Perspectives

Filing a lien is a powerful tool for securing payment, especially in industries with complex credit transactions like construction, manufacturing, and large equipment leasing. However, errors during the lien filing process can invalidate your claim and put your payment at risk. Avoid these common pitfalls with our checklist to keep your lien rights intact.

1. Understand Your State’s Deadlines: Lien laws vary by state, and missing deadlines can void your claim. Familiarize yourself with each state’s specific timeline for filing a Notice of Intent, the lien itself, and any additional notices.
2. Send Preliminary Notices: Many states require you to send preliminary notices before filing a lien. Ensure you send these on time, or your lien claim may be invalid. Even when not required, a preliminary notice can remind customers of payment obligations.
3. Files Against the Correct Party: Identify the property owner and parties in charge of payments. Filing against the wrong party can delay the process or invalidate your lien.
4. Double-Check Contract Details and Amounts: Include accurate information in your lien claim, including contract amounts, dates, and any unauthorized changes. Overstating or misstating your claim amount can raise legal issues, jeopardizing your lien.
5. Prepare Complete Documentation: Gather all supporting documentation, including contacts, change orders, and proof of delivered services or goods. Detailed records not only strengthen your lien but are crucial if your claim goes to court.
6. Avoid DIY Errors-Seek Legal Help for Complex Filings: Liens in specialized industries may require additional steps or filings. Partnering with legal professionals who understand industry specific nuances ensure compliance and strengthen your lien rights.

By following this checklist, credit, and finance professionals can mitigate risks and increase the likelihood of successful lien filings, ultimately protecting your company’s cash flow and ensuring timely payments.

As artificial intelligence (AI) becomes more integrated into employment processes like screening and hiring, it offers potential efficiencies but introduces new legal challenges. Employer are now navigating complex anti-discrimination laws that apply equally, whether decisions are made by humans or AI tools. This post covers key concerns for employers and how to mitigate the risks of AI-driven employment decisions.

Discrimination Risks in AI-Driven Hiring

AI tools can unintentionally lead to discriminatory outcomes, even when used with the best intentions. One concern is the potential for disparate impact-when seemingly neutral criteria disproportionately affects protected groups. For instance, if an AI system screens candidates based on years of experience, it may inadvertently discriminate against older applicants or recent graduates, violating federal or state anti-discrimination laws.

Moreover, the “black box” nature of AI means that decision-making processes are often opaque. When faced with claims of discrimination, employers may struggle to prove that their AI system made decisions for non-discriminatory reasons, posing a significant legal risk.

Privacy and Data Security Concerns

When using AI tools in recruitment, privacy issues must also be addressed. Employers should ensure compliance with data protection regulations like the EU’s General Data Protection Regulation (GDPR) and U.S. laws concerning password privacy and biometric data. Additionally, tools that analyze physical characteristics, such as eye movements or voice tone, could violate laws like the Employee Polygraph Protections Act, which restricts lie detection practices in employment.

Wage and Hour Considerations

AI tools that monitor work activities, track employee time, or auto-populate time records could lead to wage and hour violations under the Fair Labor Standards Act (FLSA). For example, AI that tracks keystrokes may miss compensable work activities, or it may not accurately track break times that must be compensated under the FLSA. Employers must oversee AI’s’ wage calculations to ensure compliance with regular and overtime pay rates.

AI and Disability Discrimination

Employers should also be aware of the risk of unintentional disability discrimination. AI systems that assess speech patterns, facial expressions, or physical movements may misinterpret characteristics associated with disabilities. For example, an AI system could penalize a candidate with a speech impediment or a disability that affects facial expression, even though they are fully qualified for the job.

States like Illinois are taking steps to regulate AI in employment through legislation such as the Artificial Intelligence Video Interview Act, which requires employers to notify candidates and obtain consent before using AI in video interviews.

Layoffs and Worker Protections

When automation leads to layoffs, employers must ensure compliance with the Worker Adjustment and Retraining Notification (WARN) Act and state-specific laws that require advance notice before mass layoffs. Employers should also take care to avoid age discrimination in layoffs, as older workers may be disproportionately affected by automation and must be offered the same retraining opportunities as other workers.

