BREAKING NEWS - Maryland: Gradually becoming a better place to die (from an estate tax perspective).

            On May 15, 2014, Maryland Governor Martin O’Malley signed into law House Bill 739 ("Estate Tax Bill") raising Maryland’s Estate Tax Exemption from $1 Million to match that of the federal estate tax exemption in 2019.  Although the bill is effective July 1, 2014, it is implemented over a five (5) period and the "recoupling" of the Maryland and federal estate tax exemption equivalents will not be complete until January 1, 2019.  Currently the federal estate tax exemption equivalent is $5.34 Million and it is indexed for inflation, meaning that this amount generally increases every year.

            The Estate Tax Bill was heavily supported in both the Maryland Senate and House of Delegates passing by votes of 36 to 10 and 119 to 14, respectively.  Testimony was presented in hearings for both the House and the Senate that the exemption needed to be raised to entice Maryland’s wealthy residents to remain in Maryland for the rest of their lives instead of moving to a more estate tax friendly jurisdiction like Virginia or Florida.  

            Maryland's reputation for being a bad place to die had been reported in several prominent news publications.  Indeed, a recent article on Forbes.com listed Maryland as one of the worst places to die in 2014.  Prior to this recent enactment of the Estate Tax Bill, Maryland was one of eight states that had an estate tax exemption of $1 million or less. Maryland and New Jersey were also the only states to have both an inheritance tax and an estate tax. Note that Maryland still imposes an inheritance tax against non-lineal descendants (cousins, friends, etc.) at a tax rate of 10 percent.

            The phase-in period for the Estate Tax Bill will begin January 1, 2015 and the exemption equivalent will increase over the subsequent four years until it recouples with the federal exemption amount on January 1, 2019. 

            The enactment of the Estate Tax Bill creates significant planning opportunities for Maryland residents and non-residents owning real property in Maryland.  You should contact your estate planning attorney in the near future to discuss how the 2014 Estate Tax Bill impacts your estate plan.  The estate planning attorneys at Adelberg, Rudow, Dorf, & Hendler, LLC have been closely monitoring the Estate Tax Bill and its implications and are happy to meet and discuss your individual options.

EEOC Offers Guidance on Using Arrests and Convictions in the Hiring Process

An employer’s use of an individual’s criminal history in making employment decisions may, in some instances, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964, as amended.

A violation may occur when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin (disparate treatment liability). Alternatively, an employer’s neutral policy (e.g., excluding all applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if the exclusion is not job-related and consistent with business necessity (disparate impact liability).

Whether an employer’s policy treats a protected group differently is usually easy to determine. If an employer’s background check process treats an applicant from a protected group differently than an applicant outside that group (regardless of whether the other applicant is also in a protected group), then a finding of disparate treatment is likely. However, determining whether a neutral criminal background check policy disparately impacts applicants in a protected group is more difficult. If an applicant can show that the employer’s policy eliminates members of a protected group more than applicants that are not part of the protected group (which may be as simple as showing that members of the protected group are arrested and convicted at a higher rate) the policy may have a disparate impact. The employer must then show that the policy is justified in light of the job requirements and the necessities of the business.

In determining whether the policy is job related and consistent with business necessity, the EEOC emphasizes that arrests and convictions must be treated differently.

An arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job-related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question. The important distinction is the focus on the arrestee’s conduct, not the arrest. In short, the conduct surrounding the arrest may be considered if it would be sufficient to deny employment if the applicant had not been arrested.

In contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct. In certain circumstances, however, there may be reasons for an employer not to rely on the conviction record alone when making an employment decision. Employers should either create a screening process that is narrowly tailored, with the process validated per the Uniform Guidelines on Employment Selection Procedures, or develop a screening process where, upon screening out an applicant, an individualized assessment is conducted.

An individualized assessment should allow an applicant to demonstrate that he or she should not be excluded. The employer should consider a number of factors during the assessment, including: the circumstances of the conduct, the number of convictions, whether the same kind of work was performed post-conviction, the employment history before and after the conviction, rehabilitation efforts and character references. If the applicant does not cooperate with the employer’s efforts to gather information, a decision may be rendered with the information the employer was able to gather. While not mandatory, the EEOC does note that a screening process with an individual review will be less likely to violate Title VII.

Where federal laws and regulations disqualify convicted applicants from certain occupations, the employer is entitled to deny employment based on applicable convictions. However, state and local laws that limit or prohibit the employment of applicants with certain criminal convictions are preempted by Title VII and are not a viable defense.

The following are examples from the EEOC of best practices for employers who consider criminal record information when making employment decisions:

General

·         Eliminate policies or practices that exclude people from employment based on any criminal record.

·         Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination.

Developing a Policy

·         Develop a narrowly-tailored written policy and procedure for screening applicants and employees for criminal conduct.

