New Law in the Brief (Sort of): Act 162 and Taxes for Cash-Based Businesses

Hey everyone, long time no see . . . been very busy, but I am grateful for all the business deals that everyone has been doing.  It makes for an optimistic outlook in the economy and that there are a lot of creative people in Hawaii looking to be successful.
Anyway, I am writing this post on Act 162 (SB1197 SD1 HD1) of the 2013 Hawaii Legislative Session because I am wondering did you file your General Excise/Use Tax Returns (more commonly known as GET)?  It was due on July 20th for monthly, quarterly, and semiannual (so all three categories basically).

Further, this Act even though it is so short highlights several key concepts to understanding government, law, and business.  Specifically the following aspects: (1) the concept of “sunset” provisions and how legislation is tied together over the years; (2) how laws are enforced (namely through taxes and penalties); and (3) the applicability of the law to people/businesses who don’t think the law applies (cash-based businesses and the GET in this case).

Let’s get to it!

Act 162: Relating to Tax Administration

Act 162’s measure title doesn’t really help tell you what it does. All it says is “relating to tax administration” so I can see how someone may just gloss over the title.  However, the description, which says “Deletes the sunset provisions for the special enforcement section of the department of taxation.” provides no insight either, unless you know what is the special enforcement section of the Department of Taxation.

Sunset Provisions and Repealing Them

Before, I get to the Special Enforcement Section, let’s touch upon the first concept I mentioned, the “sunset provision”.  So many times legislators are not sure about the effectiveness of a proposed law, it might be for a variety of reasons, may be the problem will go away, there is not enough money to fund the project, etc . . . so they put in a sunset provision, that is the law will repeal itself upon a certain date in the future (i.e. it will cease becoming law upon that date).  If you are a contract buff, consider it like a specified termination date in the agreement.

In Act 162, this is how the language looks like that references the sunset provision:

SECTION 1.  Act 134, Session Laws of Hawaii 2009, is amended by amending section 13 to read as follows:

“SECTION 13.  This Act shall take effect upon its approval; provided that:

(1)  The amendments made to section 235-20.5, Hawaii Revised Statutes, by this Act shall not be repealed when section 235-20.5, Hawaii Revised Statutes, is reenacted on January 1, 2011, pursuant to section 8 of Act 206, Session Laws of Hawaii 2007; and

(2)  Sections 231-F, 231-J, 231-K, 231-L, 231-M, 231-N, 231-O, and 231-P, Hawaii Revised Statutes, in section 2 of this Act shall take effect on July 1, 2009[; and

(3)  This Act shall be repealed on June 30, 2014, and section 235-20.5, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of section 8 of Act 206, Session Laws of Hawaii 2007; provided further that sections 231-1, 237-9, and 237-12(b), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act].”

Notice the lined-through section?  That is the sunset provision from the original law that was passed, Act 134 from session 2009, which now Act 162 (2013) is amending.   So by strike-through, the goal of Act 162 is to delete that sunset provision from the Act 134 (2009) law.  Since no new date was put in, rather they deleted the whole section, this would mean that now Act 134 (2009) is permanent.

Click here to see the bill in its entirety.  Notice, that Act 162 DELETES the sunset provision.

Special Enforcement Section and Tying it Together

However, deleting the sunset provision of the previously enacted bill has no meaning to you unless you know what that bill did.  So notice that in Act 162 (2013) it tells you exactly that piece of information.  Specifically, that “Act 134, Session Laws of Hawaii 2009, is amended”, so if you look up Act 134 (2009) you would discover that the purpose of that act earlier was to:

The purpose of this Act is to provide the department of taxation with the necessary resources and tools to target high-risk, cash-based transactions to shore up confidence in Hawaii’s tax system for those that do comply.  Importantly, the legislature intends that the enforcement resources provided focus on the civil collection and enforcement nature of Hawaii’s tax laws.  In an effort to demonstrate the targets of this undertaking, this Act defines “cash-based business” for enforcement purposes, and the department of taxation is directed to focus on such businesses.  At the same time, education is equally important as enforcement.  Therefore, this Act requires the department of taxation to reach out to industry groups, specific demographics in the economy, and practitioners to educate taxpayers on their tax responsibilities.

While this is only describes the purpose, an in-depth look at the provisions of the bill would show that the Special Enforcement Section was created in the Department of Taxation and that its powers included investigation, enforcement, etc . . . for violations of the tax code, specifically targeting “cash-based businesses”.

Now what businesses primarily deal in cash?  You would probably think those vendors who are at farmers markets, craft and fairs, and swap meets.  You would be right because the since the creation of the Special Enforcement Section they have investigated numerous cash-based vendors and found that when asked for their tax license, they had none.  You can see some of the specifics from the Section’s reports by clicking the following for: (1)  July 1, 2009 through June 30, 2010 and (2) July 1, 2011 through June 30, 2012.

