Our Tax Exemption Was Revoked - Now What?

We recently received an inquiry from a small nonprofit organization that learned that the Internal Revenue Service had revoked its tax exemption for failure to file required notices. Among other consequences, this meant that the organization would be liable for corporate income tax, could face additional tax penalties, and would be unable to provide donors with a tax deduction for their gifts.

If your organization has received similarly discouraging news, take heart. Organizations who have had their exemption revoked can regain their tax-exempt status by re-filing IRS Form 1023.

As part of this process, your organization can apply to have its exemption retroactively reinstated. In most cases, the organization must include a reasonable cause statement (as outlined in IRS procedures) to establish that it exercised ordinary business care in attempting to comply with the annual reporting requirements.

While your application is pending, the Council of Nonprofits advises that you should be transparent with donors, staff, and board members about the loss of tax exemption, keep good records, and be patient with the lengthy IRS process.

Powers of Attorney: Protecting Yourself from Abuse

As part of the estate planning process, we often ask our clients to consider signing a durable power of attorney. This document gives another person (the “attorney-in-fact”) the power to do a variety of things on your behalf, such as access financial accounts, transfer property, or defend legal actions.

An “attorney-in-fact” acting under a power of attorney owes fiduciary duties to the individual who executed the power of attorney. This means an attorney-in-fact must act solely in the best interest of the principal and is required to act with good faith, care, and loyalty on behalf on the principal. Acts of self-dealing which benefit the attorney-in-fact are prohibited.

Although most attorneys-in-fact act in the interest of the grantor, these powers are sometimes abused, even by family members. Often, this abuse targets the elderly or others who are unable to care for themselves. For example, instead of using the principal’s funds to pay for long-term care expenses, the wrongdoer may instead withdraw money for a personal vacation trip.

Improper use of powers of attorney is a serious violation of law. An individual who abuses a power of attorney can be subject to a variety of legal claims including fraud, misrepresentation, conversion, breach of contract, and breach of fiduciary duty.

What can you do to protect yourself? First, if you are granting a power of attorney, you must be absolutely sure that you select a trusted attorney-in-fact who will act in your interest and carry out your wishes. Second, if needed, the document granting a power of attorney should specifically outline those wishes – and any limitations. It is also advisable to revisit the power every few years, particularly if the relationship situation or dynamics have changed. Conversely, if you have been granted a power of attorney, use your power with good faith in the principal’s interest, and watch for signs of abuse by others.

Supreme Court Rules on Securities Fraud Class Actions

A United States Supreme Court decision near the end of its last term makes it more difficult for investors to pursue class action suits alleging securities fraud, but it does not effectively prevent such actions altogether.

The case involved a challenge to Basic Inc. v. Levinson, a 1988 decision in which the Court adopted a “fraud on the market” theory in securities fraud class action suits. In these securities fraud cases, a presumption arises that a company’s false statements improperly inflated the share prices and that investors relied on that inflated price when they bought. This presumption helps plaintiffs fulfill the requirements for a class action suit of Rule 23 of the Federal Rules of Civil Procedure, particularly the need for “questions of law or fact common to the class.”

In the June decision in Halliburton Co. v. Erica P. John Fund, the Court held that companies can rebut this presumption during the class certification stage of litigation with evidence showing that the stock price was not inflated. Prior law prevented this evidence until the merits of the case were at issue, thus encouraging earlier settlements.

The impact of the ruling is unclear. Although the court did not abolish the “fraud on the market” presumption altogether, it did allow corporate defendants to offer contrary evidence earlier in the litigation process.

The New York Times has a summary of the decision, and Forbes and the Wall Street Journal have full discussions of the potential impact of the ruling.

IRS Streamlines Tax-Exempt Application Process for Most Charities

The Internal Revenue Service has recently released a new tax form to help small charitable organizations apply for tax-exempt status. Form 1023-EZ, introduced in July 2014, provides an alternative to the longer Form 1023 and will allow the IRS to more efficiently process applications for 501(c)(3) tax-exempt status.

From the IRS news release:

The new Form 1023-EZ, available today on IRS.gov, is three pages long, compared with the standard 26-page Form 1023. Most small organizations, including as many as 70 percent of all applicants, qualify to use the new streamlined form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible.

