Jansen Law Firm, PLLC
Happy New Year!
After 6 years at our Westpark location, we are beginning 2019 at a new address. Effective January 1, 2019, our office is located at 11757 Katy Freeway, Suite 1300, Houston, Texas 77079. Our new telephone number is (281) 854-2019.
It is an amazing office building with lots of amenities, and the building is very well located for easy access for all our clients in the Houston, Texas area. We are excited for you to visit us at our new location and for us to continue providing all our clients with the outstanding legal services they have come to expect from Jansen Law Firm, PLLC.
In August 2015, Jeff Jansen was appointed to serve as the Chairman of District 4 (Harris County) of the Unauthorized Practice of Law ("UPL") Committee appointed by the Texas Supreme Court. The UPL Committee and its districts are responsible for investigating and enforcing the State Bar Act and stopping persons and companies who may be providing legal services to citizens of the State of Texas without being licensed to practice law in Texas.
Harris County is the largest county in the State of Texas and, therefore, generates the largest number of complaints and investigations of alleged UPL. All of the more than 25 attorney and non-attorney subcommittee members in Harris County volunteer their time to help ensure that complaints are addressed properly and timely, and that any instances of UPL in the southeast Texas area are stopped.
If you are interested in learning more about what the UPL Committee does, check out its website at http://www.txuplc.org/.
If you are interested in possibly serving as a volunteer member of the Harris County subcommittee, please contact Jeff Jansen at firstname.lastname@example.org or at (713) 388-6150. You do not have to be an attorney to join the UPL subcommittee.
In October 2015, Jeff Jansen of the Jansen Law Firm obtained a complete dismissal with prejudice of a lawsuit filed in 2014 by the Texas Attorney General and Comptroller of Public Accounts against the President of a corporation that had operated a nightclub in central Texas.
For a number of years, our client had operated a nightclub in central Texas. As happens to a lot of nightclubs, eventually the bar stopped being profitable and the corporation closed the nightclub. The Texas Comptroller of Public Accounts then conducted an audit of the nightclub’s sales for the 4 years before the nightclub was closed, and determined that the corporation owed more than $160,000 in unpaid state taxes, penalties, and interest.
Because the nightclub was closed, the Texas Comptroller began attempting to collect the amount owed by the corporation directly from its owner and President. That’s when Jansen Law Firm was hired. Eventually, the Texas Attorney General filed a lawsuit against the individual, claiming that he was personally liable for the unpaid taxes, penalties, and interest of the corporation and nightclub. After about a year of fighting on behalf of our client, Jeff Jansen and the Jansen Law Firm were able to convince the State of Texas that, under the applicable law and facts of this case, there was no basis to impose personal liability against the owner-President of the corporation. Therefore, the State of Texas dismissed the lawsuit, zeroed out the liability assessment, and released the tax liens it had previously filed against the individual.
LESSONS TO BE LEARNED: (1) Just because the State of Texas, the Texas Comptroller, or the Texas Attorney General asserts that an individual is personally liable for the tax debts of another person or entity, the facts may actually show that the State is wrong and the individual is not personally liable. (2) If a person receives a Notification of Individual Tax Liability or a Jeopardy Determination from the Texas Comptroller, it is very important to not ignore those notices and to contact an experienced attorney as soon as possible to determine one’s legal options.
Please understand that all of these cases are different and depend on the facts involved. Many times, a person can properly be held personally responsible for unpaid tax debts of another person or entity depending on what events have already taken place. But the only way to really know for sure what, if any, legal options might be available is to consult with a qualified attorney. Ignoring the issue will never make the problem go away. Do not hesitate to contact us by email at email@example.com or (713) 388-6150 if you would like to discuss your particular situation. We represent taxpayers throughout the State of Texas who may be having issues dealing with the Texas Comptroller or Texas Attorney General.
How in the world did an entire year pass without me making any blog posts?
Answer: This past year has been very busy, handling a lot of different lawsuits and business matters for our law firm's clients. That is always good from a business perspective.
