Month: January 2018

Labor & Employment

New California Laws

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The following was written collectively by our Labor & Employment Department.

New California Laws

1. California Salary History Ban

AB 168, which enacted California Labor Code Section 432.3, is intended to promote equal pay, particularly between men and women. In passing AB 168, which went into effect on January 1, 2018, California joins a handful of states (Massachusetts, Delaware and Oregon) and municipalities (New York City, Philadelphia and San Francisco) which have enacted similar measures. In sum, AB 168 prohibits all California employers (including public employers) from

  • Inquiring or seeking from job applicants, whether “orally or in writing, personally or through an agent,” salary history information (the law does not define the term “salary history); and
  • Relying on or considering salary history as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant. Continue reading “New California Laws”
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Labor & Employment

New York: New Laws

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The following was written collectively by our Labor & Employment Department.

New York: New Laws

1. NY State Paid Family Leave Law Goes into Effect

In 2016, New York State adopted a 12-week paid family leave policy for New York employees (the “Paid Leave Law”). Once fully implemented, the Paid Leave Law will provide New York employees with up to 12 weeks of job-protected paid family leave for the purpose of (1) caring for a new child, (2) caring for a family member with a serious health condition, or (3) relieving family pressures when a family member, including a spouse, domestic partner, child or parent, is called to active military service. Starting on January 1, 2018, employees will be eligible for eight weeks of paid leave, earning 50% of their weekly pay (capped at 50% of the statewide average weekly pay). The number of weeks of leave and amount of pay increases yearly until, by 2021, employees will be eligible for the full 12 weeks of paid leave, earning 67% of their weekly pay (capped at 67% of the statewide average weekly pay).

Paid leave to care for a new child will be available to both men and women and will include leave to care for an adoptive or foster child. An employee may take paid leave to care for a new child any time within the first 12 months after the child’s birth or 12 months after the placement for adoption or foster care of a child with the employee. Paid leave to care for a family member with a serious health condition includes leave to care for a child, parent, grandchild, grandparent, spouse or domestic partner. Continue reading “New York: New Laws”

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Trusts, Trusts & Estates

How Does the Suspension of Miscellaneous Itemized Deductions Impact Your Trust or Estate?

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By Jeffrey Eisen and Daniel Cousineau

The Tax Cuts and Jobs Act suspends miscellaneous itemized deductions (i.e., those deductions subject to a 2% floor) from 2018 through 2025, creating an incentive for taxpayers to try and characterize their expenses as giving rise to itemized deductions rather than miscellaneous itemized deductions. General discussion of the new tax law has overlooked this repeal’s impact on estates and non-grantor trusts (i.e., most irrevocable trusts), including a time-sensitive planning opportunity.

Prior to the new legislation, an individual could claim miscellaneous itemized deductions for certain types of expenses that were not specifically enumerated in Internal Revenue Code Section 67. These expenses were not deductible until they exceeded 2% of an individual’s adjusted gross income. Expenses specifically enumerated in Section 67 were itemized deductions not subject to the same 2% floor, making them more attractive to taxpayers than miscellaneous itemized deductions. The new legislation suspends miscellaneous itemized deductions but keeps itemized deductions (subject to certain other restrictions not relevant here). Continue reading “How Does the Suspension of Miscellaneous Itemized Deductions Impact Your Trust or Estate?”

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Tax, Trusts & Estates

#MeToo Can Be #Costly

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By Jeffrey Davine

General Rule- Deduction for Settlement Payments.

If an employer settles a claim made by an employee (or former employee), the employer may generally claim a deduction for the amount that is paid to the employee to resolve his/her claims.  The expense is treated as an ordinary and necessary business expense and a deduction may be claimed pursuant to Section 162(a) of the Internal Revenue Code.

For example, if an employer pays an employee $25,000 to settle the employee’s claims for back wages, emotional distress, and age discrimination, the employer may deduct the $25,000 on its tax return (the employer’s tax reporting obligations with respect to the $25,000 payment and how the payment should be allocated among the claims made by the employee are topics for a different article). Continue reading “#MeToo Can Be #Costly”

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International Business, International Trade, MSK Blog

New Tariffs: Trade War Washing Ashore?

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By Susan Kohn Ross

Yesterday, January 22, 2018, U.S. Trade Representative (USTR) Robert Lighthizer announced the imposition of safeguard tariffs on solar cells and modules. Much has been said in the general press about this case, but only now is the key point starting to register, and is something international traders immediately thought about – is President Trump starting a new trade war with China?

