Articles by Our Attorneys

It depends. To be found in contempt, the Court must find that a party willfully disobeyed a Court Order in a meaningful way when they had the ability to comply with the Order. Courts generally expect parents to exercise good judgment and common sense in dealing with the other parent, preferring to elevate substance over form. If you find yourself in a crisis situation that prevents a parent from following the custody schedule, that parent should communicate with the other parent and try and find an amicable solution. Such solutions may include trading time or offering make up time. If the schedule is unworkable, a parent may file to modify the schedule, although the existing schedule remains in place until the Court issues a new Order. A parent should also communicate with their attorney about the crisis to get advice on how to proceed rather than making unilateral decisions to violate the Court Order.

If you have questions about adhering to a custody order during an emergency, please contact Patrick Boyer at 302-654-4454 or [email protected].

Does the Court have jurisdiction over my divorce? In a divorce case, there are two types of jurisdiction, “in rem” and “in personam.” A Court’s “in rem” jurisdiction refers to its authority to enter a decree of divorce. In Delaware and Pennsylvania, at least one spouse must have been a bona fide resident of the state for the six months preceding the filing. A Court can grant a divorce decree regardless of whether it has “in personam” jurisdiction.

The authority to divide marital property, award alimony, and enter other financial relief ancillary to divorce refers to a Court’s “in personam” jurisdiction. To have “in personam” jurisdiction, the responding spouse, if a non-resident, must have sufficient “minimum contacts” with the forum state. This generally involves whether and to what degree the non-resident spouse has ties to the forum state, such as, whether they conduct business in the state, whether they obtain any benefit from the forum state, and whether it would be fair to bring them into Court in that state. A party objecting to a Court’s “in personam” jurisdiction must raise this objection in their first filing with the Court, or the objection may be waived. Similarly, if the non-resident spouse is personally served within the forum state, the objection is also waived.

If you have a question related to divorce jurisdiction, please contact Patrick Boyer at 302-654-4454 or [email protected].

When the Family Court issues a final order, litigants may appeal that order to the Delaware Supreme Court within 30 days. Generally, to raise an issue on appeal, a party must have fairly presented that issue to the Family Court. An important consideration is the standard of review, that is, what type of scrutiny the Delaware Supreme Court will employ in evaluating the questions presented on appeal. Questions of fact, such as whether the Family Court correctly understood the evidence, will generally be reviewed under a clearly erroneous standard of review. That is, if the appealing party cannot show that the Family Court’s understanding of the record was not clearly wrong, its decision will be upheld. Similarly, the Supreme Court will generally not disturb findings of credibility, or the weight given to the evidence presented. If the question appealed involves an exercise of discretion, such as the percentage division of marital property in a divorce matter, the standard of review is whether the Family Court abused its discretion. This generally means that if the exercise of discretion is within the broad range of reasonableness, the Family Court’s decision will be upheld. The most favorable standard of review is called “de novo” review. This means that the Supreme Court will look at the question anew, without any deference to the Family Court’s order. This standard of review is employed to questions of law. Generally, the appeals with the best prospect of success involve questions of law.

If you have a question about whether an appeal is in your best interests, please contact Patrick Boyer at 302-654-4454 or [email protected]

On March 19, 2020, Pennsylvania Governor Thomas Wolf ordered closure of any “place of business in the Commonwealth that is not a life sustaining business regardless of whether the business is open to members of the public.”

The Governor’s Order compelled the shuttering of thousands of private businesses and resulted in record unemployment claims across Pennsylvania. According to preliminary statistics posted by the Pennsylvania Department of Labor and Industry, nearly 1.1 million unemployment claims have been filed over the last three weeks, representing 16.3% of the Commonwealth’s workforce.

Representatives of Pennsylvania’s businesses and employees have initiated a class action suit against the Governor and the Commonwealth Secretary of Health, alleging violations of their constitutional right under the Fifth and Fourteenth Amendments to the U.S. and Pennsylvania Constitutions. The case is Schulmerich Bells, LLC et al. v. Wolf, 2:20-cv-01637 (E.D. Pa. March 26, 2020).

