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Articles by Our Attorneys

IRS Postpones Venmo Tax Law To 2023 Tax Season

December 27, 2022 by Joseph A. Bellinghieri, Esq.

The Internal Revenue Service (IRS) has delayed the tax provision requiring users of Venmo, PayPal, Etsy, eBay, and other third-party websites or apps to declare any earnings from selling goods or services over $600 dollars in a given year through a 1099-K form. This change will not be instituted until the 2023 tax season to give individuals additional time to familiarize themselves with the new law and allow for a “smooth transition.” Previously, the regulation was supposed to be effective for the 2022 tax season. As a result, the IRS says third party settlement organizations will not have to report tax year 2022 transactions on a form 1099-K.

The announcement follows bipartisan criticism that the provision would create mass confusion and paperwork headaches for millions more Americans. While the IRS confirms that the law is “not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill,” it is still uncertain how third party settlement organizations or the IRS will determine which payments are for which purposes. The IRS hopes an extra year will allow more people to become aware of and prepared for the new changes.

There are valid fears that some transactions may be mistakenly labeled as taxable and included on I 099-K forms. To avoid this issue, be sure to carefully record and classify your transactions. Explicitly state who you received money from and for what purpose. Moreover, some apps like Venmo allow you to create separate business profiles for the selling of goods and services. Separating personal and business transactions into different accounts is the best way to prevent misunderstandings.

If transactions are mislabeled or you are incorrectly sent a 1099-K form, alert the applicable third party organization and ask them to notify the IRS. However, this can be a slow process and cause unnecessary stress.

The reporting requirement changes are part of the American Rescue Plan Act of2021 (COVID19 Stimulus Package) to help close the annual hundreds of billions of dollars “tax gap.” Previously, only earnings exceeding $20,000 dollars and 200 transactions required reporting, As a result of this plummet in the threshold, many more Americans, especially independent contractors, small businesses, and individuals with side hustles, are expected to be affected.

Filed Under: Articles by Our Attorneys, News

Employment Law Update November 2022

December 1, 2022 by Jeffrey P. Burke, Esq.

In November 2022, the world of employment law saw notable employee compensation cases – ranging from the compensation of the world’s richest executive down to local fast food service employees – and more ugly workplace allegations coming out of the NFL.  Read the latest in the updates below.

Tesla shareholder lawsuit examines Elon Musk’s unprecedented Tesla pay package

In 2018, EV automaker Tesla awarded Elon Musk a compensation package of stock options that helped secure his title as the world’s richest person.  Today, the package is worth approximately $50.9 billion, and is now being challenged in a shareholder lawsuit filed in the Delaware Court of Chancery that alleges that it was the product of Musk’s exploiting his control of Tesla and its board of directors.  The lawsuit alleges that the pay package was unjust enrichment, and that the board failed to meet its legal duty to act in the best interest of Tesla shareholders.

Among other things, the lawsuit alleges that Musk secured the compensation to fund his personal ambition to colonize Mars through another company of which Musk is CEO, SpaceX, and that the pay package was not needed to incentivize Musk as he was already the largest shareholder of Tesla.  According to expert for the shareholder plaintiff, the Tesla board was not sufficiently independent from Musk, citing instances of personal friendship, vacationing together, and a lack of oversight of Musk notwithstanding Musk’s skirmishes with the SEC over issues such as tweeting about the financial condition of the company.  By contrast, an expert witness testified on behalf of Tesla that the compensation package was reasonable, while the Tesla Board members testified that the compensation was necessary to keep Musk engaged, noting that Musk has ideas for many other companies he may want to pursue in time.  

Although the trial took place this month, the court cautioned that it could be months before a ruling occurs.  Regardless of the outcome, given the high profile of the case, it will likely create significant precedent in the field of executive compensation, and also serve as a reminder of the many complex components involved in establishing executive compensation packages.

Pennsylvania Wendy’s Franchise Owners Alleged to have Edited Timesheets to Short Their Employees Full Wages and Overtime Pay

The owners of approximately a dozen Wendy’s franchise locations in Pennsylvania have been sued in a federal class action lawsuit for allegedly incorrectly compensating their non-exempt (hourly wage) employees by improperly editing the employees’ time sheets to omit hours worked, including regular hours as well as hours in excess of 40 hours subject to overtime pay.  If the allegations prove correct, the conduct would constitute a violation of both the federal Fair Labor Standards Act and the Pennsylvania Minimum Wage Act.  Both laws require employers to properly track hours worked by nonexempt employees as well as to pay at least 1.5 times the employee’s regular rate of pay for all hours over 40 worked in a workweek.  The proposed classes under the federal and state laws consist of individuals who worked for the Wendy’s franchisors as nonexempt employees in the past three years.  The action serves as a reminder to employers that any practice that applies broadly to a class of employees must be carefully and lawfully vetted and administered, and that failure to do so can lead to widespread legal actions from many employees with significant legal exposure.

