Starting on January 1st, 2024, the Corporate Transparency Act (“CTA”) will introduce new reporting requirements that may affect your company. These changes come as the U.S. government seeks to enhance corporate transparency and curb illicit financial activities facilitated through anonymous shell companies.
We have provided a concise overview below to help you understand the key components of the CTA and its potential impact on your business. We hope you will find this recap useful.
Your Business Might be a Reporting Company
The scope of the CTA is broad, which means that your business is likely to be subject to these new reporting requirements. Reporting companies include both domestic and foreign entities (corporations, LLCs, and similar private entities) created or registered to conduct business in the U.S. There are some exceptions, such as entities that employ more than 20 US-based employees, have filed US federal tax returns demonstrating more than $5 million in gross receipts or sales, and have an actual office within the United States.
Beneficial Ownership Reporting
Reporting Companies will have to disclose information about their beneficial owners—individuals who exercise “substantial control” (directly or indirectly) over the company or own or control at least 25% ownership interest in said company. Criteria for “substantial control” include:
- Serving as a senior officer.
- Exercising authority over senior officers or a majority of the board.
- Having significant influence over company decisions.
- Any other forms of substantial control.
Reporting Requirements and Process
Reporting Companies will have to provide information about both the company itself and each individual who is a beneficial owner of the company.
- Company Information: Full legal name, any trade or d/b/a name, address of the principal place of business in the U.S., jurisdiction of formation, and federal taxpayer ID number.
- Beneficial Owner Information: The individual’s name, date of birth, residential address, unique identifying number (from a U.S. or non-expired foreign passport), and a copy of this document.
Though detailed forms are yet to be released, reports will primarily be submitted electronically through a FinCEN portal. FinCEN is currently developing secure and confidential systems to facilitate and protect this information exchange, ensuring it remains inaccessible to the public.
Non-compliance penalties include civil fines of $500 per day of non-compliance and criminal penalties of up to a $10,000 fine or 2 years in jail.
Timeline for Compliance
- Existing Companies: Entities created or registered in the U.S. before January 1, 2024 will have a full year, until January 1, 2025, to comply with the CTA by filing their initial report.
- New Companies: Entities created or registered on or after January 1, 2024, will have to file their initial report within 30 days of creation or registration in the U.S.
We’re Here to Support You
We understand that new regulatory requirements can be complex. Our dedicated team is closely monitoring the developments and is ready to assist you in navigating through these requirements.
Deborah Nilson is delighted to speak at the CIC Webinar – Doing Business in the US – on January 12, 2022 at 10 AM (EST)/16H (France) ; how to adopt good reflexes, develop your business in the U.S. and anticiate operational issues (in French).
Link here for registration: https://lnkd.in/dJmxsJ74
The Americans with Disabilities Act (ADA), a federal law, requires businesses open to the public to be accessible to all patrons, including those with disabilities. Many courts, and state legislatures, have interpreted this obligation to extend to business websites, which must take into account the needs of consumers with disabilities. Failure to be ADA-compliant exposes businesses to costly lawsuits or settlements, since individuals and groups can sue directly and recover attorneys’ fees – and there are some very aggressive lawyers embracing the ADA cause. Making a good-faith effort in this area protects you from legal risk while allowing you to serve a broader range of customers whose needs are frequently unmet.
Consult with specialized web technicians to ensure that your site meets appropriate standards. You’ll want, for example, to make your website available to blind people and others with disabilities that affect their ability to read a computer display, by adding text equivalents to imagery, and posting documents in formats that function well with assistive technology.
As always, we are here to answer any questions.
Employees working in-person for private employers in New York City must have received at least one dose of an FDA-approved COVID-19 vaccine by December 27. The new measure, introduced by outgoing mayor Bill de Blasio, provides exemptions for sincerely-held religious beliefs and valid medical reasons, but does not provide a testing alternative. An application for an accommodation must be made by December 27th.
Employers must verify and keep a record of each in-person employee’s proof of vaccination by December 27. There are 3 options for how employers can meet this requirement:
- An employee’s copy of their proof of vaccination or a record of a reasonable accommodation with supporting documentation;
- Employers can create their own paper or electronic record that includes identifying information for each employee (i.e. name, whether fully vaccinated, proof of first dose, or record of reasonable accommodation);
- Employers may check each employee’s proof of vaccination before they enter the workplace each day. They must keep a record of each verification. [This option may be more suitable for larger employers].