·         Identify essential job requirements and the actual circumstances under which the jobs are performed.

·         Determine the specific offenses that may demonstrate unfitness for performing such jobs.

o   Identify the criminal offenses based on all available evidence.

·         Determine the duration of exclusions for criminal conduct based on all available evidence.

o   Include an individualized assessment.

·         Record the justification for the policy and procedure.

·         Note and keep a record of consultations and research considered in crafting the policy and procedures.

·         Train managers, hiring officials, and decision makers on how to implement the policy and procedure consistent with Title VII.

Questions about Criminal Records

·         When asking questions about criminal records, limit inquiries to records for which exclusion would be job-related for the position in question and consistent with business necessity.

Confidentiality

·         Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended.

Transgender Employment Discriminaiton

This week, the EEOC affirmatively stated that an employer who discriminates against an employee on the basis of the person’s gender identity is violating the prohibition on sex discrimination contained in Title VII of the Civil Rights Act. The decision was issued in response to an EEOC complaint filed by Mia Macy against the Bureau of Alcohol Tobacco Firearms and Explosives (ATF).

Macy alleged that the ATF rescinded an employment offer, made while she was presenting as a male, after learning Macy planned to transition to female. The ATF informed her that the position had been eliminated; however, Macy learned that the job had been filled by another candidate. After unsuccessfully pursuing her claim with the ATF’s internal EEO compliance office, she appealed to the EEOC in late 2011 to determine whether Title VII applied to transgender employment discrimination. The EEOC’s decision, which was released on April 23, reads in part as follows:

''[T]he Commission hereby clarifies that claims of discrimination based on transgender status, also referred to as claims of discrimination based on gender identity, are cognizable under Title VII's sex discrimination prohibition....''

The EEOC applies to employers in industries affecting commerce. Generally, an employer is subject to Title VII if the employer has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

The Maryland Human Rights Act (which similarly affects employers with 15 or more employees) has not yet added gender identity to its list of protected classes, although it does protect employees based on sexual orientation. However, several local jurisdictions have modified their laws to specifically protect transgender individuals from employment discrimination, including: Baltimore City, Baltimore County, Howard County and Montgomery County.

Employers in the above referenced jurisdictions are covered by the local employment discrimination laws as follows:

• Montgomery County – if the employer has one or more employees (either for compensation or as a volunteer);
• Baltimore County– if the employer has one or more employees for each work day in at least 20 calendar weeks in the current or preceding calendar year;
• Howard County– if the employer has five or more employees for each work day in at least 20 calendar weeks in the current or preceding calendar year; and
• Baltimore City– if the employer has 15 or more employees for at least 15 days during the preceding 12 full months.

A New Kind of Password Protection: Maryland Does It First

On April 1, 2012, Maryland’s House of Representatives and Senate passed a bill (User Name and Password Privacy Protection and Exclusions) banning employers from requiring employees and job applicants from disclosing their user names and passwords for social media accounts.


Obtaining this information had become a standard practice for some public employers, such as the Maryland Department of Public Safety and Correctional Services (DPSCS). The issue received attention after an incident in which a former employee was asked to provide his Facebook username and password as a pre-requisite to being rehired by DPSCS after taking a voluntary leave. After the Maryland ACLU became involved, the DPSCS temporarily suspended the practice, allowing applicants to voluntarily participate in a review of their social media accounts.

If Governor O’Malley signs this bill into law, an employer will be prohibited from requesting or requiring an employee or job applicant to disclose any user name, password, or other means for accessing a personal account or service through an electronic communications device (i.e. computer, laptop, smart phone or any other device that can access the internet) unless the employee uses a service that can access the employer’s computer or information systems. Additionally, it prohibits an employer from threatening to fire, firing or penalizing an employee for refusing to disclose such information.

Proponents of the legislation have likened these disclosure procedures to an invasion of privacy akin to phone-tapping or reading an employee’s personal diary. They are hopeful that the law will set a strong precedent in favor of privacy.

On the national level, U.S. senators have called for a federal investigation of this employment practice. Facebook’s Chief Privacy Officer, Erin Egan, released a statement in March saying that the company would take legal action if it felt privacy of its users’ accounts were infringed upon. In response to the recent hype, Facebook has revised its Statement of Rights and Responsibilities, making it a violation to share or solicit a Facebook password. Other states have proposed similar legislation to ban the practice.

Maryland Legislature Considers Expanding Sales Tax

This legislative session, the Ways and Means Committee of the Maryland House of Delegates considered House Bill 1051, a Bill entitled, “Sales and Use Tax – Services.”

Its purpose is to alter the definition of “taxable service” under the sales and use tax section of Maryland law in order to impose a tax on services which had not been taxed in the past.