What you should take away from all of this is that if you are a cash-based business, you should realize that the deletion of the sunset provision effects you because the Special Enforcement Section of the Department of Taxation has been made permanent.  So it will continue to investigate and enforce penalties against you, if you are in violation of the law. Primarily focusing on the fact that if you do not have a tax license to conduct business you will pay a penalty.

What’s the Penalty for Not Having a Tax License?

Act 134 (2009) amended Hawaii Revised Statute 237-9 by inserting the following language:

Any person who receives gross income or gross proceeds of sales or value of products from engaging in business in the State and who fails to obtain a license or receives gross income or gross proceeds of sales or value of products from engaging in business in the State without a license required under this section may be fined not more than $500; provided that a cash-based business may be fined not less than $500 and not more than $2,000, as determined by the director or the director’s designee.  The penalty under this subsection shall be in addition to any other penalty provided under law and may be waived or canceled upon a showing of good cause.

So as a cash-based business can you afford penalties like these? 

But the Law Doesn’t Apply to Me! I only do this Occasionally . . . every Saturday, Sunday and Every Other Wednesday

I know, I can hear it right now, as I have with many clients, “X law does not apply to my Y situation” . . . well, to be honest your focus is perhaps cooking delicious food for people or creating a unique piece of art, but your craft is not the practice of the law (lawyers) or the application/enforcement of the law (government agents), so how can you be absolutely sure the law does not apply to you?

What you should realize that the words and definitions for the tax code are broad, so long as you are “engaged in business” you are subject to the tax.  HRS 237-2 defines:

“Business” as used in this chapter, includes all activities (personal, professional, or corporate), engaged in or caused to be engaged in with the object of gain or economic benefit either direct or indirect, but does not include casual sales.

I know you see it, it says “does not include casual sales” and you feel that you only show up on Saturdays to do your sales, well we look again at HRS 237-1 and find that “causal sales” means an “occasional or isolated sale or transaction” involving:

     (1)  Tangible personal property by a person who is not required to be licensed under this chapter, or

(2)  Tangible personal property which is not ordinarily sold in the business of a person who is regularly engaged in business.

Yeah, it is hard to imagine the Department of Taxation’s Special Enforcement Section buying into “occasional or isolated” when you show up for your slotted vendor stall on a regular section, and you are selling the same goods that you did the week before.  However, everyone’s facts and situation is different and it might be something worth looking into, but the point of this post is to generate some thought for you the reader the following:

  1. sunset provisions are temporary, but by deleting them it makes the law permanent;
  2. that a new law in one year you feel might not apply to you may actually have huge ramifications for your business because it is tied to a prior one that has continuously effected you; and
  3. your business is your business, but the applicability of the law is for enforcers and practitioners, however they can help you make better risk management decisions based on these laws. 

At the end of the day consider seeking professional (law, tax, and accounting) help to make determinations for your cash-based business.   As you’d rather be paying taxes on time rather than paying penalties and taxes for trying to avoid a law that you did not think applied to you because you were just taking cash or viewed yourself as “casual”.  It might be the time to register your LLC or corporation, update your accounting practices, or make better financial decisions in light of your taxes.

Mahalo for staying through this lengthy post!

P.S.

Need instructions on filing your returns? Click on this link to be taken to the State of Hawaii’s Department of Taxation’s General Instructions.

Considering getting a LLC or Corporation because your cash-based business needs it?  Review my downloadable one-sheet.  If you are a more visual person take a look at this infographic.

LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.

Social Media and the Law: Legislative and NLRB Updates

The following information was presented by me to the Social Media Club of Hawaii’s Social Media “Boot Camp” for Hawaii Recruiting, Staffing and Hawaii Human Resources Professionals on Friday, February 22, 2013.  You can find a downloadable pdf version on the “Resources” page of my website. Here was what was discussed:
Legislative Updates

Summary: Generally, speaking states are moving to prohibit employers from asking for usernames, passwords, and access to an employee’s or potential employee’s personal social networking account.  The argument goes that they need access to the personal accounts as a way to protect proprietary information, trade secrets, to comply with federal or trade association regulations, or to prevent an employer of being exposed to legal liability (due diligence).  The countervailing argument is that the personal account has nothing to do with one’s application to a job or doing the job, and is an invasion of privacy.  Thus far, it seems privacy advocates are carrying the day as four states last year, Illinois, Maryland, Michigan, and the latest California have adopted laws that prevent employers from accessing personal social media accounts of employees or potential employees. Hawaii’s 2013 legislative session has two bills fashioned after California’s.