"Previously, all of these groups went through the same lengthy application process -- regardless of size," [IRS Commissioner John] Koskinen said. "It didn't matter if you were a small soccer or gardening club or a major research organization. This process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS.”

The change will allow the IRS to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations while reducing the application backlog. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine months.

To determine if your organization qualifies to file the new form, review the Form 1023-EZ Instructions and Revenue Procedure 2014-40, as well as consult an attorney. Form 1023-EZ must be filed online and requires a user fee of $400.

Nonresident Commercial Real Estate Brokers

Ohio law requires a real estate broker’s license before an individual or entity can sell, rent, lease, or manage property in return for a fee. However, an important exception does exist for commercial real estate brokers who are located outside the state.

Ohio Revised Code 4735.022 permits an out of state broker who is actively licensed in another state to act as a broker in Ohio without obtaining a license if certain conditions are met. The out of state broker may act as a broker in Ohio if it works in cooperation with a licensed Ohio broker.

The two parties must sign a written agreement detailing the terms of cooperation, and the out of state broker must agree to follow Ohio law, submit to the jurisdiction of Ohio courts, and provide an out of state certificate of good standing. Documents and trust funds must be held by the Ohio broker, and importantly, the name of the Ohio broker must be included on all advertising.

The Ohio Association of Realtors has more information on the topic, as well as a sample agreement.

Your New Sidewalk: Who Pays?

Ohio municipalities have the power to levy charges known as “special assessments” against properties. These assessments – which are distinct from property taxes – are used for a variety of purposes, including building sidewalks, removing snow, planting shade trees, and laying water pipes.

The process begins when a city, either by its own determination or a citizen petition, passes a resolution of necessity declaring the need for the improvement. The city must also determine the cost of the improvement, and the amount of each special assessment can be calculated in one of three ways:

1. By a percentage of the tax value of the property assessed;
2. In proportion to the benefits that may result from the improvement;
3. By the front foot of the property bounding and abutting upon the improvement.

According to Ohio law, special assessments must be limited to the special benefits conferred upon the property. The cost of the assessment cannot outweigh the benefit to the property. For example, when a proposed sidewalk would harm a property’s value by destroying shrubs and eliminating the home’s privacy, the special assessment was declared unlawful. (Martino v. City of Sidney, 140 Ohio App. 3d 340 (2000)).

If a property owner objects to the assessment, he must act quickly – an objection must be filed with the city clerk’s office within two weeks of notice of the resolution’s passage.  As illustrated by this recent example from Cleveland Heights, objections are heard by a equalization assessment board, which then makes a recommendation to the city council. After all objections are resolved, the city council passes a final resolution to move forward with the project.

The final assessment will be added to the real property tax bill.  In most cases, a special assessment may be paid at once or over a period of years – however, assessments not paid at once may be subject to interest.

Uniform Fiduciary Access to Digital Assets Act Approved

Several months ago, a previous post discussed the important issue of what happens to someone's online accounts after their death.  Last week, the Uniform Law Commission approved model legislation to address this growing problem.

From the Uniform Law Commission's news release:

The Uniform Fiduciary Access to Digital Assets Act solves the problem using the concept of “media neutrality.”  If a fiduciary would have access to a tangible asset, that fiduciary will also have access to a similar type of digital asset.  UFADAA governs four common types of fiduciaries: personal representatives of a deceased person’s estate; guardians or conservators of a protected person’s estate; agents under a power of attorney; and trustees. 

UFADAA defers to an account holder’s privacy choices as expressed in a document (such as a will or trust), or online by an affirmative act separate from the general terms-of-service agreement.  Therefore, an account holder’s desire to keep certain assets private will be honored under UFADAA.

The draft legislation -- which gives the deceased's representative access to the accounts unless a will, court order, or law provides otherwise -- would only become effective if adopted by a state's legislature.

Changes in Ohio Adoption Law To Serve Adoptee's Interest

In December 2013, the Ohio legislature made important and long-awaited changes to Ohio’s adoption laws to allow all adoptees - regardless of birth year - easier access to their adoption file and birth certificate. Under prior law, more than 400,000 adoptees born between 1964 and 1996 were unable to access this information.

