The Fleischmann Law Firm, P.C.

Update on the FTC Noncompete Ban

Thu, 21 Aug 2025 13:41:25 GMT

Where the Federal Ban on Employee Non-Competes Currently Stands

Background

Since May 2024, the Fleischmann Law Firm has followed the Federal Trade Commission’s (FTC) efforts to nationally ban employee non-compete agreements under the Noncompete Rule (often written as the Non-Compete Rule and Non Compete Rule) Three prior blogs discussed this issue. The first discussed the Noncompete Rule .

The second and third blogs reviewed two major cases that challenged the FTC’s Constitutional authority to enact the Noncompete Rule. The matters were Ryan LLC v. FTC , which plaintiff filed in the U.S. District Court for the Northern District of Texas, and ATS Tree Services, LLC v. FTC , which plaintiff filed in the U.S. District Court for the Eastern District of Pennsylvania.

Case Challenge Updates

Shortly after Ryan filed suit, the U.S. Chamber of Commerce also challenged the Noncompete Rule in the same Texas District Court and joined Ryan.

In June 2024, Properties of the Village, Inc. (POV) filed a third challenging case in U.S. District Court for the Middle District of Florida ( POV v. FTC ). Two months later, the court granted POV a preliminary injunction, but strictly for POV, not nationwide. The FTC appealed.

On August 20, 2024, in the Ryan matter, Ada Brown, Judge for the United States Northern District of Texas, determined that the FTC exceeded its legislative authority and that the Noncompete Rule violated its enabling statute, effectively setting aside the nationwide ban (initially set to take place September 4, 2024).

In October 2024, the court denied ATS’ preliminary motion for an injunction against the Noncompete Rule. The court reasoned that because ATS could not establish irreparable harm or success probability, it would not be able to enforce the Noncompete Rule. ATS then voluntarily withdrew its suit but preserved the right to relitigate pending Ryan’s outcome.

With regard to Ryan , the FTC appealed Judge Brown's order to the United States Fifth Circuit Court of Appeals and, in early January 2025, presented opening briefs urging it to reverse the lower court’s decision. The FTC was to then complete briefing within the next few months.

FTC Commission Leadership regarding the Noncompete Rule

The FTC passed the Noncompete Rule subsequent to President Joseph Biden’s Executive Order encouraging competition. President Biden, during his administration, appointed Lina Khan Chairperson of the FTC. All of the aforementioned events, including passing of the Noncompete Rule, took place during her tenure. Ms. Khan advocated eliminating non-compete agreements.

In November 2024, during these events, Donald Trump won the presidential election. In January 2025, right after the FTC presented opening briefs to the United States Fifth Circuit Court of Appeals, President Trump appointed Andrew N. Ferguson as the new FTC Chairperson. When Mr. Ferguson was an FTC Commissioner, he voted against passing the Noncompete Rule and believed the agency overstepped its authority in enacting comprehensive regulation. He, instead, preferred a case-by-case application that focused on detailed non-compete misuses that violated the Sherman Antitrust Act (federal laws that preserve free and unrestricted competition). In February 2025, he established a Joint Labor Task Force to concentrate on locating and prosecuting customs that harm American workers.

Case Challenge Updates Under Current FTC Leadership

Under Mr. Ferguson’s tenure, the FTC filed motions to stay the Ryan and POV appeals. The FTC now has until September 8, 2025 in which to decide whether to discontinue pursuing its appeals.

Considering Mr. Ferguson’s past comments, views, and tactics thus far, it seems most likely that the FTC, under his leadership, will drop the appeals. This means that Judge Brown’s federal ban on the Noncompete Rule remains effective (i.e. the law is no longer applicable).

State laws regarding non-compete agreements remain effective.

Pennsylvania Non-Compete Agreements

Pennsylvania courts essentially accept non-compete agreements that:

protect legitimate business interests (e.g. trade secrets, customer relations).
are reasonable and fair with regard to length and geographic area.
offer the employee sufficient consideration.

Sufficient Consideration

In 2020, the Pennsylvania Supreme Court, in Rullex Co., LLC v. Tel-Stream, Inc. , more deeply examined the fair consideration concept. The Court clarified that when an employee executes a non-compete agreement after an employee hires them (even after the first day), the employer must offer some kind of consideration beyond the job offer or at-will employment (e.g. bonus pay, promotion, salary increase).

When an employee executes a non-compete agreement before or when employment begins, the job offer itself or at will employment is sufficient consideration.

The Court also clarified that non-compete agreements were not employment requirements

Watch this space for upcoming future blogs about this matter and other corporate law updates and changes.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other rule and notice updates and changes.

Its attorneys partner with you to minimize risk and liability, offer objective and fair assessments, and weigh all circumstances and options. They offer solid recommendations and provide superior representation.

Attorney Craig J. Fleischmann and staff offer over three decades of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Beneficial Ownership Information Reporting - UPDATE

craig@fleischmannlawfirm.com (Craig Fleischmann) — Mon, 24 Mar 2025 14:33:42 GMT

FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies

As reported by the Financial Crimes Reporting Network (FinCEN):

[Updated March 21, 2025] All entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information (BOI) to FinCEN. Existing foreign companies that must report their beneficial ownership information have at least an additional 30 days from the date of publication of the interim final rule . For more information, see press release and alert .

https://fincen.gov/news/news-releases/fincen-removes-beneficial-ownership-reporting-requirements-us-companies-and-us

FinCEN Alert on BOI Reporting

craig@fleischmannlawfirm.com (Craig Fleischmann) — Mon, 30 Dec 2024 15:19:22 GMT

Alert: Alert [December 27, 2024]: Impact of Ongoing Litigation – Deadline Stay – Voluntary Submission Only

FinCEN has issued the following alert regarding current status of BOI reporting:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.

On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al. , No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. Texas Top Cop Shop is only one of several cases that have challenged the Corporate Transparency Act (CTA) pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal.

https://www.fincen.gov/boi

Recent Caselaw Regarding Home Improvement Contract Cancellation

Mon, 07 Oct 2024 19:10:19 GMT

In a case of first impression, the Pennsylvania Commonwealth Court recently held that a consumer is not obligated to give a contractor written notice – or notice by any particular medium or means – when cancelling a home improvement contract within the three (3) day recission period.

Case Background

The ruling in Commonwealth, Office of Attorney General v. Gillece Services, LP , No. 861 C.D. 2023 (July 3, 2024) stemmed from a three-judge panel court that reviews civil actions the Commonwealth initiates through state government officers acting in their official capacity, that others bring against the Commonwealth, and appeals from state agency decisions. It affirmed Gillece’s appeal of the lower court’s decision.

The Pennsylvania Attorney General’s Office initiated the original case under the state’s Unfair Trade Practices and Consumer Protection Law (UTPCPL), a law designed to restrict deceptive business procedures. The Attorney General alleged that the contractors sued would only cancel home improvement contracts unless the consumer hand-delivered a written request to the contractor’s employee or corporate offices. The Attorney General additionally alleged that the contractors further penalized customers by:

entering their properties without permission and commencing work.
failing to disclose that contractors would not honor verbal cancellation requests.
failing to refund all payments within ten (10) business days of receiving the consumer’s cancellation request.
misrepresenting to the consumer that, because they had not signed an emergency work authorization, their deposit was nonrefundable.

The complaint asserted that these actions violated either the UTPCPL or the Pennsylvania Home Improvement Consumer Protection Act (HICPA).

UTPCPL, 73 P.S § 201-1, et seq. , bars unjust, fraudulent and otherwise deceptive business practices in sales and service contracts.
HICPA, 73 P.S. § 517.7, et seq. , protects homeowners from fraudulent and deceptive home improvement contractor practices.

HICPA works like an extension of the UTPCPL. Violations under HICPA are considered violations of the UTPCPL .

Case Analysis

The court addressed whether HICPA requires home improvement contractors to honor a customer’s non-written cancellation request. More specifically, the court questioned whether the UTPCPL’s written notice requirements applied to HICPA. In doing so, the court scrutinized two specific UTPCPL and HICPA provisions:

UTPCPL, 73 P.S. § 201-7, which states that when a contractor sells or enters into an agreement for services or goods that cost twenty-five dollars ($25) or more, the consumer may cancel the contract or sale by notifying the seller, in writing, within three (3) full business days following the day on which they entered into the contract.

HICPA 73 P.S. § 517-7(b), which permits an individual who signed a home improvement contract, to cancel the contract without penalty, no matter where they signed the contract, within three (3) business days.

