The Massachusetts Equal Pay Act Goes Into Effect July 1st – What Does It Do?

On July 1, 2018, the Massachusetts Equal Pay Act (“MEPA”) will go into effect in the Commonwealth, requiring companies to ensure that they pay male and female workers equally for “comparable work.”  On March 1, 2018, the Attorney General’s office issued guidelines aimed at clarifying certain provisions of the law. The below answers the most frequently asked questions regarding MEPA.

Who does the law apply to?

Virtually all Massachusetts employers must comply with MEPA, including state and municipal employers, irrespective of size. It does not apply to the federal government as an employer. It covers all employees whose primary place of work is in Massachusetts, regardless of where the employee lives.

What constitutes “comparable work”?

The definition of “comparable work” has been the most criticized aspect of the law, as many believe that even the Attorney General’s issuance of guidelines aimed at clarifying the term have left it far too subjective of a standard.  The Attorney General guidelines state that employers must pay men and women equally for jobs that require “substantially similar skill, effort and responsibility” and are performed under “similar working conditions.” This provision will undoubtedly be the most litigated aspect of MEPA.

Do job titles matter?

Although job titles are one factor to look at when determining comparable work, the Attorney General’s guidelines clearly indicate that different job titles alone do not give rise to the presumption that two employees are not doing comparable work. In other words, businesses cannot just use job titles alone to justify pay rates. They must do a deeper comparison to meet the “comparable work” threshold.

Are there exceptions to the law?

Yes, the law does recognize that in certain circumstances, differences in pay for comparable work may be attributable to one of these six factors: (a) seniority with the employer; (b) use of a merit system; © differences tied to meeting sales, revenue or production goals; (d) geographic location differences; (e) additional education, training and experience reasonably related to the job; and (f) travel required for the job.

What is the effect of the law on the hiring process?

A key change in the recruitment and hiring process for employers to be aware of is that employers may no longer ask applicants about salary history. Studies have shown that since women have historically made less than their male counterparts, the use of past salaries to determine future salaries inherently contributes to the continuity of the pay gap problem. In addition, the law makes it illegal for employers to prohibit employees from openly discussing wages with one another.

What can businesses do to protect themselves?

The law provides that businesses can use a “self-evaluation” as an affirmative defense of a lawsuit alleging a violation of MEPA.  To do so the business must show that it has conducted a legitimate self-evaluation of its employee pay rates and gender comparisons within the past three years prior to the litigation. The business would present the self-evaluation to a judge who would have to deem it adequate and find that the company made “reasonable progress towards eliminating compensation differentials based on gender”.

How can your business prepare to ensure compliance with the new law?

The Attorney General’s Office has offered a dedicated website with information, advice and webinars: https://www.mass.gov/massachusetts-equal-pay-law.  It is also advisable to meet with an employment law attorney to review your current pay structure and hiring practices, and to conduct an initial self-evaluation.

Please contact one of the employment lawyers at Baker, Braverman & Barbadoro, P.C. to make an appointment for your business. Theresa Barbadoro Koppanati.

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Are Scholarships Tax-Free?

“I’m delighted to announce that your child has been awarded a scholarship.”  Music to your ears!

Now some reality:

Scholarships (and fellowships) are generally tax-free, whether for elementary or high school students, for college or graduate students, or for students at accredited vocational schools. It makes no difference whether the scholarship takes the form of a direct payment to the individual or a tuition reduction.

However, for the scholarship to be tax-free, certain conditions must be satisfied. The most important are that the award must be used for tuition and related expenses (and not for room and board) and that it must not be compensation for services.

Tuition and related expenses. A scholarship is tax-free only to the extent it is used to pay for (1) tuition and fees required to attend the school or (2) fees, books, supplies, and equipment required of all students in a particular course. For example, if a computer is recommended but not required, buying one would not qualify. Other expenses that don’t qualify include the cost of room and board, travel, research, and clerical help.

To the extent a scholarship award isn’t used for qualifying items, it is taxable. The recipient is responsible for establishing how much of the award was used for qualified tuition and related expenses so as to be tax-free. You should maintain records (e.g., copies of bills, receipts, cancelled checks) that reflect the use of the scholarship money.

Scholarship award can’t be payment for services. Subject to limited exceptions, a scholarship isn’t tax-free if the payments are linked to services that your child performs as a condition for receiving the award, even if those services are required of all degree candidates. Thus, a stipend your child receives for required teaching, research, or other services is taxable, even if the child uses the money for tuition or related expenses.