Beginning in March 2015, Ohio’s adoption laws will allow a past, present, and future adopted person easier access to her adoption record, including her birth parents’ social and medical history records. The law will also allow the Ohio Department of Health to release the county in which the final decree of adoption was ordered for the purpose of obtaining the adoptees birth parents’ location. Additionally, an adopted person will be able to ask her birth parents questions through the Ohio Department of Health.

The ability to access this information will serve an adoptee’s interests by providing her with an avenue to find her biological parents if she would like. However, identifying information of the biological parents is kept anonymous if requested by the parents. These changes could save adoptees from serious health problems by allowing adoptees access to past records, especially pertinent medical information relating to certain health conditions that are better treated early in life. This may even work the opposite way: say an adoptee inadvertently finds out about some health condition she has while in the midst of testing for other problems, but has no side effects from such condition because side effects generally do not manifest until later in life, but the condition is hereditary. In this instance, an adoptee will be able to contact the Ohio Department of Health and inform them of the need to contact her birth mother to inform her of this discovery.

Beginning in March 2015, adoptees can make these requests to the Ohio Department of Health's Division of Vital Statistics for her adoption records and/or to contact her birth parents.

Attorney-Arranged Adoptions: An Overview

Thinking of adopting? Domestic adoptions in Ohio are a growing trend and are generally less expensive than international adoptions due to the increasing regulations and the lengthy process of adopting a child from outside the country. In a private domestic adoption, birth parents choose the adoptive parents. In such case, the prospective adoptive parents compile pictures and provide a short biography about their lives, jobs, interests, parenting philosophy, and hobbies. From this, the birth parents will decide whom they would like to place their child with to raise as their own.

Attorneys are an important part of this 6 month long process. An attorney is needed to file and complete the proper court documents, ensure that the child is immediately placed with the adoptive parents, appear at the court placement and consent hearing, and see the adoption through the finalization process. In most cases, both the birth mother and adoptive parents retain an attorney. In attorney-arranged adoptions, an adoption agency is not required but may be used to complete the home study requirements of the adoptive parents.

The process for an attorney arranged adoption in Ohio is slightly different depending on the county; however, it generally includes a home study to be completed by the adoptive parents, a placement and consent hearing, the filing of a petition for adoption, and a finalization hearing. For more information on fees, costs, processes, future changes in adoption law, and the matching process associated with private adoptions, contact an Ohio adoption attorney.

What is a Lawyer? Kindergarteners and the Law

What is a lawyer? Black’s Law Dictionary defines “lawyer” or “attorney” as “one who is licensed to practice law” or “a person who practices law”. Although these definitions are technically correct, what do they mean to a kindergartener?

We recently attended a local elementary school’s Career Day to teach students about the profession of law. Students were very familiar with rules both inside the classroom (no running) and outside the school (wear your seatbelt). We discussed how these rules – or laws - help illustrate right and wrong; teach responsibility for actions; keep us safe; and provide a fair way to settle problems.

After students identified what a law was, we talked about how lawyers help people understand and follow the law, as well as work to peacefully solve problems. We talked about making laws, famous lawyers like Barack Obama and specific ways our firm works with the law (such as starting a business or writing a contract between an artist and a customer). Students also received coloring pages entitled “What a Lawyer Does”, developed by the South Carolina Bar Law Related Education Division.

Undoubtedly, the highlight of the session was the case of A. Bear et al v. Gold E. Locks. Adapted from a series of lessons provided by the New Jersey State Bar Foundation, this brief demonstration allowed the students to act out roles of plaintiff, defendant, judge, and jury:

• “Mr. Bear, did you invite the defendant into your home?” 
• “Ms. Locks, do you admit to breaking the plaintiff’s chair? Did you repay him for the damages?” 

At the conclusion, the student “jury” had a wide variety of suggested sentences for Goldilocks, such as a $5 fine, forcing her to build a new chair for the Bears, or an extended jail term.

Participation in educational forums like Career Day – while it may result in new clients – is important because it presents a positive image of the law to the next generation of attorneys. Resources to help your interested student learn about lawyers or celebrate Law Day are available from the American Bar Association.

