Articles by Our Attorneys

In normal times, negotiating a commercial real estate lease is a substantial undertaking. Commercial leases carry long terms (often ten years with renewal periods) do not have early termination provisions, and some if not all of the costs associated with operating the property are passed along by the landlord to the tenant. The COVID-19 Pandemic severely impacted commercial real estate, leaving vacancies, defaulting tenants and also tenants not paying for a time after invoking force majeure clauses. As the economy reopened and businesses moved back to their commercial space or entered into leases for new commercial space, the high inflation of the last several months makes the negotiation of a new lease (or the renegotiation of an existing lease where this is possible) an even higher stakes undertaking.

Commercial leases for real estate are often triple net leases, meaning that the cost for real estate taxes, insurance and operating expenses are passed on to the tenant. Typically, there may be an escalator for base rent of a fixed percentage from year to year; and also a similar escalator or cap with regard to operating expenses for the property. In an era of low inflation, these escalators and/or caps would usually be a low fixed rate typically 2 to 3 percent for an escalator for base rent and a cap on operating expenses of 5 to 6 percent.  Landlords and tenants could link the escalator/cap, to the consumer price index to cushion against fluctuations in inflation. Doing so, however, eliminates the certainty of having a fixed escalator/cap, and has the potential to create substantial uncertainty for the landlord and tenant with regard to their future expenses. In an era of low inflation, a fixed escalator/cap was commonplace.

The current high rates of inflation create a dilemma for both landlords and tenants. If inflation remains high, an escalator/cap negotiated at too low a level would have an adverse financial impact to the landlord; while an escalator/cap negotiated too high could have a similar adverse financial impact on the tenant. While the uncertainty of the current inflationary environment leads to difficult choices with regard to the negotiation of escalators/caps, other issues regarding the lease and expenses are important to negotiate as well.  These include what items would be included in operating expenses, how normal repairs as opposed to replacements are handled, and also whether capital expenditures are part of operating expenses or something reserved for landlord. Both landlords and tenants need to be extra careful in the current environment in negotiating both the business terms and legal terms of a lease, and employ experienced legal counsel in guiding them through this process.

Contact Attorney Leo M. Gibbons at [email protected] or visit his bio for more information.

February may be the shortest month, but there were still significant employment law developments, including the nomination of a Supreme Court Justice and a landmark lawsuit against the NFL. Read the details below.

President Biden nominates Judge Ketanji Brown Jackson to the U.S. Supreme Court

Confirming what has been rumored since Justice Breyer announced his retirement, federal appeals court Judge Ketanji Brown Jackson was officially nominated to potentially serve as the first African American woman on the U.S. Supreme Court.  Below are a pair of employment law decisions that may foreshadow what Justice Jackson’s SCOTUS opinions may look like in the areas of unions and disability discrimination:

• In Fed’n of Gov’t Emps., AFL-CIO v. Trump, 318 F. Supp. 3d 370 (D.D.C. 2018), the American Federation of Government Employees (“AFGE”) and numerous other federal employee unions brought challenges to three of President Trump’s executive orders on collective bargaining rights of federal workers. The unions argued that the orders exceeded the president’s powers and conflicted with both federal labor laws and the employees’ constitutional rights.  In a lengthy opinion, Jackson ruled for the union challengers. She agreed with them both that she had the power to review their claims and that President Trump’s “directives undermine federal employees’ right to bargain collectively as protected by” federal law.  Notably, the D.C. Circuit reversed Jackson’s holding that she had the power to review the union’s claims. The unions, Judge Thomas Griffith reasoned, must first pursue their challenge through an administrative agency process and then, if necessary, in the courts of appeals.
• In Pierce v. District of Columbia, 128 F. Supp. 3d 250 (D.D.C. 2015), Jackson ruled that prison employees and contractors in the District of Columbia had discriminated against William Pierce, a deaf man serving a 2-month sentence for assault, when they failed to take any action to determine what accommodations he would need to communicate with others and “largely ignored his repeated requests for an interpreter.” Jackson found that the plaintiff “easily satisfe[d]” the “deliberate indifference” standard under Title II [applicable to prison officials] . . . where “[t]he District’s employees and contractors knew that [the plaintiff] had a hearing disability, and yet they did not undertake an assessment of the accommodations that [he] might need in order to access prison services”.  Instead, the employees and contractors “figuratively shrugged and effectively sat on their hands with respect to this plainly hearing-disabled person in their custody, presumably content to rely on their own uninformed beliefs about how best to handle him and certainly failing to engage in any meaningful assessment of his needs.”  A jury later awarded Pierce $70,000 in damages, and the city did not appeal.