Staying Ahead of State and Local AI Regulations

Several states and cities are leading the charge in regulating AI in employment. In New York City, for example, the Automated Employment Decision Tools Law requires bias audits for AI hiring tools and mandates that employers notify candidates when AI is being used. Similarly, Colorado’s Senate Bill 24-205, effective in 2026, will require “reasonable care” from employers deploying high-risk AI systems to prevent algorithm discriminatory outcomes.

As AI continues to transform hiring and employment practices, staying compliant with evolving laws is essential to protect your organization. Working with experienced legal counsel can help you navigate complex AI-related employment regulations, keep your policies up to date, and ensure your hiring practices are fair and legally sound. Don’t wait for compliance issues to arise-proactively safeguard your company and foster a workplace that values equity and transparency. Contact our team to review your current practices and build a robust compliance strategy that supports your organization’s growth. 

The National Labor Relations Board’s (NLRB) General Counsel, Jennifer Abruzzo, recently issued a memo declaring that many stay-or-play provisions in employment contracts, which often take the form of Training Repayment Agreement Provisions (TRAPs), likely violate workers’ Section 7 rights under the National Labor Relations Act (NLRA). These provisions, designed to recoup costs like training or sign-on bonuses if an employee leaves their job within a specified period, have long been used by companies- but are now under heightened scrutiny.

Why Stay-or-Pay Provisions Violate Section 7 Rights

At the heart of the issues is the way these provisions restrict employee mobility. TRAPs make it financially difficult for employees to resign, effectively coercing them into staying in roles they might otherwise leave. This can discourage employees from engaging in activities protected under Section 7, such as organizing, advocating for improved working conditions, or seeking new employment.

The NLRB’s General Counsel argues that these provisions interfere with worker’s rights by increasing the fear of job loss if they engage in protected concerted activities. Employees might be reluctant to quit or challenge workplace conditions if doing so would trigger a significant financial penalty, making it harder for them to exercise their legal rights.

Types of Stay-or-Pay Agreements Covered

The memo covers a wide range of provisions beyond traditional TRAPs, including:

• Educational reimbursement or repayment agreements
• Quit fees or liquidated damages clauses
• Sign-on bonuses or relocation stipends tied to a mandatory stay period

These provisions typically require employees to pay back costs or face penalties if they leave their job voluntarily or are terminated for reasons other than cause within a certain period.

What is Still Permissible?

The NLRB memo does not ban all forms of stay-or-pay agreements. Employers can still use repayment provisions, but they must be narrowly tailored to avoid interfering with Section 7 rights. Specifically, agreements are more likely to be considered lawful if they meet the following criteria:

1. Voluntarily Entered: Employees must freely choose to enter the agreement, with no undue financial or employment consequences if they decline. For instance, repayment terms tied to optional training or benefits, like elective educational opportunities, are generally permissible.
2. Reasonable and Specific Repayment Amount: The repayment amount must reflect the actual cost to the employer for the benefit provided. If the amount is higher than the actual cost, the provision is likely intended to restrict employee mobility, making it unlawful. Further, the amount of the repayment must be clearly communicated to the employee at the time the agreement is entered into.
3. Reasonable Stay Period: The length o f the required stay should be proportional to the benefit. For example, if the employer provides a costly relocation stipend, the stay period might reasonably be longer than than it is for less expensive benefits, like a sign-on bonus.
4. No Repayment if Terminated with Cause: Employees should not be required to repay amounts if they are terminated without cause. Otherwise, they might fear engaging in protected activities, worrying they could be fired and forced to pay.

60-Day Deadline to Modify Nonconforming Agreements

Employers currently using TRAPs or other stay-or-pay provisions should note that they have a 60-day window from the memo’s issuance to modify any nonconforming agreements. This essentially creates a December, 6, 2024, deadline to comply. Failure to do so could result in enforcement action by the NLRB, including the rescission of the provisions and potential financial liability for any financial harm caused to employees. It is critical for HR professionals and management to promptly review and revise any existing agreements to ensure compliance with the new guidance.