Oral Agreements vs. Written Contracts

Many contracts include a clause like this one:

Entire Agreement: This Contract constitutes the entire agreement between the parties and supersedes any and all prior arrangements, agreements, or discussions with respect to this subject matter. Parties have made no representations other than those contained in this Contract. 

A written contract is presumed to be the final agreement between the parties, and that presumption is even stronger when the agreement contains a clause of this type. What this means is that under the “parol evidence” rule, a party is generally prevented from introducing evidence in court that contradicts the written agreement.

For example, a Central State University professor hired on a written 10 month employment contract could not introduce evidence of a prior oral agreement of a three year contract.  Likewise, imagine a car salesperson who promises “no money down” but provides a final written contract requiring a $1000 down payment. In both cases, the written agreement is controlling.

The moral? Since you will be bound by the written agreement, both you, and an attorney, should read the document carefully before you sign it to make sure that it reflects all previous written or oral discussions.

After the Lease Expires: Holdover Tenants

In a general month-to-month tenancy in Ohio, the landlord must give a tenant at least thirty (30) days notice of termination prior to the periodic rental date, which is the date on which rent is due. For example, if monthly rent is due on May 1, the landlord must give notice on or before April 1. If the landlord does not give notice until April 3, however, the tenant can stay until May 31.

But what happens if notice is given but the tenant does not leave? A landlord can either 1) have the tenant evicted or 2) accept payment from the holdover tenant. (Baltimore & Ohio RR. Co. v. West, 57 Ohio St. 161, 165-166 (1897)). If a lease expires and the tenant continues to pay rent, and the landlord continues to accept the rent payment, the “holdover tenant” has created a new periodic tenancy.

The length of the term of the new tenancy is based on the expired lease. A lease that provided for annual rent will be held as a year-to-year tenancy, and one that required rent to be paid monthly will be a month-to-month tenancy. A provision that states an annual Base Rent payable in equal monthly installments is considered, under Ohio law, a year-to-year tenancy. (Cesta v. Manfredi, 101 Ohio App.3d 326, 329 (1995)).

For example, imagine a tenant who rents a commercial space for $12,000 annually (payable in monthly installments) from June 1, 2012 until May 31, 2013. If the tenant continues to pay rent after the lease expires, and the rent is accepted by the landlord, a new one year term is created. Assuming the tenant is still paying the annual rent in equal $1000 monthly installments, he can argue that a year tenancy was created and can occupy the premises until May 31, 2014, regardless of when notice to vacate is given by the landlord. If the holdover tenant vacates prior to the end of the term, the landlord can require him to pay the annual $12,000 that is due for the entire new term, but the landlord is still under a duty to mitigate damages, including finding a new tenant.

As always, it is essential for both landlords and tenants – particularly in commercial settings – to ensure that their lease has a well-drafted holdover clause.

Forming an Ohio Nonprofit: An Overview

The Ohio Attorney General reports more than 42,000 registered nonprofit organizations in Ohio. How do you add your great idea to the list?

The first decision you must make is what type of nonprofit organization to form. Probably the most common is the nonprofit corporation, because it enables the founder(s) to limit liability. Under Ohio law governing nonprofit corporations, the founder must file articles of incorporation with the Ohio Secretary of State. In addition to an initial filing fee of $125, you will need, among other things, a distinctive name and a well-defined purpose for the organization.

Once your nonprofit corporation is formed, you must still meet additional requirements to continue operating. Ohio law requires you to regularly make filings. For example, every five years nonprofits must file a statement of continued existence. Additionally, the Ohio Attorney General requires an annual charitable registration filing.

In order for your organization to be tax-exempt, you must apply for tax-exempt status with the Internal Revenue Service, not the state of Ohio. The IRS lists a variety of different tax-exempt organizations  – each with slightly different rules – so it may be helpful to consult an attorney to ensure that your corporation meets the correct guidelines. Annually, you will have to file Form 990 with the IRS; if you do not, your tax-exempt status could be revoked.

More helpful nonprofit resources are available from the Ohio Secretary of State or the Ohio Attorney General.

Listen....Do You Want to Know a Secret?

