2016, Virginia’s Proffer Reform Law has continued to stir debate. Despite the rift between homebuilders and local governments over the law, efforts are underway to find common ground.
Initially, opponents of the law sought either outright repeal or additional exemptions to make the law inapplicable to certain parts of the Commonwealth. However, recent efforts have instead focused on reforming the Proffer Reform law.
This published article, co-authored by VF&N Attorneys Michael R. Vanderpool and Karen L. Cohen, highlights some of the key concerns voiced by both opponents and supporters of the law, and evaluates what types of legislative changes may be appropriate in light of common law and constitutional limitations.
The Maryland General Assembly passed Senate Bill 853, which took effect on October 1, 2018, that added the following text to Section 3-507.2 of the Maryland Code, Labor & Employment:
In an action brought under subsection (a) of this section, a general contractor on a project for construction services is jointly and severally liable for a violation of this subtitle that is committed by a subcontractor, regardless of whether the subcontractor is in a direct contractual relationship with the general contractor.
If a court finds that a sub-contractor failed, under certain circumstances, to properly pay an employee, the general contractor may be liable for damages, counsel fees, and other costs.
The Act now permits an employee of a sub-contractor, who was not paid in accordance with applicable Maryland wage/hour laws, the right of action against the general contractor even though there is no direct contractual relationship between the general contractor and the subcontractor’s employee.
Risk mitigation strategies for Owners, General Contractors and Senior Sub-Contractors involved in Maryland based construction projects:
Inspection of Payroll Records – Include in your contracts a provision that requires subcontractors to provide certified and detailed payroll information with every pay application.
Audit Clauses – Include provisions in your contracts that permits you to conduct “spot audits” or “interviews” with sub-contractor employees.
Certifications – Require sub-contractors to certify or declare in their payment applications that they have checked/audited the payrolls of every sub-contractor at every tier to confirm the payment of employees.
Insurance/Bonding – Require subcontractors to furnish payment and/or performance bonds or wage-hour insurance. To cover the entire statutory period for wage claims, these bonds or insurance will have to be maintained for three years after final payment of wages on the project.
Broad Indemnity and Personal Guaranty Provisions – In addition to any existing general indemnification clause, include a specific clause or language addressing claims arising out of any violations of the Act. Require that the principals of all sub-contractors personally guaranty compliance with the Act and payment of employees.
Flow Down of Terms and Conditions – Require that all clauses in the sub-contract relating to the Act and subcontractor’s obligations thereunder flow down to each subcontract tier.
Obligation to Defend – In addition to indemnification obligations there should also be provisions all sub-contracts requiring the sub-contractor to defend the general/direct contractor for violations of the Act.
Hiring Decisions – Include provisions giving the general contractor the power to approve or reject the hiring of sub-subcontractors of all tiers.
Site Security – Implement site security to confirm identification of all employees on the job site so no previously unidentified individuals can later appear seemingly out of nowhere and claim that an employer/subcontractor did not pay them.
Creation of Fiduciary Duty – “In-Trust” Requirements – Include a provision in all private works sub-contracts requiring sub-contractors to hold all payments received “in trust” for the benefit of the direct contractor and the benefit of the subcontractor’s employees, lower-tiered subcontractor employees, for the purpose of meeting the wage and benefit obligations owed not only to the subcontractor’s employees but the employees of any lower-tiered subcontractors.
Increased Retention – Increase retention percentages, withholding, and back-charges depending on the sub-contractor and size of job.
Identification of General Contractor – expressly note the identity of the general contractor in each contract. Project owners may want to include disclaimers that they are “not” acting as the general contractor.
Three Years Statute of Limitations – A general contractor should retain pertinent records from all subcontractors for at least that long following project completion and should make sure that all indemnification obligations survive the completion of the project for that length of time as well.
Please contact us at 703-369-4738 with any questions.
*The information contained in this website is provided for informational purposes only and should not be construed as legal advice. The material on this website may not reflect the most current legal developments. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this site. Do not act or refrain from acting upon this information without seeking professional legal counsel.
On Sept. 10th, 2018, Prince William County Circuit Court Judge Carroll Weimer, Jr. ruled in favor of a group of homeowners, voiding the grant of a Special Use Permit (SUP) for a cell phone tower.