The court stressed that HICPA left out specific written notice requirements (unlike the UTPCPL which contains such directives). Strictly observing this omission, the court found that written notice is not required to cancel a home improvement contract. It did so despite HICPA’s specific reference to UTPCL provisions.

Ultimately, for home improvement contractors, the decision indicates that they may no longer require written notices to rescind contracts and they can no longer rely upon the UTPCPL’s statutory language to ensure that their contracts are HICPA compliant.

The Fleischmann Law Firm will monitor this matter and keep you updated on any changes or developments.

The Fleischmann Law Firm, P.C. :

The Fleischmann Law Firm specializes in business law and can guide your corporation through emerging contract laws and other rule and notice updates and changes.

Attorney Craig J. Fleischmann and staff offer over thirty years of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Current Developments Regarding the Federal Trade Commission’s Ban on Non-Compete Employment Agreements

Wed, 04 Sep 2024 20:01:13 GMT

Background

The Fleischmann Law Firm continues to closely follow ongoing developments regarding the Federal Trade Commission’s (FTC) efforts to nationally ban employee non-compete agreements. We thus far published two blogs on this matter. The first detailed the FTC’s ban or Noncompete Rule . The second reviewed legal challenges questioning the FTC’s Constitutional authority and advised that in July 2024, a Texas federal court in Ryan LLC et al. v. Federal Trade Commission issued a temporary order prohibiting the FTC from enforcing the Noncompete Rule and plans to issue a final rule.

Recent Texas Case Developments

On August 20, 2024, Ryan ultimately concluded that the Noncompete Rule exceeded the FTC’s authority. Judge Ada Brown, who issued the decision, maintained that the FTC’s enabling statue (Federal Trade Commission Act) did not intend it to issue substantive rules to thwart unfair competition methods. Rather, it intended it to focus on unfair or deceptive acts or practices. Because the Noncompete Rule focused on unfair competition methods, the FTC lacked the authority to issue the Noncompete Rule. Judge Brown also maintained that because the Noncompete Rule was random, inconsistent, and unreasonably extensive, it violated the Administrative Procedure Act

Judge Brown’s decision permanently blocks the Noncompete Rule. Nationwide noncompete bans will not take effect on September 4, 2024, and employers no longer need to issue notifications to workers bound to noncompete agreements.

The FTC is presently considering appealing this decision to Fifth Circuit Court of Appeals, so this matter may not yet be over.

Related Federal Case Developments

In the Pennsylvania federal matter, ATS Tree Services v. FTC , the court denied ATS’ preliminary motion for an injunction against the Noncompete Rule. The court held that ATS could not establish irreparable harm or the probability of success on the evidence, meaning the court would find the Noncompete Rule enforceable.

If ATS ultimately enforces the Noncompete Rule, it would conflict with Ryan . Potential ATS challenges would proceed to the Third Circuit Court of Appeals, where potential conflicts in those courts would lead to requests for U.S Supreme Court review. Should that occur, and should the Supreme Court decide to review the matter, it would likely address recent developments regarding the Administrative Procedures Act.

Administrative Procedure Act

During the 1930s, President Franklin Roosevelt created a series of agencies to implement his New Deal programs. In 1946, Congress enacted the Administrative Procedure Act (APA) to regulate administrative agencies’ decision-makings, avert abuse, make agency actions more publicly acceptable, and to offer an essential outline for federal agencies’ procedures. President Harry Truman signed the APA into law.

Administrative agencies implement, enforce, and oversee rules and regulations. There are two core kinds of administrative agencies: 1) independent agencies and 2) executive agencies. The president exercises more control over executive agencies. The Departments of Commerce and Defense are executive agencies examples. The FTC is an independent agency.

Recent Supreme Court Holdings Regarding The APA

In 2024, the Supreme Court, in Loper Bright Enters. v. Raimondo , 144 S. Ct. 2244 (2024) overruled Chevron USA v. National Resources Defense Council (1984), which for several decades, many knew as the Chevron Doctrine (which stated that if federal legislation is ambiguous or creates an administrative gap, the courts must submit to the regulatory agency's reasonable explanation).

Loper Bright overruled Chevron and held that, under the APA, courts must decide whether an agency acted within its statutory authority and may not accommodate an agency’s ambiguous legal interpretation. Loper Bright indicates that the Supreme Court might say that the FTC did not offer a sufficient legal basis for the Noncompete Rule.

State Bans on Noncompete Agreements

Some states have their own limits on employee Noncompete Agreements. Many enacted rules addressing noncompete agreements for specific workers and/or industries. This firm published a recent blog on Pennsylvania’s ban on healthcare noncompete agreements .

The Texas federal court ruling does not affect the Pennsylvania healthcare ban or any other state ruling.

The Fleischmann Law Firm will continue to keep you updated on these matters.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other rule and notice updates and changes.

Attorney Craig J. Fleischmann and staff offer over thirty years of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Pennsylvania Bans Nearly All Healthcare Noncompete Agreements

Mon, 05 Aug 2024 18:18:10 GMT

This firm recently published two blogs regarding the Federal Trade Commission’s (FTC) nationwide ban on non-compete agreements (Noncompete Rule). The first examined the Noncompete Rule . The second covered a federal court’s temporary order that prohibited the FTC from enforcing the Noncompete Rule . The court will soon issue a final order and other federal cases are pending. This firm will provide continued updates on this issue.

Some state lawmakers, Pennsylvania included, anticipated that the federal courts will block the FTC’s ruling and moved forward with passing legislation to ban certain healthcare provider noncompete agreements.

Background and Significant Details

In August 2023, Pennsylvania State Representative Dan Frankel (D-Allegheny) introduced House Bill 1633 to ban select healthcare noncompete covenants. Twenty-three other house representatives supported the bill. After the house and senate (General Assembly) reviewed and updated the bill, in July 2024, Governor Josh Shapiro signed it into law as The Fair Contracting for Health Care Practitioners Act (Act 74) .

The General Assembly determined that:

Noncompete covenants caused Health Care Practitioners to fear termination and their ability to find employment in their line of work.
Combined hospital systems are gradually stretching over extensive regions and noncompete covenants could potentially prohibit Health Care Practitioners from practicing outside their original employment setting.
Noncompete covenants impede the competition that enhance patient services and improve employee dynamics, which ultimately discourage Health Care Practitioners from wanting to practice in Pennsylvania.

The General Assembly also observed that geography, transportation, and practitioner availability frequently governed patient’s access to patient’s access to health care and that rural residents often travel several hours for basic medical care. Seamless care is a fundamental public policy and Pennsylvania cannot risk losing Health Care Practitioners to other states.

Definitions and Conditions Under The Fair Contracting for Health Care Practitioners Act (Act 74)

The Fair Contracting for Health Care Practitioners Act (Act) describes Health Care Practitioners as licensed:

Medical Doctors
Osteopathic Physicians
Registered Nurse Practitioners
Nurse Anesthetists
Physician Assistants

The Act applies only to these abovementioned Health Care Practitioners.

The Act defines a noncompete covenant as an agreement between a Health Care Practitioner and employer that hinders the Health Care Practitioner’s capacity to:

Continue treating patients.
Independently accept new patients.
Accept new patients with a competing employer.

The Act considers any covenant or amended noncompete covenant a Health Care Practitioner and employer agree upon after the effective date of January 1, 2025 as contrary to public policy and, thus, void. The employer, therefore, cannot enforce any such agreement.

The Act, however, allows an employer to enforce a non-compete covenant that lasts less than one year, as long as the employer did not terminate the Health Care Practitioner.

Patient Notification Requirements

Within ninety (90) days after a Health Care Practitioner willingly exits employment, the Act requires the employer to notify the patients that the Health Care Practitioner saw within the past year and the patients with whom the departing Health Care Practitioner had an ongoing outpatient relationship for two or more years. The notification must:

Inform about the Health Care Practitioner's departure.
Advise that the patient has a right to select a new Health Care Practitioner amongst the employer’s existing Health Care Practitioners.
Instruct how the patient can transfer their health records should they wish to continue care with another practice or the departing Health Care Practitioner.

The notice does not have to offer any specifics about the departing Health Care Practitioner’s future services.

