Aug 20 2013

Yes, You Can Get Fired for that Tweet

A Canadian auto mechanic was fired after he tweeted in search of a delivery of marijuana. This raises an interesting question for both employers and employees – how far does that promise of free speech go?

In the workplace, probably not very far. Most employees are hired as “at-will employees” meaning that they can quit at any time, and for any or no reason, and the employer can fire them at any time, for any or no reason. The only exception here is that an employer cannot fire for an illegal reason (generally because of race, sex, nationality, sexual orientation etc.). In essence, as long as the employer isn’t discriminating, no employee is guaranteed a job tomorrow.

That means that an employer who learns of drug use by his employees through social media, even if that drug use is after hours, may choose to fire the employee. An employer who reads almost anything on social media that he disagrees with may use that as a reason to fire or demote any employee (with one caveat below).

The First Amendment – in particular, the clause about freedom of speech – does not apply because an employer, unless it is the government, is not covered by that rule. Employees have no right to speech without repercussions. As such, an errant tweet complaining about your boss, or insulting a customer, or one asking for a delivery of illegal drugs, can get you fired.

Be careful before you hit send – especially if your boss may be watching.

PS: The caveat – if the boss sees a post that gives information about you, such as your religion, or sexual orientation, then that information most likely cannot be used to fire you.

Aug 13 2013

Considerations for a New Lease

Leasing space, whether it is an office, a storefront, or a warehouse, can lead to many different questions. Commercial leases are traditionally long, and not known for their readability. This list, while mostly written from the tenant’s point of view, will list a few things to consider when evaluating a lease.

  1. Insurance – Who is responsible for maintaining insurance on the property and are there set levels. If the tenant is only renting a portion of the building, will that tenant be responsible for contributing to a general insurance policy that the landlord holds on the building?
  2. Taxes – Most commercial leases dictate that tenants will pay a proportionate share of the property taxes. If the tenant is taking the entire property, can they grieve the taxes? If not, can tenants request that the landlord file a grievance to lower the property taxes?
  3. Renewal periods – Does the tenant have the unilateral ability to exercise the renewal periods or does the landlord need to approve it? Are the rents set for the renewal periods or are they subject to the market at the time? For a tenant, it is better to have a set rent for each renewal period.
  4. Build-out budget – Is there a budget for a build-out? How much is the landlord willing to pay to make the space meet your specifications? If the answer is “nothing,” then is the landlord willing to forego rent for the first three to six months so that the tenant can pay for the build?
  5. Competing businesses – The tenant may want to keep competing businesses out of the space, especially if it is a shared building. However, look at the landlord’s reach – does the landlord control the building next door, or across the street? If so, can the “No Competition” clause be extended to cover those properties as well?
Aug 08 2013

How Can I Use a Child’s 529 Plan

You did everything that you were supposed to do to help pay for your child’s college education. This included setting up a Section 529 Plan, either through a State plan or through a brokerage house. Now your little one that only yesterday (it seems) was just starting kindergarten, is heading off to college. And with college comes the expenses, so the question arises as to what college costs can the 529 Plan be used for.

The Section 529 Plan is a wonderful thing. It permits you to put money into an account that grows tax free if it is used for qualified purposes. If you use a State sponsored Yplan, many States (including New York) let you take a tax deduction for the contribution (in New York, up to $5,000 per person or $10,000 for a married couple). You have more control over the account than if were put into an Uniform Gifts to Minors Act account in the child’s name and you can change the beneficiary if the child gets a full scholarship.

But the money must be used for Qualified Higher Education Expenses. This includes tuition, fees, books, supplies and equipment required by an education institution for enrollment or attendance. It can also be used for the reasonable cost of room and board if the student is enrolled in the institution at least halftime. So what about purchasing a laptop computer for the student? This is not a qualified expense unless the school requires the student to have a computer. I know you can’t write a paper or do research without the computer, but that is a “logical” argument and this is the tax law. No one has ever accused Congress or the Tax Law of being logical.

So be careful when making disbursements from a Section 529 Plan and remember that it sends out tax forms at the end of each year showing the amount of disbursements. It is safest to make the payments directly to the college for tuition, books, room and board from the plan, and use other funds to purchase questionable items such as computers and software.

Aug 06 2013

Estate Planning for College Kids

When your child goes off to college, at 18, a lot changes. That child is now an adult, at least in the eyes of the law, even if he’ll always be your son. And while estate planning for a college student might seem odd (most of what they have is going to be bank or brokerage accounts that are not under their own total control – see our recent post on avoiding probate for ways to handle these assets), there are some very real concerns.

  • Health care decisions – because the child is now a legal adult, there should be a health care proxy in place to ensure that someone can step in and make medical decisions. Without this, the process can be complicated, costly and, most importantly, time-consuming. It is better to have the child execute a health care proxy instead. A HIPAA Release, which allows the parent to get information on the child’s health, may also be warranted.
  • Financial issues – most college kids have their mail sent to their parents house because they don’t have a permanent address at school. Most things can be handled by the child but a Power of Attorney is useful because it allows for a parent or someone else to handle financial matters that may come up. More importantly, a Power of Attorney will allow someone to handle tax issues for the college student.
  • School information – Colleges will not release student information anymore – it’s not something that’s even negotiable. Parents will need a release, called a FERPA Waiver or FERPA Release in order to learn about their child’s grades and other education information. While an attorney can draft this form, each college most likely has their own and you are better using the one provided by the school.

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