Perspectives

The Corporate Transparency Act (CTA) is quickly approaching its critical deadline, and it’s essential for all LLC owners to take action now. Starting January 1st, 2025, certain business entities will be required to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN) or face steep penalties. If your business is subject to the CTA, now is the time to ensure you’re compliant.

Why the Deadline Matters

The January 1 deadline isn’t just a suggestion-it’s a hard cutoff. Businesses that fail to comply with the CTA could face severe penalties, including fines up to $10,0000 or imprisonment for up to two years. Missing this deadline could put your business at significant risk, and the consequences of non-compliance are steep.

Preparing now to meet the CTA requirements ensures that your business stays on the right side of the law and avoids unnecessary complications. Don’t wait until the last minute-act today to stay compliant and protect your business.

Is Your Business Ready?

Under the CTA, many businesses, including LLCs, corporations, and other entities formed under state law, must report their beneficial owners. These are the individuals who own or control at least 25% of the company or have substantial control over its operations. If you’re unsure whether your business needs to report, it’s crucial to seek legal advice to determine your compliance obligations.

The CTA’s requirements apply to a wide range of businesses, so even if you think your business might be exempt, it’s worth confirming your obligations. Compliance isn’t optional, and getting it right can save you from future headaches.

How Can WFJ Help?

At Wagner, Falconer & Judd, we’re here to help you through the complexities of the CTA and ensure your business is prepared for the upcoming deadline. Here’s how we can help:

• Assessment and Planning: We’ll help you assess whether your business needs to report under the CTA and create a plan to gather the necessary information.
• Accurate Reporting: We’ll guide you in accurately identifying and documenting your beneficial owners to meet FinCEN’s strict filing standards.
• Ongoing Support: The CTA’s reporting obligations are not a one-time event. As your business evolves, we can provide ongoing support to ensure continued compliance beyond January 1, 2025.

Don’t Wait-Act Now

The January 1, 2025 deadline is fast approaching, and it’s crucial to prepare early. By partnering with WFJ, you can ensure your business is ready to meet its obligations and avoid costly penalties. Our experienced legal team is ready to help you navigate the CTA’s requirements so you can focus on running your business with confidence.

Contact us today to schedule a consultation and take the first step toward compliance. Time is running out-don’t let this deadline sneak up on you!

Ensuring timely and accurate lien filing is a critical part of securing payments and protecting company revenue. However, with the complexities of state-specific lien laws and strict filing deadlines, managing the lien process internally can be fraught with challenges that put even the most organized teams at risk. Outsourcing lien filing to professionals, particularly legal experts, can provide much-needed relief and strategic advantages.

Here’s when you should consider it-and why partnering with a law firm can safeguard your interests.

The Challenges of In-House Lien Management

Credit professionals face numerous obstacles in managing liens, including:

• Complex and Varied State Laws

Each state has unique lien laws governing what qualifies for a lien, notice requirements, filing deadlines, and the duration of the lien’s validity. Missing a step or misunderstanding a state-specific requirement can invalidate your lien, leaving your company unprotected.

• Strict Deadlines 

Many states have short and unforgiving deadlines for filing preliminary notices, liens, and other associated documents. Balancing these deadlines with other pressing financial duties increases the likelihood of errors.

• High Stakes

An improperly filed lien doesn’t just cost your company money; it can strain relationships with clients and business partners, damaging future opportunities.

• Resource Constraints

Even the largest companies are often stretched thin managing accounts receivable, disputes, and other tasks. Taking on lien filing adds an additional layer of responsibility that can overwhelm internal teams.

Key Benefits of Outsourcing Lien Filing to Legal Professionals

Bringing in a law firm with expertise in lien law can alleviate these pain points and position your company for success. 

• State-specific Expertise

Legal professionals stay up-to-date with state-specific lien requirements and legislative changes, ensuring that filings comply with all laws and regulations.

• Deadline Management

A dedicated legal team will ensure that notices and filings are submitted on time, mitigating the risk of losing lien rights due to missed deadlines.

• Accurate Documentation

Attorneys can handle the meticulous preparation of lien documents, reducing the likelihood of disputes over improper filings.

• Strategic Advisory

Beyond filing liens, legal counsel can advise on how to structure contracts to strengthen lien rights and improve your position in case of disputes or non-payment.

• Improved Efficiency

Outsourcing lien management allows your team to focus on core responsibilities without sacrificing lien protection or compliance.

When to Make the Switch

Consider outsource lien filing if:

• Your company operates in multiple states, each with different lien laws.
• Your team struggles to meet the deadlines associated with preliminary notices and lien filings.
• You’ve experienced errors or invalidation in past lien filings.
• You’re expanding into new markets with unfamiliar lien laws.
• Your team has a high workload, and lien filing is becoming a distraction from core financial tasks.

Why Partner with a Law Firm for Lien Filing?

While some companies may consider lien service providers, partnering with a law firm offers an unparalleled advantage: comprehensive legal protection. The attorneys at Wagner, Falconer & Judd don’t just file liens; they provides advice on how to prevent payment disputes and protect your company’s rights under the law.