Recovery of Health Care Practitioner Expenses

The Act allows employers to recover reasonable relocation, training, and patient-based establishment expenses from a freely departing Health Care Practitioner, provided:

The employer can directly attribute said expenses to the freely departing Healthcare practitioner.
Said expenses accrued within three years prior to the Health Care Practitioner’s departure.
The Health Care Practitioner repays said expenses over a five-year period from the departure date.

Act Exclusions

The Act, thus far, does not appear to impact noncompete agreements:

Approved prior to the effective date of January 1, 2025.
Concerning the transfer or sale of a business entity in which a Health Care Practitioner holds ownership interest.

However, there are some ambiguities in the language of the Act that may require court interpretation or further legislative clarification. This firm will provide continued updates on this issue.

The Fleischmann Law Firm, PC

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other rule and notice updates and changes.

Attorney Craig J. Fleischmann and staff offer over thirty years of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Important Updates You Need to Know Regarding the Federal Trade Commission’s Ban on Non-Compete Employment Agreements

Thu, 18 Jul 2024 14:26:55 GMT

Background

In May 2024, just a few months ago, this this firm published a blog regarding the Federal Trade Commission’s nationwide ban on non-compete agreements (Noncompete Rule).

The blog explained the history behind the Noncompete Rule, how and why the Federal Trade Commission (FTC) recently determined that non-compete agreements violated the Federal Trade Commission Act, defined non-compete agreements and related terms, and detailed steps employers must take to notify certain workers bound to non-compete agreements prior to the effective.

At that time, the FTC’s Noncompete Rule effective date was September 4, 2024.

Challenging Lawsuits

The blog also noted that several plaintiffs challenged the FTC’s Noncompete Rule. One involved a Texas tax service firm that claimed the FTC did not have the constitutional authority to issue the rule.

On July 3, 2024, the United States District Court Judge in Ryan LLC v. Federal Trade Commission issued a temporary order prohibiting the FTC from enforcing the Noncompete Rule. At present, the ruling pertains only to the parties. The court, however, expects to issue a final ruling by August 30, 2024. The court could expand the ban and completely prohibit the Noncompete Rule.

The challenge brought in the United States District Court for Eastern District of Pennsylvania, ATS Tree Services, LLC v. The Federal Trade Commission , which seeks a nationwide injunction against the ban is still pending. The ATS Tree Services Court has indicated it will issue its decision by July 23 ^rd .

Watch this space for further developments.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other rule and notice updates and changes.

The firm’s attorneys partner with you to minimize risk and liability, offer objective and fair assessments, and weigh all circumstances and options. They offer solid recommendations and provide superior representation.

Attorney Craig J. Fleischmann and staff offer over three decades of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

What You Need to Know About the Federal Trade Commission’s Ban on Non-Compete Employment Agreements

Wed, 29 May 2024 19:54:51 GMT

The Federal Trade Commission (FTC) recently determined that non-compete agreements violated the Federal Trade Commission Act and announced a nationwide ban on their use going forward and certain restrictions for previous ones .

The commission believed non-compete agreements stripped energy from the American economy and hindered workers from seeking new jobs and starting new businesses. It thus believes the ban will increase salaries, reduce health care costs, and inspire more patents.

The Noncompete Rule will become effective September 4, 2024. The FTC will codify it in the Code of Federal Regulations at 16 CFR Part 910.

Employer Notice Requirements

The Noncompete Rule requires employers to notify to all workers (other than senior executives) bound to non-competes that they will no longer enforce the agreement.

Employers must forward the notice on or before September 4, 2024 (the effective date).

To assist, the FTC posted a sample notice containing model language (use link to access) that employers can use.

What is a Non-Compete Agreement?

The Noncompete Rule describes non-compete agreements as any written, oral, or business policy that penalizes, forbids, or attempts to stop a worker from seeking or accepting another position or operating another company.

Disputes regarding whether a non-compete agreement violates the rule will be handled on a fact-specific, case-by-case basis.

Who is a Worker?

The Noncompete Rule defines a worker as any current or previous worker, paid or unpaid. Such workers can include independent contractors, volunteers, and interns.

Who is a Senior Executive?

The Noncompete Rule defines a senior executive as a policy-making worker who also earns more than $151,164 a year. This annual salary includes commission and nondiscretionary (guaranteed) bonuses and compensation.

Policy-making refers to the authority to make significant decisions regarding a business’ direction. This definition does not involve advising or influencing a business’ decisions or making policy decisions for a business subsidiary.

Chief executive officers and presidents are policy-makers, but these positions may include others.

What Does the Noncompete Rule Do?

After the effective date (September 4, 2024), the Noncompete Rule:

bans all new non-compete agreements with all workers, including senior executives.
bans employers from enforcing existing non-compete agreements with workers (except in matters already in litigation).

Existing senior executive non-compete agreements, however, can stay active.

To What Does the Noncompete Rule Not Apply?

The Noncompete Rule does not apply to bona fide business entity Sale Agreements or any legal actions involving non-compete agreements that arose prior to the effective date (September 4, 2024).

The rule does not limit non-conflicting state laws that restrict non-compete agreements, but it will block state laws that conflict with it.

If an individual has a good-faith basis to believe that the Noncompete Rule does not apply, this may serve as a defense in an enforcement proceeding.

How Will the Rule Be Enforced?

Though the FTC Act deems rule violations “unfair methods of competition,” it does not offer a party private action rights and does not allow itself to recover civil penalties or other monetary relief from others participating in unfair competition methods.

The FTC may participate in its own internal review and consider issuing a cease-and-desist order to a violating employer. Or it may seek a federal court injunction that stops a business from engaging in prohibited activities. If a party fails or refuses to comply with an already issued rule violation cease and desist order, the FTC can seek to have that party held in contempt and obtain civil penalties.

What Inspired the FTC’s Decision?

In July 2021, President Joseph Biden issued an Executive Order encouraging competition. He claimed non-compete agreements improperly limited workers’ abilities and urged the FTC, which enacts laws to inhibit unfair business practices, to lessen their use.

Alternatives to Non-Compete Agreements

Non-disclosure agreements (NDAs) would effectively safeguard private and classified information. Many non-compete agreements already have NDAs. Another alternative are non-solicitation clauses.

Note, however, that NDAs and non-solicitation clauses that prevent workers from accepting employment or operating a business could still be considered non-compete agreements under the rule.

Suspected Rule Violations

After the effective date (September 4, 2024) business owners, workers, and customers can email suspected rule violations to the Bureau of Competition at noncompete@ftc.gov .

Federal Lawsuits

So far, there are three federal lawsuits challenging the FTC’s decision.

A Texas tax service firm believes that the FTC did not have the authority to issue the rule and that the its decision was unconstitutional. The Chamber of Commerce additionally filed suit in Texas. It, too, is questioning the bureau’s legal authority to issue the ban. The court, however, due to overlapping and “first in time” rule issues, stayed the Chamber of Commerce matter.

A tree service also filed a suit in Pennsylvania. It considers non-compete agreements necessary to protect training methods.

More plaintiffs may file additional lawsuits.

Stay Informed

Business owners should be aware of these changes, notice requirements, rule applications, and legal interpretations. They may also want to discuss other alternatives that would protect their business interests and consult with a professional advisor.

Watch this space for future blogs about this and other corporate law updates and changes.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other rule and notice updates and changes.

Attorney Craig J. Fleischmann and staff offer over three decades of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Corporate Transparency Act: Beneficial Ownership Information Reporting Company Rules Effective January 1, 2024

Tue, 07 Nov 2023 15:29:12 GMT

Information You Need to Know About the Beneficial Ownership Information

Reporting Company Rules Effective January 1, 2024

Criminals often use anonymously owned United States companies to launder money, fund terrorism, evade taxes, and participate in other unlawful activities. To detect and counter these activities, Congress passed the Corporate Transparency Act (“CTA”).

The act sets forth reporting rules for all domestic and foreign companies. Every qualifying “Reporting Company” must relay Beneficial Owner Information (“BOI”), along with other pertinent data, to the Financial Crimes Enforcement Network (“FinCEN”). Download FinCEN’s Small Entity Compliance Guide through this link .

A Reporting Company’s failure to comply could lead to very extreme penalties.

This article provides a general overview of these definitions and reporting rules. It also outlines the deadlines, penalties, and exemptions.

What is a Reporting Company?

A Domestic Reporting Company is any entity that is required to formally file a document with a U.S. state, territory, or Native American Tribe to establish its existence (e.g. corporation, limited liability company [“LLC”]).

A Foreign Reporting Company is any non U.S. entity that has formally filed documents to do business with any U.S. state, territory, or Native American Tribe.