What this Means for Employers

Employers should carefully review their contracts and policies involving TRAPs or other stay-or-pay provisions. While the goal of retaining talent is valid, these provisions cannot come at at the cost of violating worker’s rights. HR teams and company management should ensure that any stay-or-pay provisions comply with the criteria stated above. Businesses should take note of these developments and ensure their policies are compliant within the 60-day window, focusing on creating retention strategies that respect employees’ legal rights and promote a healthy, motived workforce.

In light of these developments, it’s essential for employers to stay ahead of compliance issues by reviewing their stay-or-pay provisions and ensuring they align with the NLRB’s guidance. By taking proactive steps to modify agreements and protect workers’ rights, businesses can mitigate risks and foster a positive workplace culture. For tailored advice and support in navigating these changes, we recommend reaching out to your trusted legal advisor or contacting the Employment and Labor team at Wagner, Falconer & Judd to ensure your policies are fully compliant and designed to protect both your company and its employees.

In light of recent extreme weather events, it’s crucial for businesses to ensure their contracts include a Force Majeure clause. This provision protects parties from liability or obligations when unexpected events beyond their control prevent the fulfillment of contractual duties.

What Does Force Majeure Cover?

A Force Majeure clause typically applies to situations such as:

• Natural Disasters: Hurricanes, floods, wildfires, or other severe weather events.
• Government Actions or Regulations: Unexpected regulations, travel bans, or other state-imposed restrictions.
• Labor Strikes or Civil Unrest: Disruptions in operations due to strikes or protests.
• Pandemics or Public Health Emergencies: Events similar to the COVID-19 pandemic that impact business operations.

Why Force Majeure Clauses Matter?

Including a Force Majeure clause in contracts is essential for businesses to mitigate risks, provide flexibility, and avoid breach of contract when unforeseen events occur. Here’s why:

Mitigates Risk: A Force Majeure clause reduces potential liabilities by freeing parties from obligations when events beyond their control-like natural disasters or pandemics-disrupt operations.

Provides Contract Flexibility: This provision allows for the adjustment or suspension of obligations during disruptive events, ensuring businesses can adapt without facing penalties.

Avoids Breach of Contract: By acknowledging the impact of unpredictable events, a Force Majeure clause helps prevent breaches and protects relationships between parties.

How This Plays Out in Practice

In real-world scenarios, Force Majeure clauses are invaluable when dealing with:

Supply Chain Disruptions: When extreme weather or other factors interrupt supply lines, the clause provides relief from penalties.

Service Interruption: If a company cannot perform services due to uncontrollable circumstances, it avoids liability by invoking the Force Majeure provision.

By including this clause, businesses can protect themselves from undue risks and financial burdens when events outside of their control occur. It’s a proactive step that provides flexibility and helps manage unforeseen disruptions effectively.

If you’re looking to strengthen your contracts or need guidance on incorporating Force Majeure clauses, our legal team at WFJ is here to assist.

Strong contracts are the foundation of every successful business relationship. Without proper protections, businesses can face significant financial risk, disputes, and the possibility of non-payment. To minimize these risks, it’s essential to include specific provisions in every contract. Here are the key clauses that should be present in your contracts:

Payment Terms

What: Defines payment schedules, methods, penalties and consequences for late payment.

Why: 

• Ensures Cash Flow
• Reduces Financial Risk Against Late or Missed Payments
• Sets Clear Expectations

Key Elements:

• Payment Terms
• Late Payment Penalties
• Security Interests
• Dispute Resolution

Limitation of Liability

What:

• A contract provision that caps the amount and types of damages one party can recover from the other.
• Protects businesses from excessive claims and financial exposure in the event of disputes or equipment failure.
• Sets a maximum financial responsibility for the business.

Why: 

• Avoid exposure to excessive damages from customer claims.
• Help dealers estimate and manage their potential liability in worst-case scenarios.
• Protects businesses from liability from unseen circumstances.

Examples:

• Monetary Cap
• Exclusion of Certain Damages
• Time-based Limits

Indemnity Clauses

What: Contract provision where one party agrees to compensate the other for certain damages or losses.