The Complaint includes allegations that, with fewer than 24 hours’ notice, members of the Pennsylvania’s business class were prohibited from using their physical locations to operate businesses, as well as being denied the ability to utilize tangible property for any economically profitable use. In addition to claims for substantive and procedural due process violations, the Plaintiffs seek just compensation under the Fifth Amendment’s Takings Clause.

Plaintiffs do not disclaim the legality of the Order’s purpose, instead stating, “Governor Wolf and Dr. Levine have acted under color of state law, and the COVID-19 Closure Orders were issued to serve a well-recognized public purpose by a duly elected state official and his designee.” For purposes of their Fifth Amendment claims, Plaintiffs’ position is strictly limited to the determination and payment of just compensation for the alleged taking. The implications of a successful Fifth Amendment claim are mind-bending – to say nothing of the potential just compensation figures for the economic havoc wreaked by the Order, practically speaking, the Pennsylvania taxpayers (and not the Defendants) would be on the hook for the damages themselves.

While the Governor has yet to file a response, the Order cites to his statutory authority under the Emergency Management Services Code, 35 Pa.C.S.§7101, et seq. to declare a state of “disaster emergency” throughout the Commonwealth in general, and “…specifically to control ingress and egress to and from a disaster area and the movement of persons within it and the occupancy of premises therein.”

However, disease is not among the disaster-related events that trigger the Governor’s authority under the Code, and even if it were, the sheer breadth of the Order’s geographical and substantive reach remains suspect. The Order ostensibly intends to designate the entire Commonwealth as a “disaster area,” and while the Code authorizes the Governor to control “disaster areas” and the movement of the public and the “occupancy of premises,” the Order does not discuss or otherwise seek to regulate the occupancy of premises – rather, it seeks to regulate the operation of activities within and upon certain premises within the Commonwealth – regardless of occupancy.

Furthermore, while the Code does authorize the Governor to “commandeer or utilize any private, public or quasi-public property if necessary to cope with the disaster emergency,” invocation of that power is specifically tied to the requirement to “provide for payment for use under terms and conditions agreed upon,” and further anticipates the physical use of private property – not the non-invasive, regulatory taking effected by the Order.

Whether the Governor will be found to have possessed the legal authority to implement the Order remains as uncertain as the duration of the Order itself, which “remain[s] in effect until further notice.”

*Note: due to the rapidly evolving government response to the COVID-19 pandemic, this article may not be current at the time it is read. The article will be updated in line with relevant developments.

On March 18, 2019, the Pennsylvania Liquor Control Board (the “LCB”) issued Advisory Notice No. 26 (the “Advisory Notice”) prohibiting on-premises alcohol sales by liquor licensees (“Licensees”) as part of efforts to stem the spread of the novel virus COVID-19. Although just one of several executive and administrative directives issued by the Commonwealth in response to COVID-19, the Advisory Notice provides the most relevant guidance for Licensees.

The following questions and answers reflect some of the questions we have received from Licensees over the past week:

Q: How is the Advisory Notice restricting Licensees?

A: The Advisory Notice bans service or consumption of food and alcohol on the licensed premises and at public gatherings, while permitting continued sales for off-premises consumption for Restaurant, Distributor, Retail Dispenser, and Sacramental Wine Licenses. Licensees with a Brewery, Distilleries/Limited Distillery, or Winery/Limited Winery Licenses may also continue to sell alcohol they produced themselves pursuant to their license) for off-premises consumption.

Q: Does this mean the LCB is waiving the requirement that certain Licensees can only sell food and alcohol for off-premises consumption by also selling food and alcohol for on-premises consumption?

A: Yes, at least until further notice from the LCB.

Q: How long will the restrictions in the Advisory Notice be in place?

A: The Advisory Notice states only that the restrictions will be in place “until further notice”.

Q: What are the penalties for violating the restrictions in the Advisory Notice?

