Can Real Estate Property Lost Due to Unpaid Taxes Be Recovered Through Bankruptcy?

Every state has a statute authorizing the counties within it to foreclose on or sell real estate which has delinquent taxes owed on the property. In Missouri, for instance, counties are allowed to conduct sales of such properties once the real estate taxes have been delinquent for three years. The exact procedure may vary from county to county.

The purchaser at a tax sale will likely pay much less than the property is worth. If the previous owner should file a bankruptcy case, can the bankruptcy court set aside the sale as “fraudulent,” in the sense that the property was transferred from the owner for less than the true value of the property?

In 1994, in BFP v. Resolution Trust, 511 U.S. 531, the U.S. Supreme Court ruled that properly conducted mortgage or Deed of Trust foreclosures cannot be fraudulent transfers because, although it is very rare for a foreclosure sale price to be anywhere close to a market price, notice of the sale is published and members of the public can attend the sale and purchase the property if they care to.

However, the fraudulent transfer question is much closer if the transfer is by tax sale. The notice of the sale is narrower than even a mortgage foreclosure, and the chances of the property selling for a fair value is even less.

So, can a sale or foreclosure for delinquent taxes be set aside as constructively fraudulent? This question has given rise to a split among the Circuits. The Sixth Circuit, in the recent case of Lowry v. Southfield Neighborhood Revitalization Initiative (In re Lowry), 20-1712 (6th Cir. Dec. 27, 2021), found that the BFP reasoning did not apply to tax sales. This brought the circuit split even, with three circuits (the Fifth, Ninth and Tenth) finding that BFP does apply to tax sales and three circuits (the Third, Sixth and Seventh), holding that it does not.

The Bottom Line: Continue reading »

Unpaid Leave for Victims of Domestic or Sexual Violence Now Required in Missouri

Authored by Katherine M. Flett with assistance from Haley E. Gassel, contributor

Missouri employers must now provide unpaid leave and accommodations to employees due to domestic or sexual violence under the Victims’ Economic Safety and Security Act (VESSA).

Employers Covered Under VESSA

• Employers with 1-19 employees are not subject to these requirements.
• Employers with 20-49 employees are required to provide one week of unpaid leave per year to employees covered under these statutes.
• Employers with 50 or more employees are likewise required to provide two weeks of unpaid leave per year to employees covered under these statutes.

Employees Eligible for Unpaid Leave or Accommodations under VESSA

VESSA applies to employees of covered employers who are victims of domestic or sexual violence, or whose family or household member is a victim of domestic or sexual violence. A family or household member is a spouse, parent, daughter, son, someone related by blood or by marriage, someone who shares a relationship through a son or daughter, and anyone jointly residing in the same household.

Reasonable Accommodations

Employers and public agencies are required to make reasonable safety accommodations to the known limitations resulting from circumstances relating to being a victim of domestic or sexual violence or a family or household member of domestic or sexual violence. Reasonable accommodations include: Continue reading »

Business Owners: Private Company in Missouri Wins Challenge to Its COVID-19 Vaccine Mandate

Missouri has its first decision on a challenge to a private company’s COVID-19 vaccine mandate. The U.S. District Court of Western Missouri heard a petition for an injunction against Tyson Foods’ COVID-19 vaccine mandate and the company prevailed. In Reese v. Tyson Foods, Inc., Clifton Reese, a Tyson Foods employee, had requested a Temporary Restraining Order and/or Preliminary Injunction against Tyson Foods regarding its COVID-19 vaccine mandate.

In Reese, Tyson announced a vaccine mandate that all employees nationwide to be fully vaccinated by specified dates. The policy stated that employees seeking religious or medical accommodations should contact Tyson human resources “immediately.” Clifton Reese waited a month before making his request for religious accommodation. He refused the company’s accommodation of unpaid leave, but Tyson formally notified Reese that his religious accommodation was granted with the following stipulations:

1. The accommodation status could change at any time.
2. Because his accommodation of unpaid leave of absence was not job-protected, the position could be filled if necessary.
3. If providing the accommodation was an undue hardship to the employer, the accommodation could be revoked. The employee would then have to comply with the mandate or be subject to termination.