Returns and records. If the scholarship is tax-free and your child has no other income, the award doesn’t have to be reported on a return. However, any portion of the award that is taxable as payment for services is treated as wages, and the payor should withhold accordingly. Estimated tax payments may have to be made if the payor doesn’t withhold enough tax. Your child should receive a Form W-2 showing the amount of these “wages” and the amount of tax withheld, but any portion of the award that is taxable must be reported, even if no Form W-2 is received.

If you have questions about your child’s scholarship offers, please contact one of the tax attorneys at Baker, Braverman & Barbadoro, P.C. to set up an appointment. Warren F. Baker.

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How to Avoid Probate and Reduce the Costs of Estate Administration

Today many people are using revocable living trusts as the foundation for their estate plans. When properly prepared, a living trust will avoid the public, costly, and time-consuming court process of conservatorship (due to incapacity) or probate (after death). Still, many people make a big mistake that sends their assets and loved ones right into the court system: they fail to fund their trust.

What Does it Mean to “Fund a Trust?”

Funding can be accomplished several different ways:

  • Changing the title of the asset from your individual name (or joint names) to the name of your trust – for example, from John Smith individually, to John Smith, as Trustee of the John Smith Living Trust
  • Assigning your interest in an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.
  • Changing the primary or contingent beneficiary of the asset (i.e. your IRA, 401(k), 403(b), life insurance policy, etc.) to your trust.

What Happens to Assets Left Out of Your Trust?

For many people avoiding probate is one of the main reasons they set up a revocable living trust. Unfortunately, you may believe that once you sign your trust agreement, you’re done. However, if you fail to take the next step and change titles and beneficiary designations before you become incompetent or pass away, then your loved ones will be forced to complete the probate process in order to distribute your assets.

Which Assets Should, (or should not), Be Funded Into Your Trust?

In general, the following types of assets are typically appropriate to transfer into your trust as soon as it is created:

  • Real estate – homes, rental properties, vacant land and timeshares
  • Bank and credit union accounts – checking, savings, CDs
  • Safe deposit boxes
  • Investment accounts – brokerage, agency, custody
  • Notes payable to you
  • Life insurance – if you don’t have an irrevocable life insurance trust
  • Business interests
  • Intellectual property
  • Oil and gas interests
  • Personal effects – artwork, jewelry, collectibles, antiques

On the other hand, the following types of assets are treated differently for tax purposes, and should be evaluated on a case-by-case basis to determine whether they can, or should, be transferred into your trust:

  • IRAs and other tax-deferred retirement accounts – only the beneficiary should be changed
  • Incentive stock options and Section 1244 stock
  • Interests in professional corporations
  • Foreign assets – in some countries funding an asset into a U.S.-based trust causes adverse tax consequences, while in other countries trusts aren’t recognized or are ignored due to forced heirship laws
  • UTMA and UGMA accounts – your minor grandchild is the owner, not you as the custodian; instead, name a successor custodian
  • Cars, trucks boats, motorcycles and scooters –most states allow a small amount of assets, including vehicles, to pass outside of probate, in others a beneficiary can be designated for vehicles, and in others, vehicles don’t have to go through probate at all

However, it may be possible to name the trust as beneficiary of these assets, which is not the same as transferring them into trust. When the trust is named as beneficiary, the asset typically transfers on the death of the owner. It is vitally important to work closely with your attorney to determine what should go into your trust and what should stay out.  Also, before purchasing new assets, you should consult with your attorney to determine the most advantageous way to title your accounts, prepare transfer documents, and determine who to designate as beneficiary.

What Are the Benefits of Proper Funding?

Funding your trust makes it possible to obtain the best results from your trust-based estate plan:

  • Your incapacity trustee, rather than a court-appointed conservator or probate judge, will take control of your trust assets if you become mentally incompetent. Having a properly funded trust with backup trustees will allow you to avoid the need for court involvement in the management of your property if you are incapacitated during life.
  • After death, your settlement trustee, rather than a probate judge will take control of your trust assets. This will allow your loved ones to avoid the cost, delay, and aggravation of the court-supervised probate process.
  • Your trust will be easier to update as your wishes and circumstances change instead of doing things piecemeal through joint ownership, transfer-on-death accounts, or individual beneficiary designations.
  • Your final wishes will remain a private family matter instead of being publicized in the local probate court records.
  • Your incapacity or settlement trustee (i.e. surviving spouse & dependents) will typically have direct and immediate access to your trust assets without the need for obtaining a probate court order.
  • Your incapacity or settlement trustee will be able to manage, invest, sell and reinvest your trust assets without court intervention.