The case is Stump v. Harrisburg LIV Bacon LLC et al., case number 1:22-cv-01770, in the U.S. District Court for the Middle District of Pennsylvania.

Washington D.C. Attorney General sues the NFL and Washington Commanders for allegedly misleading the Public over Toxic Workplace

In an unusual twist following a year-long investigation into allegations that the NFL’s Washington Commanders franchise fostered a toxic workplace, the Washington D.C. Office of Attorney General is using the findings of the investigation to support a lawsuit against the NFL, its commissioner Roger Goodell, the Washington Commanders, and Washington team owner Daniel Snyder, alleging violations of the D.C. Consumer Protection Procedures Act.  The D.C. law requires businesses selling goods or services to District residents to comply with consumer protection laws, including consumers’ right to accurate information about the products they purchase. The lawsuit claims that the league and the team have profited off their connection to Washington, D.C. for years by selling tickets and memorabilia to residents bolstered by lying about the team’s knowledge of the alleged environment of perpetual sexual harassment as well as the team’s willingness to comply with the league-led investigation.  According to outgoing Attorney General Karl Racine, the lawsuit will pursue statutory fines of $5,000 for each false statement made by Goodell, Snyder, the Commanders or the NFL.

The lawsuit comes on the heels of $10 million fine implemented by Goodell in 2021 following the investigation’s findings that the team enabled a toxic workplace culture that included bullying and sexual harassment of female employees, particularly the team cheerleaders.  The instances of inappropriate conduct highlighted in the investigation included “parading” the cheerleaders around for team executives, Snyder allegedly ordering the filming the cheerleaders during a photo shoot during breaks without their knowledge, and Snyder allegedly putting his hand on the thigh of a cheerleader during a dinner and trying to pull her into his limo afterwards.  

Both the NFL and the Commanders have issued statements attacking the lawsuit.  According to the Commanders, the “lawsuit repeats a lot of innuendo, half-truths and lies”, and the organization welcomes the “opportunity to defend the organization…and to establish, once and for all, what is fact and what is fiction”.  The NFL pushed back, stating that the “investigation into workplace misconduct …was thoroughly and comprehensively conducted” and that “[f]ollowing the completion of the investigation, the NFL made public a summary of [the] findings and imposed a record-setting fine against the club and its ownership.”

The lawsuit represents a creative use of consumer protection laws.  If successful, it could open the door to similar lawsuits against other large companies alleged to have mislead the public about allegations of misconduct in their workplace.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

Filed Under: Articles by Our Attorneys, News

Brady v. Bündchen: WSTBD (What Should Tom Brady Do?)

November 2, 2022 by Michael C. Rovito, Esq.

Practicing within the Family Law specialty has led to some very entertaining conversations over the years. Some of my favorites have included the puzzled faced-fellow guests at weddings (or better yet, some of the guests at my own wedding) when they ask what I do for a living and my Wife says, “He makes divorce dreams come true.” I also often hear questions from friends about what would happen in *insert legal situation here*, and many of those questions I remain able to answer.

Recently, as we find ourselves in America’s favorite season (Football, not Fall), many of those questions have zeroed in on everyone’s favorite fountain of youth dwelling Quarterback, Tom Brady, and his conscious decoupling from Entrepreneur/Fashion Mogul Gisele Bündchen – that most common question, “What would you tell Tom Brady?” I think it’s better rephrased as “What should Tom Brady do?”

The answers are fairly common, regardless of whether the parties involved are Joe and Jane, or Tom and Gisele. Here are a few of them:

  1. Maintain a Support Network – Divorce can be emotionally draining. Circle the wagons: your friends, your family, and enlist a counselor or therapist as well. Your Support Network will help you stay strong and grounded through this process. A big caveat here is your children. Although your children are your family, and are often shared with the other party in this, remember, they’re not pawns and must not be used as such. With very limited exception, they should not be involved. 
  2. Don’t shy from compromise, but be prepared for litigation – Not every issue has to go before a Judge. Plenty of parties find the resolution of their cases through mediation, or through discussions between attorneys. Operating in this fashion frequently saves parties much financially and also emotionally; however, not every case is so fortunate and many have to find resolution through the engagement of the litigation process. Do not fear that process, respect it. 
  3. This too shall pass – Whether it be through seeking a mutually consented finalization after 90 days (Pennsylvania specific), or, as many days as it takes, you will come out on the other side of this process. 