Why:

• Mitigates Financial Risks
• Avoids Liability from Damages Caused by Misuse
• Coverage for 3rd Party Claims

Key Elements:

• Scope of Indemnity
• Types of Claims
• Geographical & Temporal Limits

Insurance

What: Contract provision requiring one or both parties to maintain specified insurance coverage.

Why:

• Transfers Risk from the dealer to an Insurance Company
• Ensures Financial Protection for Both Parties in Case of Loss or Liability

Key Types: 

• General Liability
• Property
• Product Liability
• Worker’s Compensation

Price

What: Cost for goods/services-protects against misunderstandings, unauthorized discounts and potential financial losses.

Why:

• Avoids Disputes
• Adjustment Clauses (Price Adjustment Mechanisms for Raw Material Price Changes or Fuel Surcharges.)
• Escalation Clauses (Allows for Gradual Price Increases.)

Key Components:

• Fixed vs Variable Pricing
• Payment Terms
• Currency & Exchange Rates

Performance Dates

What: Deadlines for:

• Delivery of Equipment
• Completion of Service
• Payment Milestones

Why:

• Establishes clear timelines to avoid misunderstandings
• Holds parties responsible for meeting their contractual obligations
• Prevents delays that can lead to operational disruptions or financial losses

Key Protections:

• Delay Clauses
• Extension Provisions
• Force Majeure

Security Agreement & Repossession

What: Legal document that grants a lender a security interest in the equipment sold, ensuring the right to repossess the equipment if the buyer defaults.

Why:

• Reduce risk if buyers fail to meet obligations
• Provides strong negotiation power if a customer defaults or requests an extension
• Outlines precise legal remedies available to the dealer, ensuring smoother enforcement

Key Components:

• Collateral Identification
• Obligations of the Buyer
• Default Conditions
• Right to Repossession

Warranty

What: 

• Contractual promise by the seller regarding the condition, performance, or lifespan of the equipment sold
• Express Warranties: Assurances made about the product
• Implied Warranties: Automatically applied under the law

Why:

• Limits Disputes

Strategies:

• Define Terms Clearly-specify duration, coverage limits, and conditions for repair
• Exclude Certain Warranties-use disclaimers to avoid unintended implied warranties
• Set reasonable limitations

Force Majeure

What: 

• Contract provision that frees parties from liability or obligation for events beyond their control
• Natural disasters
• Government actions or regulations
• Labor strikes or civil unrest
• Pandemics or public health emergencies

Why:

• Mitigates risk
• Provides contract flexibility
• Avoids breach of contract

In Practice:

• Supply chain disruptions
• Service interruption

By including these key provisions in every contract, your business can reduce financial risk, avoid disputes, and protect itself from non-payment. Ensuring that contracts are thorough and well-structured is essential for long-term business success. If you need assistance drafting or reviewing contracts, working with experienced legal counsel is a proactive way to safeguard your business interests.

If you have questions about contract provisions or need legal support, contact WFJ today. Our team of experienced attorneys can help you create robust contracts that help protect your business from risk and ensure your financial stability.

The Corporate Transparency Act (CTA) is fast approaching its critical deadline of January 1st, 2025. This law, designed to enhance transparency and combat illicit financial activity, requires certain business entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). If your business falls under this new mandate, now is the time to act. (Learn more about the CTA in our previous blog post: here.)

Why the Deadline Matters

Failing to comply with the CTA by the January 1 deadline could result in severe penalties, including fines of up to $10,000 or imprisonment for up to two years. Compliance isn’t optional, and businesses that miss the mark could face significant risks. Preparing now ensures your business remains compliant and avoids unnecessary complications.

Is Your Business Ready?

Many businesses, including corporations, LLCs, and other entities formed under state law, must submit reports identifying their beneficial owners-individuals who own or control at least 25% of the company or exercise substantial control over it. Even if you’re not sure whether your business is required to report, it’s essential to seek legal advice to determine your compliance obligations.

How Can WFJ Help?

