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Healing the Legal Relationships Harmed by COVID-19: Part 1, legal considerations

Last Friday, in a Freeman Lovell webinar, Josh Freeman and Michael Thomas discussed the impact of COVID-19 on legal relationships. This post is a supplement to that webinar. A recording of the webinar is embedded in the below post, or you can watch it HERE .

Written by Michael Thomas

A less accounted-for, but deeply felt, impact of the COVID-19 outbreak is the strain it is putting on some previously functional legal relationships. It didn’t take long for COVID-19 to start impacting legal issues. To take one early example, a Florida judge ruled earlier this month that a divorced emergency room doctor’s timesharing rights with the couple’s 4-year-old would be temporarily suspended “in order to protect the best interests of the minor child.”

Family law is not the only area that is changing. What about service providers? What happens when there is a dispute about a contract with a client? How should businesses interact with customers? Should employers require employees to come to work once a Stay-at-Home order is lifted? And what about landlords and tenants? Are leases still enforceable during a pandemic?

Considerations for business owners

It can be hard to know where to start when deciding what steps to take as you get back to business. Here are a few key considerations.

Statutes and Regulations

The first place each business needs to do is to look at what liability they are open to depending on the statutes and regulations that oversee that type of business. For example, the Utah State Legislature has approved a new Bill ( H.B. 3007 ) that gives immunity from negligence claims related to COVID-19 exposure on a business's premises (pending Governor veto or signature). For example, that means that if a customer is exposed to COVID-19 from another individual while on a business's premise, the business would not be liable. That does not mean that businesses can be reckless in their precautions to avoid the spread of COVID-19 without repercussions. Plus, if a business falls under OSHA or local health codes, they must maintain those standards. (If you have any questions about how this new Bill may affect your business, feel free to contact us . )

Contractual Obligations

Businesses and individuals should take a look at what contractual obligations they are subject to. Despite COVID-19 uprooting normal life, most contractual obligations will remain in place, subject to be fulfilled and enforced.

This can be particularly tricky for contracts like Service Agreements or Leases that may have a force majeure clause. Force majeure is a common clause that may be placed in contracts that release one or both parties in a contract from certain obligations to perform when there is an extraordinary and unforeseeable event (historically described as an "act of God"). But without any specific language in a force majeure about a pandemic, there is still some debate whether the COVID-19 crisis applies to the contract. (If you would like us to review a contract, send us a message )

Case Law Precedent

Even with the unique situation, we are in, much of how judges may interpret laws and situations among COVID-19 will be established through case law precedent. There may not be much precedent when it comes to legal relationships during a pandemic, however, we can look back at other situations that may be comparable and indicate how a judge may rule in a dispute. (We can help you understand the potential results of disputes by looking back at case law precedents that may relate to your situation. Tell us about your situation . )

Business Judgement

Ultimately, how you approach the threat of COVID-19 depends in large part on how you do business. You will need to balance costs and safety. Paying for additional protective and hygienic equipment costs money may cost your bottom line even more while sales are lower than usual, but giving your customers peace of mind will be critical to keeping their trust.

Are you someone they can trust and feel safe around? A restaurant may change their dining options from dine-in to pick-up only. What will evoke trust from its customers? Facemasks, new contactless protocols, videos of cooks maintaining strict hygiene practices? What if a different restaurant had none of the workers wore masks or gloves? What if the cashier sniffles and wipes his nose with the same hand he uses to pass food to a customer? Which restaurant would you go to? Your business may not serve food or have customers visit your place of business, but as we move forward during this time, public perception of how businesses are adapting to COVID-19 will be crucial. Complying with laws and regulations is a starting point, but keeping or regaining trust will be the key to weathering the storm.

Part 2 of this post will address considerations for landlords. And Part 3 will provide an update on developments for employers. See the full webinar above.