 The Bottom Line on Trust Funding

Trusts can provide certainty with regards to the distribution of assets after death, and can also be used to achieve tax efficiency. Also, regardless of whether or not you have a taxable estate, trusts can dramatically reduce the cost of estate administration, and can significantly reduce the time it takes to distribute your assets after death. However, many people fail to take the additional step of funding the trust once it has been created.

If you want to know more about how you can benefit from a living trust, or if you would like to review your existing trust agreement to make sure it is properly funded, please contact Baker, Braverman & Barbadoro, PC to make an appointment.Thomas P. O’Neill, III.

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Thinking Of Converting Your Multi-Family Home To A Condominium?

With the skyrocketing real estate values in Greater Boston the last few years, many owners of two, three and four family homes have thought about converting their properties into Condominium ownership so that they can legally sell off one or more units and maximize their total value from the properties.  If you are thinking of converting your multi-family home into a condominium here are some important things to consider.

It is much easier, both from a physical and from a legal standpoint to convert a residential property into a Condominium when the property is completely vacant. Some municipalities have Condominium Conversion rules that will kick in if the converted property is currently tenanted, but not if it is vacant at the time of conversion.  In addition many properties need at least a small amount of physical alteration to work well as a Condominium, such as separating the heating systems, electrical panels and building access as well as striping of reserved parking spaces, all of which are a lot easier if your building is vacant.  Any common area electric needs to be metered separately from the individual unit owner’s service.

The advantage of converting a property into a Condominium is that in most cases, you are greatly increasing the total re-sale value of the property. The preparation of proper Condominium legal documents and the Site Plan and Floor Plans to comply with lender requirements requires both an experienced Condominium real estate attorney and an experienced surveyor/engineer to make the process quick, easy and legally effective.

If you are considering converting one of your multi-unit properties into a Condominium, contact Baker, Braverman & Barbadoro, P.C. for a consultation. Lawrence A. DiNardo.

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Administering an Estate in the Digital Age

Imagine that a family member has just passed away and you know they have important information stored on the internet. It could be in the cloud, in their email, or on a social media account. How do you access this information? The Massachusetts Supreme Judicial Court (“SJC”) recently decided the case Ajemian v. Yahoo!, Inc., 478 Mass. 169 (2017), has shed some light on this question.

Ajemian was named the Personal Representative (formerly executor/trix, appointed by the Probate Court to administer the decedent’s estate) of her late brother’s estate and needed access to his Yahoo email account. She offered her Letters of Authority (a document from the Probate Court that shows the Personal Representative has the authority to act on behalf of the estate) to Yahoo who refused to grant her access to the email account. Yahoo claimed that a Personal Representative of an Estate did not have the right to access the information because of federal privacy laws and that the disclosure violated Yahoo’s terms of service. The SJC ultimately determined that disclosing the information in the Yahoo email account to Ajemian did not violate federal privacy laws because Ajemian, as Personal Representative, was the only person with authority to consent to the release of the email account on behalf of the deceased. The SJC did not make a ruling on whether or not the disclosure would violate Yahoos terms of service and remanded that decision back to the Probate Court.

While the SJC did not give the total green light to the release of the Yahoo email account to Ajemian, the SJC did rule that the release did not violate federal privacy laws. This decision can have a ripple effect throughout the internet community possibly allowing Personal Representatives to request and access the electronic information of deceased loved ones. Facebook and Instagram already have policies in place allowing court appointed Personal Representatives to delete or memorialize the account of a deceased loved one. Gmail even allows people to appoint someone on their email service who will automatically be able to access account information after the death of the account holder.

One way to ensure that your loved ones will be able to access your electronic information, or to specifically prohibit access, is to make provisions regarding such access in your Last Will and Testament (“Will”). Your Will tells the court who you want to be in charge of your estate and what you want that person to do with your assets. This can include access, or specific prohibitions, to electronic information.

If access to your electronic information after you pass away is important to you, the Estate Planning attorneys at Baker, Braverman & Barbadoro can help you draft a Will that includes your electronic access goals. – Elizabeth A. Caruso.

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Massachusetts Child Labor Laws: Is Your Company in Compliance?

Two prominent franchises were recently found in violation of the child labor laws by the Massachusetts Attorney General’s Office. Burger King was found to have more than 800 child labor violations at stores across the state. Among the violations uncovered were minors working shifts that exceeded the total maximum daily hours allowed or shifts that ended later than allowed under state law, in some instances past 3 a.m. Many of the minor employees also did not have the proper work permits. Similarly, Sugar Heaven, a popular candy franchise, violated child labor laws by scheduling and allowing minors to work later or for longer than what is permitted and by failing to obtain work permits for minors. Employees under 18 were also frequently left to close the stores late at night.

