Employee or Independent Contractor Classification under the Fair Labor Standards Act Effective March 11, 2024

Ruth Binger

By Ruth Binger



worker classificationThe U.S. Department of Labor (DOL) has modified the Wage and Hour Division Regulations to replace its 2021 analysis for determining whether a worker is an employee or independent contractor (Final Rule). The previous test gave greater weight to control and opportunities for profit and loss.

Effective March 11, 2024, under the Final Rule the employee or independent contractor classification determination will focus on the economic realities of the worker’s relationship and whether the worker is either economically dependent on the potential employer for work or is in business for himself. In short, is the worker dependent upon the business to which it renders services for work?

Economic dependence does not focus on the amount of income the worker earns, but rather whether the worker has other sources of income from other customers. To determine economic dependence, the DOL assesses seven factors and conducts a totality-of-the-circumstances analysis. No one factor carries more weight. The DOL looks at the working relationship, the workplace, and the particular industry.

Under the Final Rule, Section 795.105, DOL, uses the following tools and/or factors in its determination: Continue reading »

CTA Reporting Requirements Have Begun!

Jaime L. Curry

By Jaime L. Curry



beneficial ownership reportingReporting requirements for affected entities under the Corporate Transparency Act (“CTA”) went into effect January 1, 2024. In our article “Be Sure You’re Ready: The Corporate Transparency Act is Coming Soon!,”  we provided detailed information on the CTA’s applicability and reporting requirements. Now that the CTA is in effect and entities must report beneficial ownership, let’s take another look.

The Facts About the CTA

  • The CTA is a bipartisan act passed in 2021 by Congress to create a beneficial ownership information reporting requirement because many states, including Missouri, do not have requirements in place to collect beneficial ownership information of certain entities. An estimated 32.6 million entities are affected by the CTA.
  • For entities already in existence prior to January 1, 2024, that do not qualify for any of the 23 exemptions available, Beneficial Ownership Interest (“BOI”) Reports are due by December 31, 2024.
  • New entities formed in 2024 are subject to a 90-day BOI Report filing deadline (extended from the original 30-day deadline). Entities formed January 1, 2025, or later are subject to a 30-day BOI Report deadline.

How and What Does an Entity File?

  • An entity can file its own report – at no cost – on the Financial Crimes Enforcement Network (“FinCEN”) website at https://boiefiling.fincen.gov/fileboir.
  • Required information to be filed for an entity includes the legal entity name, any trade names or dbas, the principal place of business address, and all taxpayer-identification numbers issued to the entity.
  • Owners of at least 25% of interest in the entity and those with substantial control of the entity must report their legal name (including middle name), home address, date of birth, unique identifying number from an accepted identification document (generally a state-issued driver’s license or passport), name of the state or jurisdiction of the identification document, and an image of the identification document.

Who Has Access to Filed Information?

  • FinCEN’s database of entities will not be freely accessible to the public.
  • Federal, state, local, and tribal officials, as well as certain foreign officials, may submit a request for information for authorized activities related to national security, intelligence, and law enforcement. If a reporting company consents, certain financial institutions may be granted access in certain circumstances. For more information on access, please visit FinCEN’s website at https://fincen.gov/boi.

Cue the Scammers Continue reading »

What to Do If You Might Have Been Ineligible for the Employee Retention Tax Credit Claim

Jaime L. Curry

By Jaime L. Curry



covid-19 tax creditsThe COVID-19 Pandemic was cause for many new programs to be created by the U.S. government to keep businesses afloat and employees retained in unprecedented times. One of these programs was the Employee Retention Tax Credit (“ERC”) which incentivized employers to retain employees while business was down. The program was available regardless of the size of the employer and included tax-exempt organizations.

To be eligible for the ERC, employers had to (1) be either fully or partially suspended by government order due to COVID during the calendar quarter or (2) have gross receipts below 50% of the comparable quarter in 2019.

The IRS began sending out letters in December 2023 to more than 20,000 taxpayers who received disallowed ERC claims. Letter 105 C, Claim Disallowed is being sent to a first group of taxpayers because the entities either (1) did not exist during the eligibility period (March 13, 2020, through December 31, 2021), or (2) did not have paid employees during the ERC’s applicable time period (ERC is a credit against qualified wages).

Letter 105 is being sent out to taxpayers prior to payment in an effort by the IRS to help ineligible taxpayers avoid audits, repayments, and penalties. Many employers were encouraged to file ERC claims by “promoters” who received monetary commissions based on approval. Issuance of a disallowance letter prevents promoters from receiving funds to which they are not entitled. Continue reading »

Five Common Mistakes Business Owners Make When Organizing an LLC in Missouri

Katherine M. Flett

By Katherine M. Flett



llc1. Not Having an Operating Agreement

An Operating Agreement (“OA”) is a crucial document that establishes the ownership of the LLC, the rights and duties of the company’s members and managers, and the operating rules for the company. While the OA is not filed with the Missouri Secretary of State (“SOS”), it is required by law. Without an OA, your LLC runs the risk of losing its limited liability protection and the members of the LLC could be held personally liable.