Every case is different, but there will be an end to the tunnel, and a competent attorney, whether we’re providing advice through the mediation process or zealously advocating for you in court, is a necessity. 

   



Filed Under: Articles by Our Attorneys

Employment Law Update October 2022

November 1, 2022 by Jeffrey P. Burke, Esq.

October 2022 brought some notable developments in the employment law world, including large discrimination / retaliation verdicts for employees nationally and in Pennsylvania, and a notable Appeals Court ruling that could have widespread impacts for remote workers.  Further details are below.

Fed-Ex hit with $366M Retaliation Verdict 

An African-American former salesperson for FedEx was awarded more than $366 million in damages after a Texas federal jury concluded that FedEx disciplined and eventually fired her for complaining that she was being discriminated against because of her race.  Notably, the jury awarded the worker $365 million in punitive damages in the face of (only) $120,000 for past pain and suffering and $1.04 million for future mental anguish.

FedEx defended it’s the case by asserting that the actions taken by the company were due to performance issues.  However, according to the complaint the worker was a rising star in the company who had received several awards and promotions because of her performance.  In March, 2019, she was allegedly asked to take a demotion by her manager, which the worker reported to human resources.  The worker alleged that the company failed to properly investigate her complaint, which led her receiving discipline and disrupting her commission structure.  The worker further alleged that she reported the manager again for discrimination and retaliation in August, 2019, however FedEx failed to perform a meaningful investigation, and the worker was eventually terminated in January, 2020 based on the track laid by the manager.

FedEx said in a statement that the company plans to appeal the verdict.  Regardless, the verdict serves as a reminder of the severe consequences that can arise out of equal opportunity complaints, and the need by employers to fully and effectively investigate them.

The case is Harris v. FedEx Corporation, case number 4:21-cv-01651, in the U.S. District Court for the Southern District of Texas.

Western Pennsylvania Jury Awards County Jail Guard $1.2M for Novel “Associational Discrimination” Claim

A former guard at the Allegheny County Jail was awarded $1.2 million dollars in damages in the U.S. District Court for the Western District of Pennsylvania after he claimed that he was wrongly fired for filing a workplace complaint about a supervisor who made offensive comments about his biracial niece.  Notably, the case had been previously dismissed at the trial level, before the Third Circuit Court of Appeals reversed and held for the first time that “associational discrimination,” or acting with prejudice toward someone because they associate with someone of a different race, could form the basis for a legal claim under Title VII of the Civil Rights Act.

The employee, who is white, alleged that a supervisor had called his biracial grandniece an offensive, racially charged name, and also had texted the employee pictures with racist depictions of African and Asian-American people captioned with the names of other jail employees. After the employee escalated his complaint, the supervisor was eventually placed on paid administrative leave during an investigation, and then retired.  The employee allegedly was then subjected to retaliation from other administrators and employees allied with supervisor, and he was terminated seven months after making his report. 

The case is Kengerski v. Allegheny County, case number 2:17-cv-01048.

Federal Appeals Court Rules that Time Spent by Employees Booting up Computers is Compensable under Federal Law

The Ninth Circuit Court of Appeals ruled this month that the time spent by a group of call center workers booting up their computers is intertwined with their work and therefore compensable under the Fair Labor Standards Act. “The employees’ duties cannot be performed without turning on and booting up their work computers, and having a functioning computer is necessary before employees can receive calls and schedule appointments,” a panel opinion stated.  The opinion reversed a lower court ruling granting summary judgment to the employer, which held that the tasks the workers completed before and after they logged out of the company’s timekeeping system weren’t compensable because they weren’t connected to their jobs. Though the lower court was reversed, the appeals court clarified in a footnote that its ruling focused on the pre-shift activities, stating that turning the computers off would not be an integral part of the workers’ jobs (and presumably not compensable).

The Ninth Circuit encompasses Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington State.  Nonetheless, the holding can serve as a reminder to employers nationwide to carefully consider whether they are properly paying their employees for “compensable” time, especially remote and other computer-based workers.