U.S. territories include American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

Who Is a Beneficial Owner?

A Beneficial Owner is anyone who directly or indirectly:

exerts substantial control over the Reporting Company (a senior officer or anyone who appoints or removes senior officers or influences the governing corporate body or determines important matters, exerts substantial control)

owns a minimum of 25% of the Reporting Company (ownership includes equity, stock, voting rights, stock, capital or profit interests, options, and any other ownership means)

If an individual satisfies either of these definitions, they are a Beneficial Owner.

Individuals meeting a Beneficial Owner classification may be exempt if they are:

serving as an intermediary, candidate, custodian, or on another person’s behalf
a minor child
acting exclusively as a Reporting Company’s employee
simply a Reporting Company’s future heir
just a Reporting Company’s creditor

Information a Reporting Company must Detail

A Reporting Company must provide detailed information to FinCEN about Beneficial Owners and the company.

Reporting Companies created or registered after January 1, 2024 are required to detail information about Company Applicants.

A Company Applicant is the individual who directly filed the creating or registering Reporting Company documentation, as well as the individual primarily responsible for controlling such filings. A Reporting Company can have several Company Applicants.

Companies or legal entities cannot be company applicants.

Information a Reporting Company Must Provide to FinCEN

A Reporting Company must disclose its:

complete legal name, any trade name, and any “doing business as” name
current address
formation or registration jurisdiction
IRS Taxpayer Identification Number (TIN)
Employer Identification Number (EIN)
For Foreign Companies: Foreign Tax ID Numbers and Territory Name

Beneficial Owners and Company Applicants (when applicable) must provide their:

full legal name
birth date
complete current address (Company Applicant’s may use business addresses)

Beneficial Owners and Company Applicants (when applicable) must also supply images, designation numbers, and the issuing venues of one of the following, unexpired, identification documents:

state driver’s license
passport
state, local government, or Native American Tribal identification document
foreign passport (if none of the aforesaid exist)

FinCEN Reporting Method

Every Reporting Company created or registered to do business before January 1, 2024 will have until January 1, 2025 to file their initial report.

Every Reporting Company created or registered on or after January 1, 2024, will have 30 days to file their initial report (beginning from the state’s date of notice or public creation notice – whichever is earlier).***

***FinCEN Update November 29, 2023***

FinCEN Extends Deadline for Companies Created or Registered in 2024 to File Beneficial Ownership Information Reports

FinCEN is extending the deadline for certain reporting companies to file their initial BOI reports. Specifically, reporting companies created or registered in 2024 will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports. Reporting companies created January 1, 2025 or after will have 30 days to report.

Should a report contain any errors, a Reporting Company has 30 days from the date it discovered the error or had reason to know of the error to file a corrected report.

Should Beneficial Owners or company information change, a Reporting Company has 30 days from said change date to file an updated report.

Where applicable, a Reporting Company is not required to file an updated report about Company Applicant changes.

There is no BOI report filing fee.

FinCEN can begin accepting electronic company reports through a secure system beginning January 1, 2024. FinCen is presently setting up the system and will be available at that time. Its website contains reference materials and other BOI resources .

Potential Penalties for Not Complying with the Reporting Company Rules

A Reporting Company’s failure to provide proper BOI to FinCEN could result in civil penalties of $500 for each day the violation goes on, as well as $10,000 in criminal penalties and/or two years of prison.

What Businesses are Exempt?

The CTA excluded certain company classes from reporting. Such classes include entities where BOI is currently a matter of public record; the government currently oversees the entity; and, where the Treasury Secretary (along with the Attorney General and Homeland Security Secretary’s concurrence) justified the exemptions.

A few examples of exempted businesses include:

brokers, dealers, and securities issuers
banks, credit unions, and loan holding companies
insurance companies
public accounting firm
public utilities
certain tax-exempt corporations
businesses that employ more than 20 full time workers
certain inactive corporations

Preparations You Can Make Now

It is vitally important for all entity proprietors to know about the upcoming CTA’s Reporting Company requirements and whether they are Beneficial Owners and potential Company Applicants.

To streamline the process and protect yourself and your business from penalties, consult with a professional advisor.

Watch this space for future blogs about this and other corporate law updates and amendments.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these and other time-sensitive reporting regulations.

Its attorneys partner with you to minimize risk and liability, offer objective and fair assessment, and weigh all circumstances and options. They offer solid recommendations and provide superior representation.

Attorney Craig J. Fleischmann and staff offer over three decades of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

New Annual Registration for Pennsylvania Business Entities is Coming Soon

craig@fleischmannlawfirm.com (Craig Fleischmann) — Wed, 27 Sep 2023 17:26:11 GMT

State Corporate Codes

Each state has a set of laws that set forth the definitions, duties, and requirements of how business owners or shareholders must operate and manage the establishment, be it a corporation, limited liability company (“LLC”) or other commercial entity or association. The laws cover everything involving the business, including its name, registered agents, mergers, registrations, and much more. Often, these laws or regulations are “defaults” where no one properly drafted documents, such as bylaws, shareholder agreements, or LLC operating agreements. Some are mandatory provisions.

The state in which the individuals who created a corporation and filed the proper documents, regardless of structure, is the governing or home state. That state might have been the corporation’s primary location, where it conducts business, or the state could have offered tax and liability advantages. Non-formation states are “foreign” states.

Now and then, state legislatures amend state codes. Such allows policy updates without having to replace the laws.

Recent Updates to Pennsylvania Title 15

On November 3, 2022, Governor Tom Wolf signed Act 122 of 2022 (the “Act.”) into law, which updated

Title 15 of the Pennsylvania Consolidated Statutes -- Corporations and Unincorporated Associations.

The Act revisions focused on the following areas:

New State Department Filing Requirements : currently, Pennsylvania relies on a ten-year (decennial) filing requirement to determine whether a business entity is still active. This led to confusion about whether businesses still existed, potential fraud, and other misunderstandings. The Act restructures the filings to annual reporting (like most other states require) requirement, beginning in 2025. Entity type will determine filing deadlines.

The annual filing fee is $7.00, which the state will waive for nonprofit corporations and not-for-profit Limited Partnerships or LLCs.

Most importantly, a businesses’ failure to file the newly required annual report will subject it to administrative dissolution/termination/cancellation and loss of its protected name. Businesses will want to be sure that their registered address with the Department of State is current so that they receive proper notices.

Entity types that the Act requires new annual reporting:

o Domestic Business Corporations

o Domestic Nonprofit Corporations

o Domestic Limited Liability (General) Partnerships

o Domestic Electing Partnerships that are Not Limited Partnerships

o Domestic Limited Partnerships (Including Limited Liability Limited Partnerships)

o Domestic Limited Liability Companies

o Domestic Professional Associations

o Domestic Business Trusts

o All Registered Foreign Associations

The new annual reports require the following information:

o Business name

o Formation jurisdiction

o Registered office address

o Name of at least one governor (director, member, partner, etc. depending on type of association)

o Principal officers’ names and titles (if any)

o Principal office address

o Pennsylvania Department of State entity number

Delaware’s Corporate Law and the Model Business Corporation Act Inspired the Act’s Additional Modernizations :

Delaware’s sophisticated business statutes and courts generally favor corporate values. The American Bar Association created the Model Business Corporations Act for states to adopt, should they wish. It innovatively address a variety of business topics, including corporate creation, LLCs, corporate management structure, and shareholder’s rights. These progressing sources prompted some of the following updates:

o Ratification procedures : the updated rules specified that:

the board of directors must approve agreements.
whenever a corporate statute, document (such as a shareholder’s agreement or incorporation certificate), or other applicable rule requires agreement, shareholder approval is mandatory.
if a defective corporate action requires any kind of filing, the entity must also file a confirmation filing with the Pennsylvania State Department.

o Abandonment of Business Opportunities : profit and nonprofit corporations may back out of business opportunities and shareholders are no longer required to notify the corporation of potential prospects. Abandonment may be unconditional, restricted, included in the articles of incorporation, or the board of directors may agree.

o Officer Fiduciary Duties; Business Judgment Rule : some of the modified amendments stated that:

a director’s obligation to investigate possible issues does not go past what the law requires.
shareholders may limit the officer’s personal liability (with exceptions).
a director sole duty is to the corporation (not creditors).

o Forum Selection : the articles of incorporation may offer a court resolution site, which must include at least one Pennsylvania state court. It may designate other courts, so long as there are reasonable relationships between the corporation and the other territories.