“Three may keep a secret, if two of them are dead.” Benjamin Franklin, Poor Richard’s Almanack

Secrets, especially business secrets, are hard to keep, and companies may take extreme measures to protect their valuable confidential assets. There are times, however, when your confidential information may need to be shared in a limited manner.  When discussing a potential business sale, franchise agreement, collaboration, subcontractor hiring, or other transaction, it’s important to protect yourself from the intentional or accidental spilling of secrets.

Before you begin sensitive business discussions, we recommend that the two parties begin by signing a nondisclosure or confidentiality agreement. A nondisclosure agreement enables you to explore a potential business relationship without fear that your existing business secrets will be compromised. In essence, the parties agree that certain confidential information may only be used to evaluate the potential relationship and may not be disclosed to third parties.

Among the important questions to examine are:

1. What information must be kept confidential?
2. Are there any exceptions in which confidential information may be disclosed? For example, can the information be shared with your attorney or financial advisor? 
3. What efforts are required to prevent disclosure? 
4. How long does the confidentiality agreement last? 
5. If confidential information is disclosed in violation of the agreement, what remedies do you have? 

Because there are at least 45 tips to consider when reviewing a nondisclosure agreement, you may wish to consult an attorney to make sure that your secrets are well-kept.

German Labor Ministry Bans After-Hours Employee Contact

In a previous post, we examined whether employees could owe overtime pay to non-exempt employees who use their company smartphones after normal working hours and how employers should establish clear policies governing smartphone usage.

In Germany, this need for clarity was highlighted when the country’s labor ministry recently banned managers from contacting employers after-hours except in case of emergency. . Under the guidelines, employees are not to be penalized for failing to check voicemails after hours and should only be contacted if the matter cannot wait until the next workday. Other German employers, including BMW and Volkswagen, have also established policies to limit after-hours contact. The policy comes in the wake of an apparent suicide by a Swiss telecom executive who had admitted the constant use of his smartphone caused him extreme stress.

While these guidelines were established to protect the “mental health” of employees rather than to avoid overtime pay, the principle is the same. Employers and employees both benefit when clear policies are established and communicated.

Sixth Circuit Rules on Telecommuting as Reasonable Accommodation

Yesterday, the 6th Circuit Court of Appeals issued a ruling in EEOC v. Ford Motor Co., deciding in favor of an employee who requested to telecommute to work for medical reasons.

The Ohio Employer's Law Blog has this summary of the case, where a key issue was whether physical presence was an essential function of the employee's job:

Yesterday, in EEOC v. Ford Motor Co., the 6th Circuit, for the first time, recognized that modern technology is making telecommuting a realistic reasonable accommodation option. . . . 

"[W]e are not rejecting the long line of precedent recognizing predictable attendance as an essential function of most jobs.… We are merely recognizing that, given the state of modern technology, it is no longer the case that jobs suitable for telecommuting are “extraordinary” or “unusual.” … [C]ommunications technology has advanced to the point that it is no longer an “unusual case where an employee can effectively perform all work-related duties from home.” 

For more, visit the Ohio Employer's Law Blog.

The Benefits of Federal Trademark Registration

Registering your business’s trademark with the United States Patent & Trademark Office (USPTO) is not a requirement for protecting your mark. However, any “common law” rights based on the use of your mark are far more limited than the federal protections. For example, although you can file for trademark protection in Ohio, the state’s trademark statutes do not prevent someone from using the same mark in Indiana. A business which later discovers an existing trademark (like this North Carolina taco restaurant chain) could be forced to rebrand itself in order to avoid claims of infringement. 

Although you may still be able to establish rights based on your legitimate use of the mark, there are significant advantages to federal trademark registration.  The USPTO lists at least five important benefits of registration:

1. Constructive notice nationwide of the trademark owner's claim. Any potential users of the same mark are presumed to know that your claim is federally protected, even if the infringer does not have actual notice. For example, even if a soft drink maker had never heard of Coca-Cola and acted in good faith, his attempt to trademark the new drink name Koca-Cola would likely be denied because he is assumed to know that he is infringing.


2. Evidence of ownership of the trademark. Federal registration proves that you have the exclusive right to own and use the mark nationwide, barring others from trademarking the same mark or claiming ownership.


3. Jurisdiction of federal courts may be invoked. If your mark is federally protected, you can seek to have a trademark infringement case heard in federal, rather than in state, court.


