Recent SEC Rule Amendments Will Make It Easier to Raise Money

Joseph R. Soraghan

By Joseph R. Soraghan



crowdfunding“We’re the SEC, and we’re here to make it easier for small businesses to raise capital. . . . Really, . . . we are . . . really . . . trust us.”

Unbelievable?? Yes, except for the past nine years. But its largesse arrived grudgingly under pressure from Congress in the JOBS Act of 2012, which in turn was due to pressure from the business and entrepreneurial community.

Since the adoption of the Securities Act in 1933, sales of investments by companies and entrepreneurs to investors to raise capital have required either registration with the SEC and states (a long expensive process that is not available to most new and/or small businesses), OR qualification for an “exemption” from the requirement.  The exemptions have historically been difficult and expensive to obtain and are also unavailable to many businesses.

But in the JOBS Act of 2012, Congress adopted 1) two new exemptions: Regulation Crowd Funding and an improved Regulation A (called “Regulation A+”); and, importantly, 2) a requirement for the SEC to modify many of the existing exemptions to significantly improve their availability.  The SEC has since structured the two new exemptions and on November 2, 2020 amended a number of the existing exemptions. The November 2 amendments became effective March 15, 2021. Some of the amendments are as follows: Continue reading »

Illinois Enacts New Restrictions for Considering Criminal History in Employment Decisions and Equal Pay Requirements

Katherine M. Flett

By Katherine M. Flett



employmentEmployment law changes regarding human rights and equal pay have arrived in Illinois.  On March 23, 2021, Governor J.B. Pritzker signed into law S.B. 1480, which makes significant amendments to both the Illinois Human Rights Act (IHRA) and the Illinois Equal Pay Act (IEPA), effective immediately.

Criminal Conviction Record and Employment

S.B. 1480 amends the IHRA with more limitations on how an employer may use an employee’s or applicant’s criminal conviction record when making employment decisions. It is now a civil rights violation for any employer to use a criminal conviction record as a basis to refuse to hire, terminate, or take any other adverse employment action against the applicant or employee with two exceptions:

  1. There is a “substantial relationship” between one or more of the previous criminal offenses and the employment sought or held; or
  2. By granting or continuing employment, an “unreasonable risk” would exist “to property or to the safety or welfare of specific individuals or the general public.”[1]

To determine whether a substantial relationship exists, an employer should consider whether the employment position “offers an opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position.”[2]

The new law also requires an employer to consider the following relevant factors when making this determination: Continue reading »

American Rescue Plan Act Brings Changes to Employer Obligations

Jessica A. Gottsacker

By Jessica A. Gottsacker



layoff noticeApril 1, 2021 rings in new employer obligations with the enactment of the American Rescue Plan Act of 2021 (ARP). Employers and employees should take note of the recent changes to Consolidated Omnibus Budget Reconciliation Act (COBRA), Families First Coronavirus Response Act (FFCRA), and unemployment benefits to ensure compliance. We have highlighted those changes for you below.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Between April 1, 2021 and September 30, 2021, employers must offer 100% subsidized COBRA continuation coverage to “assistance eligible individuals” (“AEIs”).  AEIs are any qualifying plan participants who lose, or have lost, health insurance coverage due to a reduction in number of hours of employment or involuntary termination. The government is expected to provide further guidance, but “involuntary termination” is currently defined as termination of employment for any reason other than “gross misconduct.”

Additionally, the following individuals may also be eligible for the subsidy:

  • Individuals previously eligible for COBRA continuation coverage which would have extended into the subsidy period under the ARP who:
    • Did not elect COBRA coverage (e.g., an individual involuntarily terminated on March 30, 2020 who did not elect COBRA but would be within their 18-month coverage period if they had elected COBRA), or
    • Dropped COBRA coverage (e.g., an individual involuntarily terminated on March 30, 2020, who elected COBRA, but did not pay premiums after December 31, 2020 but are still within their 18-month COBRA coverage period).
  • Individuals who are or become eligible during the subsidy period (e.g., an individual involuntarily terminated on March 15, 2021 or an individual involuntarily terminated on May 1, 2021)

The coverage extends to the employees, their spouses, and their dependent children. Similar to the standard COBRA eligibility, once an AEI becomes eligible for other group health insurance coverage or Medicare, they must notify their employer of their loss of eligibility or face a penalty.

Under ARP, employers are required to provide several new notices to those who become eligible for COBRA continuation coverage by May 31, 2021. (The DOL is scheduled to issue model notices by May 10.)