Former Miami Dolphins Head Coach Sues NFL alleging Systemic Racial Bias

Earlier this month, former Miami Dolphins Head Coach Brian Flores filed a proposed class action lawsuit seeking to represent African American coaches and general managers passed over the NFL hiring process.  Flores had back-to-back winning seasons with the Miami Dolphins before his recent termination this January.  Following his termination, Flores was set to interview for an open head coaching position with the New York Giants when he found out through a text message that another Caucasian candidate had already been selected for the role.  Flores nevertheless went through the interview process, which he considered a sham and being conducted only for appearances under the NFL’s “Rooney Rule”, which requires teams to interview minority candidates for open head coaching jobs.

The lawsuit highlights the significant labor vs. management paradigm in the NFL between the largely minority players and the largely Caucasian ownership and coaching staffs.  Among other things, the suit points out that, despite the fact that the NFL player pool is 70% African American, only 1 NFL team currently employees an African American head coach.  Multiple high-profile NFL representatives are identified as potential witnesses, including New England Head Coach Bill Belichick, who sent the text message that alerted Flores to his losing out on the New York position, and Hall of Fame Quarterback-turned-GM John Elway, who was allegedly involved in another sham interview of Flores, allegedly arriving to a Flores job interview an hour late looking “disheveled” and making it “obvious” he and others had been drinking heavily the night before.

Many headlines will likely be forthcoming.  The case is Flores v. The National Football League et al., case number 1:22-cv-00871, in the U.S. District Court for the Southern District of New York.

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.

The New Year started off with a bang with major shake-ups surrounding employer-mandated COVID-19 vaccination policies, and several notable Pennsylvania lawsuits in the employment world:

Supreme Court blocks OSHA Vaccine or Test Rule for Private Businesses, allows Healthcare Mandate

Earlier this month, the U.S. Supreme Court blocked the Occupational Safety and Health Administration (OSHA) emergency temporary standard (ETS) implementing a vaccine-or-testing rule for private businesses with at least 100 employees.  The Supreme Court’s ruling did not technically “kill” the ETS, but meant that OSHA couldn’t enforce the ETS while the 6th U.S. Circuit Court of Appeals considered the merits of lawsuits against the mandate.

Subsequent to the Supreme Court’s ruling, OSHA officially ended the litigation by withdrawing the ETS, effective Jan. 26.  However, employers should note that the ETS also acted as a proposal for a permanent standard, which is separate from this litigation.  A permanent standard requires the agency to undergo a formal rulemaking process with a notice-and-comment period.  OSHA has explicitly stated that this portion of the ETS remains pending: “OSHA is not withdrawing the ETS to the extent that it serves as a proposed rule,” according to the agency’s announcement.  To that end, employers are likely to see some sort of regular COVID-19 standard proposed in 2022, though it is safe to say this standard will have some substantial changes from the ETS that was already struck down.

In a separate opinion, the Court permitted the federal Centers for Medicare & Medicaid Services (CMS) to require COVID-19 vaccination for health care workers at Medicare- and Medicaid-certified providers and suppliers.  For employers covered by the CMS mandate, workers were supposed to have received their first COVID-19 vaccine dose by Jan. 27, and required to be fully vaccinated by Feb. 28.  Additionally, those employers are required to track employees’ vaccination statuses and develop vaccination policies that include medical and religious exemptions and accommodations.

Pennsylvania Superior Court rules Benefits Plan Description Is ‘Contract’

An employer’s short-term disability benefits program for its employees created an enforceable contract under Pennsylvania law, the Pennsylvania Superior Court has ruled.  The three-judge panel held that the “summary plan description” that Capital Blue Cross gave an employee laid out the terms and conditions under which the company would pay short-term disability benefits, so the employee could sue the company for breach of contract when she claimed it unfairly terminated those benefits, notwithstanding that the individual’s employment was “at-will”.  The employee’s benefits were terminated before the 26-week maximum by an administrator that claimed she was capable of working elsewhere and eventually said she would also be ineligible for long-term disability.  The case is Evans v. Capital Blue Cross, case number 410 MDA 2021, in the Superior Court of Pennsylvania.

Pennsylvania Employee files Suit for Discrimination over Medical Marijuana Use

A Mifflintown, Pennsylvania patient under Pennsylvania’s Medical Marijuana Program has filed suit in federal court, alleging he was wrongfully terminated after his status as a medical marijuana cardholder was revealed.  The employee was employed for three years as a shift supervisor.  He alleges that he was approached by company management “out of the blue” in November 2020 and was asked if he ever used marijuana, allegedly based on information relayed to management by another employee about his participation in the Program.  After the employee showed management his medical marijuana card, management abruptly terminated his employment, allegedly citing a blanket policy against medical marijuana usage.