Under the legal representation of Brett A. Callahan of Vanderpool, Frostick & Nishanian P.C., the homeowners claimed that they were not properly notified of the Planning Commission hearing or the Board of Supervisors (BOS) public hearing on the SUP for a cell phone tower to be placed near their homes.
Meaning of the word “Current”
The homeowners bought into a new subdivision March through late May 2016, yet the SUP applicant and County used a February 3, 2016 Adjacent Property Owners (APO) list to send notices. This list was based on an earlier list generated by the County from the tax records. The applicant maintained that they had relied on the list provided by the County and the County’s policy was that an APO list up to six months old is “current.” The County likewise argued that it is their prerogative to apply an administrative interpretation that an APO list based on tax records up to six months old is “current” under the notice statute to avoid excessive burden on the County.
The judge determined:
A policy permitting APO lists based on six-month-old tax records is not in compliance with the law either under the plain meaning of the word “current” in the statute or legislative intent standard of statutory interpretation, especially in light of how quickly County tax assessment records are updated and the free and easy access to tax assessment records through the County’s website.
The SUP is void ab initio for lack of notice.
* NO GUARANTEE OF RESULTS: Our prior results, including successful judgments and settlements, do not guarantee a similar outcome. Each case we handle is different and therefore we cannot guarantee any specific result in your case
In response to recent tech industry expansions and the resulting attraction of technology subcontractors and suppliers to the area, Vanderpool, Frostick, and Nishanian, P.C. (VF&N) announces the formation of its Technology Subcontractors and Suppliers Legal Team to support the needs of this industry.
With stringent work requirements such as clean room construction, specialized semiconductor materials and ultrapure water suppliers, tech and manufacturing subcontractors and suppliers are highly specialized vendors. When relocating or preparing to do business in Northern Virginia, technology subcontractors and suppliers need local legal counsel to help navigate the regulatory landscape in the area.
“Being located just miles from microchip fabrication plants, aerostructures companies, and other high-tech businesses, VF&N saw a need for a legal team to provide services tailored to the tech industry’s subcontractors and suppliers,” said Randolph Frostick, Esq. President of Vanderpool, Frostick and Nishanian P.C. “What sets VF&N attorneys apart is their knowledge of local and state laws, and their experience in responding to the challenges that subcontractors face, whether they are currently located in or relocating to our region.”
About Vanderpool, Frostick & Nishanian, P.C.
Vanderpool, Frostick and Nishanian, P.C has been serving the business community in Northern Virginia and surrounding areas for over thirty years and is keenly focused on providing innovative solutions for our client’s legal needs. VF&N provides solutions from lawyers you trust.
Vanderpool, Frostick, & Nishanian, P.C. together with Prince William SHRM, Inc. are pleased to invite you to attend the 7th Annual Employment Law & HR Summit. XPLORE HR: Navigating the Road Ahead
October 12, 2018 ~ 8 a.m. to 5 p.m.
Foxchase Manor, 8310 Chatsworth Drive, Manassas, VA 20109
Being informed about changes in the law on managing and paying employees is critical to your business. We encourage business owners, C-level executives, human resource and administrative personnel, managers/supervisors and in-house counsel who may benefit from education or updates on employment law issues to attend. The programing is approved for 6 HRCI (3 General/3 Business) & 6 SHRM PD Hours and is designed to be engaging and useful. A continental breakfast and lunch will be provided.
Kris Spitler, Esq. will cover hot topics in employment law focusing on recent significant court decisions, new laws and regulations, and other legal trends that your business needs to know now. She will also be participating in a presentation, along with Mindy E. Weinstein, Esq, the Acting Director EEOC Washington Field Office, where she will discuss successfully addressing sexual discrimination risks in today’s changing cultural landscape, and reducing the potential liability for your business.
We are also pleased to announce that Christopher D. Silva, Assistant District Director, U.S. Department of Labor/Wage & Hour Division, will speak on FLSA exemptions, wage deductions, independent contractor classifications, overtime requirements, and minimum wage issues.
For additional information on the other topics, speakers, and online registration CLICK HERE
Many state legislatures have simplified the process of forming a business entity. In many jurisdictions the formation of a limited liability company or “LLC” can be completed either on-line or by filing a single page form along with the payment of a filing fee. Although the filing of the formation documents is quite easy there are many long-term considerations one should take into account during the organizational process.