But that is not a good excuse for not having written anything useful on this blog for the past 13 months. I actually enjoy writing and I know that I can and will make time to write each week about issues affecting our clients and others that contact us asking for assistance.
So, in the next few months, I promise that I will write in Jeff's Corner about a lot of different topics that affect businesses and individuals in Texas, such as:
Of course, in a blog post, there is no way to cover every possible issue that may arise or that applies to an individual situation. That's what good attorneys are there for and I hope that you will use what I do write as a springboard to allow you to think about and discuss any applicable issues with your chosen attorneys. Nothing I write here can ever be taken as legal advice to you because you first have to have established an attorney-client relationship in order to receive any usable legal advice.
Mostly, my sincere hope is that I will be able to explain some of these complex legal issues that regularly arise in our day-to-day businesses and lives in an easy-to-understand way. Then you will be at least aware of the issues that may apply to your particular situation and you'll know the types of things to discuss with an attorney.
Many employers of all sizes do not understand the potential legal liability they face for improperly classifying their workers (employees vs independent contractors and exempt vs non-exempt) or not properly keeping track of the hours their employees work and paying overtime for all hours worked that exceed 40 hours in any given workweek for all non-exempt employees. A large problem for employers that guess wrong concerning employee classification is they rarely have the proper documentation concerning the hours an employee actually worked if the employer wrongly assumed that a particular worker or class of workers were exempt. Without that documentation it is often difficult for an employer to prove how many hours an employee actually worked in any given workweek.
The penalties for guessing wrong in the classification or mishandling these issues are severe. In addition to having to potentially pay backpay for overtime, there is a federal statutory penalty of liquidated damages that effectively doubles the amount owed plus the employer will be separately responsible for paying the employee's attorney's fees as well as having to pay an attorney to defend the company. There is also potential personal or individual liability for the owners of the business and the persons who are responsible for a company's pay policies. An employee is allowed to sue for damages looking back for the past two years (and, in certain cases, three years) so the liability can add up to large numbers. Employees can join together against an employer and bring a collective action as a single lawsuit, which multiplies the potential liability.
Therefore, it is important to attempt to properly classify a company's employees and to know whether a particular employee's time must be tracked so that overtime pay can be paid when the employee works more than 40 hours in any workweek. There is some good news for employers - some employees are exempt from the Fair Labor Standards Act's overtime provisions because of the nature of the work they do.
Today's post summarizes those exemptions from the FLSA's overtime provisions. In other words, the following categories of employees are not entitled to overtime compensation no matter how many hours they work in a particular workweek.
The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.
However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations. The requirements for the most commonly asserted “white collar” exemptions are listed below:
To qualify for the executive employee exemption, all of the following tests must be met:
• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
To qualify for the administrative employee exemption, all of the following tests must be met:
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
To qualify for the learned professional employee exemption, all of the following tests must be met:
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
• The advanced knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
Creative Professional Exemption
To qualify for the creative professional employee exemption, all of the following tests must be met:
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Computer Employee Exemption
To qualify for the computer employee exemption, the following tests must be met:
• The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
• The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
• The employee’s primary duty must consist of:
1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
4) A combination of the aforementioned duties, the performance of which requires the same level of skills.
Outside Sales Exemption
To qualify for the outside sales employee exemption, all of the following tests must be met:
• The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
• The employee must be customarily and regularly engaged away from the employer’s place or places of business.
Highly Compensated Employees
Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.
“White Collar” Exemptions Do Not Apply To Blue Collar Workers
The exemptions provided by FLSA Section 13(a)(1) apply only to “white collar” employees who meet the salary and duties tests set forth in the Part 541 regulations. The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. FLSA-covered, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt under the Part 541 regulations no matter how highly paid they might be.
Police, Fire Fighters, Paramedics & Other First Responders
The exemptions also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work.
If you have any questions about these issues, feel free to contact me at (713) 388-6150 or email me at firstname.lastname@example.org.