Federal: Representative Eliot Engel of New York has recently introduced H.R. 537, the ‘Social Networking Online Protection Act’ (SNOPA).  The bill if enacted would prohibit employers from requiring/requesting that the employee or applicant provide the employer their user name, password, or other means for accessing the employee/applicant’s private email account on any social networking website; OR discharge, discipline, discriminate in employment or promotion, or take adverse action against them for refusing/declining to provide a user name, password, or access OR if the employee/applicant files a complaint under the Act (basically asserting their right to sue to protect themselves).  Finally, it gives the US Secretary of Labor to assess a civil penalty of up to $10,000 for violations and stopping the violating actions. Further, US district courts can give relief to the affected person through employment, reinstatement, promotion, and the payment of lost wages and benefits.

State: During this 2013 Hawaii Legislative session, two bills, HB713 and SB207, work for the most part, very similar to the Federal law, and the language is based mostly on California’s recently adopted law.  I will focus on HB713 as I have worked with this bill in particular.  The current incarnation of HB713, is an HD2 that was passed out of the House Judiciary Committee, yesterday (2/21) and basically uses broad language to prohibit an employer from asking an employee or potential employee their user name, password, or trying to get access to their personal social networking account.  Currently, the HD2 would have the Hawaii Civil Rights Commission investigate a claim, and would operate similarly to any other investigation that the Commission already does for other issues under its authority. Prior variations had DLIR handle the investigation.

Bottom line:  This issue is not going away, and it is clear that as time goes on it is more likely than not employers will be denied access to personal social media accounts.  However, this still does not prevent workplace investigations and other necessary steps when there may be a violation, and the social media account is involved. For example, situations where there is workers’ compensation fraud or the wrongful transmission of trade secrets.  The best situation for employers is still likely that workers use their personal devices and personal time to do their personal social networking, and not on company time, company devices, and company email accounts. As always check with attorney or HR specialist on policies and procedures.

 

NLRB Rulings

Summary:  The National Labor Relations Board (NLRB) continues to apply the National Labor Relations Act (NLRA) to situations where the employer has taken adverse actions against employees due to postings on social media sites.  Further, it has frowned on overly broad social media policies by companies trying to regulate employees’ social media behaviors. However, a recent DC Court ruling has stated that President Obama’s recess appointments to the NLRB were invalid. However, this should not be taken as a sign that employers can ignore the recent rulings on social media policies and firings.

In Hispanics United Buffalo, the NLRB held that the termination of five employees due to their Facebook posts, where the company claimed harassment by the five on another employee, violated the NLRA. The posts and comments were deemed as a discussion of job performance, and dealt with the preparation of co-workers to defend against allegations of poor work.  The comments were prompted when one threatened to complain to the boss that others were not working hard enough, which in turn prompted these comments: “My fellow co-workers, how do you feel?” “Try doing my job. I have five programs,” “What the hell, we don’t have a life as is,” as well as other expletive-laden responses. The NLRB ruled this was “concerted activity” for “mutual aid.”

However, in The Arizona Star Daily situation, a reporter that had posted Twitter comments stating that “What?!?!?! No overnight homicide. … You’re slacking, Tucson.” Another began, “You stay homicidal, Tucson.” was not protected as those comments were offensive, and not concerted activity, nor about working conditions.  Similarly, an Illinois bartender fired for posting on his Facebook that he was unhappy about not receiving a raise in five years and calling customers “rednecks” and that he hoped they chocked on glass as they drove home also did not meet protective-worthy status.

NLRB on Social Media Policies: Wal-Mart’s social media policy, after working with the NLRB, received praise, where it prohibits “inappropriate postings that may include discriminatory remarks, harassment and threats of violence or similar inappropriate or unlawful conduct.”  Contrast that with the finding that General Motor’s policy was unlawful for instructing that, “offensive, demeaning, abusive or inappropriate remarks are as out of place online as they are offline.”  The NLRB felt it proscribed a broad spectrum of communications that would included protected criticisms of the employer’s labor policies or treatment of employees. Similarly, Costco struck out on an overly broad blanket prohibition against employees’ posting things that “damage the company” or “any person’s reputation.”

While, it is hard to draw any clear distinctions, it does seem clear that employers should adopt social media policies that are specific rather than impose across-the-board prohibitions; the NLRB seems to take into account chilling effects on speech in concert by workers through social media platforms, especially where working conditions are touched upon. However, a worker’s general gripes and disparaging comments about customers or groups of people will less likely be protected under the NLRA.

 

Overall Reminders:  Recent court cases have indicated that a series of emails can be taken together as a contract.  Therefore, when engaging in employment activities, such as using LinkedIn, recruiters or HR persons should be careful not to make a written offer.

Also social networking is becoming a part of people’s everyday Internet interaction. By now it is clear that information is permanent when published on the web, as many people  can screen capture, take a picture with their mobile device, etc . . . so companies should take great care when using social media as delivery system for information.