At WFJ, we specialize in helping you secure your business through effective lien filing and legal counsel. Our team is experienced in state-specific lien laws and deadlines, ensuring your company is always protected.

Don’t let the complexity of lien filing jeopardize your revenue. Contact us today to learn how we can streamline your lien processes, so you can focus on growing your business with confidence.

Take Action

If you’re ready to reduce risk and maximize efficiency, we’re here to help. Reach out to WFJ to schedule a consultation and take the first step toward stronger lien protection.

A recent ruling from a federal judge in Texas has blocked the Department of Labor’s attempt to raise the salary threshold for employees to qualify for exemption from overtime pay under the Fair Labor Standards Act (FLSA). This decision has significant implications for businesses and worker alike, particularly regarding how exempt status is determined for employees in executive, administrative, and professional (EAP) roles.

The FLSA and the EAP Exemption 

The FLSA mandates that covered employers pay employees at least the federal minimum wage and provide overtime pay for hours worked over 40 hours in a week. However, the law includes an important exception for EAP employees, meaning those in executive, administrative, or professional roles may be exempt from these requirements.

For employees to qualify for this exemption, they must meet certain criteria, which the Department of Labor (DOL) defines through regulations. One of these criteria is the salary level. The DOL periodically updates this salary threshold, and in its 2024 Rule, the Department aimed to raise the minimum salary for exempt employees to a higher level.

The 2024 Rule and the Court’s Decision

On November 15, 2024, a Federal Judge in Texas ruled against the DOL’s 2024 Rule, which had raised the salary threshold for EAP employees. The first phase of the rule, which took effect on July 1, 2024, increased the salary level from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). This change would have made approximately one million employees who were previously considered exempt eligible for overtime pay.

The court ruled that the DO exceeded its authority under the FLSA by using a “salary -only” approach to determine whether an employee is exempt. According to the ruling, the FLSA requires the DOL to consider the duties of employees, not just their salary level, when applying the EAP exemption. The judge found that the department’s rule did not properly account for the role and responsibilities of the employee, violating the scope of authority granted by Congress.

What About the Other Phases of the 2024 Rule? 

The 2024 rule included additional phases that had not yet taken effect. The second phase was set to raise the salary threshold to $1,128 per week starting January 1, 2025. The third phase would have implemented automatic increases to the salary threshold starting in 2027 without requiring notice or public comment. The court also found the provisions to be beyond the DOL’s authority, finding that the Department lacked the power to make these changes unilaterally.

What Does This Mean for Employers?

If your company had already raised employee salaries outlined in the 2024 rule, you are not in violation of the law by rolling back those increase. However, it’s important to note that you cannot ask employees to return the additional pay they received, as that could lead to legal and reputational issues.

It’s also worth considering the impact that lowering salaries might have on employee morale. While the legal ruling may allow businesses to revert to the previous salary levels, doing so could cause dissatisfaction and erode trust within the workforce.

Could the Biden Administration Appeal?

While the decision may seem final, the Biden Administration could still choose to appeal the ruling, although a reversal seems unlikely. The court’s decision was notably supported by the Supreme Court’s ruling earlier this year in Loper Bright Enterprises v. Raimondo. In that case, the Supreme Court overturned decades of precedent by overturning what is known as Chevron deference, which had previously allowed agencies like the DOL considerable discretion in interpreting the laws they enforce. Now, courts are required to exercise their own judgement in determining whether an agency has stayed within its statutory authority. Given the court’s reliance on Loper Bright, it seems highly unlikely that the ruling will be overturned.

Conclusion

The Texas federal judge’s decision to strike down the Department of Labor’s 2204 salary threshold increase is a significant development for businesses and employees affected by the FLSA’s overtime and minimum wage exemptions. While the ruling halts the planned increases, employers must be careful about reversing salary adjustments that were already made. moreover, the possibility of an appeal remains, but the likelihood of a reversal is slim in light of recent Supreme Court decisions. Employers should continue to monitor the situation and ensure their compensation practices align with current legal standards.

A well-structured performance management process is a vital tool for employers. Not only does it help align individual contributions with organizational goals, but it also boosts employee engagement, productivity, and long-term success. Here’s a guide for employers on crafting a performance management strategy that not only drives performance but also fosters a fair, supportive workplace.

Key Elements of an Effective Performance Management Process

1. Continuous Performance Development: Performance management is not a one-time event; it’s a continuous cycle of identifying, measuring, and developing employee performance. By consistently communicating expectations and offering opportunities for improvement, employers can create a culture of transparency and fairness.
   • Open Communication: Effective performance management starts from the hiring stage. Clearly communicate job descriptions, work rules, and performance standards. This sets the stage for employees to understand what is expected of them.
   • Timely Feedback: Provide employees with regular, constructive feedback. Don’t wait until a formal review; let them know where they stand and offer guidance on how to meet performance standards.
   • Documentation: Keep detailed notes of all discussions. Document the date, people involved, and a summary of the conversation. For instance, “On May 15, I advised Frank that his error rate for processing claims is 5%, which is above the acceptable range. We discussed strategies for improvement.”
2. Aligning Individual Performance with Organizational Goals: An effective process ensures that each employee’s performance aligns with the larger organizational objectives. This fosters a sense of purpose and accountability, empowering employees to understand how their role contributes to the company’s success.
   • Establish Clear Goals: Set measurable, achievable goals that align with the company’s mission. Employees who understand how their goals impact the organization are more likely to feel engaged and motivated.
   • Reduce Legal Risk: When employees are notified of performance issues before termination, they are less likely to file claims. Should a claim arise, written warnings are invaluable for demonstrating that the employer’s actions were justified.
   • Formal Evaluations and Continuous Review: Human Resources (HR) plays critical role in ensuring consistent and fair treatment. HR can review managerial decisions to confirm that they are aligned with the company’s policies and have been handled consistently across similar situations.