4. Registration can be used as a basis for obtaining registration in foreign countries.  Marks can also be protected in foreign countries; however, in order to register your mark in a foreign country, you must first have a U.S. registration.


5. Registration may be filed with the U.S. Customs Service to prevent importation of infringing foreign goods. Once your mark is federally registered, it can be filed with U.S. Customs and Border Protection to stop imitation foreign goods from infringing on your protected mark. This can prevent infringing goods from being imported, as in recent cases involving counterfeit Hermes handbags or Levi’s jeans.

Other important advantages of federal trademark registration include the right to use the ® trademark symbol and the potential of receiving higher damages in a lawsuit.

As a result, in order to fully protect your business's trademark, federal protection is a must.

iPhones and Overtime

According to a recent Pew Research study, 55% of American adults have a smartphone and 63% of cell phone users use their phone to go online. The growth of smartphone usage has made it easier – and more acceptable – for employees to perform job responsibilities before or after the regular working day.

For employers, however, these technological advances can be dangerous. The Fair Labor Standards Act (FLSA) requires non-exempt employees to receive overtime pay for working more than 40 hours in a week. If non-exempt employees use their phones to work after-hours, the employer could owe them overtime pay.

A pending case in Illinois federal court, Allen v. City of Chicago, has brought this issue to light. In the lawsuit, a Chicago police officer alleged that he was required to regularly check his employer-issued Blackberry device and respond to e-mails, voice mails, and text messages while off duty but not paid overtime. While it is important to note that a final decision in the case has not been reached, the court has allowed the suit to proceed, finding that Allen made plausible allegations that the City violated the FLSA.

Whether or not Allen is ultimately successful, the case can already teach employers a few lessons:

1. As much as possible, only provide smartphones to exempt employees who are not subject to overtime pay requirements. 
2. If non-exempt employees need smartphones, establish clear written policies to detail who should be issued a phone and what type of after-hours use is permissible. 
3. Require the non-exempt employee to carefully track any after-hours work, and review the employee’s records for accuracy. 
4. Provide training to managers, supervisors, and employees, to ensure knowledge and compliance. 

For a more detailed look at these issues, visit For the Defense, the Legal Intelligencer, or Parker McCay.

Managing the Madness for Employers

As the NCAA Men’s Basketball Tournament tips off during the middle of the workday today with Ohio State’s opening game against Dayton, employers have a dilemma.

ThinkHR's Laura Kerekes put it this way:

So let’s face it: productivity is reduced somewhat during March Madness. But also consider that office morale and camaraderie can also be impacted favorably by this event, too. So what should an employer do? Embrace March Madness, ignore it, or manage it? 
 
Recent calculations by global outplacement firm Challenger, Gray & Christmas, Inc. estimated that office pools and online streaming of basketball games could cost America’s employers as much as $1.2 billion for every unproductive work hour during the first week of the tournament. In addition, office pools often violate state or federal anti-gambling laws.

Despite these dangers, employers gradually seem to be embracing, or at least tolerating the tournament. HR executives point to the positives of team building and employee engagement. At least one recent study says March Madness may even boost employee morale. In addition, employers likely realize that the ubiquity of smartphones allows avid fans to follow the games regardless of where they are.

So what should employers do to manage the madness? Recommendations include a free-to-enter company-wide office pool; televisions in break rooms; a relaxed dress code to allow employees to wear their team’s colors; or even flexible hours to catch the big game. And as always, well-defined and clearly communicated office procedures are a must.

Landlords Must Keep Premises Safe for Guests

The Ohio Supreme Court has ruled that landlords have the same duty to the guests of tenants as they do to tenants to keep their common areas safe. 
 
The case in question, Mann v. Northgate Investors, L.L.C., grew out of a 2007 incident in which a woman visited her friend's Columbus apartment.  When leaving at night, she fell down a stairwell that lacked adequate lighting and was severely injured.
 
In the February 12 decision, the court unanimously agreed that a landlord's duty under Ohio law to “[k]eep all common areas of the premises in a safe and sanitary condition” also extends to guests of tenants. Violation of this duty is negligence per se.

For more, read the full opinion or the Columbus Dispatch report on the case.