While this is a concern for marketing and PR, HR should remember it has the responsibility of dealing with the pieces of terminating, disciplining, and investigating the marketer or executive who creates the firestorm on social media.  Therefore, all decision-makers in a company need to understand social media policy.

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LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.

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Last Post of 2011 and Looking Forward to 2012


Aloha Everyone!

Hope you are having an awesome Friday for this last aloha Friday of 2011. I just wanted to take the time, as I close out for the day to wish you all a happy and safe New Year’s Eve and for a start of a good New Year. In addition, I would like to thank all my friends, acquaintances, clients, readers, supporters, and yes even my Twitter followers for making 2011 a good start for me.

Storytelling in 2011 

I appreciate getting to know you all in the various settings that I have and welcome meeting new people and reconnecting with old friends whether it be in social media, IRL networking, or for coffee. Also thank you for allowing me to tell you all my story and journey of an attorney that loves the intersection of law, business, and politics in the realm of small business and startups.

Past Highlights 

I would like to highlight thanks to all of you for the positive feedback regarding this site and my services. In particular, I would like to continue to make this site a place a resource for small businesses and startups navigating transactional and compliance issues. Thus from this 2011 you will continue to see posts series like the following:

Because I care about the Hawaii community and am finding that I meet new people of this great state via social media I will continue to do special write-ups on:

New Features for 2012 

Although like all good growing businesses, their ideas change and grow I will be rolling out new features and ways to get information into struggling business owners’ hands. In fact, I’ll admit that being an attorney who just started going solo there were times I wish there were resources for me, and there were, but I will continue to try to deliver information to the people who want its and need it. I would like to thank various people and organizations that have given me feedback before I talk about my 2012 features.

First the Thank Yous

Thank you to my friends at Off-Menu Catering, all of you give so much support and thoughtful feed back to carry me through continuing to serve small business.

Thank you to The Greenhouse: Innovation Hub and in particular Doc Rock (@docrock) and John Garcia (@johngarcia) for creativity and inspiration, Jill (@swamwine) of SWAM, Danny (@wangchungs) of Wang Chung’s, and Shawn of Small Business Planning Hawaii (@SBPHawaii) for bouncing ideas off of to deliver services and information to small business owners. Melissa Chang (@Melissa808), Jennifer Lieu (@jlieu), and Capsun Poe (@capsun) always guiding lights for social media use.

Mahalo to the Young Lawyers Division, HSBA, and Leadership Institute for providing guidance to an attorney.  To fellow attorneys Wayne J. Chi and Scott C. Suzuki thank you for doing talks with me, some more planned in the future! To William (@alohastartups) of Alohastartups.com, much thanks as you are providing a great resource for startups in Hawaii and I am excited for the plan in 2012. However, I think I still owe you a post from 2011! Thanks to Rechung (@TheBoxJelly) of The Box Jelly for providing a space for legal talks and helping Hawaii coworkers.

Finally, thank you to Marcus Landsberg, a fellow Hawaii attorney that has helped out and set down this path of being a solo practitioner like me and showing that solo does not mean alone.

. . . Back to New Features of 2012

Ok, enough with the thank yous and let me get to the new features that you readers can look forward to from me in 2012 for this site in particular:

  • PODCASTS – that’s right Hawaii small business owners, no worries if you cannot make it down to one of my talks! I will be providing portions of them for you to watch in your store or at home.
  • One-sheets – simple pdfs talking about one particular issue for you to download, print, and share.
  • Newsletter – I am not sure what the frequency will be, but definitely watch your e-mail inboxes!
  • REVAMP of blog and website – I will be shifting gears and making sure that I deliver to you content in a more user-friendly style!

That’s it for this year! Have fun and be safe this New Year’s Eve and see you in 2012 (Year of the Dragon!).

-RKH

New Law in the Brief: Act 206 Protecting Domestic Violence Victims in the Workplace

Today’s New Law in the Brief focuses on a serious new law that helps out people in an unfortunate situation.Act 206 is aimed at creating a protected status for those who have been a victim of domestic violence. Some of you are probably are questioning the need for such a thing because a) you thought this was a already protected status or b) thought what kind of employer fires someone for being the victim of abuse.
Sadly, that was not the case in the State of Hawaii and it was only this year that an employer is prevented from discriminating against those who have been victims. You may ask who is callous enough to fire a woman who is being beaten? Well, the sad truth is that actually is the case and this news post from The Maui News shows this to be the case (and discusses the new law as well).

The Specifics of Law

Act 206 will go into effect next year, January 1, 2012.

The law will protect victims of domestic or sexual violence from employers discriminating against them from status. In general, it aims to prevent wrongful termination or suspension, as was the cast in the Maui News story. However, for the victim to be availed this protection the employer has to be notified from the victim or have actual knowledge. Furthermore, the employer must make reasonable accommodations for the victim, so long as it does cause an undue hardship. The law is very much fashioned similar to the ADA.