The employee is suing the company under the Americans with Disabilities Act, the Pennsylvania Medical Marijuana Act and Pennsylvania common law. The employee says he was fired due to his disabilities and status as a medical marijuana patient.  Notably, the Pennsylvania Medical Marijuana Act expressly prohibits discrimination against an individual based upon their participation in the Program, though the Act does permit employers to impose restrictions around certain dangerous work duties.

The case is Berrier v. Valley Proteins Inc., case number 1:22-cv-00131, in the U.S. District Court for the Middle District of Pennsylvania.

Attorney’s Fees potentially on the table for Pennsylvania Teachers Challenging Union “fair Share Fees”

A Lancaster County Court must determine whether two nonunion teachers challenging the collection of “fair share fees” were prevailing parties and entitled to attorney fees after the 2018 U.S. Supreme Court ruling in Janus v. AFSCME, which held that fair share fees are unconstitutional.  The teachers filed suit in 2014, challenging the constitutionality of Pennsylvania’s Fair Share Law, however the case remained in limbo while Janus was being decided.  The Lancaster lawsuit was previously dismissed as moot, however a Pennsylvania appellate court has now ruled that the matter was not completely moot because the plaintiffs had also sought to make the unions pay the teachers’ legal bills, and this claim constituted a “live controversy”.  The case is Ladley et al. v. PSEA, case number 158 CD 2019, in the Commonwealth Court 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.

In many divorces, the two big assets are retirement accounts and the house. Part or all of your retirement account may be part of the marital estate. If it is split unfairly, there may be tax consequences to you or your ex-spouse on the amount split.

Most retirement accounts fall into two categories: a defined benefit pension and a contribution based retirement account. A defined benefit pension is an amount of money you will get per month during your retirement for the rest of your life, it is usually based on salary, and number of years you have worked for your employer or union. A contribution based retirement account is an amount based on the amount you or your employer has contributed, a 401(k) or an IRA would be considered a contribution based pension.

Additionally, another factor to consider is when the retirement plan was funded. If it was funded during the marriage, the entire account would be considered marital property up until the date of separation. If it is was funded prior to the marriage, and lasts through the marriage, the contributions during the marriage, and the interest on the amount prior to the marriage, could be considered marital property. A retirement plan you have inherited, if it is never comingled with other marital accounts, is usually considered non-marital separate property.

In most cases, a Qualified Domestic Relations Order or QDRO, is usually the best way to divide marital retirement accounts. A QDRO is usually prepared by an attorney who specializes in retirement accounts. The QDRO needs to be preapproved by the pension’s plan administrator. Once approved, a QDRO is signed by a judge and sent back to your plan administrator. The plan administrator will then divide the account in regard to the QDRO. Some accounts, like an IRA, can be divided without a QDRO, but you have to be careful or there may be tax consequences.

If done properly, retirement accounts can be divided without immediate tax consequences. The tax consequences if not done correct can be significant.

By: Brian J. Forgue, Esquire

One of the most common questions I am asked by a spouse in the midst of a divorce is whether spouses are entitled to receive any portion of money or property that the other spouse inherits individually. The short answer is: it depends.

The general rule in Pennsylvania is that inheritances are the separate property of the spouse that received them and are not subject to equitable distribution in divorce.  Of course, there are certain exceptions to this rule based on the factual circumstances of each case.  For example, one main exception is if the inheriting spouse takes a monetary inheritance and deposits that money into a joint bank account titled with their spouse.  In this instance, the inherited money may be considered commingled, therefore becoming marital property, which is subject to be divided in equitable distribution.   Similarly, if a spouse inherits something other than money, like a plot of real estate or a house, and the inheriting spouse adds the non-inheriting spouse to the title as a joint owner, then the property would be considered a marital asset and subject to equitable distribution.  

It is important to note that while the initial inheritance of a spouse is considered separate property, any increase in value in that inheritance during the course of the parties’ marriage is considered marital property subject to division.  For example, if Spouse A inherits $100,000 from a parent’s will and during the course of the parties’ marriage, that $100,000 inheritance increases in value to $150,000 at the time Spouse A and Spouse B separate, the $50,000 increase during the parties’ marriage is considered marital property subject to equitable distribution, assuming Spouse A did not commingle the inheritance funds into any joint account during the marriage.  But, the original $100,000 inherited by Spouse A before the marriage remains the separate property of Spouse A. This example applies similarly to inherited personal and real property as well.  

The best way to keep inheritances separate property is to physically keep any monetary inheritance in a separate bank account away from any joint accounts you may have with your spouse and be sure not to deposit or commingle marital funds into the account containing the inherited funds.  In the case of inherited personal or real property, be sure to keep these items titled individually in your name alone or your spouse may have a claim that such items are marital property as opposed to separate property.

If you have questions or concerns about inheritances and your divorce, call Brian directly at 610-840-0221 or via email at [email protected].