By December 27, employers must complete the “Affirmation of Compliance with Workplace Vaccination Requirements” affirming they are in compliance with this requirement and post it in a public place.
Also, please note that each contractor who enters the workplace is subject to the vaccination requirement as well.
Additionally, Gov. Kathy Hochul signed an executive order requiring either masks or vaccines in public venues (including workplaces) in New York state.
As always, we are here to answer any questions.
We’re excited to announce the official launch of our new website is finally LIVE! A big thanks to our design and development team at Kronologie & Chase Jennings, as well as to Deborah Ann Nilson and Nathalie Gast for their collaborative efforts.
Have you explored our new site yet? Be sure to let us know what you think in the comments below!
The coronavirus pandemic has upended the year for people from Wuhan to Milan. New York City alone now has almost 100,000 confirmed cases and all nonessential businesses, including many in the fashion sector, have shuttered since March 22 in response to orders from the state governor and a collective effort to “flatten the curve” of coronavirus infections.
Workplace consequences have been dramatic. Last week, the federal Labor Department reported that a record 6.6 million Americans had filed for unemployment insurance, bringing the total number of people who have filed for unemployment in the last three weeks alone to almost 17 million. Reports of employers mistreating nurses and retail workers have trickled onto social media, and newly enacted federal laws provide various forms of emergency relief.
James Brudney, a professor at Fordham University School of Law with extensive experience in employment and international labor law, stressed the importance for employers, particularly larger brands, of “doing the right thing by their workers and in reputational terms, not just the barely legal thing.”
Referring to recent walkouts by Amazon warehouse workers protesting conditions of unsafe exposure to the virus, he said employment lawsuits based on job-related illness and death are likely, just as they were common post 9/11. In fact, there already has been one case filed in Illinois by the survivors of a late Walmart employee who claimed he died due to catching the virus at his workplace.
“One would hope that in these circumstances employers, who are also obviously suffering, would have the sense of both compassion and justice not to be taking retaliatory steps against workers who are trying to protect their fundamental safety and health in tough conditions,” said Brudney, adding that exposure to the coronavirus at work could lead to sizable state workers’ compensation claims. He recommended more generally that employers consult the International Labour Organization’s COVID-19 recommendations as well as Convention 177 on protections for home workers, saying that they provide a useful crisis benchmark for the fashion industry.
In this challenging context, what else should employers know? The interplay between federal and state laws, and between the President and state governors, is confusing to many American employers, and even more so to foreign companies doing business in the United States. Some important issues to get straight at the outset are:
Are my employees at-will? Are they exempt or non-exempt?
Most states consider employment to be at-will by default, meaning that either the employer or the employee can end the relationship at any time, with or without cause or notice. However, before letting anyone go or changing any terms of employment, employers must check whether they are bound by a contract with their employees instead. Employers should also know whether their employees are exempt or non-exempt under the federal Fair Labor Standards Act. Employees whose jobs do not meet the FLSA definition or who make less than $674 a week are non-exempt under federal law and must earn overtime pay. States and cities can raise the minimum amount, so that, for example, an employee must earn at least $1,125 a week in New York City to be exempt.
Can I reduce my employees’ hours?
Employers are allowed to reduce the number of hours their non-exempt employees are scheduled to work. Providing reasonable notice is considered good practice, though there is no federal requirement to do so and state laws vary. In California, for instance, notice is important to avoid “reporting time pay” obligations, which employers trigger when they schedule workers but don’t have enough work for them to do because of inadequate planning or lack of proper notice.
Can I reduce my employees’ pay?
Employers can never reduce pay rates for hours already worked; any changes must be prospective. That said, absent a contract, employers are free to reduce employee pay for future hours worked, as long as they pay at least the minimum wage, which varies by state and sometimes by city. For example, federal law sets the floor at $7.25, but while California’s minimum wage is $12 a hour, it’s $15 an hour in San Francisco. In addition, some states impose notice requirements. New York State requires employers to inform employees at least seven calendar days before changing their pay rate, unless the new rates appear explicitly on wage statements. Reducing an employee’s pay can change the employee’s status from exempt to non-exempt.