The case is Cariene Cadena et al. v. Customer Connexx LLC et al., case number 21-16522, in the U.S. Court of Appeals for the Ninth Circuit.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

Filed Under: Articles by Our Attorneys

2023 IRS Inflation Adjustments

October 27, 2022 by Joseph A. Bellinghieri, Esq.

The IRS has released numerous inflation adjustments affecting individual income tax brackets, deductions and credits for the 2023 tax year.  Due to outrageous inflation during 2022 increases in the various adjustments is very large.

For instance, the standard deduction for a married couple filing a joint tax return will increase to $27,700.00 in 2023 from $25,900.00 in 2022.  For singles and couples and filing separately it will rise to $13,850.00 from $12,950.00 and for a head of household it will rise to $20,800.00 from $19,400.00.

Also, the various tax brackets all will be increasing by approximately 7%.  In that regard, I have attached a chart showing all of the new brackets for ordinary income in 2023.  

Inflation also means that individuals will be able to transfer more to their heirs tax-free during life or upon death.  Starting in 2023, you will now be able to give $17,000.00 in gifts not utilizing your lifetime gift and estate tax exemption for paying gift tax.  That amount was $16,000.00 in 2022.  Also, the lifetime exemption will be increasing to $12,920,000.00 in 2023 up from $12,060,000.00 in 2022.  That is an increase of $860,000.00 that an individual can leave to their heirs without incurring any federal estate taxes.  However, please note that the exemption is due to expire by the year 2026 and in the event a taxpayer would like to utilize this exemption it is imperative that they do so before then.

Married Individuals Filing Jointly and Surviving Spouses (Joint) Tax Rates 2023

If taxable Income Is The Tax Due is

$0 – $22,000 10% of taxable income

$22,000 – $89,450 $2,200 + 12% of the amount over $22,000

$89,450-$190,750 $10,294 + 22% of the amount over $89,450

$190,750 – $364,200 $32,580 + 24% of the amount over $190,750

$364,200 – $462,500 $74,208 + 32% of the amount over $364,200

$462,500 – $693,750 $105,664 + 35% of the amount over $462,500

over $693,750 $186,601.50 + 37% of the amount over $693,750

Heads of Household Tax Rates 2023

If taxable Income Is The Tax Due is

$0 – $15,700 10% of taxable income

$15,700 – $59,850 $1,570 + 12% of the amount over $15,700

$59,850-$95,350 $6,868 + 22% of the amount over $59,850

$95,350 – $182,100 $14,678 + 24% of the amount over $95,350

$182,100 – $231,250 $35,498 + 32% of the amount over $182,100

$231,250 – $578,100 $51,226 + 35% of the amount over $231,250

over $578,100 $172,623.50 + 37% of the amount over $578,100

Individual Taxpayers (Single) Tax Rates 2023

If taxable Income Is The Tax Due is

$0 – $11,000 10% of taxable income

$11,000 – $44,725 $1,100 + 12% of the amount over $11,000

$44,725-$95,375 $5,147 + 22% of the amount over $44,725

$95,375 – $182,100 $16,290 + 24% of the amount over $95,375

$182,100 – $231,250 $37,104 + 32% of the amount over $182,100

$231,250 – $578,125 $52,832 + 35% of the amount over $231,250

over $578,125 $174,238.25 + 37% of the amount over $578,125

Married Filing Separately Tax Rates 2023

If taxable Income Is The Tax Due is

$0 – $11,000 10% of taxable income

$11,000 – $44,725 $1,100 + 12% of the amount over $11,000

$44,725-$95,375 $5,147 + 22% of the amount over $44,725

$95,375 – $182,100 $16,290 + 24% of the amount over $95,375

$182,100 – $231,250 $37,104 + 32% of the amount over $182,100

$231,250 – $346,875 $52,832 + 35% of the amount over $231,250

over $346,875 $93,300.75 + 37% of the amount over $346,875

Trusts & Estates Tax Rates 2023

If taxable Income Is The Tax Due is

$0 – $2,900 10% of taxable income

$2,900 – $10,550 $290 + 24% of the amount over $2,900

$10,550-$14,450 $2,126 + 35% of the amount over $10,550

over $14,450 $3,491 + 37% of the amount over $14,450



 

If you need any additional information in regard to the 2023 IRS inflation adjustments, please contact Joseph A. Bellinghieri, Esquire at 610-840-0239 or via email at [email protected].