A: The Advisory Notice states that Licensees who violate the restrictions are subject to citation and license suspension. Further violations after license suspension can lead to unspecified “further enforcement action”. While not directly stated, Licensees should assume that this includes license revocation.

Q: Does the Advisory Notice alter quantity restrictions on alcohol sales for off-premises consumption that were already applicable to certain licenses and permits prior to the Advisory Notice?

A:  No. Some licenses and permits, like the Wine Expanded Permit, restrict the amount of alcohol sold for off-premises consumption per transaction. The Advisory Notice does not alter these restrictions.

Q: Does the Advisory Notice require “social distancing” procedures for Licensees making sales for off-premises consumption?

A: The Advisory Notice only recommends that beer distributors employ social distancing best practices and avoid gatherings of more than 10 people. However, Governor Wolf’s March 19 order closing non-“life sustaining” businesses specifically requires that restaurants and bars employ social distancing practices in fulfilling sales for off-premises consumption. As a matter of public health, all Licensees offering sales for off-premises consumption should implement social distancing practices. This includes allowing customers to order ahead online or by telephone and receive their order outside the premises in a parking space or roadside. Many establishments are also allowing customers to pay for their orders online or by telephone before picking them up.

If you are unsure about how the LCB’s advisory notice may apply to you or have other questions about the implications of the COVID-19 pandemic on your license, please contact MacElree Harvey, Ltd. by emailing Matthew McKeon at [email protected].

In the midst of the COVID-19 crisis, Pennsylvania is seeing an unprecedented surge in applications for Unemployment Compensation (“UC”) benefits.  UC benefits can provide a much-needed safety net for Pennsylvania employees who lose their income.  Notably, there is one segment of this population that faces unique challenges in the current environment:  individuals who occupy the roles of both owner and employee of a business.  What relief can these “owner-employees” expect under the Pennsylvania UC law if their businesses can no longer afford to pay them a salary?  The answer to this question requires a look at both the history of the Pennsylvania UC law as well as the recent federal legislation enacted to combat the economic effects of COVID-19.

Background

Historically, if an owner-employee exercised substantial control over a Pennsylvania business, UC benefits would not available when he or she was forced to stop taking a paycheck due to a downturn in business.  This is the case even if the business has been paying UC taxes on the individual’s pay. See, Sam v. Unemployment Compensation Board of Review, 528 A.2d 1067 (Pa. Commw.1987) (holding that the mere payment into the Fund by an employee does not establish a quid pro quo entitlement to benefits).  This is the result of what is often referred to the “self-employment” exception to the UC law. 

Harsh as this result may seem, as a matter of policy, the Pennsylvania Courts hold that the UC law “is not a vehicle to be used to compensate persons who suffered from a failed business venture.” Owoc v. Unemployment Compensation Board of Review, 809 A.2d 441, 443 (Pa. Commw. 2002).  Moreover, Section 402 of the UC Law, which lists multiple grounds by which an employee can be found ineligible for unemployment compensation, provides that “[a]n employe[e] shall be ineligible for compensation for any week … in which he is engaged in self-employment”. 43 P.S. § 802(h).

Section 402.4 of the UC Law provides an exception to “self-employment” disqualification, where a claimant’s business is forced into involuntary bankruptcy.  However, for struggling businesses that may not want to file for bankruptcy, this provision provides little benefit.

The CARES Act

On March 27, 2020, the U.S. House of Representatives passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to help individuals and businesses cope with the COVID-19 pandemic.  Among the many provisions of the CARES Act was an extension of coverage to workers who otherwise would not be eligible for unemployment benefits, including individuals who are “self-employed”. 