Reese filed a complaint with the Missouri Human Rights Commission and sent a demand letter to Tyson to continue his employment under existing COVID-19 restrictions to receive his full bonus, salary, and benefits. During the hearing, the Reese admitted he did not understand benefits he would receive during unpaid leave, such as continuation of health benefits, the ability to look for new employment within or outside of the company, and keeping earned bonuses. Continue reading »

Missouri Employee Not Entitled to Injunctive Relief Against Private Employer’s COVID-19 Vaccine Mandate

Recently, Clifton Reese, an employee of Tyson Foods, requested a Temporary Restraining Order and/or Preliminary Injunction against his employer regarding its COVID-19 vaccine mandate in Reese v. Tyson Foods, Inc.

On August 3, 2021, Tyson Foods announced a vaccine mandate which required all employees nationwide to be fully vaccinated by specified dates. Moreover, the policy requested that employees seeking religious or medical accommodations contact human resources “immediately” to allow Tyson time to consider each employee’s request to meet company deadlines. Despite the notification to contact human resources immediately, Reese waited a month before contacting human resources seeking a religious exemption.

In response to his request, Tyson offered Reese an accommodation of an unpaid leave of absence, which he rejected. Tyson then confirmed Reese’s request for a religious exemption from the company vaccine mandate had been granted, the status of the accommodation was subject to change, and if the accommodation was an unpaid leave of absence that was not job-protected, “it may be necessary to fill your position.” Tyson also explained that if providing the accommodation was an undue hardship to the company, the accommodation could be revoked, and Reese would have to either comply with the mandate or be subject to termination.

In response to Tyson’s confirmation of the accommodation, Reese filed a complaint with the Missouri Commission of Human Rights. Reese hired an attorney and sent a demand letter to Tyson demanding that Tyson continue Reese’s employment “with the already existing COVID-19 restrictions in place,” and that he receive his full bonus, salary, and benefits. Tyson said they would review the demand. Continue reading »

Private Employer Mandatory Vaccination Policy With Medical and Religious Accommodations Is Allowed

Recently, a group of healthcare workers in Kentucky requested a Temporary Restraining Order and/or a Preliminary Injunction from the U.S. District Court of Eastern Kentucky against an employer’s COVID-19 vaccination mandate in Beckerich, et al. v. St. Elizabeth Medical Center, et al. At question was whether a private employer is allowed to modify its employment conditions to require employees to be vaccinated in response to the unprecedented global pandemic known as COVID-19.

In Beckerich, St. Elizabeth’s Medical Center and physicians group implemented a mandatory COVID-19 vaccination policy for its employees. Under the policy, employees could avoid the mandatory vaccination by submitting a request for a medical exemption or sincerely held religious beliefs before October 1, 2021. The policy also indicated that failure of an employee to comply without an accepted exemption could result in termination. The employees argued that the policy violated their constitutional rights and claimed St. Elizabeth’s had not approved religious and medical exemptions to the vaccination policy in compliance with the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act of 1964.

Regarding the ADA claims, U.S. District Court Judge David Bunning noted private employers are required to offer medical and religious accommodations but the employees in Beckerich failed to show that St. Elizabeth had not complied with the ADA reasonable accommodations. The evidence revealed St. Elizabeth granted medical exemptions 13% of the time and granted deferments 61% of the time. Only 14% were denied with 10% pending. Judge Bunning noted St. Elizabeth had granted more medical accommodations than there were plaintiffs in the case. No evidence was provided showing that over 5,000 medical and religious exemptions had been requested. The judge determined the employees had very little chance at success on the merits because they failed to meet the key elements to prove an ADA claim.

Regarding Title VII claims, Judge Bunning noted the employees failed to suggest they could raise a preliminary case of religious discrimination. None of the named plaintiffs had been denied a religious exemption with only one marked pending but St. Elizabeth’s noted that request was approved.  Because no religious exemptions were denied, the employees were not able to prove any religious discrimination. Continue reading »

Asset Protection and Estate Planning Perspective on the Importance of Holding Investment Properties in an LLC

Most small business owners today are aware of the importance of forming a legal entity before beginning their business operations. However, more individuals and families are turning to rental properties as an investment strategy, and they do not necessarily think of themselves as small business owners. But that is exactly what they are. It is critical to ensure that if you or your family own rental or other investment properties, you protect your personal assets from liability by setting up a legal entity to be the owner of the properties.