Filed Under: Articles by Our Attorneys, News

Employment Law Update September 2022

October 10, 2022 by Jeffrey P. Burke, Esq.

Employment lawsuits have been as active as ever in September 2022.  Among them are interesting cases affecting a prominent ride-sharing company, the U.S. military, and the government agency in charge of investigating discrimination claims in the Commonwealth of Pennsylvania.  My analysis and insights are below.

Ride-hailing Giant Lyft Facing Flood of Lawsuits Over Sexual, Physical Assaults

Lyft Inc. was on the receiving end of 13 lawsuits filed in California state court this month alleging that the company’s systemic failure to conduct thorough background checks and screenings exposed both drivers and passengers to sexual and physical assaults.  The plaintiffs’ legal counsel have revealed that they also filed arbitration demands on behalf of other assault victims, and therefore the full number of claims against Lyft is unclear.

In the lawsuits, eleven passengers and two drivers, all female, from eleven states filed separate actions in San Francisco Superior Court asserting negligence, vicarious liability, misrepresentation and other claims against Lyft. The passengers claim that Lyft has been aware of a sexual predator crisis among its drivers for years but failed to take adequate measures to conduct background checks and monitor its drivers.  The claims by the drivers similarly allege failures on the part of Lyft to ensure the safety of drivers from predatory passengers.  The lawsuits describe disturbing acts of unwanted solicitations, groping and sexual assault.

Lyft released its first-ever Community Safety Report in October 2021, which stated that during the three-year period from 2017 to 2019, Lyft received reports of 4,158 sexual assaults, ranging from nonconsensual touching or kissing to rape.  Lyft nevertheless asserts that from 2017 to 2019, over 99% of trips occurred without any reported safety incident, with the safety incidents referenced in the report accounted for just 0.0002% of all trips.  The company also defended its driver screening procedures, saying it requires an initial and annual background checks, and continuous criminal and driving record monitoring, among other things. Lyft said it developed in-app safety features that allow riders and drivers to share their location with family and friends, connect directly with Lyft Support, and quickly and easily access emergency assistance from the Lyft app.  

​​​​​​​Sikhs Denied Bid To Start Marine Corps Training With Uncut Hair and Beards

A federal judge has refused to allow three Sikhs prospective recruits to start basic training with uncut hair and beards pending an appeal over related U.S. Marine Corps policy, saying doing so could negatively affect the Marines’ “national security mission.”

The three plaintiffs had filed suit in April, saying the Marine Corps had wrongly refused to accommodate their requests to keep their hair and beards, and carry other articles of faith. According to the complaint, maintaining uncut hair, including uncut facial hair, is an essential part of the Sikh religion.  During basic training, the Marine Corps requires recruits to comply with uniform grooming standards including shaved heads and beards, which it asserts is necessary to ensure that Marines are prepared to think as a team before thinking as individual and to serve in extreme environments.  The plaintiffs noted in their arguments for the injunction that the Marine Corps already allows certain recruits to maintain beards for medical reasons and female recruits not to shave their heads.

The court concluded that the public interest and balance of equities had weighed in favor of the Marine Corps at the preliminary stage of the case.  The plaintiffs subsequently said they would appeal the denial of their injunction.

Jury Clears Pa. Human Relations Commission In Staff Atty’s Retaliation Suit

The state agency charged with policing discrimination in the workplace, the Pennsylvania Human Relations Commission (“PHRC”), has been cleared of allegations of unlawful retaliation brought by African American former employee.  In a somewhat ironic series of events, the PHRC had entered into a settlement agreement in the employee’s earlier discrimination lawsuit in 2017 in which the PHRC was supposed to, among other things, create a diversity committee.  Following the settlement, the employee claimed that the agency was not following through its obligations.  In the same timeframe, the employee, a former staff attorney, was terminated from employment, and the employee brought a second lawsuit alleging unlawful retaliation for his complaints about the agency’s alleged failure to follow the settlement.  The agency defended by asserting that it let the employee go because he sent an email from his work account containing sexually suggestive material and forwarded confidential work documents to his personal email.

A jury in the Middle District of Pennsylvania found the PHRC’s arguments more persuasive and ruled in favor of the PHRC.  The case is Cooper v. Pennsylvania Human Relations Commission, case number 1:19-cv-02230, in the U.S. District Court for the Middle District of Pennsylvania.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment.  Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.

Filed Under: Articles by Our Attorneys

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