If enacted, the bill would expand the definition of “taxable service” to include 29 additional services, requiring those 29 services to collect and remit sales tax for the first time. The full text of the proposed bill, including all 29 additional services can be found here.

Those additional services are varied and diverse in nature, and impact every level of the state economy, from individual households to businesses, and even entire industries. For example:

• Patrons would have to pay sales tax every time they get haircuts, manicures, and massages.  
• Cable television service would carry a sales tax, in addition to the regulatory fees and taxes already collected.  
• Individuals trying to better their lives through dating or dieting services would have to pay sales tax.
• Auto services, including towing, repairs, car washes, and even warranty contracts, would be subject to sales tax as well.

While individuals and families certainly would be impacted as a result of the expanded sales tax, the brunt of the burden would fall on businesses, particularly small businesses. Not only will their services become more expensive to consumers, businesses also will be tasked with collecting, accounting for and remitting sales tax to the State.

Most of the services which will be forced to collect sales taxes are organized as small or family owned businesses. In addition to the administrative burdens of handling the sales tax, businesses would have to pay sales tax for tasks such as engaging an employment agency, speaking with a public relations advisor or engaging a business consultant.

Tax preparation services would become more expensive for businesses as a result of collecting sales tax, and they too would carry a sales tax.

While several steps remain in order for this bill to become law, it is important for everyone to be aware of these proposed changes because of the breadth of the bill. If enacted, the Bill would take effect on January 1, 2013.

Is it a violation of the Americans with Disabilities Act (ADA) to require employees to have a high school diploma?

On November 17, 2011, the EEOC issued an informal discussion letter about how the ADA applies to qualification standards for jobs. The letter can be found at http://www.eeoc.gov/eeoc/foia/letters/2011/ada_qualification_standards.html. There has been significant commentary and conjecture about the meaning and scope of the letter.


To quell such speculation, the EEOC has provided the following answers to common questions:

Question: Have you just made it illegal for businesses to require a high school diploma?

Answer: No. Nothing in the letter prohibits employers from adopting a requirement that a job applicant have a high school diploma. However, an employer may have to allow someone who says that a disability has prevented him from obtaining a high school diploma to demonstrate qualification for the job in some other way.

Question: Are you telling people that they are protected by the ADA if they decide not to graduate from high school? Wouldn’t this create a disincentive to finish high school?

Answer: No. The ADA only protects someone whose disability makes it impossible for him or her to get a diploma. It would not protect someone who simply decided not to get a high school diploma.

Employers may continue to have high school diploma requirements and, in the vast majority of cases, they will not have to make exceptions to them. However, if an applicant tells an employer she cannot meet the requirement because of a disability, an employer may have to allow her to demonstrate the ability to do the job in some other way. This may include considering work experience in the same or similar jobs, or allowing her to demonstrate performance of the job’s essential functions. The employer can require the applicant to demonstrate, perhaps through appropriate documentation, that she has a disability and that the disability actually prevents her from meeting the high school diploma requirement.

Question: So, does that mean the employer must hire the person with a disability?

Answer: No. Even if the applicant with a disability can demonstrate the ability to do the job through some means other than possession of a high school diploma, the employer may still choose the best qualified person for the job. The employer does not have to prefer the applicant with a disability over someone who can perform the job better.

Question: Is the informal discussion letter a new interpretation of the law?

Answer: No. Like all of EEOC’s informal discussion letters, the letter simply applies the existing standards under the ADA and the EEOC's regulations. The EEOC’s informal discussion letters are meant to provide assistance for employers in complying with the laws. In this case the letter was intended to explain how the ADA applies when any job requirement (although a high school diploma was the specific example that we were asked about) excludes someone with a disability from a job.

Question: Is this the first time that a high school diploma requirement has been questioned as a possible violation of employment discrimination law?

Answer: No. The U.S. Supreme Court decided in 1971 that a high school diploma requirement was discriminatory because it had a disparate impact on African Americans who had high school diploma rates far lower than whites in the relevant geographical area, and because the requirement was not job related for the position in question and consistent with business necessity. Griggs v. Duke Power Co., 401 U.S. 424 (1971). The courts and the EEOC have consistently applied the Supreme Court’s interpretation of the law ever since, and Congress confirmed it in the Civil Rights Act of 1991.

Additionally, in 2003, EEOC brought a lawsuit on behalf of an employee with an intellectual disability who was fired from her job as a nursing assistant in a residential care facility when the employer adopted a requirement that nursing assistants have high school diplomas. She had worked successfully in the job for four years and had several times tried to obtain her GED, but could not do so because of her disability. Her GED instructors offered to work with the employer to find an alternative way to assess the employee’s ability to do the job, but the employer refused. The employer settled the case with EEOC.

Legal Drama

It’s a New Year with new seasons of our favorite TV shows. Too bad the legal dramas haven’t resolved to use realism in their scripts.