The best option for most of these types of small businesses is to form a Limited Liability Company (LLC). Limited Liability Companies require less formality than corporations and are generally less costly to form. They also offer the benefit of pass-through taxation. Though liability insurance offers protection, the one-time cost of setting up an LLC is typically less than the cost of an umbrella insurance policy over time. However, there are still coverage limits with an umbrella insurance policy: If the rental property is owned in your individual name and your liability exceeds the coverage limits, your personal assets could be at stake. LLCs shield their members from personal liability when formed and operated properly.

If you are going to own multiple properties, it may be wise to form a different LLC for each property to shield each property from the liabilities of the other properties. You will want to consult with an experienced attorney to make certain that you are following the correct procedures in establishing your LLC, such as registering the LLC with the Secretary of State, creating an operating agreement, and obtaining a tax ID number for the business.

As you can see, LLCs are extremely useful as a means of asset protection. They are also a great tool for estate planning purposes. Continue reading »

Religious Exemptions to COVID-19 Vaccination Mandates under Title VII and the EEOC’s Additional Guidance

With continued and widespread COVID-19 infection and the FDA’s full approval of the Pfizer-BioNTech COVID-19 vaccine, many employers have instituted COVID-19 vaccination mandates. Title VII requires employers to provide reasonable accommodations for employees with sincerely-held religious beliefs that conflict with getting vaccinated. Given that religious beliefs are difficult to disprove, many employees have taken this as an opportunity to request religious exemptions to avoid COVID-19 vaccination mandates.

The Law – Title VII

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of religion and requires employers to provide reasonable accommodations to employees claiming their sincerely-held religious beliefs conflict with getting vaccinated. Title VII protects not only people who belong to traditional, organized religions, such as Buddhism, Christianity, Hinduism, Islam, and Judaism, but also others who have “sincerely-held religious, ethical or moral beliefs.”

Given this sweeping definition of religion, the U.S. Equal Employment Opportunity Commission (“EEOC”) has cautioned that an employer should generally assume that an employee’s request for a religious accommodation is based on a sincerely-held religious belief. Nevertheless, an employer is permitted to question the sincerity of an employee’s purported religious belief where there is an objective basis for doing so. Further, an employer is not required to accommodate an employee’s religious beliefs and practices if doing so would impose an “undue hardship” on the employer’s legitimate business interests. For the EEOC’s list of factors to be considered when determining whether an accommodation imposes an undue hardship on an employer, visit: EEOC Undue Hardship.

The EEOC’s Guidance on Religious Exemption Requests

On October 25, 2021, the EEOC updated its technical assistance related to the COVID-19 pandemic, which included additional guidance on how employers should handle religious exemption requests (Section L). Read the full EEOC update here.

The key takeaways are:

1. Employees who have a religious objection to receiving a COVID-19 vaccination must inform their employer and request a reasonable accommodation to be afforded protection under Title VII. Reasonable accommodations may include telework or reassignment.
2. If an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, the employer can make a limited factual inquiry seeking additional supporting information.
3. An employer who objectively demonstrates that it would be an “undue hardship” to accommodate an employee’s request for religious exemption to the employer’s vaccination mandate is not required to provide the accommodation.
4. An employer is not required to grant all employees’ requests for religious exemptions on the basis that it has granted some employees requests for religious exemptions. The determination is fact-intensive and specific to every request.
5. While an employer should consider the employee’s preference, if there is more than one reasonable accommodation that would resolve the conflict between the vaccination requirement and the religious belief without undue hardship, the employer may choose which accommodation to offer.
6. An employer has the right to discontinue a previously granted religious accommodation. If the employer learns that the belief is not religious in nature or sincerely-held, or if the accommodation becomes an undue hardship, the employer can discontinue the accommodation.

Continue reading »

Medical Marijuana Use by Employees in Missouri: Where Are We Now?

Due to the pandemic and labor shortage, Missouri courts have not had an opportunity to consider Amendment 2 and employment issues related to medical marijuana in the workplace. Amendment 2 allows state licensed physicians to recommend medical marijuana to patient employees diagnosed with chronic debilitating conditions. It also protects employees with a medical marijuana card issued by the Department of Health and Senior Services (DHSS) from being terminated unless the employer proves that the employee is “under the influence of marijuana.”