Stay tuned for future blogs to further clarify, detail, and explain the amendments.

The Fleischmann Law Firm, P.C.

The Fleischmann Law Firm specializes in business law and can guide your corporation through these important, time-sensitive changes. Its attorneys partner with you to minimize risk and liability, offer objective and fair assessment, and weigh all circumstances and options. They offer solid recommendations and provide superior representation.

Attorney Craig J. Fleischmann and staff offer over three decades of experience, integrity, cost-effectiveness, value, and integrity. Contact the Fleischmann Law Firm today.

Take a Hike: Perkiomen Trail

Mon, 16 Aug 2021 20:14:44 GMT

During the COVID-19 outbreak, a lot of people were itching for a reason to get out of their homes without spreading the coronavirus to others. This is when many people took advantage of being outdoorsy. Since the beginning of time, having fun in the great outdoors has been a wonderful pastime for people of all ages and places, even without the feeling of breaking the rules. Venturing through the arteries of Pennsylvania’s trail system is something that The Fleischmann Law Firms associate, Franqui Raffaele, chose to explore during quarantine, and still continues to use as a way to keep the stress away. The trail she explored the most was the Perkiomen Trail. This trail is a clean, family friendly environment that welcomes people of all ages to come and enjoy the beauty of nature.

To hear more about why Franqui recommends the Perkiomen Trail, take a look at the article that she wrote for sidebar magazine HERE

Historic Trappe

Wed, 14 Jul 2021 10:40:07 GMT

Pennsylvania is an area that is rich in history and culture. There are buildings here that have been here that predate the independence of this country. These buildings are time capsules that have stood the tests of time and deserve to remain preserved. The Fleischmann Law Firm is happy and proud to support Historic Trappe, an organization dedicated to the preservation of four historic Trappe, Pennsylvania buildings.

Historic Trappe, executively directed by Lisa Minardi, not only restores historic buildings in Trappe, but they also encourage the preservation of other historic buildings, as well as heritage tourism. They offer plenty of different activities and workshops, community dinners and outings, and even the Trappe Tree Lighting. They also have two colonial gardens which can be visited by the public.

For more information about Historic Trappe, you can check their website at www.historictrappe.org

and to read their article, click HERE

American Youth Literacy Foundation

Wed, 16 Jun 2021 17:08:00 GMT

Learning to read is a normal part of growing up, but some children take to it a little quicker than others. In actuality, approximately 20 million children in public schools are either completely or functionally illiterate. Which is why The Fleischmann Law Firm is proud to highlight the American Youth Literacy Foundation or AYLF.

With their home base located in Collegeville, the tutoring initiative turned nationwide foundation was started by R. Kali Woodward who began this journey when she noticed that her own son was struggling to learn how to read. In early 2021, AYLF launched FUNetix. FUNetix is an interactive reading app which teaches any child how to read in just 12 hours of total play time, working to resolve the children’s literacy crisis that has developed in the United States. The best part is the app is totally free to use and completely kid friendly.

For more information about the American Youth Literacy Foundation or to sign up, click HERE and check out the app in the app store for IOS and Google.

American Youth Literacy Foundation | Article

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Welcome to Collegeville

Mon, 25 Jan 2021 16:20:00 GMT

Nestled along the Perkiomen creek lies the picture-perfect town of Collegeville. This charming little town prides itself as being a friendly and safe place to live and work.

This month, The Fleischmann Law Firm is proud to Sponsor the non-profit group, Collegeville Economic Development Corporation. They work hand in hand with Collegeville Borough to bring to light just how wonderful a town Collegeville is to live and work within.

Maintaining themselves as a non-profit organization, the Collegeville Economic Development Corporation works closely with the Collegeville Borough by promoting the town’s businesses, partnering with Ursinus College, and organizing family friendly activities throughout the community.

For more information about the Collegeville Economic Development Corporation, click HERE

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Franqui Raffaele and the Ghost of Bar Preps Past

Tue, 19 Jan 2021 21:20:00 GMT

Welcome Franqui Raffaele, and congratulations on being published in the Montgomery County Bar Association Sidebar Magazine

When it comes to your estate planning, there is nothing more important than making sure that everything is done correctly, which is why The Fleischmann Law Firm is happy and proud to announce our newest Associate Attorney, Franqui-Ann J. Raffaele, Esq .

Franqui joined the firm in the summer 2020 as a law clerk. She had just graduated law school and was studying for the Bar Exam. As she persevered through this endeavor, the waiting game proved to be rewarding. In the midst of the COVID-19 pandemic, Franqui-Ann Raffaele passed the Pennsylvania Bar Exam and became the newest associate attorney at The Fleischmann Law Firm. Franqui’s primary practice is focused on Estate Planning, Estate Administration, Elder Law, Guardianships, and Orphans Court matters.

If you are interested in learning more about Franqui’s story, you can read the article published in the Montgomery County Bar Association magazine, The Sidebar, HERE .

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Creative Light Factory: Writers Room ∙ Learning Center ∙ Creativity Hub

Tue, 10 Nov 2020 17:56:00 GMT

Having trouble with writer’s block, stifling creativity, or looking for a space to express yourself? Prepare to be blown away.

Sitting right in the middle of Spring City, Chester County is a safe and affordable space where artists and writers alike can go and thrive. This place is called Creative Light Factory. Opening its doors in 2017 as the only physical writers’ room in the Philadelphia suburbs, Creative Light Factory prides itself as being a nurturing environment for writers and artists of all skill levels. At CLF, everyone is encouraged to express themselves through their creative abilities and ultimately share them with others in the community and the rest of the world.

The Fleischmann Law Firm is a proud sponsor of the small but growing non-profit arts organization that has touched the lives of over 1,500 artists, produced hundreds of personal works into solid reality, and garnered a handful of delightful reviews.

You can read the entire article HERE

and for more information please visit www.creativelightfactory.org

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Governor Wolf’s Emergency Shutdown Orders Ruled Unconstitutional: Full Opinion

Tue, 15 Sep 2020 17:11:00 GMT

United States District Court Judge William S. Stickman, IV holds as follows:

The Court closes this Opinion as it began, by recognizing that Defendants’ actions at issue here were undertaken with the good intention of addressing a public health emergency. But even in an emergency, the authority of government is not unfettered. The liberties protected by the Constitution are not fair-weather freedoms—in place when times are good but able to be cast aside in times of trouble. There is no question that this Country has faced, and will face, emergencies of every sort. But the solution to a national crisis can never be permitted to supersede the commitment to individual liberty that stands as the foundation of the American experiment. The Constitution cannot accept the concept of a “new normal” where the basic liberties of the people can be subordinated to open-ended emergency mitigation measures. Rather, the Constitution sets certain lines that may not be crossed, even in an emergency. Actions taken by Defendants crossed those lines. It is the duty of the Court to declare those actions

unconstitutional. Thus, consistent with the reasons set forth above, the Court will enter judgment in favor of Plaintiffs.

The full Opinion may be accessed here: Butler v. Wolf

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What’s your SCORE?

Tue, 01 Sep 2020 21:03:00 GMT

What’s your SCORE?

Opening its doors in 1991, the TriCounty chapter of SCORE, or Service Corps of Retired Executives, SCORE is the nation’s largest network of volunteer, expert business mentors. Based in Pottstown, PA, SCORE TriCounty Chapter serves up and down Montgomery county, getting a lot of business near highway 422. With more than 350 chapters open nationwide, and more than 10,000 advisor mentors. According to Tom Gosse, a SCORE volunteer advisor, SCORE provides free, confidential, expert business counseling and mentoring to individuals who are interested in starting their own business. Apart from conducting low cost workshops and seminars, their free service has been helping between 15-30 Collegeville residents a year. This 100% free service is on the front line to keep Main Street America in business.

2288_UpperProvidenceLiving_Sept2020

To view the article in detail, please visit: https://www.fleischmannlawfirm.com/wp-content/uploads/sites/255/2020/09/2288_UpperProvidenceLiving_Sept2020.pdf

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May 2020 Non-Profit Spotlight: Operation143

Tue, 30 Jun 2020 19:01:00 GMT

May’s sponsored Non-Profit is Operation143. The Article may be accessed here.