The Good Wife just gets worse and worse. In one episode, a divorce lawyer framed a client’s husband to look like he was cheating. If that weren’t enough, the firm lied about having a copy of a signed document from the divorce case. After a frantic search, the lead divorce attorney surprised the rest of the firm by magically producing the document in the 11th hour to present to opposing counsel.

In the following week’s episode, the law firm took tens of thousands of dollars in fees…by cashier’s check rather than cash.  Any lawyer knows that the cashier’s check is the equivalent of cash and must be reported.

We then have the client who is being hounded for representing an unknown business owner and refusing to tell our heroes who his client is.  He bases this refusal on attorney-client privilege. Of course, he has the same privilege with his lawyers and they could not have revealed the information. AND, as it turns out, he was lying. He actually was one of the three clients.

As usual, they make the judge look like a jerk.

Then, we have the state’s attorney co-opting a law firm employee to steal information (or the whole file), which she turns it over to the prosecutors.  Part of the basis is that “the good wife” forged a signature which is a felony for which she could be disbarred. 

Of course, she would have to be prosecuted by her husband. The employee turns over the file to hurt the partner who is being investigated-who actually did nothing wrong, except for introducing a bookie to his judge friends. That’s their problem not his.

If that weren’t enough, this show also makes the federal agents look like jerks and puts them down-primarily for being efficient.

I took a break from blogging about The Good Wife because the drama, in many ways, outweighed the legalities-but no more.  Sadly, even the drama parts (i.e. relationships) have gotten silly. 

Stay tuned for my next blog about the new TV version of The Firm.  Let’s hope it doesn’t disgrace Grisham’s classic legal thriller.

Attention Employers: NLRB postpones effective date...

The National Labor Relations Board (NLRB) has again postponed the effective date for the “Notification of Employee Rights Under the National Labor Relations Act” (Requirement). The Requirement was originally to become effective on November 14, 2011; however, the effective date was pushed back to January 31, 2012, and again to April 30, 2012 because of ongoing litigation regarding the constitutionality of the Act.

Under the Requirement, the vast majority of employers must conspicuously hang posters in the workplace to notify employees of their rights under the National Labor Relations Act (NLRA). Specifically, these posters provide employees with information about: their rights to organize or join a union, bargain collectively, or discuss wages or other benefits with co-workers, and provide examples of conduct which is illegal for employers and unions to engage in. The purpose of the Requirement is to make employees aware of the protections that may be available to them under the NLRA.

What Should an Employer Do With This Information?

            Nothing yet. If the Requirement becomes effective on April 30^th, make sure you hang an 11 x 17 copy of the poster in a place where you customarily post notices to employees and otherwise comply with the Requirement.

Even if the court strikes down the Requirement, you should review your employee handbook or employment practices to ensure compliance with the NLRA, including creating a social media policy. The NLRB has recently used the NLRA to reinstate employees in several cases in which employees were fired for posting negative comments about their jobs/employers because the posting of such comments was held to be protected activity under the NLRA. Make sure any such policy carefully defines what is and what is not allowed under the NLRA.

What Will Happen to Employers Who Don’t Hang the Poster?

           

            The NLRB does not independently audit workplaces to determine whether employers have complied with the Requirement nor does it initiate enforcement actions against non-compliant employers. However, an employee, union or other person can file an unfair labor practice (ULP) charge against an employer in violation of the Requirement. The NLRB has indicated that it may be willing to give an employer who fails to properly display the poster the benefit of the doubt (and assume that the employer was unaware of the Requirement) provided the employer immediately complies with NLRA. On the other hand, if the NLRB determines that an employer “knowingly and willfully” failed to display the poster, such failure can be considered evidence of an unlawful motive, which may lead to an enforcement action to correct an unfair labor practice. If the employer is found to have committed an unfair labor practice in violation of the NLRA, the employer may be ordered to cease and desist from such unfair labor practice and to take such affirmative action to remedy the unfair labor practice. Remedies may include, paying litigation costs, attorneys’ fees, and union expenses

The notification poster may be downloaded in 26 different languages from http://www.nlrb.gov/poster for free.

How to Stay Off the Naughty List at the Holiday Party

     Despite the altruistic intentions employers typically have for throwing holiday office parties, the combination of alcohol, coworkers and holiday cheer can have harmful effects on office morale. Rather than providing a venue to thank employees for their contributions and celebrate the season, these parties can end up in tears, misunderstandings, and even worse: lawsuits!

     To set a tone of temperance, remind your employees that normal work rules and standards apply to holiday parties (regardless of whether the party is on or off company property). Send out an office e-mail refreshing everyone’s memories of the importance of good behavior and include a gentle reminder of the office discrimination and harassment policies.