Facebook After Death: What Happens to Your Digital Assets?

From bank accounts to social media, more and more of our personal information is stored and accessed online. But after someone dies, both these digital accounts and the “digital assets” (from e-mails to stored files) contained in the accounts can become difficult for the deceased’s representative to access.

Typically, access to a deceased’s online accounts or assets is governed by each site’s policies. For example, Twitter requires a death certificate and a signed statement from the deceased’s representative before closing an account. Shutterfly will provide access to an account with proof of a death certificate and power of attorney document. Yahoo allows a deceased’s account to be closed by the personal representative but not accessed. Requests to close Instagram accounts can be made entirely online by someone other than the representative. Gmail warns that its 2-step process may take several months and require, among other things, an e-mail from the deceased and a court order.

In an effort to streamline family member’s access to online information, some states have proposed or enacted legislation to allow family members or representatives to access digital assets or accounts. For example, Idaho’s law specifically gives the power to an estate’s personal representative to “take control of, conduct, continue, or terminate any accounts of the decedent” on social networking, microblogging, or e-mail websites. Ohio has not yet enacted such a law.

It is unclear how this patchwork of new law will affect existing probate, criminal, or other statutes. As a result, the Uniform Law Commission is currently drafting model legislation governing Fiduciary Access to Digital Assets to give guidance to the states.

Until this new area of law is settled, both clients and attorneys should include digital asset consideration in the estate planning process. We are now recommending that our clients incorporate language into their estate plans to specifically grant personal representatives the power to access digital assets after death.

DeWine: Counties Can't Charge for Online Access to Public Records

Earlier this month, Attorney General Mike DeWine issued an advisory opinion that counties may not charge fees to access online copies of public records.

In the opinion, DeWine’s office noted that Ohio’s public records law requires that public records be made available for inspection and that, when requested, copies of the records must be made available at cost.

The Attorney General’s office determined that providing access to online documents is equivalent to allowing the documents to be inspected. Therefore, since the records were only being made available for inspection and were not copies, the county was not permitted to charge a fee.

The opinion was prompted by the Monroe County Auditor’s Office, which had contracted with a private company to provide online access to public records. The county charged users a monthly $15 subscription fee to access the records.

For more, read the full opinion or a report from the Columbus Dispatch.

A Tenant's Unpaid Water Bill: Who's Responsible?

Imagine this scenario. A tenant suddenly vacates her apartment and moves out of state, leaving her water bill unpaid. Who is liable for the outstanding bill?

Under Ohio law, landlords can be held responsible for a tenant’s unpaid water bills. A municipality has the power to place a lien on the property and collect the payment through property taxes or bring a lawsuit against the property owner to recoup the money.

Unpaid bills can mean a large financial loss for the city, so government leaders have a high incentive to collect. For example, a 2013 investigation in Toledo found that the city was owed almost $24 million in unpaid water bills.  If cities seek to recover these missing funds from property owners, a landlord's credit and bottom line can both be affected.

As a result, landlords should take some proactive steps to protect themselves and reduce their liability for a tenant's delinquent bills, such as:

1. Perform credit checks on prospective tenants as part of a background check. This can eliminate potentially risky tenants who might be unable to pay a bill. 
2. Consider requiring a co-signer for some tenants, such as students with limited income. 
3. Rather than putting water service in the tenant's name, put the service in the landlord's name and charge additional rent to cover the cost of water. 
4. Modify the lease to make a continued tenancy contingent on the payment of water bills. If the tenant does not pay the water bills, landlords may be able to begin eviction proceedings. 
5. In order to monitor and prevent potential problems, ask the utility company to send the landlord a copy of the tenant’s monthly bills.
6. Educate and encourage tenants to check for leaks or prevent wasteful water practices in order to reduce the possibility of unusually high bills.

Non-Compete Agreements: What is Reasonable?

Modern employment or franchise contracts often include a noncompetition clause or agreement which restricts an employee’s ability to compete with the employer after ending his employment. These provisions are designed to prevent a former McDonald’s franchisee from launching a new Burger King franchise down the street or prohibit a paper salesperson from soliciting his former employer’s clients from a competing company in the same building.