At least once per week, I am contacted by a potential new client that has either been sued or receives a letter from an attorney threatening to sue their company for a variety of alleged injuries. And almost every single time, during the initial consultation, when I bring up the subject of whether they may have available general liability insurance coverage the potential client says they hadn't thought about it.
What is interesting to me is that a person or company pays a good amount of money for coverage against claims of injury when they purchase a liability insurance policy but they don't understand how those policies work or what they must do after they receive notice of a potential claim that may be covered.
Universally, an insured has an affirmative duty to provide their insurer with notice as soon as possible after the insured receives notice of a claim or potential claim. If the insured fails to provide notice in a timely manner, and if the insurer claims that the failure to provide notice has adversely affected the insurance company's rights, then it's possible that a claim that may have been covered by insurance may actually not be covered - simply because the insurer failed to or forgot to notify the insurance company.
One of the first things a person or company must do after they receive notice of a claim or potential claim is to determine the date of the alleged injury (if there is an occurrence-type liability insurance policy) and give notice of the claim to the insurance company by providing a copy of the demand letter or lawsuit papers. Then the duty of the insurance company to defend the insured against the allegations begins and assuming there is the possibility of coverage the insurance company will hire an attorney to defend the insured against the allegations. The insurance company has the right to control the defense against a claim so without notice they are prejudiced. The insurance company will normally select an attorney themselves that they are comfortable with, although sometimes an insured can negotiate the right to keep using an attorney of their own choosing who will be paid at least in part by the insurance company. Either way, having the insurer defend the lawsuit or claim will save the insured a lot of money in potential legal expenses.
Additionally, this notice from the insured to the insurance company will also trigger the insurer's duty to indemnify (pay any damages) assuming the claims actually fall under the coverage of the insurance policy. If the claims are covered, then the insurance company has a duty to attempt to settle the claims within the policy limits or possibly risk being responsible for any judgment that exceeds the policy limits if they fail to act responsibly in refusing to settle.
Sometimes I am told by the potential client that they do not want to provide notice of the claim to the insurance company because they are afraid of their premiums going up or of being cancelled altogether. Then I have to remind them that the insurer will find out about the claim or lawsuit during the next renewal because you are required to disclose the existence of any claims or threatened claims during that process. And I also remind them that the entire purpose of buying insurance is to protect against losses caused by lawsuits or other claims. It makes little business sense to pay for an insurance contract and then refuse to use it when circumstances arise that bring it into play. Further, you will be required to disclose the existence of the insurance policy through the discovery process - so there is no way to hide its existence from the opposing party.
Not every claim or lawsuit is covered by liability insurance. Most claims for breach of contract, for example, are not covered by liability insurance. Claims by employees for discrimination or wrongful termination or workplace injuries are generally excluded from coverage in comprehensive general liability policies. If you want coverage then you must normally pay for additional employer coverage and workers compensation coverage. However, no matter the type of claim, it's important to discuss the issue of potential insurance coverage with an attorney if and when you are faced with a lawsuit or demand letter or other type of claim. You need to ensure that you do not waive your rights to receive the benefits of any insurance contract that may be in effect for the relevant times.
If you have any questions about the possible applicability of insurance coverage to a claim you are facing, please contact the Jansen Law Firm, PLLC at (713) 388-6150 or email me directly at email@example.com and we will be glad to assist you.
I have found over the years that many people do not understand the importance of avoiding forfeiture of their company's right to do business in the State of Texas for failing to comply with their state tax obligations. People do not understand how they can lose their charter or right to do business, or the significance of having lost their corporate privileges. It's a big deal that is easy to avoid but which has tremendously bad consequences if one fails to keep their business entity in good standing.
Forfeiture of a corporation, limited liability company, limited partnership, or other filing entity’s corporate privileges in Texas occurs when (1) the filing entity does not file the report required by Chapter 171 of the Texas Tax Code; (2) the filing entity fails to pay its franchise taxes within 45 days after the notice of forfeiture is mailed to the filing entity; or (3) when the filing entity does not permit the Texas comptroller to examine the filing entity’s records pursuant to Section 171.211 of the Texas Tax Code. Unfortunately, for business owners, forfeiture is extremely common in Texas.