Formation, Employees, and Tax Status
Unless an organizer of an LLC makes an alternative election with the Internal Revenue Service to be taxed as a corporation, a new LLC will, like a partnership, be treated as a “pass through” entity for tax purposes, i.e., income or losses pass through to the LLC members. For new business owners the ability to deduct early losses may seem like a positive facet of the LLC but it can create problems.
Membership, employee equity, and taxes – Many corporations offer employees stock options as part of their compensation package. When employees receive LLC equity (a “membership interest”) as compensation it entitles them to share in the value of the equity in the company. Unless the organizer of the LLC elected a different tax scheme, the LLC will file tax returns as a partnership, and everyone who is an equity holder will receive a K-1 tax schedule which will disclose a lot about the company’s finances. Many founders would probably not want to give company employees this kind of detailed information. Additionally, The Bipartisan Budget Act of 2015 changed the IRS partnership audit rules. Effective as of January 1, 2018 underpayment of taxes will be imputed at the partnership level, i.e., current partners owning interests in a partnership are liable for the underpayment of taxes even if the subject years of the audit occurred before their admission to the partnership.
Restrictions on the sale of membership interest. Without sufficient provisions in an LLC’s operating agreement governing restrictions on the transfer of LLC membership interest, members may find themselves in business with someone they do not know or who might cause problems for the company. “Permitted Transfer” provisions will expressly permit certain transactions but disallow others. In addition, the operating agreement should include provisions on “Involuntary Transfers”. These are transfers that occur by operation of law such as those resulting from death, divorce, or bankruptcy.
Difficulty raising equity Venture capital groups or “VC groups” may be hesitant to look at an LLC for investment. If a VC group is already structured as a pass-through entity itself, the group may be wary of investing in another “pass though” entity that could leave the VC stakeholders with an unwanted tax bill. Add employee/members to the mix along with inadequate or non-existent provisions regarding transfers of membership interest and many VC groups may walk away. Who wants to buy into a company where valuation is difficult to measure, and the full nature and extent of ownership cannot be documented?
It should be clear that the path that looks the easiest is not without consequences. If you are organizing a start-up or considering becoming a member in an LLC make sure you obtain competent counsel to discuss, your business goals, liability concerns, and operational matters.
*This information is designed to provide general information, is not intended to constitute legal advice and should not be utilized as a substitute for professional services in specific situations. If legal advice or other expert assistance is required, the services of a professional should be sought.
VF&N’s attorneys Martin Crim, Neal Knudsen, and Kris Spitler, in conjunction with the Prince William County Bar Association and the amazing social services teams of Manassas City and Manassas Park, joined together to celebrate the achievements of local youth who have come in contact with the Prince William County juvenile justice system. These young adults have achieved academic and social progress in spite of tremendous odds against them. Congratulation to all the scholarship and award winners at this year’s Beat the Odds ® Program.
“The name of the program says it all. Most of the young people involved with the juvenile justice system enter life, and go through childhood, with few of the advantages that most of us take for granted. I greatly admire the demonstrated determination of the recipients, despite the odds. I disagreed with one young lady’s remarks. She thanked the people who ‘made her a success.’ She may have had help along the way, but she deserves all the credit for her own success.” Neal T. Knudsen, Esq. Vanderpool, Frostick & Nishanian, PC
Vanderpool, Frostick and Nishanian, P.C. may be synonymous with doing business but what you may not know is that we also have a bustling social services team. Our team serves the Departments of Social Services for the cities of Manassas and Manassas Park and the counties of Spotsylvania, Warren, and Fauquier, and Culpeper.
Being a good leader of your company includes correctly identifying and addressing sexual harassment in the current culture of #MeToo and #Time’sUp.
Below are eight steps any business should consider when reviewing their sexual discrimination policies and risk management.
Company leadership makes a visible commitment to addressing sexual harassment
Ensure you & your entire management team understands sexual harassment and bias
Have effective written policies to include:
Training for both managers and employees
Evaluate if your company has EEOC risk factors
Welcome reports of sexual harassment and then timely investigate
Take appropriate actions if sexual harassment found to have occurred
Determine whether your company has a gender pay gap
Some of these task can be a huge undertaking and may require competent outside counsel. The Employment Law Team of VF&N offer customizable and tailored in house staff training, presentations, handbook creation and policy review on this and various employment law topics.
*This article is designed to provide general information, is not intended to constitute legal advice and should not be utilized as a substitute for professional services in specific situations. If legal advice or other expert assistance is required, the services of a professional should be sought.