2. Not Updating the Operating Agreement

The OA establishes the ownership of the LLC, how the LLC conducts its business, and how it is taxed.  There are several ways for an LLC to be taxed, including as a disregarded entity or an S-corporation.  Including this in the OA and acting in accordance with the OA are very important.  If tax status, ownership, or any other portion of the OA changes, it should be promptly amended to reflect the change(s).

3. Not Registering a Fictitious Name Used By the LLC

If an LLC transacts business in a name other than the legal entity’s name, that name must be filed as a fictitious name (also known as a “d/b/a” or “doing business as”) with the SOS. A fictitious name is any name business is transacted under other than the true name of the legal entity. For example, if the legal name of the LLC is “Flett Enterprises, LLC” and it owns a restaurant named “Andy’s BBQ,” the owner should register “Andy’s BBQ” as a fictitious name. If not, the owner(s) risk personal liability for operating “Andy’s BBQ” in their individual capacity. Continue reading »

Planning for the Incapacity or Death of a Business Owner

Jaime L. Curry

By Jaime L. Curry



are you readyAs a business owner, you are used to making plans. You have had to make plans since day one – plans to get your business off the ground, plans to increase inventory, plans to take on employees. . . plans, plans, plans. One plan that some business owners don’t think about until it’s too late is what happens to their business at the death of one of the owners.

Not planning is, in fact, a plan. If no documents are in place to transfer ownership at death, the deceased owner’s probate estate is the recipient of the business interests and the business is tied up in probate court. How can you avoid this happening to your business?

First, check your corporate governance documents. Depending on the type of entity you own, this could be your operating agreement, shareholder agreement, bylaws, or a buy-sell agreement. These documents could outline any restrictions on the transfer of ownership interests. Some of the more common transfer restrictions are to other members or shareholders, revocable trusts, or family members.

Typically, two of the simpler ways to transfer ownership interest in an entity is to assign the interest during the owner’s life to a revocable trust or, alternatively, assign the interest at the death of the owner to the owner’s trust. The terms of the trust can then control where the ownership goes, how it gets to the desired beneficiaries, and who is in charge. Make sure to update operating agreements or bylaws to reflect those changes any time an assignment of ownership occurs. Assignments of ownership interests at death can also be made to other individuals provided the terms of the entity’s operating agreement or bylaws allow for this transfer. Continue reading »

Non-Compete and Non-Solicitation Agreements Under Attack!

Katherine M. Flett

By Katherine M. Flett



noncompeteSoon companies may be prohibited or severely limited from using employee non-compete and non-solicitation agreements. The Federal Trade Commission’s (FTC) January 2023 proposed Non-Compete Clause Rule would prohibit employers from using non-compete agreements with any employee or independent contractor, paid or not, with very limited exceptions. The proposed rule is retroactive requiring employers to rescind all existing non-compete agreements and notify workers that these agreements are no longer in effect.

The FTC’s proposed rule does not prohibit customer or employee non-solicitation agreements unless they are overly broad. The proposal indicates that eradicating non-compete agreements is a priority for the FTC. The vote is scheduled for April 2024 and will likely be subject to extensive litigation if passed.

In May 2023, Jennifer Abruzzo, the National Labor Relations Board (NLRB) General Counsel, issued a memorandum stating that offering, upholding, and enforcing non-compete agreements may interfere with Section 7 of the National Labor Relations Act (NLRA). Employees could interpret the agreements as creating a lack of employment mobility by denying them the ability to quit or change jobs or by blocking access to other employment opportunities. Non-compete agreements could be lawful if they are narrowly tailored and only restrict individuals’ managerial or ownership interests in competing businesses or true independent contractor relationships. According to the memorandum, the NLRB will focus on pursuing enforcement actions against employers utilizing non-compete agreements. Continue reading »

Advantages of the Single-Member LLC and the Disregarded Entity Rules

Bryan J. Schrempf

By Bryan J. Schrempf



limited liability companyThe limited liability company (LLC) is a relatively modern invention that has grown rapidly in popularity and for good reason. Generally, an LLC is a business entity that is legally distinct and separate from its owners, or rather its members.  As a result, the LLC provides its members with significant protection from liability to third parties, like a traditional corporation provides to its shareholders.

However, the LLC has some advantages over the corporation, including :

  • An LLC is generally subject to less administrative requirements than a corporation.
  • An LLC may elect to be taxed as a partnership, corporation, or s-corporation.
  • An LLC that is wholly owned by a single member may be treated as a “disregarded entity” for federal income tax purposes.

What are the benefits of a disregarded entity?