Key Components of a Performance Management System

1. Goal Setting: Setting clear and realistic goals is the first step in aligning performance with expectations. These goals provide a roadmap for employees, offering clarity on what they should achieve. When employees are aware of their targets, they are more likely to contribute effectively.
2. Continuous Feedback: Feedback shouldn’t be reserved for annual reviews. Regular feedback-both positive and corrective- helps employees stay on track and feel valued. It’s essential that this feedback is well-documented and timely.
3. Performance Appraisals: Conduct formal evaluations to assess employee’s achievements and areas for improvement. Performance appraisals provide an opportunity to discuss progress, reinforce goals, and address any concerns. Remember, consistency is crucial-similar performance issues should be addressed in a similar manner.
4. Development Plans: Growth opportunities keep employees engaged and motivated. Creating development plans for employees, including training, skill-building, or career advancement opportunities, can enhance loyalty and performance.

Compliance and Legal Protections

An effective performance management process is also a valuable asset for legal compliance. Regular documentation, written warnings, and clear communication can shield employers from potential legal issues. Here are some tips for maintaining a legally compliant performance management system:

• Keep Records: Ensure all performance-related documentation is securely stored in the employee’s personnel file. Notes from 1:1 meetings should be kept in a manager file, and electronic communications should be professional, as they may be discoverable in a lawsuit.
• Involve HR: HR provides an independent review of disciplinary actions, ensuring that they are fair and consistent with company policy.

Partnering with Legal and HR Professionals

Navigating performance management can be challenging, especially when disciplinary action or termination is involved. To manage this process compliantly, work with trusted legal counsel and HR professionals. These experts can guide you in implementing performance management strategies that not only improve productivity but also help you minimize legal risks, fostering a productive and legally sound work environment.

Partial-day absences for exempt employees can create confusion for employers. The Fair Labor Standards Act (FLSA) has strict rules on salary deductions, and understanding these rules is essential to avoid costly compliance issues. Let’s examine a common scenario to highlight the right approach for managing partial-day absences in a compliant way.

Case Study: Partial-Day Absence Deduction

Scenario: Maria, an exempt employee, takes a half day off for a medical appointment. Her employer deducts four hours of pay from her weekly salary to account for this absence.

Impact: This deduction reduces Maria’s salary based on the hours worked, which is a violation of the FLSA. Exempt employees, under the FLSA, must receive their full salary for any week in which they perform any work, regardless of hours worked, with limited exceptions.

Correct Approach: Maria should receive her full weekly salary despite her partial-day absence. If her employer has a Paid Time Off (PTO) policy, they are permitted to deduct the four hours from her PTO balance instead. If Maria’s PTO is exhausted, her salary should still remain unaffected by the absence.

Key Takeaways for Employers and HR Professionals 

• Understand the FLSA Rules on Salary Deductions for Exempt Employees

Exempt employees are generally entitled to their full weekly salary if they work any part of the week, with very limited exceptions. Partial-day deductions from an exempt employee’s salary are typically prohibited.

• Implement a Clear PTO Policy

A well-defined Paid Time Off policy allows employers to manage partial-day absences in compliance with FLSA guidelines. Employers can deduct partial-day absences from an exempt employee’s PTO balance without affecting their salary.

• Avoid Salary Deductions After PTO Exhaustion

If an exempt employee has used up all available PTO, you still cannot reduce their salary for a partial-day absence. It’s important to communicate this rule clearly to managers and payroll teams to prevent inadvertent violations.

• Train Supervisors and Payroll Staff

Ensure that your HR, payroll, and supervisory staff understand how to handle partial-day absences for exempt employees. Training them on these guidelines can help prevent misunderstandings that lead to compliance issues.

Applying This Lesson to Your Business

Consider conducting a review of your PTO policies and payroll practices to confirm compliance with FLSA standards. Are partial-day absences being managed correctly for exempt employees? Do supervisors and payroll staff know the rules and understand the correct procedures? Making adjustments now can protect your business from potential penalties down the line.

Consult Legal Counsel to Ensure Compliance

Handling partial-day absences for exempt employees requires a clear understanding of FLSA rules and your own company’s policies. To ensure full compliance, consult with experienced legal counsel who can review your policies and help you implement best practices. Reach out to our team to discuss how we can assist you in navigating complex employment laws and maintaining compliant, fair practices in your workplace.

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.