Accordingly, the CARES Act presumably will provide relief to many owner-employees through Pennsylvania.  Under the CARES Act, workers, including the “self-employed”, are eligible for UC benefits provided they are otherwise able and available to work, but are unable or unavailable to work because they:

• Have been diagnosed with COVID-19.
• Are experiencing COVID-19 symptoms and seeking a medical diagnosis.
• Have a household member diagnosed with COVID-19.
• Are providing care for their family or household member who has been diagnosed with COVID-19.
• Have primary caregiving responsibility for a child or other person in the household who is unable to attend school or another facility that is closed as a direct result of COVID-19, and the school or facility care is required for the individual to work.
• Are unable to reach their place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency.
• Are unable to reach their place of employment because they have been advised by a health care worker to self-quarantine due to COVID-19 related concerns.
• Have their place of employment closed as a direct result of COVID-19 public health emergency.
• Were scheduled to begin work but no longer have a job or are unable to reach the job as a direct result of COVID-19.
• Have become the breadwinner or major support for a household because the head of household has died as a direct result of COVID-19.
• Are forced to quit their job as a direct result of COVID-19.

These criteria make clear that the CARES Act authorizes unemployment benefits for owner-employees who lose employment as a “direct result” of the COVID-19 pandemic.  However, what about owner-employees whose businesses are experiencing an “indirect” impact from COVID-19? There are many businesses that are not required to shut down under any government closure orders, and who currently have no employees, etc., who have COVID-19, but that are still experiencing a significant – if not crippling – downturn in income.  As currently enacted, if a business can no longer afford to pay an owner-employee a salary or wages due to these “indirect” impacts, it appears that the CARES Act will not be of assistance. 

If an owner-employee is not eligible for UC benefits under the CARES Act, how will eligibility for UC benefits be decided?

So, in the event that CARES Act benefits are not available, how will eligibility for UC benefits for a Pennsylvania owner-employee be decided?  The most likely answer is under the traditional “substantial control” test discussed above. 

Simply put, to have “substantial” control over the business, and therefore be ineligible for UC benefits, a person must have control over both the management and policies of the business. Baer v. Unemployment Compensation Board of Review, 739 A.2d 216, 218 (Pa. Commw. 1999); Friedman v. Unemployment Compensation Board of Review, 513 A.2d 560 (Pa. Commw. 1986).  This issue is determined on a case-by-case basis by looking at the specific powers and duties of the individual, and the authority he or she exerts over the day-to-day operations of the business.  The results can be difficult to predict, however examples in the case law provide some guidance. 

In Starinieri v. Unemployment Compensation Board of Review, 447 Pa. 256, 289 A.2d 726 (Pa. 1972), a claimant, who owned 37.5% of a Pennsylvania corporation, was terminated from his position following the business filing bankruptcy.  The claimant filed for UC benefits but was denied.  In his appeal, the claimant argued that he could not exercise substantial control as a minority shareholder.  The Supreme Court of Pennsylvania rejected this argument, and found that the claimant was not eligible for benefits due to the power he held in the company, as he was employed as the Executive Manager of the company, was the Secretary/Treasurer of the corporation, and was the second largest shareholder. See also, Losito v. Unemployment Compensation Board of Review, 415 A.2d 1279 (Pa. Commw. 1980) (owner of one-third of the stock of a corporation, who controlled its operations, was denied benefits and considered self-employed); Baer, supra (claimant owning 50 percent of the stock and maintaining substantial policy-making authority was sufficient evidence that she was ‘self-employed’ and ineligible for UC benefits).

By contrast, in Friedman, supra, the claimant, a 20% shareholder and Vice President of a business was discharged from his position as Store Manager with responsibilities of ordering inventory and materials, supervising other employees, and hiring and firing employees. The Court concluded that, notwithstanding these powers, as a minority shareholder whose decisions were subject to the veto power of the President of the corporation, the claimant lacked substantial control over the policies of the corporation.  Therefore, the claimant was eligible for UC benefits.

These examples demonstrate that the eligibility for UC benefits of an owner-employee is often unclear, especially where the individual is a minority-owner, and that every business and situation is unique.

Conclusion

The CARES Act should help many in need due to the COVID-19 pandemic, including business owners who previously would not have been eligible for UC benefits.  However, many other individuals still face uncertainty about current and future eligibility for UC benefits.  For all of these reasons, sound planning when setting up your business, and a keen understanding of the law, is one way to ensure that your business can meet the challenges that lie ahead.

Written by: Employment Law Attorney Jeffrey Burke