  • A disregarded entity will not need to file a separate income tax return because its income or loss will pass-through to its sole member.
  • A single-member LLC that is not taxed as a corporation, has no employees, and is not subject to excise taxes does not even need to apply for a separate Employer Identification Number (EIN).[1] Instead, such a disregarded entity may use the taxpayer identification number of its sole member. However, if another party, such as a bank, insists that the disregarded entity provide its own EIN, then the disregarded entity may obtain one for convenience.

Continue reading »

Illinois Passes Freelance Workers Protection Laws: Understanding the Freelance Worker Protection Act

Katherine M. Flett

By Katherine M. Flett



freelanceAuthored by Katherine M. Flett with assistance from Kristina M. Stevenson, contributor

In a pioneering move, Illinois has become the first state to enact comprehensive protection laws for freelance workers. The Freelance Worker Protection Act (FWPA), set to take effect on July 1, 2024, introduces stringent regulations governing the engagement, treatment, and compensation of freelance workers within the state. This legislation, which is gaining steam nationwide with other states, aims to safeguard the rights and interests of freelance workers, who play an increasingly vital role in today’s dynamic economy.

Defining Freelance Workers

The FWPA defines a freelance worker as an independent contractor who offers products or services within Illinois or for Illinois-based entities, in exchange for compensation exceeding $500. This compensation can stem from a single contract or multiple contracts over a 120-day period. However, certain exceptions apply. Construction service providers, employees of construction contractors, and those already subject to traditional employer-employee relationships under the Illinois Wage Payment and Collections Act are excluded from the definition.

Key Protections Offered by FWPA

The FWPA outlines three requirements regarding hiring freelance workers: Continue reading »

Be Sure You’re Ready: The Corporate Transparency Act is Coming Soon!

Jaime L. Curry

By Jaime L. Curry



corporate transparency actTo help combat money laundering, prevent financing of terrorism and drug and human trafficking, and deter securities fraud among other illicit activities, January 1, 2024, will usher in the new reporting requirements for most small and closely held businesses. Courtesy of the Corporate Transparency Act (CTA) established under the Anti-Money Laundering Act of 2020, companies will be required to disclose beneficial ownership information to the Treasury Department’s Financial Crimes and Enforcement Network (FinCEN).

What does this mean for existing entities?

All domestic corporations, limited liability companies, and other entities created under state law and formed prior to January 1, 2024, will have until December 31, 2024, to report the required information to FinCEN.

Because the CTA aims to garner information on shell companies and entities with no or little operations, it provides 23 exemptions allowing an entity not to report. One such exemption is for operating companies that meet the following requirements: (1) employ more than 20 full-time employees in the U.S., (2) had more than $5,000,000 in gross receipts or sales as reported on the prior year’s IRS Form 1120, and (3) have an operating presence at a physical office in the U.S.

What does this mean for new entities?

New entities created on or after January 1, 2024, will have 30 days from actual notice of creation or after a secretary of state provides public notice of the entity’s creation or registration, whichever is earlier, to file the required reporting information.

Whose information is reported?

Individuals who directly or indirectly exercise substantial control over the entity, senior officials who have substantial control over a company, and individuals who own or control 25% or more of ownership interests are the Beneficial Owners who must disclose required information under the CTA.

What kind of information do Beneficial Owners have to report? Continue reading »

Your Business and the ADA: Ensuring Accessibility and Inclusion

David R. Bohm

By David R. Bohm



handicap parkingPart 2 of 2-Part Series on Accessibility and Accommodation

It is important for small businesses to be aware of and comply with the requirements of the Americans with Disabilities Act (ADA). The ADA has two sections that can potentially impact small businesses: Title I and Title III.

Title I of the ADA applies to businesses with 15 or more employees (or 6 or more employees under the Missouri Human Rights Act) and requires employers to provide reasonable accommodations for employees with disabilities. This means making modifications or adjustments to the work environment that enable employees to perform their job duties which could include providing assistive devices, modifying work schedules, or allowing telecommuting.

Title III applies to all businesses, regardless of their size, and requires them to make their physical premises accessible to individuals with disabilities. A key aspect is the removal of architectural barriers that may hinder accessibility and ensuring that physical structures are designed and constructed in a way that accommodates individuals with disabilities. Elements such as entrances, parking spaces, ramps, doorways, hallways, and restrooms must be accessible to people with mobility impairments.

When constructing a new building or making alterations or renovations to an existing building, businesses are generally required to comply with the ADA Standards for Accessible Design adopted by the Department of Justice in 2010. However, even if a business is not engaged in construction or renovation, they still have an obligation to make alterations to their premises to provide access if it is “reasonably achievable.” The term “reasonably achievable” has not been precisely defined, but courts consider factors such as the nature and cost of barrier removal, the business’ financial resources, technical difficulties, the number of employees and visitors, safety requirements, and the impact on business operations. Continue reading »

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