Points of Business Interest - September 2009

Effective January 1, 2010, several statutory changes become effective. Some worthy of note are as follows:

● On that date, any member exercising any managerial authority for an LLC owes fiduciary duties. Current law imposes this duty only if the duty is exercised pursuant to the operating agreement.

  • The Mechanics Lien Act was also amended to provide that a contractor who improves an owner-occupied, single-family dwelling is to give the owner written notice within 10 days after recording a lien against the property. If the notice is not given on time and it causes the owner to suffer damages before the notice is given, the lien is extinguished to the extent of the damages.
  • We have a new Banking Convenience Account for Depositors Act. This allows for the creation of a convenience account in the name of a depositor and a convenience depositor. The depositor is not considered to have gifted away an interest in the deposit and the convenience depositor is not an owner of the account, but may pay out of the account for the convenience of the depositor.
  • The Freedom of Information Act received a complete rewrite, making a number of changes, including but not limited to the time to reply, the creation of a public access counselor in the Attorney General's office to review privacy exemptions issued by the municipality, issue subpoenas and sue to enforce its opinions. The Act also provides that the first 50 pages of black and white, letter or legal size copies are free.
  • For those of you who feel they are being killed by the economy, the Healthcare Surrogate Act has been amended by two bills, one of which requires healthcare facilities to permanently maintain advanced directives and allows the surrogate to make decisions for the patient until the patient regains capacity or dies, and the other reduces the requirements for a Do Not Resuscitate (DNR) order.

Effective immediately:

  • The Residential Real Property Disclosure Act was modified to require the seller to disclose whether the property had been used for the manufacture of methamphetamine. Realtors and others involved in the sale of residential real estate should be sure that the disclosure act that they execute contains this provision.

Employment discipline; the fine line.

We consistently advocate to our clients that they keep a written record of all employee discipline, even simple reprimand for problems that can likely be cleared up quickly. Cases have shown that it is a painful experience when an employer who had a basis to terminate an employee, but failed to document the problems properly, then wishes to terminate the employee for the cumulative weight of the problems but lacks the evidence. It is also essential that these records be kept contemporaneously, using just the facts. Do not give opinions in the comments; such is that you suspect a drug problem with a particular employee. Instead, utilize specific facts regarding absenteeism, below-standard work or other facts that can legitimately result in discipline and, if needed, termination.

It is also very useful to use progressive discipline with employees unless the facts are particularly egregious. A verbal reprimand, followed by a written reprimand, if necessary, followed by increasing time off without pay prior to termination, coupled with well documented personnel records showing the basis for all of the discipline and the fact that the problems were not addressed by the employee makes for a much stronger case if the employee asserts that the termination was wrongful.

Now Is the Time To Leverage a Bad Economy.

While the economy has been showing signs of improvement recently, it is still weak. If you have a multi-year commercial lease, it may be the right time to re-negotiate that lease. You can leverage the bad economy into a rent reduction; this will probably have to be coupled with an extension of the lease for an additional period of time, to give the landlord an incentive, unless the situation is so precarious that the rent reduction is necessary for the tenant to stay in business. In addition, if the premises are in a development containing one of more anchor stores, you can add language to provide that if the anchor store leaves for any reason, rent will be dropped by a set amount in order to offset the loss of traffic.