28 Dec, 2023
In a couple of months, a new rule will take effect, requiring all registered legal entities to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). We wanted to give you a heads up about the rule and give you as much information about what it means to you. What is the rule? The rule, which is called the Beneficial Ownership Information Reporting Requirements (BOI Rule), comes from the Corporate Transparency Act, which was passed by Congress in 2021. This law created the BOI Rule with FinCEN as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other deceitful ownership structures. Under this new law, FinCEN will permit Federal, State, and local officials to obtain ownership information for authorized activities related to national security, law enforcement, and intelligence. When does the rule take effect? And when do I have to submit a report? The BOI Rule takes effect on January 1, 2024 . If your company existed before January 1, 2024, you must file its initial beneficial ownership information report by January 1, 2025. If your company is formed or registered after January 1, 2024, you must file its initial beneficial ownership information report within 30 days after receiving actual or public notice that its creation or registration is effective. If any beneficial ownership information changes, you will have 30 days from the day of the change to file an updated or corrected report with FinCEN. What do I need to include in the report? The BOI Rule requires that all entities report information about the company, each individual with substantial control over the entity, and each beneficial owner. What information is required to report about the entity? Full legal name of your company and any DBAs names; Complete current street address for your company's principal place of business (P.O. boxes will not be accepted); The jurisdiction of formation or registration; and Tax identification: IRS tax identification number (TIN) and employer identification number (EIN). What information is required to report about the controlling individuals and beneficial owners? The individual's legal name; Individual's date of birth; Individual's residential address; and A unique identifying number from an acceptable identification document (such as an unexpired driver's license, passport, identification document issued by a State or local government or Indian tribe.) and the name of the issuing state or jurisdiction. Who is considered to have substantial control of the entity? Examples of an individual that exercises substantial control over the entity are: An individual is a senior officer (President, CEO, CFO, COO, Manager, or other office who performs a similar function); An individual has the authority to appoint or remove certain officers or a majority of directors of the reporting company; An individual is an important decision-maker for the company; or An individual has any other form of substantial control over the company. Who is considered a beneficial owner? A beneficial owner is an individual that owns or controls at least 25% of the entity’s ownership interests. This includes individuals that indirectly own or control 25% of the ownership interest. For example, if Joe is a 50% owner of Parent LLC, which in turn owns 50% of Subsidiary Corp, then Joe beneficially owns 25% of Subsidiary Corp (50% of 50% = 25%). What type of entities will be required to file a report with FinCEN? All domestically formed entities and foreign registered entities in the USA are required to file a report. Types of entities include corporations, limited liability companies, limited partnerships, general partnerships, and any other entity registered with a state Secretary of State or Division of Corporations or other similar office. There are some types of companies that are exempt from the reporting rule, and in general they are companies that already have to report beneficial ownership to another federal agency. The 23 exemptions listed by FinCEN are: Securities reporting issuer, Governmental authority, Bank, Credit union, Depository institution holding company, Money services business, Broker or dealer in securities, Securities exchange or clearing agency, Securities exchange or clearing agency, Other Exchange Act registered entity, Investment company or investment adviser, Venture capital fund adviser, Insurance company, State-licensed insurance producer, Commodity Exchange Act registered entity, Accounting firm, Public utility, Financial market utility, Pooled investment vehicle, Tax-exempt entity, Entity assisting a tax-exempt entity, Large operating company, Subsidiary of certain exempt entities, and Inactive entity. Now what do I do to comply with the BOI Rule? While you are not able to submit the beneficial ownership information report until January 1, 2024, you should use this time to gather information about your company, owners, and other entities now, so you can timely file your report. We added a small BOI Rule cheat sheet for you to keep and reference. Also, you can read FinCEN’s FAQ page about the BOI Rule https://www.fincen.gov/boi-faqs . Can you help me with my company’s report? Yes! We are happy to help prepare and file your company’s BOI Rule report with FinCEN. We can begin to gather and prepare the information for your filing right away and be ready once the BOI Rule takes effect January 1, 2024. To get started, please reach out to us. We also know that some situations can be complicated, so please feel free to ask us any questions regarding compliance with the beneficial ownership interest reporting requirements for your company.
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