     Here is a top-five list of items to bring to your employees’ attention:

1. Lay off the eggnog (and other spirits of the season). It should go without saying, but it doesn’t. Despite stories around the water cooler of the last year’s holiday foibles, it’s almost inevitable that there is “that guy” who repeats the same mistakes from the year before. Don’t be “that guy”.

     If you’re going to serve alcohol, hold parties outside of the office, thereby shifting the responsibility of serving the alcohol to those with a liquor license and professional bartenders. Also, consider placing a limit on the amount of alcohol served (i.e. provide each guest with a limited number of “drink tickets”.

     Some people lose their inhibitions when they drink. This is not necessarily a bad thing if a drink gives you the courage to sing karaoke; however, sexual harassment by coworkers is at an all-time high at holiday parties. Unless your company has an employer liability lawsuit on its holiday wish list, keep your drinking and comments in moderation.

     Note to Employers: Designate a few managers/supervisors (to refrain from drinking and) to watch for over-consumption/inappropriate behavior. Stop serving alcohol well before the party ends, if there is a bar. Use the money saved on drinks towards a taxi service for your employees. Don’t encourage employees to drink too much (i.e. no drinking games). Also, be sure to serve food and leave out the mistletoe.

     Injuries occurring to employees at the party may be compensable through workers’ compensation and an employer may have liability for injuries caused by an inebriated employee leaving the party.


2. Don’t dress for the party as if you are auditioning for the: “What Not to Wear: Office Holiday Party” episode. Nightclub attire does not an office party attire make. You know how much your co-workers love to gossip so don’t give them anything to talk about. Avoid revealing or overly flashy attire.

     Note to Employers: In reminding employees that “work policies” apply, it might be best to indicate that the office dress code is similarly in effect at the party.


3. Don’t play hooky without a good reason. Even if the party is “optional” it is a good opportunity to make a good (or bad) impression on your coworkers. Don’t skip it if you can help it.

     Note to Employers: It might seem counterintuitive, but make attendance voluntary, not mandatory. This can encourage attendance by making the party seem like a reward rather than a burden; and some people are just not comfortable in these types of settings.


4. Don’t add people to the guest list. Unless an invitation otherwise specifies, office parties are for employees only.

     Note to employers: Consider inviting spouses, significant others or guests: they may help keep potentially unruly employees in check.


5. Don’t stay too long: Although it’s good to be enthusiastic in boosting intra-office morale, your enthusiasm shouldn’t involve closing out the bar! No need to ditch the party within minutes of your arrival, but at the same time, don’t overstay your welcome, especially if you’re overstaying your welcome at the bar!

Voluntary Classification Settlement Program

The IRS has announced the Voluntary Classification Settlement Program (VCSP) which will allow employers to voluntarily reclassify as employees workers previously classified as independent contractors.  An employer can reclassify all of its workers as employees or only certain subsets of workers as employees.

An employer is eligible for the program if the employer:

• Has consistently treated the workers as independent contractors;
• Has filed all required Forms 1099 for the workers for the previous three years; 
• Is not currently under audit by the IRS, U.S. Department of Labor, Maryland Department of Labor Licensing and Regulation or other such state agency; however, an employer who was previously audited by such an agency is eligible if the employer complied with the results of the previous audit.

In return for voluntarily reclassifying its workers, the IRS will cap the employer’s employment tax liability at 10 percent of the employment tax liability that would have been due on compensation paid to the workers, but the employer will not be liable for any interest and penalties on the liability; and will not be subject to an employment tax audit with respect to the worker classification of the workers for prior years.

To participate in the VCSP an employer must agree to extend the 3-year period of limitations on assessment of employment taxes for 3 additional years, for periods beginning in the first, second and third calendar years beginning after the date on which the employer has agreed under the VCSP to begin treating the workers as employees.

Adopt an Adult?

Have you ever thought of adopting an adult for inheritance purposes? This is a question both for lawyers and non-lawyers. Most people are not aware that you can adopt an adult in Maryland. It can be a valuable tool for estate planning and inheritance purposes. Although the overwhelming numbers of adoption proceedings involve minors, Maryland law provides that an individual of any age may be adopted.            

There are good reasons to adopt an adult as part of a thoughtful and effective estate plan. First, persons who are adopted, even as adults, are generally treated the same as natural-born children of those who adopt them. An adult who inherits from an unrelated decedent must pay a 10 percent Maryland inheritance tax on the assets inherited. 

However, adult adoptees, just like natural-born children, are not subject to the state inheritance tax when inheriting from their adoptive parents. Second, if someone dies intestate (without a Will) and without a spouse, his/her assets will be distributed equally among his children, whether adopted or natural born. Third, an adult adoption virtually ensures that the adoptee will inherit from the adoptee’s adoptive parents, because the likelihood of a successful court challenge to the adoptee’s status is significantly diminished following adoption.