• Assessment and Planning: We’ll help you assess whether your business must report under the CTA and develop a plan to gather the required information.
• Accurate Reporting: We’ll guide you in accurately identifying and documenting your beneficial owners, ensuring your filings meet FinCEN’s standards.
• Ongoing Support: The CTA isn’t just a one-time requirement; reporting obligations may change as your business evolves. We offer ongoing support to keep your business compliant beyond January 1, 2025.

Don’t Wait-Act Now

Time is of the essence. The January 1, 2025, deadline will arrive sooner than you think, and preparation is key. Partner with WFJ today to ensure your business is ready and compliant. Our experienced team is here to provide the legal support and guidance you need, so you can focus on what matters most-running your business.

Contact us today to schedule a consultation or take the first step towards meeting your compliance obligations. 

Employers have a duty to engage in the interactive process when an employee requests accommodations for a disability. This collaborative process ensures that reasonable accommodations are provided, allowing employees to perform their job effectively.

Steps in the Interactive Process:

1. Acknowledge the Request

When an employee requests an accommodation for a disability, the employer must respond promptly. This step is critical not only to comply with the Americans with Disabilities Act (ADA) but also to show the employee that their request is taken seriously.

• Best Practices: Employers should have clear procedures in place for handling accommodation requests. This includes training managers and HR staff on recognizing requests, even if they are informal or don’t explicitly use the term “accommodation”. It is vital to avoid unnecessary delays, as failing to respond in a timely manner can be seen as a violation of ADA requirements.
• Legal Implications: If an employer ignores or delays a response, it may lead to claims of discrimination or non-compliance under the ADA.

2. Gather Information

Once the request has been acknowledged, the employer must gather relevant information to understand the employee’s disability and the type of accommodation needed. This step often involves open dialogue with the employee to better understand their specific limitations and job requirements.

• Best Practices: Ask open-ended questions to fully understand the employee’s situation, while being mindful of privacy and confidentiality. Involving HR, supervisors, or external experts, such as medical professionals, may help in identifying appropriate accommodations.
• Legal Considerations: Employers may request documentation about the employee’s disability from a healthcare provider, but this should be limited to confirming the need for accommodation, not an invasive inquiry into the individual’s medical condition.

3. Explore Accommodation Options

After gathering information, the employer should research and evaluate potential accommodations. Under the ADA, employers are not required to provide the exact accommodation the employee requests, but they must consider reasonable alternatives that allow the employee to perform their essential job functions.

• Best Practices: Collaborate with the employee to brainstorm accommodation options that work for both parties. Common accommodations might include modifying work schedules, restructuring job duties, or providing assistive technologies.
• Reasonableness Standard: Employers should keep in mind that accommodations are considered “reasonable” if they don’t create an undue hardship for the business. Factors like the cost of accommodation, the size of the business, and its overall resources are all considered in determining undue hardship.

4. Implement Accommodations

Once an agreement on the appropriate accommodation is reached, it’s time to implement it. This may involve making physical adjustments to the workplace, providing new equipment, or altering work schedules or duties.

Best Practices: Ensure all stakeholders, including the employee’s supervisors, are informed of the accommodation so it can be integrated smoothly. It’s important to document the accommodation process and provide any necessary training or support for the employee to effectively use the accommodation.

Potential Challenges: Sometimes accommodations require adjustments to work processes, which may cause initial disruption. Clear communication is key to minimizing confusion or frustration from both the accommodated employee and the broader team.

5. Monitor and Evaluate

After accommodations are implemented, employers must continue to monitor their effectiveness. Disabilities and job demands may evolve over time, making it crucial to check in with the employee regularly to ensure the accommodation remains suitable.

Best Practices: Set regular follow-up meetings to review how the accommodation is working and address any concerns or adjustments that may be needed. Keep communication open so that the employee feels comfortable discussing if their needs change.

Documentation: It is important to document these evaluations and any changes to the accommodation to protect the company in case of future disputes or claims of non-compliance.

By following these steps, employers can not only support employees with disabilities but also demonstrate a commitment to an inclusive and compliant workplace. The interactive process should be seen as a continual dialogue between the employer and employee, fostering collaboration to find effective solutions. Moreover, compliance with the ADA protects businesses from legal risks while promoting a positive work environment that values diversity and equal opportunity.