By way of a quick summary, after seeking relief through the antidumping and countervailing duty laws and not getting the desired market relief, Suniva, later joined by SolarWorld, invoked Section 201 of the Trade Act of 1974. The appropriate petition was brought, the International Trade Commission (ITC) conducted the required proceedings, found detrimental harm, and made recommendations to the President. While disagreement among the Commissioners was acknowledged, most favored an increase in duties, and President Trump agreed. Safeguard tariffs have been imposed for four years – the maximum length of time permitted – on a per year basis – 30%, 25%, 20% and 15%. The USTR announcement also states the first 2.5 gigawatts of imported cells are excluded from the safeguard tariff. A critical point here is these safeguards are being imposed on both the cells and the modules, regardless of where made, as would be expected from a global safeguard, but the solar cells are overwhelmingly made in China. Continue reading “New Tariffs: Trade War Washing Ashore?”

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International Business, International Trade, MSK Blog

Border Searches of Electronic Devices

Men dress up lifestyle hold smartphone screen shows the key in the Security online world. the display and technology advances in communications. The concept of advancement in living in the future.
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By Susan Kohn Ross

Earlier this month, MSK attorneys David Rugendorf and Frida Glucoft published an Alert summarizing the latest directive issued by Customs and Border Protection (CBP) regarding the search of electronic devices. A copy of their original article can be found here – Hold That Call International Travelers. Given the increasing likelihood of any traveler’s electronic devices being subjected to a search, whether arriving or departing the U.S. by air, ocean or land, these recent changes warrant a deeper dive.

First, for those who want to read the actual document, it is CBP Directive 3340-049A. As the earlier Alert noted, CBP has the broad rights to search any individuals, luggage, and cargo entering and leaving the U.S. Searches of cargo are governed by other laws and regulations. This directive deals only with arriving and departing travelers and their devices. Continue reading “Border Searches of Electronic Devices”

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Tax

Has Your Partnership or LLC Agreement Been Updated to Comply with the New Tax Rules?

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By Robin Gilden and Daniel Cousineau 

The new partnership audit rules substantially change the audit procedures for partnerships (including multi-member LLCs) and may require that you update certain provisions within your partnership or LLC agreement to maintain compliance.

In partnership audits, the IRS has historically adjusted the returns of partners, rather than the partnership, because partnerships do not actually pay an entity level tax but pass through their income and losses to the partners. The Bipartisan Budget Act of 2015 (the “Act”) substantially changed these rules for partnerships with tax years beginning after December 31, 2017.

Under the Act, the IRS will examine partnerships and make any adjustments at the partnership level in the year that the audit is completed rather than the year under review. The partnership will pay the tax, interest and penalties on any underpayments at the highest statutory rate for each partner’s distributive share of the underpayment (i.e., the highest corporate rate for corporate partners and the highest individual rate for individuals). This change in the rule shifts the cost of the adjustment to the partners holding a partnership interest at the time of the audit rather than those partners who held a partnership interest in the year of underpayment. Continue reading “Has Your Partnership or LLC Agreement Been Updated to Comply with the New Tax Rules?”

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Immigration, International Business, MSK Blog

Your Driver’s License Is Still Valid For Domestic Air Travel, At Least For Now

business travel
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By Benjamin Lau and David S. Rugendorf

As the Department of Homeland Security continues to phase in the requirements of the REAL ID Act, some domestic airline travelers may be prohibited from using their state-issued driver’s license or ID card in order to board their flight.

After January 22, 2018, state-issued driver’s licenses and IDs may be used for domestic airline travel only if they were issued by a state which is in compliance with the REAL ID Act or has been granted an extension by the Secretary of Homeland Security. Currently, all 50 US states, Puerto Rico, Guam, and the US Virgin Islands are either in compliance with the REAL ID Act or have been granted an extension by the Secretary of Homeland Security.  The only US nationals impacted by the January 22, 2018 date are individuals who possess driver’s licenses or IDs issued by American Samoa or the Northern Mariana Islands. Continue reading “Your Driver’s License Is Still Valid For Domestic Air Travel, At Least For Now”

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Immigration, International Business, MSK Blog

Hold That Call International Travelers: CBP Doubles Down on Airport Searches of Electronic Devices

Man Checking Mobile Is Charged At Airport Security Check
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By David S. Rugendorf and Frida P. Glucoft

Many international travelers express surprise when, after arriving at LAX, JFK or other US airports or land borders, the US Customs and Border Protection (CBP) officer directs them to hand over their smartphone, laptop or related electronics device for a search. As disconcerting and invasive as it may be to have a uniformed total stranger work his or her way through one’s e-mails, photos and hard drive, one should be aware that it is generally within the authority of immigration and customs officials to conduct such searches. Just as one’s person and luggage is subject to search upon arrival to the US, so are one’s electronic devices. International travelers should be forewarned that these types of searches may become more commonplace than they already are. CBP reports that in 2017, it conducted more than 30,000 electronics device searches at airports and land borders, almost double the amount of searches it conducted in 2016. Now with a fresh policy in place, it is safe to expect this upward trend to continue. Continue reading “Hold That Call International Travelers: CBP Doubles Down on Airport Searches of Electronic Devices”

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