Operation143 formally Operation Backpack began in September 2010. Operation143 offers a program called SWFP, Student Weekend Food Program, which provides food to students in our
local community who would go without over the weekend. Operation143 serves alongside individuals and organizations to collect food and materials. Volunteers pack these items into backpacks Tuesday and Wednesday evenings. The backpacks are then sent out to qualifying students at each school.
The students discreetly pick up the backpacks each Friday and return them on Monday.

More information is available on their website https://operation143.org/ .

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April 2020 Non-Profit Spotlight: The A-Team

Wed, 01 Apr 2020 18:49:00 GMT

This month we spotlight the A-Team which serves as an information and resource network for local families who have children with autism. The organization took on non-profit status in 2014 through The Arc Alliance, previously sponsored by the firm in Upper Providence Living. The A-Team’s feature story may be accessed by clicking here.

The A-Team was looking forward to their annual Fun Day at the Spring Valley YMCA on April 4th, but it has unfortunately been postponed until COVID-19 restrictions are lifted. The A-Team is the cover story in this month’s Limerick Living magazine.

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Stay At Home Order Guidance – Coronavirus 2019 Disease (“COVID-19”) – March 23, 2020

Tue, 24 Mar 2020 15:29:00 GMT

A copy of the Guidance for the Governor’s Stay at Home STAY AT HOME policy affecting Allegheny County, Bucks County, Chester County, Delaware County, Monroe County, Montgomery County, and Philadelphia County may be found here: Stay At Home Order Guidance 03.23.20

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March Non-Profit Spotlight: Skippack Historical Society

Tue, 24 Mar 2020 14:47:00 GMT

There is a lot of local history right under our noses to be discovered at the Skippack Historical Society which is the feature of the firm’s sponsorship this month in Upper Providence Living Magazine. More information can be found by visiting their Facebook Site: https://www.facebook.com/SkippackHistory/ or at on their website: https://www.skippack.org/ and by reading the article by clicking here.

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Gov. Wolf Orders All Non-life Sustaining Businesses in PA To Close 8 PM 3/19/2020

Thu, 19 Mar 2020 22:29:00 GMT

As you probably have heard, Governor Wolf today ordered all non-life sustaining businesses in Pennsylvania to close their physical locations as of 8 p.m. 3/19/2020 to slow the spread of COVID-19.

Enforcement actions against businesses that don’t comply will begin at 12:01 a.m. Saturday, March 21, according to the governor’s office.

The order is effective immediately and to remain in effect until further notice.

A copy of the Order and the list of whether a business is categorized as life sustaining or non-life sustaining may be found here: https://www.fleischmannlawfirm.com/wp-content/uploads/sites/255/2020/03/PA-Governor-Wolf-COVID-19-Business-Closure-Order.pdf

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Fostering Hope – February 2020 Non-Profit Spotlight

Wed, 05 Feb 2020 23:49:00 GMT

Fostering Hope is a 501(c)(3) non-profit that does all sorts of amazing things to help assist foster parents and kinship families (families who foster relatives) by providing a variety of services. Please visit our website and read the article published in this month’s edition of Upper Providence Living here , or visit their website to learn more: http://www.fosteringhopepa.com .

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Spring-Ford Area Historical Society – January 2020 Non-Profit Spotlight

Mon, 06 Jan 2020 20:55:00 GMT

January’s Non-Profit Sponsorship in Upper Providence Living is of the Spring-Ford Area Historical Society, which focuses on local family, property and military history. The story can be read here. The website is https://www.sfahs.com/

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December 2019 Nonprofit Spotlight – Simply Positive Kids

Tue, 17 Dec 2019 16:49:00 GMT

This month we feature Simply Positive Kids , where kids can make an impact when they’re able to show up at a neighbor’s to rake leaves, fix something around the house, or spend time at the woman’s shelter. Although completely non-denominational, this time of year the kids engage in their flagship event, RACK, Random Acts of Christmas Kindness!

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November 2019 Nonprofit Spotlight – The Arc Alliance

Fri, 08 Nov 2019 15:52:00 GMT

The Arc Alliance, based in Eagleville, PA serves individuals of all ages in Berks, Bucks, Chester, Delaware, Montgomery, and Philadelphia counties who have a diagnosis of autism
and/or an intellectual disability. Please help us support this amazing organization which you can learn about by reading the Upper Providence Living Article posted here https://www.fleischmannlawfirm.com/wp-content/uploads/sites/255/2019/11/Arc-Alliance-Nov-2019.pdf or at the organization’s website: https://thearcalliance.org/

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October 2019 Nonprofit Spotlight — Daily Bread Community Food Pantry

Tue, 22 Oct 2019 13:07:00 GMT

Please take a few moments to read about the good work being done in the community by Daily Bread Community Food Pantry. The Article in Upper Providence Living can be read here: https://www.fleischmannlawfirm.com/wp-content/uploads/sites/255/2019/10/Daily-Bread-Food-Pantry_UpperProvidenceLiving_Oct2019.pdf

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September 2019 Nonprofit Spotlight – Laurel House

Mon, 09 Sep 2019 15:35:00 GMT

This month we are very proud to sponsor Laurel House as the monthly nonprofit spotlighted in Upper Providence Living Magazine . If you do not receive the publication, I urge you to read the article here: Laurel House_UpperProvidenceLiving_Sept2019 . Laurel House has been a devoted resource in the community to victims of domestic violence since 1980.

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August 2019 Nonprofit Spotlight – Coming Home With Grace

Tue, 13 Aug 2019 20:52:00 GMT

Please take a moment to read this history behind organization and the amazing work they do designing beautiful accessible space for persons in need.

https://www.fleischmannlawfirm.com/wp-content/uploads/sites/255/2019/08/Coming-Home-with-Grace-August-2019.pdf

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Nonprofit Spotlight – Upper Providence Living

Tue, 09 Jul 2019 19:41:00 GMT

The Firm is pleased to announce that it will sponsor a local nonprofit to be spotlighted in Upper Providence Living Magazine. This month, Mom’s House of Phoenixville was chosen as the first nonprofit to be showcased. Please click on the link below to learn more about the amazing work and services that Mom’s House provides: free state-licensed weekday childcare for infants and preschoolers to low-income single parents who are full-time students.

Nonprofit spotlight- Mom’s House of Phoenixville_

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Robin E. Rosenthal Joins the Firm

Mon, 03 Jun 2019 18:53:00 GMT

The Fleischmann Law Firm, PC is pleased to welcome Robin E. Rosenthal, PP-SC as a paralegal employed by the firm.

Ms. Rosenthal received her degree from The Martin School of Business in Philadelphia, Pennsylvania. She received her NALS Professional Paralegal Certification in 2010 and went on to receive specialty certifications in Civil Litigation and Trial Management. She also obtained her Microsoft Office Specialist Certification in 2013 at the Bucks County Community College, and is also a long-time member of the Pennsylvania Association of Notaries.

With over 25 years experience as a legal professional, Robin has worked as a legal assistant and paralegal in the fields of commercial litigation, family law, medical malpractice and catastrophic personal injury.

Robin has served on different committees on behalf of NALS of Pennsylvania, and currently volunteers as a Paralegal/Notary Public with the American Bar Association, Wills for Heroes Foundation in Pennsylvania, which provides essential legal documents free of charge to our nation’s first responders. Robin was also the recipient of the NALS Joann Boyd Scholarship and was the recipient of the National Continuing Legal Education Award. Soon after receiving her National Certification, she was featured in the publication, The Paralegal Mentor, Strategies for Paralegals Seeking Excellence.

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Changes to The Pennsylvania Contractor and Subcontractor Payment Act (“CAPSA”) Are Coming, Effective November 18, 2018

Tue, 24 Jul 2018 18:47:00 GMT

The Pennsylvania Contractor and Subcontractor Payment Act 73 P.S. §501, et seq. (“CASPA”) is a means to ensure that contractors and/or subcontractors who make improvements to real property are paid in a timely manner, whether under the terms of a contract or under statute. CASPA allows for interest, penalties, attorneys’ fees and expenses. Originally enacted in 1994, CASPA is undergoing some changes to give the Act more teeth to contractors and subcontractors, and to close some loopholes.

CASPA provides that contractors and subcontractors are entitled to payment from the party with whom they contracted. The Act specifies that the owner of the property must pay the contractor according to the terms of the contract. It was enacted to cure abuses within the building industry involving payments due from owners to contractors and subcontractors and to encourage fair dealing among the parties to a construction contract. Lomas v. Kravitz , 130 A.3d 107 (Pa. Super. 2015), appeal granted 147 A.3d 517, 637 Pa. 207, affirmed 170 A.3d 380. However, it was time that the law be revised to correct some abuses still taking place. One area that needed to be tweaked regards the written notice required for withholding payment due to “deficiency items.”