The employer is allowed to request verification of an employee’s continued status. In many cases, a Temporary Restraining Order (TRO) is issued and does end at some point or the victim’s persecutor is put away, and thus the need for protection ends.

Finally, the law also creates a civil remedy (money) for employee-victims denied their reasonable accommodation under the law.

Reasonable Accommodations for Victim-Employees

The law offers up some reasonable accommodation measures that an employer should do to help the victim-employee and they are as follows:

(1) Changing the contact information, such as telephone numbers, fax numbers, or electronic-mail addresses, of the employee;
(2) Screening the telephone calls of the employee;
(3) Restructuring the job functions of the employee;
(4) Changing the work location of the employee;
(5) Installing locks and other security devices; and
(6) Allowing the employee to work flexible hours;

provided that an employer shall not be required to make the reasonable accommodations if they cause undue hardship on the work operations of the employer.

See Act 206.

An employer may have to do all of these or some of these, but remember the standard is “reasonable” accommodation, thus whatever is necessary to protect the victim-employee and make them feel safe should be implemented to the employer’s ability without it impacting their operations.

If an employer is already experienced in handling ADA reasonable accommodations many of these changes and the kind of process you have to go through should seem familiar. However, the slight difference here is you are kind of protecting the identity and safety of the victim, so that the person harming them cannot find and harass them. Also when handling this kind of situation, remember your obligation to keep a safe work environment for ALL your employees.

Thanks for following my New Law in the Brief posts. Law in the Brief will be going from regular posting to special posting until next year. This does not mean there are no new laws in Hawaii. In fact, there are a 235 Acts from this past legislative session. You can check them out here.

Just click Law in the Brief, to see the past posts.

As always, don’t forget to “Subscribe” to this blawg do so by clicking the little orange button up in the right-hand corner of the page.

*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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New in the Brief – Act 196, Members, Partners, and Sole Proprietors are Not Employees for Workers’ Comp

Hey Everyone,
just a reminder to come join me at the Box Jelly tomorrow night 10/18 for a talk on “Protecting Your Brand.” The subject will be a discussion of various intellectual property laws that a small business owner should understand as they grow their business. Here is the link for more info.

Today’s law in the brief shows exactly why definitions play a role in the application of the law. If you attended my talk on Business Entity Formation you would know that when you choose to operate a business there are many forms you can choose from. Each has its pro and con.

Many times the pros and cons come with dealing with things like taxation and the way benefits are handled by the entity. Act 196 tries to specifically clarify one of these areas. Namely, that LLC members, partners in partnerships, and sole proprietors are NOT defined as “employers” for the purposes workers’ compensation.

The Mechanics of it All

Act 196 amended HRS Section 386-1, which is the definition of employment AND lists what is excluded from that definition. Thus by adding the following lines to the exclusion section:

(10)Service performed by a member of a limited liability company if the member is an individual and has a distributional interest, as defined in section 428-101, of not less than fifty per cent in the company; provided that no employer shall require an employee to form a limited liability company as a condition of employment;

(11)Service performed by a partner of a partnership, as defined in section 425-101, if the partner is an individual; provided that no employer shall require an employee to become a partner or form a partnership as a condition of employment;

(12)Service performed by a partner of a limited liability partnership if the partner is an individual and has a transferable interest as described in section 425-127 in the partnership of not less than fifty per cent; provided that no employer shall require an employee to form a limited liability partnership as a condition of employment; and

(13)Service performed by a sole proprietor.

people in those situations would not be treated as an “employer” for workers’ compensation law.

What does this Mean?

To put it succinctly, The Retail Merchants of Hawaii stated it in their testimony regarding the Act when it was a measure in the Legislature:

A business owner who is not actively involved in the day-to-day activities of the business most likely would not suffer a work-related injury and therefore would not benefit from workers’ compensation insurance. Even if the owner does work at the business, there would be little or no gain to file a worker’s compensation claim, which would result in increased premium costs borne by the business. In the case of a sole proprietorship, an injury would likely result in the termination of the business operations.

Admittedly, worker’s compensation insurance imposes additional costs on the business. This exclusion would provide additional and much needed financial resources to the small business person.

Taken from Testimony before the WAM Committee on HB518 HD1 SD1, 04-01-11.

Therefore, a change in definition saves businesses from having to purchase workers’ compensation insurance. After next week’s Law in the Brief, I will be talking about definitions in agreements in my new series “Boilerplate Blurbs.” This will be all about those sentences you see in agreements. This will culminate into a seminar entitled “What’s in an Agreement? A Primer on Contract Law.”