The Massachusetts Child Labor Laws apply to all child workers ages 14 to 18; children under the age of 14 are not eligible to work, with few exceptions such as working as a news carrier, on a farm, or in entertainment (with a special permit). The state’s child labor laws, according to the attorney general’s office, were written to “protect young workers who suffer injuries at much higher rates than adults and who need to balance work and education.”

Child labor laws require the following to ensure a safe and positive work experience for minors:

  • Minimum wage. The minimum wage in Massachusetts is $11 an hour.
  • Work Permits. Workers under 18 years old need a new work permit for every job. The application for a work permit must be filled out by the parent or guardian, the minor, and employer and submitted to the school district where the child lives or attends school. Minors who are 14 or 15 also need a physician’s signature.
  • Hazardous Jobs. Teens under 18 years of age are prohibited from doing certain kinds of dangerous work. Such hazards include, but are not limited to operating, cleaning, or repairing power-driven meat slicers, grinders, or choppers; driving a vehicle, forklift, or work assist vehicle; handling, serving or selling alcoholic beverages. Teens under 16 are prohibited from even more tasks that are considered dangerous such as performing any baking activities; operating fryolators, rotisseries, NEICO broilers, or pressure cookers; working in freezers or meat coolers; working on or use ladders, scaffolds, or their substitutes; and working in amusement places (e.g., pool or billiard room, or bowling alley) or barber shops.
  • Supervision. After 8 p.m., all workers under 18 must have the direct and immediate supervision of an adult supervisor who is located in the workplace and is reasonably accessible to the minor.
  • Legal Work Hours for Minors. Massachusetts law controls how early and how late minors may work and how many hours they may work, based on their age. For example 14- and 15-year olds can only work between 7 a.m. and 7 p.m. during the school year for a maximum of 18 hours per week during the school year (which is further restricted to only 3 hours on a school day, 8 hours per day on a weekend and no more than 6 days a week). 14- and 15-year olds can only work and between 7 a.m. and 9 p.m. during the summer (July 1 through labor day), for a maximum of 8 hours a day, 40 hours a week but not more than 6 days.

Employers tend to violate the hours requirements, supervision requirements and permitting requirements for young workers most frequently. If you are an employer that hires workers under the age of 18 make sure that you are knowledgeable as to all of the restrictions involving child workers, and the paperwork required for child employees.  The employment lawyers at Baker, Braverman & Barbadoro, P.C. are available to meet with you and to review your employment practices. – Susan M. Molinari.

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Lifespan of Restrictive Covenants on Massachusetts Real Estate

Restrictive covenants are, in a nutshell, private restrictions on the use of land. They are generally disfavored by state law, and developers must adhere to strict guidelines to protect their enforceability beyond a thirty-year period.

Restrictive covenants typically arise during residential or commercial developments. Before selling off property, a developer could create restrictions governing certain aspects of the buildings or landscapes on each lot. The scope could include color and design of a building, use of a property (such as a single-family residence being required where zoning would otherwise allow multi-family residences), and maintenance of trees and bushes.

These restrictions are contracts between the developer and owners of the properties (including subsequent owners, assignees, and mortgagees). In Massachusetts, restrictive covenants “created by deed, other instrument, or a will” expire in 30 years unless properly extended (the 30-year limit generally does not apply to restrictions imposed by a planning board).

A recent case from the Massachusetts Appeals Court instructs that the developer must explicitly provide for potential extensions in the original documents in order for a restrictive covenant to survive beyond 30 years. This rule applies to any restriction created after January 1, 1962. Under the applicable statute, extensions of 20 years each may be approved by a majority of the owners in the development, but only if addressed in the original documents. In the Appeals Court case, the original restrictive covenant documents allowed the owners, by 2/3 vote, to amend the restrictions. However, the amendment provision did not explicitly address extensions. Because the right to extend was not set forth in the original documents, the court held that the owners, even with a 2/3 vote, could not extend the restriction beyond 30 years.  Accordingly, the bulk of the owners in a development could not enforce the restrictions against one owner after the 30-year period had expired.

If you own or are purchasing property subject to restrictive covenants, or if you are a developer considering whether to create restrictive covenants, please contact one of the Real Estate attorneys at Baker, Braverman & Barbadoro, P.C. to get the expert legal advice you need. – Kimberly Kroha.

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