During this past legislative session, the Maryland General Assembly considered legislation to legalize same-sex marriage. If that legislation had been enacted, then (presumably) the same-sex couples would receive the same tax benefits as heterosexual married couples do in Maryland. Upon the death of one partner in a same-sex marriage, if his/her estate was left to a spouse, there would have been no Maryland inheritance tax assessed, as the unlimited marital exemption would apply. 

Because the legislation did not pass, the 10 percent Maryland inheritance tax referenced above is still in effect. Therefore, if a partner in a same-sex relationship dies leaving the estate to a partner, the entire estate will be subject to a 10 percent Maryland inheritance tax. 

While an adult adoption may make sense in the context of domestic partners who want to insure that their partner inherits, there are other sound reasons for an adult adoption, as in the case of those who are childless but want to take advantage of provisions of a trust made by their parents or grandparents. 

One of the goals of Maryland adoption laws, which became effective in 1947, was to give adopted children the same status as natural children. This also applies to adult adoptees. Maryland law now provides that unless a Will clearly indicates otherwise, the use of the word “child, “descendant, “heir” or “issue” or any equivalent term includes an adopted individual, whether the Will was signed before or after the decree of adoption was entered.

Maryland law also provides that the legal effect of an adoption of an individual who is an adult is the same as that of the adoption of a minor. Among other things, that also means that an adult adoptee (as with all adoptees) loses the statutory right, in the absence of a Will, to inherit from his/her birth parents. However, the birth parents still can leave their estate through their Wills to their natural-born child, even when adopted by another.

Until the Maryland legislature approves same sex-marriage, adult adoption is one method to avoid the onerous 10 percent inheritance tax.  

A Funny Thing Happened on the Way to the Draft

As if trying to determine whether the Carolina Panthers should select Heisman Trophy winner Cam Newton with the first pick in the 2011 NFL Draft were not enough!

Last week, with the Draft looming in the background, Federal District Court Judge Susan Richard Nelson granted the NFL Players’ request for a preliminary injunction compelling the League to end the lock-out.  Judge Nelson then denied the League’s request that her ruling be stayed.  The League immediately appealed, and as the Denver Broncos were preparing to make their second-round selection, it was announced that the Eight Circuit Court of Appeals had issued a temporary stay of Judge Nelson’s ruling, effectively putting the lock-out back in place.  If you are confused, you are not alone.

For now, let’s start with the basics.  What is an “injunction” and what is a “stay?”  Simply put, an injunction is a court order which compels a party to either do something or, alternatively, to stop doing something.  In this case, Judge Nelson’s Order compelled the NFL to end the lock-out; but that is not the end of the story.  As you may know, any court decision can be appealed.  Judge Nelson’s order granting an injunction and compelling the League to end the lock-out is no different and, as expected, the League immediately appealed. 

So what happens to football while the case makes its way through the appellate courts?  That, sports fans, is where the “stay” comes in. A stay is a court order which preserves the status quo during the course of an appeal.  Think of a death penalty case, for example, where the condemned defendant sits in prison (very much alive, with the death sentence stayed) while the appeal is heard.  In the case of the lock-out, however, Judge Nelson refused to stay her ruling while the NFL appealed, and for a few short hours the lock-out was lifted. 

However, the decision to deny the stay, like any other court order is also appealable.  As the Denver Broncos prepared to select UCLA Free Safety Rahim Moore with the 45^th overall selection, we learned that the Eight Circuit Court of Appeals had issued an order granting the League’s request for a temporary stay, thus preserving the status quo of the lock-out. 

 – At least for now.  A ruling on the permanent stay is expected later this week.

David B. Applefeld, Esq.

NFL LABOR STRIKE

In case you have not heard, there is not an NFL labor strike.

Rather, on March 11, 2011, the “collective bargaining agreement” between NFL owners and the NFL Players' Association (NFLPA) expired, resulting in a “decertification” of the NFL NFLPA and a “lock-out” by owners.  In the likely event that your copy of Madden NFL 2011 did not come with a Black’s Law Dictionary, keep reading this Blog to understand what all this means.

“Collective bargaining” is a process by which a group of workers (the players) negotiate with their employer (the NFL owners) with the goal of reaching an agreement or contract which governs their conditions of employment.  If an agreement is reached, the parties refer to their contract as a “collective bargaining agreement.”

Employees are often represented in these negotiations by labor organizations such as the NFLPA.  Collective bargaining agreements typically last for only a specified duration and, upon expiration, must be re-negotiated.  Here, the collective bargaining agreement expired, which means that there is no current contract between the NFL players and owners.

“Decertification” is a process whereby a union stops acting as the bargaining representative for a group of employees (in this case the players), and permits the employees to negotiate with management directly.  Theoretically, this forces the employer to negotiate with each employee or player individually, and opens the door for employees to file individual claims against management (i.e. Peyton Manning’s anti-trust suit – a topic for later discussion). 