What’s the Significance of a Business Entity Forfeiting its Right to do Business in Texas?
While forfeiture of corporate privileges is an all-too-common occurrence, few business people in Texas realize the significance of forfeiture and its potential impact on not only the business but a corporation’s officers and directors as well. Tex. Tax Code § 171.152 states that if a corporation’s privileges are forfeited, the corporation is denied the right to sue or to defend a lawsuit in a Texas court (although courts have subsequently decided that the forfeited entity is entitled to defend a lawsuit; it just is not allowed to assert any claims it may have). Additionally, and equally important, § 171.252 states that each officer and director of a forfeited corporation is liable for the debts and obligations of the forfeited corporation (subject to § 171.255). Given that the liability shield and the shield from suits on company obligations are two very important primary purposes for forming a corporation or other limited liability entity, one would think that this would be enough to get people to pay attention. Sadly, this is not the case.
Why Does Forfeiture of Corporate Privileges Occur So Frequently in Texas?
First, many businesses simply don’t keep up with their mail. The Comptroller contacts businesses via mail to give them advance warning of forfeiture. The Comptroller gives a number of notices prior to requiring the Secretary of State to forfeit the filing entity. Despite this, many of these notices are not seen or dealt with in a responsible or timely manner.
A second contributing factor to forfeiture in Texas is simply a lack of understanding of a business’ obligations. The repeated modifications to the Texas Franchise Tax have caused confusion about when reports are due and who must report. Generally, all taxable entities must now report except for some narrow exceptions. Nevertheless, many businesses believe that if do not owe franchise taxes, they do not need to file anything.
The third contributing factor to forfeiture is a business simply failing to file the its annual information report along with its franchise tax return. Many businesses fail to file a complete return (including the annual report) which prevents the Comptroller from accepting the filing. Thus, despite filing its proper form for indicating whether or not it owes taxes, the business simply failed to attach the information report which the Comptroller requires.
Lastly, many business owners in Texas use forfeiture to “wind down” their business. Rather than go through the process of winding down the business through filing a certificate of termination, the owners simply let the business go into forfeiture. Given the potential liability issues inherent in forfeiture, this is obviously a terrible way to end a business, particularly given that if a business is properly wound up, it can keep its liability shield. Further discussion of the forfeiture/termination issue as it relates to winding up a business will be reserved for future discussion.
Just as Texas grants the owners of filing entities a liability shield via the Texas Business Organizations Code (or predecessor statute), so can Texas remove that shield via the Tax Code. The bottom line is that business owners in Texas rarely give forfeiture the consideration it merits. More often than not, forfeiture of corporate privileges is discovered during some crucial moment (purchase/sale of a business, filing of a lawsuit, etc.), resulting in owners and attorneys scrambling to reinstate the business entity’s privileges.
Please contact us at 713-388-6150 or by email at firstname.lastname@example.org if you have any questions about forfeiture issues.
I hope that everyone has had a nice holidays so far and has a safe, fun New Year's. I am excited for what 2014 holds for everyone.
After what seems like forever, our law firm finally has a new website. Included in that design is a place we've called "Jeff's Corner," which will serve as my area to discuss things that I think are important for our clients. My goal for this Blog is to be a place to provide updates on significant issues that are occurring in areas of the law that affect our firm's clients. Whether it be statutory, regulatory, or court decisions - almost every week something significant seems to occur that affects people's rights, ways of doing business, or the procedures for defending oneself or enforcing rights.
Although I often get very busy I will make the effort to update the blog at least every couple of days. I will try to boil down technical, legal subjects into terms that we all can understand. If anything I write is unclear don't hesitate to write a comment or send me an email at email@example.com and I will try to clarify.
Jeff Jansen is the founding member of the Jansen Law Firm, PLLC and has more than 20 years of experience as a business and trial attorney.