The text of the Act 27 of 2018 containing the revisions can be found here: http://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2018&sessInd=0&act=27

Here is a summary of the changes:

The changes take effect on November 12, 2018.

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Gambling at a Sheriff’s Sale

Thu, 14 Sep 2017 15:24:00 GMT

Are you considering purchasing real property at a sheriff’s sale? That’s a gamble that may or may not pay off. These properties are sold “as is” with no warranties, and prospective bidders generally do not even have the opportunity for an inspection. If you do purchase real property at a sheriff’s sale, is there recourse if the property provides more burden than benefit? If you complied with all the conditions of the sale, no.

In a recent opinion from the Superior Court of Pennsylvania, ( Commonwealth of Pennsylvania v. Investment Resource Holding, Inc. , 2017 WL 3261289 (Aug. 1)) a purchaser found this out the hard way. He purchased a property at tax sale in September and complied with all the conditions of the sale. A deed was prepared and recorded in November. In December, a fire caused extensive damage to the property. The purchaser was not in receipt of the deed at that time of the fire and subsequently refused to accept the deed when it was delivered. Eventually, he was charged with violations of the city’s Property Maintenance Code for failure to repair the fire damage. The purchaser claimed that because he did not accept the deed on delivery, he had unilaterally rescinded the purchase of the property. The court did not accept his argument, quoting, “(t)he bona fide purchaser at a public sale of land, the moment it is knocked off to him, if he complies in all respects with the conditions of sale, instantly acquires a vested right to the property sold.” Russell v Equibank , 8 B.R. 342 (Bankr.W.D.Pa. 1980). “Pursuant to Pennsylvania law, a purchaser of real property at a sheriff’s sale acquires, at the fall of the hammer, a vested interest in the property.” Marx Realty & Improv Co. v. Boulevard Center, Inc. , 398 Pa. 1, 156 A.2d 827 (1959). As a result, the purchaser was liable for the fines and still had to repair the damaged property. His gamble did not pay off.

The flip side of the scenario also applies. Sometimes the property may be worth more than what is paid at sheriff’s sale, and that is when the gamble pays off.

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What is Included in a Contract Matters: Why Attorney’s Fees and Prejudgment Interest Clauses are Imperative

Thu, 06 Apr 2017 14:15:00 GMT

A contract allows parties to have a clear understanding of what their duties and obligations to each other are throughout the term of the contract. For example, a contract between a restaurant and a supplier might specify how much time the supplier has to fulfill an order and how long the restaurant then has to pay the supplier. But what happens if the restaurant doesn’t pay the supplier and the supplier must take the restaurant to court in order to recover the payments owed by the restaurant?

Without a clause in the contract awarding attorneys’ fees and prejudgment interest, the supplier might end up paying more to collect than the principle amount owed. “In claims that arise out of a contractual right , interest has been allowed at the legal rate from the date that payment was wrongfully withheld, where the damages are liquidated and certain, and the interest is readily ascertainable through computation.” Daset Min. Corp. v. Industrial Fuels Corp. , 326 Pa.Super. 14, 473 A.2d 584 (1984). (emphasis added) “Where the terms of a contract provide for the payment of interest, a court’s award of such interest in favor of the prevailing party is not discretionary.” TruServ Corp. v. Morgan’s Tool & Supply Co., Inc. , 614 Pa. 549, 39 A.3d 253, 261 (2012). Additionally, each party is ordinarily responsible for its own attorneys’ fees “absent bad faith or vexatious conduct”. Lucchino v. Commonwealth , 570 Pa. 277, 282, 809 A.2d 264, 267 (2002). Known as the American Rule, it applies “unless there is express statutory authorization, a clear agreement of the parties or some other established exception.” Mosaica Academy Charter School v. Com. Dept. Of Educ. , 572 Pa. 191, 206-7, 813 A.2d 813, 822 (2002). (emphasis added). Once attorneys’ fees are allowed, the trial court has the authority to consider the reasonableness of the fee claimed. McMullen v. Kutz , 603 Pa. 602, 614-15, 985 A.2d 769, 776-77 (2009). Pennsylvania courts routinely uphold contractual agreements between commercial parties regarding consequences of breach. *

In a recent victory for one of our clients, an information technology service provider, the contract specified their right to recover all reasonable attorneys’ fees, costs, litigation expenses, and prejudgment interest in the event that legal action was required to recover payment for services rendered or products delivered, and in the event of any legal action commenced by them to enforce any term or condition provided for in the contract. Rather than pay per the contract, their customer concocted baseless defenses and counterclaims, delayed trial for three years, and failed to come forward with any credible evidence in support of their claims and defenses. The court found in favor of our client and enforced the clauses of the contract awarding attorneys’ fees, litigation expenses, and prejudgment interest. On a principle claim of approximately $25,000, our client was awarded in excess of $30,000 in additional prejudgment interest and attorneys’ fees. Without the clause in the contract that allowed for those awards our client would not have been made whole, with the litigation expenses eating away at what they were rightfully owed by their recalcitrant customer. So, if you are drafting, signing, or seeking to enforce contracts, keep these things in mind. It could be the difference between “eating” the costs of litigation and interest or recovering them.

*It is important to note, however, that these legal tenets may not apply in consumer contracts, where statutes may prohibit recovery of attorneys’ fee, etc.

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A New Law Could Seal Your Criminal Record

Thu, 26 Jan 2017 15:59:00 GMT

The legislature recently passed a law which grants new rights to individuals with minor criminal convictions on their record. It took effect November 14, 2016. The new law can clear criminal convictions for non-violent second and third degree misdemeanors or ungraded offences which carry a maximum penalty of no more than two years from the public record. It allows individuals to petition the court for an Order for Limited Access, which prohibits certain historic criminal convictions from being publicly available. The limited access does not apply to criminal justice agencies, and some government licensing agencies. Certain crimes, including those involving simple assault, intimidation of witnesses or victims, and crimes that require the perpetrator to register as sexual offenders are not eligible for an Order of Limited Access.

A past criminal record can prevent rehabilitated, law abiding individuals from getting a job or a place to live. Now, individuals who have maintained a clean record for 10 years from the time of conviction or from the time their sentence was completed may be able to have those records sealed from public view. This new law can help those individuals move forward with their lives without being forever penalized for their past. Individuals who have paid the price for their past crime(s) and have been law abiding citizens for many years now have the chance at a fresh start.

If you need help navigating the process of obtaining an Order for Limited Access, contact The Fleischmann Law Firm to discuss your options.

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Mechanics’ Lien Law Update

Tue, 17 Jan 2017 18:16:00 GMT

The Pennsylvania Superior Court recently issued an opinion concerning necessary parties to a mechanics’ lien claim in Schell v. Murphy , 2016 PA Super 302 (December 23, 2016). A Mechanics’ Lien is a statutory remedy developed by the legislature that grants protections to contractors that were not available to them under the common law. This holding is significant because it reiterates that a law developed by the legislature, which grants rights that did not exist in common law, must be strictly construed.

In this case, Schell was a contractor who entered into a contract with both Mr. and Mrs. Murphy for landscaping work on property owned solely by Mr. Murphy. After substantially completing the project, the Murphys fired Schell and refused to pay him for the work and materials he had provided. Schell filed a mechanics’ lien against Mr. Murphy, as owner of the property. The trial court found that because the wife was a party to the contract, although not an owner of the property, she was an indispensable party to the mechanic’s lien claim. The Superior Court reversed explaining that the Mechanics’ Lien Law is intended to protect contractors who, with the expectation of being reimbursed, provide labor and materials to improve another’s property. The court stressed that mechanics’ lien claims are independent of contracts claims, and are not meant to settle contractual disputes. The court also reiterated that the statutory requirements must be precisely adhered to by the contractor seeking a lien and strictly construed by the courts. The Mechanics’ Lien statute requires that the contractor filing a mechanics’ lien must name the owner of the property. It does not mention parties to a contract, therefore the wife in this case was not an indispensable party. Although she was a party to the contract, she was not an owner.