Can I treat my employees differently?
Reducing some salaries during a period of financial difficulty is legal as long as employers do not discriminate against a protected class under federal or state law. Federal law prohibits discrimination based on gender, race, national origin and age, but some states or municipalities go further. New York City, for example, prohibits treating employees differently based on their “age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, domestic violence victim status, or any other protected characteristic under the New York State Human Rights Law.”
“If your reduced hours or furloughs disproportionately affect women, or racial minorities, or older workers, there’s likely to be an effort at some point to organize those workers in litigation terms, or at least it’s a risk that you run,” said Brudney. “You have to be sure you have an evaluation system that can justify what you’re doing so that it doesn’t look discriminatory or arbitrary.” Such a system could include records of past performance evaluations or bonuses, for instance.
What’s a furlough?
An employee furlough occurs when an employer suspends its workforce without pay. Caution: If exempt employees do any work at all while on furlough, the employer must pay them the equivalent of a full day’s salary, and if hourly employees work while on furlough, the employer must pay them for the time worked. Furloughed employees usually retain their health benefits and return to work either on a specific date or when a specific condition is met. Employers should note, however, that furloughs come with the risk that top talent will seek employment elsewhere. A furloughed employee may be eligible for unemployment benefits, depending on state rules.
What unemployment benefits are available to laid-off workers?
Individual states normally manage unemployment insurance benefits and determine eligibility criteria and exclusions. The $2 trillion federal CARES Act passed on March 27 creates two major benefit categories, however. First, there’s Pandemic Unemployment Assistance, which covers individuals — including freelancers and those who are sick or caring for a sick family member — who are unable to work because of the coronavirus outbreak. Secondly, unemployed individuals who are already receiving state benefits are eligible for $600 a week in additional federal aid over the next four months, until July 31.
What is a shared work program?
State shared work programs make it easier for participating employers to keep trained staff during an economic slowdown by allowing employees to receive partial unemployment insurance benefits while working reduced hours. To participate in a shared work program, employers must meet state requirements — typically, a minimum number of employees working in the state, and a certain amount of unemployment contributions over the past year — and submit a shared work plan for state approval. Participating employers may not hire new employees to perform work covered in the plan and must seek plan approval from any relevant collective bargaining representative.
What sort of paid leave do I have to pay my employees during the COVID-19 health crisis?
The Families First Coronavirus Response Act guarantees job-protected paid leave to workers who are unable to work from home and subject to a federal, state or municipal order of quarantine or isolation for COVID-19, or caring for minor children who are under such an order. The amount of paid leave available to employees depends on the size of the business as of Jan. 1, with different rules for small, mid-sized and larger businesses. All must provide their employees with job protection for the duration of the quarantine or isolation order, but larger businesses must provide more days of paid sick leave. When employees return from their COVID-19-related leave, employers must reinstate them to the same or a comparable position and continue to provide health insurance on the same terms as if the employee had not taken leave.
What sort of paid sick leave do I have to offer?
Until the FFCRA was passed, no federally mandated paid sick leave existed, though some states required it. Federal law now allows an eligible employee to take paid sick leave because the employee is in quarantine related to COVID-19, or caring for someone who is, or unable to work remotely because he or she is caring for a child whose childcare provider is closed because of COVID-19. Employers with fewer than 500 employees must provide full-time employees with 80 hours of paid sick leave at the employees’ regular rate (or two-thirds the employees’ regular rate for caregiving employees). Paid sick leave wages are capped at $511 a day, or $5,110 total, per employee for personal use, and $200 a day, or $2,000 total, per employee caring for another. Sick leave pay rates for employees who work a part-time or irregular schedule are based on the average number of hours the employee worked for the six months prior to taking leave. If employees have worked less than six months prior to taking leave, they calculate their rate based on their average scheduled hours over a two-week period.
Cynthia Martens is an associate at The Nilson Law Group, PLLC in New York. She was previously a WWD correspondent in Milan. This article is for informational purposes only and is not intended to constitute legal advice.
Originally published in Women’s Wear Daily