For example, a noncompetition clause might include language such as:

• “For a period of one year following the termination of the employment relationship, Employee agrees not to engage in any way in a similar or competing business within fifty miles of the business location.”
• “For a period of two years following the termination of the employment relationship, Employee agrees not to directly or indirectly solicit any person or entity who are or have been customers of the Employer.” 

These clauses are valid to protect the legitimate business interests of the employer. However, the restrictions, particularly the time and geographic restrictions must be reasonable.

In Ohio, this means that the restrictions are 1) no greater than required to protect the employer; 2) do not impose undue hardship on the employee; and 3) do not injure the public. (Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 26 (Ohio 1975)).

When determining reasonableness, a court can examine a variety of issues such as the duration and distance restraints; whether the employee has confidential information; whether the employer receives a disproportionate benefit from the agreement; and whether the covenant eliminates ordinary competition or unfair competition.  (Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 26 (Ohio 1975)).

If a court determines that the restrictions are unreasonable, it can modify the employment agreement. For example, a contract prohibiting court reporters from engaging in court reporting or stenography anywhere in Franklin County for two years was reduced by the court to a one year restriction within the city of Columbus. (Rogers v. Runfola & Associates, Inc., 57 Ohio St. 3d 5, 565 N.E.2d 540 (1991)).

Noncompetition clauses are important to include in an employment contract, but employers should ensure that their agreements are narrowly tailored, reasonable in scope, and well-drafted.

New Tax Cut for Ohio Small Business Owners

Most Ohio small business owners are eligible for a 50 percent deduction on their first $250,000 of business income as part of tax cuts approved last year by the Ohio legislature.  As part of the tax cut, a business owner can exclude 50 percent of Ohio net business income from the adjusted gross income reported on the state personal income tax return.

Owners of and investors in, Ohio businesses structured as pass-through entities (such as sole proprietorships, partnerships, S-Corps, and Limited Liability Corporations) are eligible for the tax cut.  Owners and investors receiving income from the pass-through entity are required to pay personal income taxes on that income.

For more information, read the full tax alert issued by the Ohio Department of Taxation or check your eligibility for the deduction.

Does a Temporary Disability Require a Reasonable Accommodation?

Employers are required to provide reasonable accommodation to qualified employees with disabilities, unless accommodation would cause undue hardship. But what if the disability is only temporary?

The Employer Handbook blog recently posed this question:

Let's assume that your employee breaks his leg. Doctors tell your employee that he won't walk normally for seven months. Without surgery, bed rest, pain medication, and physical therapy, he "likely" won't be able to walk for more than a year after the accident. 

Bottom line: The employee will heal, but it will take some time. 

But is your employee disabled under the Americans with Disabilities Act, as amended by the Americans with Disabilities Act Amendments Act? 

In a recent case, the Fourth Circuit Court of Appeals concluded that because "disability" has a broad definition, temporary disabilities may be covered if they are severe. As a result, employers should not immediately dismiss an employee's temporary disability, because it may require a reasonable accommodation.

Read the entire blog post here.

Can You Hear Me Now? Leasing Property for Cell Towers

In addition to leasing property for mineral extraction, landowners may be approached by wireless companies proposing to lease the individual’s property for a cell tower site. As with any lease or contract, property owners can negotiate the terms to ensure the agreement is a win for both sides.

One of the most scrutinized provisions of the lease is the monthly rate paid to the property owner by the wireless company. As you might expect, rates vary widely. Essentially, the more valuable your land is to the company, the higher the monthly rate.

A variety of factors influence the demand for the land, and thus its value. For example:

1. Where is the site located? As with any commodity, demand drives price. Sites that are in heavily urban areas or along busy highways may bring a higher rate due to the number of potential wireless users.
   
2. Are there available alternative sites? A landowner has an advantage if he owns the best site in a twenty mile radius.
3. How expensive is construction of the tower? A freestanding tower will likely cost more than simply adding an antenna to an existing church steeple. Topography of the land or existing availability of utilities can also affect cost.
   
4. How long will the approval process take? If the community’s zoning or development approval is minimal and straightforward, the wireless company can more quickly place the tower into service.

Of course, monthly rates are not the only provision of a cell tower lease to consider. To make sure you are maximizing your lease potential, please consult an attorney.