In addition to the current COBRA notice requirements, the initial notice should include the following information: Continue reading »

Bankruptcy Options for Your Troubled Small Business

A. Thomas DeWoskin

By A. Thomas DeWoskin



Part 4 of a 5-part series: Options for Small Business Owners in Financial Distress

turbulenceIf you’re a small business owner in financial distress, you’re undoubtedly looking for options for your business to have a better chance of surviving the pandemic and other economic surprises of the recent year. In the first three parts of this five-part series, we’ve looked at ideas for improving your business operations, discussed the importance of the availability of cash and improving your cash flow, and reviewed non-bankruptcy options to restructure your debts.

However, you and your attorney may conclude that none of those options meet your needs and it is time to consider a formal bankruptcy filing under the U.S. Bankruptcy Code.

Forms of Bankruptcy Relief

Before getting into details, let me make a suggestion: Don’t be too hard on yourself. It is rare for a business to fail because of only one issue. Even if your actions contributed to the problem, there were most likely other factors beyond your control involved as well. Besides, bankruptcy may provide a chance for you to fix what went wrong.

Another consideration is that the old stigma of filing a bankruptcy case has largely dissipated over the past few decades. Our Founding Fathers realized that the old European use of a debtors’ prison was unworkable and that a structured mechanism to help financially strapped people and businesses navigate a “soft landing” was needed instead. As a result, there actually is a provision in the U.S. Constitution requiring the Congress to make “uniform Laws on the subject of Bankruptcies throughout the United States.”

If you feel embarrassed about filing a bankruptcy, compare it to taking a tax deduction. It’s another example of financial relief provided by statute to individuals and businesses. It’s there for you to use, and there’s no reason to feel guilty for doing so.

The Bankruptcy Code provides for several different types of bankruptcy filings: Continue reading »

Non-Bankruptcy Ideas for Helping Your Troubled Small Business

A. Thomas DeWoskin

By A. Thomas DeWoskin



Part 3 of a 5-part series: Options for Small Business Owners in Financial Distress

turbulenceIn the first two parts of this five-part series on options for small business owners in financial distress, I suggested some ideas for improving your business operations and the availability of cash so that your small business would have a better chance of surviving the pandemic and other economic surprises of the recent year. In this Part 3, I suggest some ideas on using non-bankruptcy options in an effort to restructure your debts. We will discuss several bankruptcy options in Part 4.

Non-Bankruptcy Options for Restructuring Your Debt

  1. Informal Workouts

If your business has 1) maintained good relationships with its creditors, especially its primary lenders, and 2) doesn’t have too many creditors, it may be able to work itself out of its financial troubles. Secured creditors, of course, must be treated with full respect for their security interests in the business assets. Unsecured suppliers of critical goods and services also must be treated with care, as their cooperation may be needed at some point in the future.

It is often useful to obtain an appraisal of your business assets, both real and personal, from well-respected appraisers experienced in their fields. The appraisal should value the assets at three levels: forced liquidation value, orderly liquidation value, and fair market value. These values will enable you to intelligently discuss the likelihood of collection in different situations.

Another useful action would be to hire a consultant. Sometimes business owners cannot see opportunities for improvement which are right in front of them simply because they think that the current practice works well. The consultant can help you review your company’s operating procedures, cash flow procedures, and pricing structure to look for opportunities to increase profitability. Continue reading »

Salaries Speak Louder than Words: Equal Pay Day 2021

Katherine M. Flett

By Katherine M. Flett



equal pay dayEqual Pay Day 2021 is March 24, symbolizing how far into the year women must work to earn what men earned in the previous year. Thankfully, this date is not static and falls earlier each year with this year falling 19 days earlier than just five years ago. While we celebrate this achievement, we have a long way to go to completely close the pay gap between men and women.

The Equal Pay Act has prohibited sex-based wage discrimination for over 50 years. Under the Act, an employer may justify wage disparities only based on one of four exceptions:

  • Seniority;
  • Merit;
  • Measurement of earnings by quantity or quality of production; or
  • A differential based on “any factor other than sex.”

The last “catch-all” exception was the focus of Rizo v. Yovino.Aileen Rizo, an experienced middle and high school math teacher, was hired as a math consultant by the Fresno County Office of Education (“Fresno”). Continue reading »

What, Me Worry? If You Store Customers’ Personal Information on Your Computer System, You Should!

David R. Bohm

By David R. Bohm



ransomwareMAD Magazine’s Alfred E. Nuemann would famously say, “What, Me Worry?”  If you store personal information about your clients or customers on your computer, however, you should worry that it is properly secured.