As always, don’t forget to “Subscribe” to this blawg do so by clicking the little orange button up in the right-hand corner of the page.

*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

New Law in the Brief: Act 200, Calling all Beekeepers

Hey everyone,
To the readers on the mainland, Happy Columbus Day and to my local Hawaii readers, Happy Discovers’ Day!

Anyway, today’s new law in the brief will be brief once again. As many of you know next week will be another talk at Hawaii’s first coworking space, The Box Jelly. Thanks to all of you who helped pick the topic of Protecting Your Brand: An Overview of IP Laws by voting in my poll with The Box Jelly. Be on the look at this week at Aloha Startups website, as I will do a post related to that subject.

Also as I was doing research for today’s new law I noticed that the state legislature updated its website. Check it out here. It has that kind of app-store kind of feel to it.

So what other news is buzzing around town? Well, Hawaii’s new beekeeper registry. For you apiarists House Bill 866 signed into law (Act 200) is designed to provide a volunteer registry administered by the Hawaii Department of Agriculture.

As many of you know a there are a lot troubling things affecting the bee populations. Things like bad weather, the infestation of varroa mites, nosema spores, and small hive beetles all have led to unofficial counts indicating that thousands of bee colonies in Hawaii have died off. However, this may be inexact and state agricultural officials did not compile statistics on the production of queen bees in Hawaii. This was partly due to the fact the industry is small and also because of issues relating to proprietary information.

Therefore, it designed this volunteer registration to try and get a better handle on the situation. As stated it is completely voluntary and no regulatory or fiscal action is linked to the registry. The information that beekeepers give to the state will not be shared. In exchange for registering some of the benefits may include:

  • Technical services of the State Apiary specialist;
  • e-mail notification of important issues (related to pests, disease, and hive health);
  • access to the State Apiary Program (designed to be a support system apiarists and be a kind dedicated government resource line for beekeepers);
  • finally, the goal from the aggregated data is for the Department of Agriculture to promote the industry.

Anyway, if you are beekeeper and would like to take advantage of this here is the form to fill out.

For other Bee News check out this link and this one.

P.S. You may be wondering why I care so much about bees, as I kind of hinted at it with B-Corporations Law in the Brief posts. Well, as a foodie I realize that bees are largely responsible for the great bounty of plants that we find on or plates and table. We as humans have no way of replicating what bees do for agriculture so this is an important step in combating the threats to our food production.

Also don’t forget to “Subscribe” to this blawg!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

New Law in the Brief: Act 212 Allowing Real Estate Brokers to be Opinionated

Today’s new law is brief and simple, something probably that those in the real estate industry can appreciate given the context of Act 212. Sorry for all the paperwork realtors, but you know us attorneys, we would like to have everything documented, recorded, and filed property!

What Does Act 212 do?

The purpose and intent of the law is to permit and establish requirements for a licensed real estate broker or sales person to prepare broker price opinions for use in real estate transactions where an appraisal is not required. (Btw, I realize “opinionated” does not mean this, but it is a play on words!)

How Does it do That?

Simple, the legislature inserted an exception into HRS § 466K-4, which sets the standards for real estate appraisers.

The exception reads as follows:

(c)  This section shall not apply to a real estate broker or real estate salesperson licensed pursuant to chapter 467 who provides an opinion as to the estimated price of real estate, regardless of whether the real estate licensee receives compensation, a fee, or other consideration for providing the opinion; provided that:

(1)  The opinion as to the estimated price of real estate shall state that it is not an appraisal;

(2)  The real estate licensee shall not represent that the licensee is a certified or licensed real estate appraiser; and

(3)  If the real estate licensee receives compensation related to the sale of property, the licensee shall not receive any additional compensation, fee, or other consideration for providing an opinion as to the estimated price of that property.

How to Make Use of this Exception

So the main takeaway from this Act if you are a real estate broker or sales person is to make sure that opinion is:

  1. stated as NOT an appraisal;
  2. do not represent yourself as an appraiser;
  3. and finally, if you receive compensation connected to the sale of property you do not get anything else form providing an opinion to that property.

Yes, this law is already in effect.

For Further Context

If you read the Hawaii Association of Realtor’s testimony  from April 5, 2011 before the Senate Committee on Commerce and Consumer Protection (CPN) it explains their support for this change. Here is an excerpt:

Over the last several years, due to the economic crisis, loan delinquencies have increased,which in turn have required more estimated analysis to determine the market price of the collateral for these delinquent loans. Thus, each property that falls into distress may need atleast one price opinion, and more often two or more price opinions, to determine the mostappropriate disposition of the property — whether it be loan modification, short sale, orforeclosure.

For example, a lender might use a price opinion to determine whether a short sale transaction should be approved, or whether a delinquent loan should be modified. In thesetypes of situations, the price opinion can assist with the decision to list, offer, sell,exchange, option, lease, or acquire real property in a real estate transaction, or alternatively, help struggling homeowners stay in their home.