There are no reliable tests available yet to scientifically confirm if someone is “under the influence” of marijuana. A person will test positive for marijuana for up to 25 days after use. However, there are impairment tests on the market that can help determine whether workers in safety-sensitive positions are at risk by testing current fitness for duty.  Those tests include computer-based alertness tests similar to a video game and apps that test for cognitive and motor impairment. Some tests take 20 seconds and are advertised as testing for fatigue, dehydration, emotional distress, alcohol, cannabis, etc.

Without more guidance, employers will have to create Observed Behavior tests that are signed by company personnel to bolster an argument of “under the influence.” Further, because Amendment 2 is a constitutional amendment, it would necessarily trump existing Missouri law found in laws such as workers’ compensation and unemployment statutes.

Another possible employee defense is an Americans with Disabilities Act (ADA) defense where the employee is taking physician-prescribed medical marijuana for a chronic debilitating condition that is protected by the disability laws. Missouri has no case law at this time. U.S. case law trends are that when courts are asked to apply federal law (the ADA) versus state law (i.e., Missouri Human Rights Act), federal courts are not finding a protected disability due to the employee using an illegal drug. Continue reading »

Changes Coming to Illinois Non-Compete and Non-Solicit Law

Authored by Katherine M. Flett with assistance from Haley E. Gassel, contributor

On August 13, 2021, Governor JB Pritzker signed SB 672 into law, amending the Illinois Freedom to Work Act, the state’s restrictive covenant statute. Going into effect on January 1, 2022, the new bill will only apply to restrictive covenants entered into on or after January 1, 2022.

Compensation Thresholds

In SB 672, the Illinois legislature reserved non-compete and non-solicit agreements for higher paid employees. The law prohibits employers from imposing non-compete agreements on employees earning less than $75,000 annually or non-solicitation agreements on employees earning less than $45,000 annually. Earnings are defined broadly to include compensation, salary, bonus, commission, or any other form of taxable compensation on the employee’s W-2 plus any elective deferrals. These salary thresholds will increase over time, beginning in 2027.

Other Prohibitions

SB 672 includes a special provision for employees furloughed or laid off “as the result of business circumstances or governmental orders related to the COVID-19 pandemic” or under similar circumstances. A non-competition or non-solicitation agreement may not be entered into under these circumstances unless enforcement of the agreement provides for “compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.”

Non-competition and non-solicitation agreements are illegal for non-managerial or non-administrative employees in construction or employees covered by collective bargaining agreements under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act.

Employees’ Rights

If an employee is not advised by the employer in writing to consult with an attorney before entering into a non-competition and non-solicitation agreement, the agreement is invalid. Likewise, if an employee does not receive a copy of a non-competition and non-solicitation agreement before starting employment or with at least 14 days to review the covenant, the agreement is invalid. The employee may sign the agreement before the 14-day period has ended.

An employee that successfully defends against an employer’s enforcement of a non-competition or non-solicitation agreement not to solicit shall recover from the employer all costs and reasonable attorney’s fees, along with any other appropriate relief.

Requirements for a Restrictive Covenant to be Valid

Continue reading »

Modifications of Telehealth and Interstate License Compacts Due to COVID-19

In response to the COVID-19 pandemic, many states have modified licensure requirements and renewal policies for medical providers to respond to the pandemic, including out-of-state license requirements for telemedicine.

Nationwide, the U.S. Department of Health & Human Services (HHS) is authorized to make declarations during certain emergencies regarding immunity from liability under the 2005 Public Readiness and Emergency Preparedness Act (PREP Act). In 2020 and 2021, HHS added several amendments to the PREP Act including countermeasures for treatment and prevention of COVID-19, interstate telehealth expansion related to COVID-19, and liability protection for medical providers of COVID-19 related services and products.

Covered Persons

Under the PREP Act, covered persons include “manufacturers, distributors, program planners, and qualified persons, and their officials, agents, and employees, and the United States.” To increase access to vaccines, Amendments 5 through 8 expand the categories of covered persons who  may “prescribe, dispense, and administer COVID-19 vaccines” to include: Continue reading »