Finally, a “lock-out” is not a strike.  In fact, it is just the opposite.  A lock-out occurs when an employer closes its business and refuses to allow its employees to come to work until they agree to its terms. A lockout is invoked to put pressure on the employees or their union to accept management’s last offer because employees are not paid during a lock-out.  Because the NFL owners have “locked-out” the players, there can be no off-season workouts at the teams’ facilities. 

For now, there is no agreement, and NFL fans may have to stick to Madden’s game or turn to college gridiron to get their football fix.

What do Cleveland, Detroit, Jacksonville and Houston have in common?

If you guessed the weather, you are obviously wrong. No, these four cities hold the distinction of being home to the only current NFL franchises which have never played in a Super Bowl.

According to a lawsuit filed in Dallas last week, however, there is apparently something far worse than being a lifelong Browns’ fan. On Feb. 9, 2011, a federal lawsuit was filed in Dallas on behalf of a group of irate, ticket holding fans who arrived at the “Big Game,” only to discover that the NFL had deemed their temporary seating to be unsafe.

As such, several fans were turned away at the gates and were forced to watch their team compete on television. The claim, which targets the NFL, the Dallas Cowboys and others, alleges breach of contract, fraud and deceptive sales practices, was filed as a class action lawsuit.

A class action lawsuit is a lawsuit brought by one or more named plaintiffs who allege that they have suffered the same injury as that suffered by a large number of other parties who make up the plaintiff class. The purpose of a class action lawsuit is to avoid the time and expense of having multiple lawsuits brought by different people, all with the same claim and a common injury.

Class action lawsuits are divided into phases. Initially, the court determines whether the class should be certified. In doing so, the court must examine several factors such as the size of the potential class, whether the named plaintiffs have made claims which are typical of those possessed by the class and whether the named plaintiffs have suffered a common injury as that alleged to have been suffered by the class.

If the class is certified, the litigation will proceed with the named plaintiffs representing the interests of the class. Plaintiffs in a class action lawsuit may be either individuals or businesses. The cause of the common injury can be from any number of sources, such as a defective product, statutory violations, securities fraud, or, as the Dallas class asserts, the denial of the ability to watch your team win (or lose), the Super Bowl.

Southland

Straying a bit from legal shows but staying close to the genre, I also try to catch Southland. This “cop” show is well acted and goes through several different plotlines each week covering both uniformed patrol officers and plainclothes detectives.


I was a little disturbed, however, by some issues that were raised in the last episode. One of the patrol officers, a rookie who is a main character and clearly supposed to be a viewer’s favorite, violated all sorts of procedures by contriving a traffic stop to harass and threaten a man who he believed (mistakenly, it turns out) had sexually molested his mother. When the man files a complaint with the precinct commander, the commander obligingly covers up for the patrolman and tells him not to do such a thing again.

In the same episode, the patrolman and his partner respond to a robbery at an Asian food carry-out in which the owner’s daughter was apparently punched. While there, our hero sees an illegal weapon in the owner’s desk drawer. The officer is about to take the gun (but not charge the owner), when the owner begs him to let him keep the gun – until he can get a fully licensed one – for protection against robbery in the interim.

The officer complies, but orders him to get a legal gun within two weeks. Sure enough, by the end of the episode, a young man whom several witnesses claim was merely asking to use the bathroom in the carryout is shot dead by the owner who claimed he was a robber. Our hero’s partner says to the hero,” it’s too bad we didn’t see that gun when we were in here before.” Our hero looks chagrined.

Meanwhile, another of the main characters, a detective applies for a security job, despite the fact that he has applied for full disability from his police job. This is forbidden and, if he is really disabled, he could not perform the job. He is told he is lucky, receiving only a notation in his file with no action being taken against him.

One has to wonder if these shows and others (a recent episode of Hawaii 5-0 comes to mind wherein our heroes stole $10 million to save a colleague from being killed) are attempting to set a different moral standard for law enforcement officers than for the rest of society.

Each of the instances specified above are at least civil wrongs, derelictions of duty or crimes, yet the shows manipulate us to root for the bad guys - who are really the good guys – who are fighting the bad guys.

Is this really the message the TV industry wants to send? Is this really how we want our police to act?

Estate and Gift Tax

On Dec. 10, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (“2010 Act”). This sweeping legislation addressed many aspects of taxation, including the estate and gift tax rules.

For starters, it stipulated that the estates of persons who died in 2010 can elect not to have any federal estate tax apply. Or, they can elect to have a federal estate tax apply, but with a $5 million federal estate tax exemption and a maximum federal estate tax of 35 percent.