The holding in this case kept the mechanics’ lien claim alive because the claim complied precisely with the requirements of the Mechanics’ Lien Law. However, there are many pitfalls that may be encountered when not following the strict procedure or understanding the purpose and definitions under the Mechanics’ Lien Law. If a contractor, subcontractor or materials supplier is contemplating filing a mechanics’ lien claim, or if an owner is subject to the filing or threatened filing of a mechanics’ lien, it is critical that they have legal counsel familiar with the law.

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The Pennsylvania Supreme Court Rules that Owners, not their Agents, are liable for payments to Contractors and Subcontractors under CASPA

Thu, 17 Nov 2016 16:34:00 GMT

Reported decisions regarding The Pennsylvania Contractor and Subcontractor Payment Act 73 P.S. §501, et seq. (“CASPA”) are rare. CASPA is a means to ensure that contractors and/or subcontractors who make improvements to real property are paid in a timely manner, whether under the terms of a contract or under statute. CASPA allows for interest, penalties, attorneys’ fees and expenses.

In the recent case, Scungio Borst & Associates v. 410 Shur Lane Developers, LLC and Kenworth II, LLC and Robert DeBolt, 2016 WL 5416326, September 28, 2016 (“ SBA v. 410 Shur Lane” ), the Pennsylvania Supreme Court looked at who is liable for payment on a contract between a contractor and a property owner.

In SBA v. 410 Shur Lane , Robert DeBolt (“DeBolt”), was President and part owner of 410 Shur Lane Developers, LLC (“410 SLD”). As an agent of 410 SLD, he executed written and oral construction contracts on their behalf with Scungio Borst & Associates (“SBA”). When the contract was terminated, SBA was owed $1.5 million. DeBolt refused to pay on behalf of 410 SLD, so SBA, sued 410 SLD, Kenworth, and DeBolt personally as 410 SLD’s agent under CASPA.

CASPA provides that contractors and subcontractors are entitled to payment from the party with whom they contracted. Later, CASPA specifies that the owner of the property must pay the contractor according to the terms of the contract. Things get muddled by CASPA’s definition of “owner” however, which includes “successors in interest of the owner and agents (emphasis added) of the owner acting with their authority.” 73 P.S. §502, section 2.

CASPA was enacted to help quickly resolve payment disputes that had previously been slow to resolve under common law. CASPA was not intended to impose liability on non-contracting parties where no liability had previously existed. The long-standing tenants of the common law of agency do not hold agents liable on its principal’s contract without the express agreement of the agent. Contracts are enforced between the parties to the contract. When CASPA was enacted, the legislature did not make any statement indicating it intended to change this. There was not even any discussion or debate on the issue. The Court, in its analysis, presumed that the legislature did not intend to change that, and held that, “a contractor may not maintain action under CASPA against a property owner’s agents.” Scungio Borst & Associates v. 410 Shur Lane Developers, LLC and Kenworth II, LLC and Robert DeBolt, 2016 WL 5416326, September 28, 2016.

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Welcoming Valerie Hays to the Firm

Tue, 13 Sep 2016 13:49:00 GMT

Ms. Hays joins the Fleischmann Law Firm as a paralegal / legal assistant. She received her J.D. from The University of Arkansas at Little Rock, William H. Bowen School of Law, and her B.A. in English from Case Western Reserve University in Cleveland, Ohio. Ms. Hays has an eclectic work history ranging from retail, to manufacturing, to hospitality, to law. Prior to relocating to Pennsylvania with her family in 2011, Ms. Hays was a staff attorney for the Arkansas Department of Environmental Quality. She began her law career as a solo practitioner in North Little Rock, Arkansas and primarily handled family law. Since relocating to Pennsylvania, Ms. Hays and has focused on raising her children. She has been an active volunteer with Boy Scouts, Girl Scouts, and her children’s school. In the past two years she has also worked for the Owen J. Roberts School District as a paraprofessional substitute. Ms. Hays enjoys reading, camping, travelling, photography, and crafting in her spare time.

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Who Owns the Password? The Employer or the Employee?

Thu, 19 May 2016 17:58:00 GMT

SEC v. Huang

With an ever-expanding accumulation of technological advancements, questions about privacy and self-incrimination begin to arise, especially when the devices are not owned by the user. This question was recently raised in federal court in Pennsylvania in Securities and Exchange Commission v. Huang , 2015 WL 5611644 (E.D. PA 2015-269)(“ SEC v. Huang ”).

In SEC v. Huang , former employees at Capital One and were provided company-owned smartphones. The bank allowed their employees to determine their own passwords that unlocked their devices, and in fact, urged all employees to not keep records of any personal codes in an attempt to be even more secure. Upon departing from Capital One, the employees returned their smart phones to the bank.

The SEC contends that certain former Capital One employees (Defendants) took part in an insider trading scheme during their time as employees, illegally benefitting from information obtained during their time of employment with Capital One. Documents were believed to be stored on the Defendants’ smart phones. Capital One turned the employees’ smartphones over to the SEC to aid in the investigation, but the phones still had the passcode lock mechanism on them. The bank did not have the codes, per their security policy.

The SEC demanded that the rogue employees provide the passwords to the smartphones, but they refused, asserting their Fifth Amendment rights against self-incrimination. The SEC sought court intervention to compel the Defendants to provide the passwords to unlock the smartphones in an effort to gain evidence to support the charges of insider trading. The SEC argued that, as former employees, the Defendants were “corporate custodians” and had no privacy right to withhold the passcodes.

The District Court (Hon. Mark A. Kearney) ruled in favor of the Defendants, allowing them to assert their Fifth Amendment rights and not be obliged to provide their personal passcodes to the SEC or Capital One. The reasoning was that the SEC was not seeking business documents, but actually seeking the “thought processes” of Defendants who were allowed to choose and protect their personal passwords. Neither Capital One nor the SEC actually knew definitively if what they were seeking would be found within the contents of the Defendants’ phones. The court held that producing the passcodes would be testimonial in nature and potentially self-incriminating, thereby protected from compulsory disclosure under the Fifth Amendment.

Implications:

This case can have significant implications for employers and employees. An employer may want to provide their employee with an assigned and recorded, company password for any of their company-issued devices in the future, so that an issue like the one that arose is SEC v. Huang may be avoided. This would have eliminated the argument that the passwords were the employees’ own personal thoughts (hence requiring testimonial revelations), and likely would have yielded a different holding in the case. Although, enacting this procedure could pose issues with privacy rights, especially if it is the employee’s personal device, containing personal text messages, emails, etc., not to mention the heightened security problems that could result with stored passwords.

There is the option of having some type of mobile device management system that would allow the employees who utilize the company-issued devices access to only certain applications or downloads. This would be a seemingly fair compromise for both sides – a small price to pay for a free phone.

To secure ownership of all information on an devices that are employer owned, The Fleischmann Law Firm is recommending to all its business clients that the employers assign passwords/passcodes to the devices, and that employees be required as a job condition to keep the employer informed of any changes.

The Fleischmann Law Firm, P.C.

By: Craig J. Fleischmann, Esq. and

Andrew McFadyen, Paralegal Intern

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Fleischmann Law Firms Expands – Hires New Summer Intern

Tue, 10 May 2016 14:35:00 GMT

Andrew McFadyen – Intern/Summer Paralegal at The Fleischmann Law Firm

The Firm is pleased to announce that as part of its expansion, l ocal Boyertown resident, Andrew (Drew) McFadyen has joined the Firm as an Intern/Summer Paralegal.

Drew is a rising senior at the University of Pittsburgh, majoring in Political Science, with minors in Legal Studies and Philosophy. Drew is on the executive board for PITT’s chapter of the International Pre-Law Fraternity, Phi Alpha Delta, a Founding Father of the Omega Chapter of Delta Sigma Phi, and a Student Manager at the William Pitt Union. He is also a part of two of the most prominent college musical acts in the Pittsburgh area. Drew is the lead guitarist in his band called O’Hara, and DJs in a duo called GoDeo.

Drew intends to further his education in law school, possibly in California or New York. Music is a huge passion for him, so he aims to specialize in entertainment law in order to be part of the music/entertainment industry in some fashion. His hope is to one day represent artists and protect their interests in the technological age, where piracy and thievery of intellectual property is so easy and prevalent.

“Interning at The Fleischmann Law Firm has been a fantastic experience for me. I’ve been able to learn SO much about the legal field and what truly goes into being, not only an attorney, but an entrepreneur, as well. I have gained a plethora of invaluable, hands-on experience as a paralegal in training, which will indubitably pay dividends in the long run.”

Please join us in welcoming Drew to the Firm.

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