Hackers and other malevolent individuals on the world wide web are constantly trying to compromise or steal data from your computer system to sell on the dark web.  They particularly target names combined with (1) social security numbers, (2) credit or debit card numbers or other account information, (3) security or access codes or passwords,  or (4) medical or health insurance information.

Another common form of cyberattack is to plant ransomware on a target’s computer system.  Ransomware encrypts the data on the system making it inaccessible to the system’s owner, leaving a ransom note as the only thing readable on the affected system. Continue reading »

Financial Relief for Your Troubled Small Business Clients

A. Thomas DeWoskin

By A. Thomas DeWoskin



bankruptcyIt’s no secret that many small businesses are facing financial troubles these days, not only because of the COVID-19 pandemic, but also because of the rapid and unpredictable twists and turns of the current economy. This article will discuss, in two parts, the various ways in which a financially troubled business can seek financial relief, ranging from informal negotiations and state statutory remedies to filing a Chapter 11 reorganization bankruptcy case, so that attorneys can provide general assistance to their small business clients, or refer them to an insolvency attorney if appropriate.

Part I: Negotiations and State Statutory Remedies

Informal Workouts

If a debtor is on good terms with its creditors, especially its primary lenders, it may be able to earn itself out of its financial troubles. The secured creditors, of course, must be treated with full respect for their security interests in the assets of the debtor. Unsecured suppliers of critical goods and services also must be treated with care, as their cooperation may be needed at some point in the future.

It is often useful for a debtor to obtain an appraisal of its assets, both real and personal, from well-respected appraisers experienced in their fields. The appraisal should value the assets at three levels: forced liquidation value, orderly liquidation value, and fair market value. These values will enable the debtor to intelligently discuss the likelihood of collection in different situations.

Another useful action would be to hire a consultant. Sometimes business owners cannot see opportunities for improvement which are right in front of them, simply because they think that the current practice works well. The consultant can help the owner review the company’s operating procedures, cash flow procedures and pricing structure to look for opportunities to increase profitability.

The consultant also could prepare projections of future profitability for the company, based upon the opportunities which are discovered. Armed with the collateral valuations and projections, the owner can show the company’s creditors a plan for solving its problems.[1] That is much more effective than simply asking for more time or engaging in stalling tactics.

Statutory Remedies

1. Assignments for the Benefit of Creditors

Continue reading »

CDC Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19

Brian Weinstock

By Brian Weinstock



eviction moratoriumOn March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.  This law provided different types of relief to Americans and business entities as a result of financial damage caused COVID-19.  The CARES Act prohibits the filing of eviction lawsuits by a landlord against a tenant to recover possession for nonpayment of rent if the dwelling is a “covered property” as that term is defined in the CARES Act.  Covered properties include a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994), the rural housing voucher program under section 542 of the Housing Act of 1949, federally backed mortgage loans and federally backed multifamily mortgage loans.  After the CARES Act was signed into law, this meant landlords who owned residential properties that were not covered by the two Acts mentioned and were not backed by federal mortgages could proceed with filing eviction lawsuits to evict tenants solely for not paying rent, which typically requires the landlord to state under oath through an affidavit or verified petition that the property they own is not a covered property under the CARES Act.

On September 4, 2020, the Centers for Disease Control and Prevention (CDC), which is part of the Department of Health and Human Services (HHS), announced the issuance of a CDC Order under Section 361 of the Public Health Service Act (PHSA) to temporarily halt residential evictions to prevent the further spread of COVID-19.  Continue reading »

COVID-19 Vaccines and the Workforce – Mandatory or Encouraged?

Ruth Binger

By Ruth Binger



covid-19 vaccineGetting back to normal in the next year or so may be impossible without the widespread use of COVID-19 vaccines. Although authorities do not anticipate the vaccines will be widely available until Spring 2021, employers should be considering whether to mandate or merely encourage vaccinations in the workforce.

Currently there is no definitive answer regarding mandatory vaccinations, and your plan will depend on many variables. Because this is the first pandemic in our memory and it is all new to us, consider forming a committee to monitor the status of laws, regulations, and guidance from various agencies.

Your business may be one of the lucky ones that navigated the pandemic without causing a loss of morale or culture, operating safely by working remotely, social distancing, wearing masks, and following CDC requirements. If so, setting aside all other factors, you may simply want to encourage vaccinations for the first few months that they are available, especially given potential concerns about the safety and efficacy of the vaccines and the ever-changing laws. You could do this by training and educating employees as to the efficacy of the vaccine, encouraging participation, and offering the vaccine for free (if not covered by insurance) at the workplace during work hours. Continue reading »