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Summer Interns – A Benefit or a Liability

Summer interns may be a good opportunity for both your business and the intern, but if the interns are not paid you may be exposing your business to significant liability.

The U.S. Department of Labor applies a six factor test to determine whether a for profit business may have an unpaid intern.

A copy this test and the Department of Labor’s analysis can be found at the link below.

http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

Briefly, the six factor test that permits a for-profit business to have an unpaid intern is

The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
The training is for the benefit of the trainees (rather than the employer);
The trainees do not displace regular employees, but work under their close observation;
The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
The trainees are not necessarily entitled to a job at the conclusion of the training period; and
The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If you have an unpaid intern and you do not meet all six factors of this test then you could be exposing your business to a Fair Labor Standards Act violation.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

6:08 am - January 28, 2012 Posted by mate9960 0 Comments

A Will with Unintended Consequences

A recent Florida court case illustrates what can result from a poorly drafted Will.

The case describes how a woman wrote a Will using an “EZ-Legal Form.” Her Will contained a very specific list of her real estate and bank accounts and left that property to her sister and brother. The Will did not contain what is known as a residuary clause, which states what happens to property not specifically listed in the Will.

The problem occurred when the woman’s sister died before her leaving the woman the sister’s land and cash. The woman did not revise her Will after her sister’s death. When the woman died her brother, as the sole beneficiary under her Will, claimed that property the woman inherited from their sister should be given to him even though it wasn’t listed in the Will.

The woman’s nieces claimed that since the “EZ-Legal Form” did not contain a clause stating where property should go that was not specifically listed in the Will then the property the woman inherited from her sister should go to them. Basically the nieces were claiming that the property the woman inherited from her sister should be treated as though the woman had no Will. The court agreed with the nieces.

This case illustrates the risks of using a do-it-yourself Will. The woman thought she was being very detailed and very careful. Unfortunately she did not understand some of the important elements that should be in every Will.

6:02 pm - December 30, 2011 Posted by mate9960 0 Comments

Powers of Attorney for Property Should be Taken Seriously

In the Chicago Tribune a letter to columnist “Dear Annie” illustrates important concerns about Powers of Attorney for Property. Below is a link to the story.

Her children sold her house and possessions

Briefly, an 80 year old woman was in the hospital for a very serious illness and she was not expected to survive. Fortunately, she did recover. Unfortunately, she learned that her children – acting under a Power of Attorney for Property she had given them – sold her house, took her possessions they wanted and then sold rest.

Many people think of a Power of Attorney for Property as a simple, standard, routine document that is part of their estate plan. As this story illustrates it is not simple, not routine and shouldn’t be standard. A Power of Attorney for Property can have serious implications.

The implications can be limited. For example, a Power of Attorney for Property can be narrowed to limit the authority to very specific types of transactions. This might be appropriate if the purpose is to give someone only the authority to pay bills while you incapacitated but not sell your house or other possessions.

Depending upon your personal situation a broad Power of Attorney might be appropriate. In the story the woman complains about how her children sold her house at an auction. It is possible that the woman did not have any other significant assets besides her house; that her medical expenses were large and the only way to pay them was to sell the house quickly.

In the situation where the only way to pay the bills is to sell the house then a very limited Power of Attorney would not have worked well. In that situation the children would have needed to ask a judge to appoint a guardian. A guardianship proceeding is neither quick nor inexpensive.

Another concern is trust. The person you give Power of Attorney obviously should be someone you trust to act in your best interest – even when it is contrary to their self interest. If you are not fortunate enough to have someone who meets that standard then that is another reason to consider limiting the scope of the Power of Attorney for Property.

A Power of Attorney for Property is not a simple “fill in the blank” document. It should be tailored to a person’s individual needs.

7:23 pm - October 11, 2011 Posted by mate9960 0 Comments

New Real Estate Transfer on Death Deed – a Solution or a Problem

The Illinois legislature recently passed a bill allowing a homeowner to name a beneficiary who will receive the property when the owner dies. The hope was that this new type of real estate deed would simplify estate planning for people with smaller estates. Unfortunately, it may create more problems than it solves.

The bill will become law on January 1, 2012. This a link to the full text of the bill. http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=097-0555&GA=97

How this would work is that a homeowner would prepare a new deed naming one or more people as beneficiaries. Those beneficiaries would receive ownership of the house when the owner died. The new deed would have to be signed in the same way that a Will is signed. So, the homeowner would sign the new deed in front of two witnesses and the witnesses, at the same time, would need to sign the deed too.

This new deed would have to be recorded with Recorder of Deeds office in the county where the home was located (just like other deeds are now recorded).

When the current owner died, the beneficiaries would need to prepare an affidavit saying that the owner had died and acknowledging that they accept the real estate. This affidavit would also need to be recorded with the local county recorder of deeds.

This sounds like a great way to avoid the time and expense of probate for people who have very few assets other than their house. But the legislation has some important restrictions.

Those restrictions may significantly limit the effectiveness of this new deed. This deed can be challenged anytime within two years after the homeowner dies unless a probate estate has been opened and then the time limit is six months.

Practically what does this mean. It depends upon how title insurance companies treat this situation. Today, no one can sell a house unless they can provide the buyer with a title insurance policy. So, how the title companies treat transfer on death deeds will have a large effect on whether such a deed is practical.

I have spoken to underwriters and and attorneys with two of the largest Illinois title insurance companies. Both of them are analyzing the situation, but neither one of them has adopted formal guidelines. One title insurance company indicated that they anticipate reviewing each situation separately and making individual decisions on whether to issue title insurance. Another title insurance company indicated that they might charge an additional premium equal to 2% of the sale price for sales within 1 year after the person’s death and a 1% premium for sales more than one year, but less than two years after a person’s death.

In comparison, a Will and the cost of probating the Will probably would cost significantly less than a the extra premium on the title insurance policy.

4:08 am - September 2, 2011 Posted by mate9960 0 Comments

New Requirement for Illinois Landlords

Landlords in Illinois will be required next year to change or “rekey” the locks before a new tenant moves in. Here is link to the new lock changing law. http://www.ilga.gov/legislation/publicacts/97/PDF/097-0470.pdf

There are only limited exceptions to this law including rooming houses and buildings with four or fewer units where the owner lives in one of the units.

If the landlord does not comply with this new law and there is a theft that is attributable to failing to change the locks, then the landlord will be responsible for the tenant’s losses.

I foresee a potential for possible fraud and abuse caused by the law’s requirement that the “theft that is attributable to failing to change the locks.” Some examples are that the new tenant forgets to lock the apartment door and a burglar walks in the unlocked door. Alternatively, the new tenant files a fraudulent police report about an alleged burglary and then claims that the door was locked. If the tenant then sues the landlord for damages and claims that the tenant locked the door before the burglary how will the landlord effectively be able to disapprove that story.

So Illinois landlords to protect themselves from claims by tenants for stolen merchandise will need to change the locks each time they get a new tenant.

For landlords the current rental market should make it easier to pass this new expense along to tenants.

6:46 pm - August 25, 2011 Posted by mate9960 0 Comments