Anyway, realtors enjoy giving your opinions, now you can become opinionated like an attorney!  Thanks for reading this post and be sure to look for my next post.  It will be a poll to choose the subject matter for my next talk to be held at The Box Jelly!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Law and Legal Info in the Brief: Act 141, No Resolutions for LLCs, and the HSBA’s PBN Insert on Regulatory Compliance

Hey everyone, today’s Law in the Brief will be really brief!  I got some other interesting information to share as well.

Act 141:  Relating to Small Claims Court; Monetary Limit increased from $3,500 to $5,000

The Hawaii State Legislature was keen on access to justice issues this past session. The big one was ILAF (which I wrote a Civil Beat article urging passage of the bill) and at this past week’s Hawaii State Bar Convention the two attorneys responsible, Mihoko Ito and Gary Slovin, both with the law firm of Goodsill, Anderson, Quinn and Stifel, were recognized with the Ki’e Ki’e Award for their outstanding pro bono work (congratulations).

Anyway, another law making it easier for people to access justice is Act 141. This bill increased the maximum monetary claim that may be filed in small claims court; the prior maximum was $3,500 and with Act 141 it is now $5,000.

This is great for people seeking redress on a smaller level, but had disputes with a monetary value over $3,500.  If you were above that amount you would have to file a claim in another court, which had much higher filing fees. Right now, Small Claims Court has $35.00, whereas Regular Claims it is a $120.00. The advantage of filing in Small Claims as well is that it is typically simple, informal, and the cases resolved more quickly. Many business owners and landlords/property managers use Small Claims Court to resolve problems with damage to or repossession of stolen business property (i.e. shopping carts) and leased or rental properties.

For more information on Small Claims Court click here.

No Resolutions for LLCs

While at the bar convention last week Friday (9/23) I attended both the Corporations and LLC seminars. After all I had just conducted a talk on Business Entity Formation at Hawaii’s first coworking space, The Box Jelly. So I like to keep myself updated, so I can update clients as well. During my seminar, I discussed the difference in terminology between a LLC and Corporation. I also mentioned how important it is to understand those differences. One of the panelists at the LLC seminar proved the point.

Many of the formalities needed in a Corporation, are not needed in a LLC. One of those unneeded formalities are resolutions. The panelist bemoaned how many local bank personnel keep requesting her to draft resolutions for her client LLCs to authorize a loan. Her response, as would be mine to the bank is:

LLCs DO NOT NEED RESOLUTIONS TO AUTHORIZE ACTIONS.

This is one of the things I covered at my talk.  So if you missed my Business Entity Formations seminar not to worry I will be doing one again probably in a month (so Subscribe to this Blawg to find out when).

In the meantime, do not forget to sign up for my next talk on Social Media and the Law this Wed. (9/28) at The Box Jelly, starting 6:00 p.m. It will be $10 for The Box Jelly members and $15 for non-members. Materials are included.

Go to my Facebook page for info and invite. Also I would be happy to do a legal seminar for a gathering of more than 10 people. Contact me for details.

HSBA’s Pacific Business News Road to Regulatory Compliance Insert

Also at the bar convention Pacific Business News was handing out its current issue of (Vol. 49, No. 30). In it (right after the article on Hawaii’s awesome social media stars Toby Tamaye and Melissa Chang!) is the Hawaii State Bar Association’s insert Path to Regulatory Compliance. In it are several brief articles on new laws affecting Hawaii businesses. I recommend checking it out, especially the one on Protecting Gender Expression or Identity in the Workplace on page 11.

You might find that the author and the topic are familiar if you read this blawg regularly.

See you all Friday for Draw the Law wrapping up those worker privacy issues I have been discussing.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Law in the Brief: Automatic Renewal Clauses Not So Automatic, Act 139

As a transactions attorney that drafts agreements for businesses I have found that explaining what certain clauses do is beneficial to the client and organization.  Therefore, today’s Law in the Brief covers Act 139.   Also lookout in the future I will be doing little posts on boilerplate language to help you understand what is going into an agreement.

General Overview

This new law aims to help consumers by regulating the language used for contracts with automatic renewal clauses.  Act 139: Relating to Contracts, requires the following:

  • use of clear and conspicuous disclosure of automatic renewal clauses and cancellation procedures for all consumer contracts and offers with an automatic renewal provision and additional disclosure for contracts with a specified term of twelve months or more.

This new law will be assigned a number under Chapter 481 of the Hawaii Revised Statutes, which is the Fair Trade Regulations chapter.  Specifically, it will be under Part I, the Unfair Practices Act.  Currently, there are about eleven states that have enacted similar disclosure requirements at the inception and immediately prior to the renewal of the contract type of laws.