If you elect to not have the federal estate tax apply, then the basis in the assets passing from the decedents to the heirs would be a carry-over basis. That is, whatever Mom paid for the stock continues to be the basis of the stock in the hands of her heirs. If Mom bought IBM stock at $5 per share, and if IBM stock is trading at $148 per share when the heir sells it, then the heir would have to recognize $138 of capital gains on every share of stock that she sold.

Although the capital gains tax rate is less than the federal estate tax rate, this still could generate a significant amount of income tax to be paid by the beneficiary. However, if Mom’s estate chooses to be subject to the federal estate tax in 2010, then the basis in the assets inherited by the heirs is the fair market value at the date of Mom’s death. If Mom died when the IBM stock was trading at $148 per share and the heir sells the stock when it is trading at $158 per share, then the heir only would have to recognize capital gains on $10 per share.

Deciding whether to elect to have the federal estate tax apply for persons dying in 2010 requires a determination of how much capital gains tax might be assessed, as well as how much federal estate tax might be assessed. This becomes a very complex analysis.

The 2010 Act further provides that for the years, 2011 and 2012, there is a federal estate tax with a $5 million federal estate tax exemption at a maximum 35 percent tax rate. If the estates of people dying in 2011 and 2012 are less than $5 million, then there will be no federal estate tax to pay.

The 2010 Act terminates as of Dec. 31, 2012. For those dying in 2013, the rules from 2001 will go back into effect: a $1 million federal estate and gift tax exemption and a maximum tax rate of 55 percent. My guess is that Congress will struggle with its next short-term fix toward the end of 2012. We will keep you informed.

Legal Drama Blog

Well the holiday rerun season is over and we are back to new shows. The Good Wife continues to be a great drama, but absolutely lacks an understanding of the legal process. In the latest episode, the “firm” proposed representing both the son of a rich client and his girlfriend in a drug possession count.

Our heroine allowed the children to make statements (I saw no Miranda warnings), after which they were both promptly charged with murder. Our favorite law firm then proposed that they still could represent both the young man and his girlfriend on the murder charges EVEN AFTER the prosecutor made an offer. The first defendant would cooperate and only get three months in jail, while the other one would get 25 years. Our heroes saw no conflict in this.

Ultimately, the prosecutor, who had been fired by the law firm and is out to avenge his firing (and is permanently assigned to cases against or law firm – another conflict?), convinced the young woman and her mother to get a separate lawyer. He did this by pointing out that the boy’s father was a big contributor to the States Attorney’s election campaign and she better make a deal fast.

This show has great acting, but screams for a technical advisor.

LEGAL DRAMA BLOG

Many of us like to watch a good TV show, play, movie or other drama about the law. Over the past several years, I have noticed that most of these have absolutely glaring inaccuracies about the legal issues discussed in the show.

It used to be that each show or movie had technical advisers to make sure they got things right. Either they don’t use them anymore or the standards have gotten lax. We thought it would be entertaining to periodically comment upon some of the more glaring errors as they occur.

The Good Wife is one of the best dramas on TV. It has a wonderful cast led by Julianna Margulies and Chris Noth with several excellent supporting players. Unfortunately, the writers can’t get the law right.

Michael J. Fox guest starred a few weeks ago and gave an extraordinary performance. However, the episode focused on a law firm that settled a class action with no court approval, nor any of the niceties of how a class action works, for an amount that turned out to be tens of millions of dollars less than the defense had authority for. This did not make our heroes look very good.

In terms of veracity, the Dec. 14 episode was even more galling. The firm was fighting to save a possibly innocent man from execution. The Seventh Circuit Clerk phoned our protagonist, the second-year associate portrayed by Margulies, at her home asking for an addendum to the brief she filed the night before. This prompted the firm and Legal Aid to scramble to present a new argument or produce new evidence to convince the judges to stay the execution.

With hours to go, they mobilized forces to get an expert witness to recant his testimony, which was a significant factor in the jury convicting the defendant. So far, so good. There also was a sub-issue of the institution running out of the correct barbiturate with which to start the lethal injection process.

Drama heightened, BUT then we have our protagonist sitting on her bed at home with her chief investigator (whose murky past is still a mystery) drinking beer and dishing about her love life. This was with six hours to go before the execution, when every other lawyer in the firm was working his/her butt off.

The Seventh Circuit Judge (one of three on the panel) later phones Margulies’ character, looking for her to say that the defendant is innocent. He asks if she has spoken to the expert who changed his testimony. She had not but, at the urging of the investigator, she lies to the judge and says that she had. Will she be brought before the Grievance Commission in future episodes for this infraction -don’t bet on it.

This is a great drama. Week in and week out there is fine acting and with intriguing storylines – many “ripped from the headlines.” But why, oh why, can’t they bother to get the law right? It would make for even more compelling stories.

Posted by Andrew Radding, who frequently analyzes white collar criminal issues for broadcast and print media.