The Rationale

The lawmakers hope is that with the use of “clear and conspicuous” language (as defined by the Federal Trade Commission’s standard) that this gives consumers a change to be fully apprised of the situation.  Namely, that there is an automatic renewal clause and what steps they have to take in order to stop the contract from renewal.
Basically, this is an attempt to shift the burden back to the entity issuing the contract so that consumers may not be bound to a contract for a period longer than they anticipated or finding themselves stuck with something they do not want.

Exemptions

Act 139 applies to almost everyone selling things to people under a consumer contract that is for a specific term of more than one month and contains n automatic renewal clause for a term of more than one month.  However, there are some exemptions made to certain entities:
  1. Financial Institutions, for the activities regulated under under Chapter 412);
  2. Insurers, for the activities regulated under their respective chapters, as follows:
  3. Insurance companies(Chapters 431);
  4. Mutual benefit societies (Chapter 432);
  5. HMOs (Chapter 432).

Last Word

If you are an organization that does not fall under the exemption you will need to take a look at your agreements and your processes of notification. While, the law is in effect, the substantive portion does not go into effect until next year, July 1, 2012.  Therefore, it gives you some time to review.  So consider the following questions
  1. Do you let the consumer know what the terms of automatic renewal are?
  2. Is it clear and conspicuous in the agreement?
  3. Do you have a system that monitors contracts and sends out notices when their term is almost up?
These are some of the things to think about and have an attorney conduct a legal audit and review of all your contracts so you can update them.  By the way, if you don’t know what “clear and conspicious” means in terms of written agreements this is the definition:
  1. means in larger type than the surrounding text;
  2. in contrasting type, font, or color to the surrounding text of the same size; or
  3. set off from the surrounding text of the same size by symbols or other marks in a manner that clearly calls attention to the language.

If you liked this post or any of my other series please “Subscribe” to this blawg to receive e-mail updates.  I would recommend subscribing, as I will be doing the Boilerplate Blurbs (explaining regularly used clauses) sporadically.  In addition, follow me on Twitter and “Like” me on Facebook.

If you need to contact me directly, please e-mail me at Ryankhew@hawaiiesquire.com.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Law in the Brief: To B or Not to B, Hawaii gets B-Corps through Act 209

What is a Sustainable Business Corporation or B-Corp?

You can now find Hawaii’s Sustainable Business Corporations at Chapter 420D of the Hawaii Revised Statutes. (UPDATED 10.08.12)

Act 209 Establishes an organizational and regulatory framework for sustainable business corporations.  “Sustainable business corporations” or “benefit” corporations (b-corps) are a specialized corporation committed to sustainable practices.  Their intended purpose is to develop and commit to sustainable practices and produce a public benefit.

Consider it a marriage between for-profit corporations with the public good that a non-profit is supposed to provide.

Some Specifics

Filing and Maintenance

Basically, you or your attorney would file the normal Articles of Incorporation with the Department of Commerce and Consumer Affairs (DCCA).  However, to put in the sustainable part an attachment would have to be filed that has a statement declaring that this a sustainable business corporation.

In general, when maintaining a B-Corporation you are following everything set forth by Chapter 414 (the Hawaii Business Corporation Act) of the Hawaii Revised Statutes.  The additional paperwork necessary will come from whatever chapter number the Legislative Reference Bureau decides to assign this Act.

Benefit Director and Benefit Officer

In addition, a sustainable business corporation is required to have a benefit director.  It also may choose to have a benefit officer. The role of these positions is to maintain that the company is following its goals for benefit and keeps record of it.  The benefit officer prepares the annual benefit report using a standard developed by a third party.  This third party acts sort of like an accounting firm for a corporation that publishes its financials.  The third party determines whether or not the goals are being met.

DCCA’s Role

The government’s role with a benefits corporation is minimal and only ministerial. DCCA will accept the filing and you only need interact with it and other governmental agencies, as you would normally do with a regular corporation.  The prime example is this:  a corporate annual report needs to be filed with the DCCA, but the benefit report that needs to be produced is for the shareholders.  The benefit report does not get filed with DCCA.   In fact, the hope of this Act is that the corporations make a commitment to sustainable business practices and produce communal benefit and that the shareholders who agree to invest in them police themselves.  Government role is kept to a minimal.

Last Word

If you are interested in specifics about creating a B-corporation you can contact me or if you want to know what kind of resources or generalized information check out Certified B Corps.  It is a good site to get a grasp about what a B Corps is and what is going on a national level.  If you liked this post or any of my other series please “Subscribe” to this blawg to receive e-mail updates.  In addition, follow me on Twitter and “Like” me on Facebook.  If you need to contact me directly, please e-mail me at Ryankhew@hawaiiesquire.com.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.