Acho Featured in MiLW “Sidebar of the Week”

Jim Acho 2016Jim Acho, a partner in our Livonia office, was featured in this week’s “Sidebar of the Week” in Michigan Lawyers Weekly.  The article focuses on his sports law practice, specifically representing retired athletes.  Hall of Famer Lem Barney was his first client out of law school and, for the past 15 years, Acho has represented retired players from across the country.  Acho describes the stark reality of representing players from the 1950s through 1980s who are suffering with serious health issues, including CTE from numerous concussions, and often can’t afford their prescriptions.  He is currently handling over two dozen concussion claims for retired NFL players.  Seeing their suffering firsthand solidifies his drive to better the lives of retired players.

To read the entire Michigan Lawyers Weekly article, click here.

Jim Acho is a partner in our Livonia office where he concentrates his practice on sports and entertainment law, plaintiff’s personal injury, labor and employment law, and law enforcement defense.  He may be reached at (734) 261-2400 or jacho@cmda-law.com.

CMDA Now Handles Patents

Michael Cummings, attorney, Little Falls , NJ. 04/25/2016 Photo by Steve Hockstein/HarvardStudio.comWe are pleased to announce the addition of Patent Law services to the Firm’s established intellectual property practice group. Michael O. Cummings, an experienced and skillful Patent Law attorney, has joined our Firm. Mr. Cummings understands and appreciates the importance of Patents for commercial success. Patents are valuable assets, and he is committed to protecting them for our clients.

CMDA strives to provide clients with the strongest and broadest intellectual property protection and adding the services of a Patent Law attorney is a natural fit. While we have handled a comprehensive range of legal services relating to trademarks, copyrights, domain names, and trade secrets for many years, Patent Law was one area we would refer to attorneys outside our Firm. This is no longer the case as we can now efficiently provide clients with the services of a Patent Law attorney in-house.

Mr. Cummings graduated with honors from Columbia University School of Law in 1994 and has distinguished himself at two of the largest law firms in the world. He is registered to practice before the United States Patent and Trademark Office (USPTO) and works with domestic and international clients across all industries. Mr. Cummings has handled patent matters in New York, Michigan, California, Texas and Delaware.

He provides clients a full range of Patent Law services, including:

  • Preparing and negotiating patent licenses
  • Preparing, filing and prosecuting United States and international patent applications
  • Researching and writing opinion letters on patent issues
  • Preparing concise, effective patent claims
  • Conducting due diligence investigations of patent portfolios
  • Litigating patent disputes in court, on appeal, or in arbitration
  • Writing and answering cease and desist letters
  • Working closely with clients on invention disclosures and records of invention

Developing and implementing a suitable intellectual property strategy is critical to the growth of a business. Regardless if your innovative idea is big or small, it is important to have an attorney you can trust with the knowledge and skill necessary to protect it.

Please contact CMDA to further discuss how attorneys in our intellectual property practice group can assist and protect the growth of your business.  Mr. Cummings can be reached at (973) 256-4580 or mcummings@cmda-law.com.

An Employee’s Motivation is No Longer Determinative in a Whistleblower Protection Claim

Sue Bartos 2016The Michigan Supreme Court has recently held that the employee’s motivation is no longer a determining factor in whether the Whistleblower Protection Act (WPA) protects the employee from an adverse employment action.

Since the underlying purpose of the Act is to protect the public, municipalities are most vulnerable to a WPA claim. If government officials, who are bound to serve the public and violate laws, designed to protect the public, then employees who at their own risk blow the whistle on such illegality necessarily serve the public interest and are protected by the WPA. The WPA prohibits an employer from taking adverse action against an employee for reporting, or about to report, a violation of law. If an employee is demoted, disciplined or terminated and a link can be made between this and his reporting of a violation, he can then sue his employer for violating the WPA.

In one of the first decisions to interpret the WPA, Shallal v. Catholic Services of Wayne County, the court determined that the critical inquiry is whether the employee acted in good faith and with “a desire to inform the public on matters of public concern.” If the employee did not have a genuine motive behind the reporting they could not avail themselves of the protection of the Act.

This reasoning was reinforced in the decision in Whitman v. City of Burton. Police chief Whitman claimed his contract was not renewed due to his public objections to the City’s non- payment of overtime wages. The Chief argued that this was a violation of the City ordinance, and therefore, protected activity. The Court of Appeals, on two occasions, ruled that the Chief was not acting to advance the public interest and, therefore, he was not to be considered a whistleblower.

The Court of Appeals ruling was vacated, in part, by the Michigan Supreme Court in February 2016. The Supreme Court refused to accept the opinion of the Court of Appeals that an employee’s motivation in reporting a violation of law must be to advance the public interest for him to have the protection of the Act. Even though the Supreme Court has determined motivation is not a determining factor, they did uphold the dismissal of the Chief’s claim based on an unrelated issue. One has to wonder if the Court would have found the Chief’s motivation was not determinative if there was not another basis upon which he could be denied the protection of the Act.

Based upon this recent Whitman decision, it is evident that the employee need not have the advancement of the public interest at heart when they report a wrongdoing to avail themselves of the protection of the WPA.

Suzanne P. Bartos is an attorney in our Livonia office where she focuses her practice on employment and labor law, insurance defense, municipal law, education law, and litigation.  She may be reached at 734-261-2400 or sbartos@cmda-law.com.

Contributing to a Roth IRA through the Backdoor

linda friedlandMany high income earners believe that they cannot contribute to a Roth IRA.  This is because they are unaware of the loophole they can use by contributing through the backdoor.

The income limitations imposed by the Internal Revenue Service create the perceived barrier.  For 2016, the income and contribution limits for a Roth IRA are as follows:

Filing Status Modified Adjusted Gross Income Contribution Limit
Married, Filing Jointly <$184,000 Up to the limit*
  ≥ $184,000, but
less than $194,000
Phased Out Amount
  ≥$194,000 Ineligible
Married, Filing Separately (lived with spouse during the year) <$10,000 A reduced amount
  ≥10,000 Ineligible to contribute
Single, Head of Household, Married Filing Separately (did not live with spouse at any time during the year) <$117,000 Up to the limit*
≥$117,000, but
less than $132,000
Phased Out Amount
≥$132,000 Ineligible to Contribute

Despite the flurry of recent tax legislation, the income limits have remained in place for contributions to a Roth IRA.  However, for conversions from a Traditional IRA to a Roth IRA, the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 removed these income limits, creating a backdoor for interested investors to utilize.  To contribute to a Roth IRA through the backdoor, follow these steps:

Step 1: Consult with a tax adviser to determine whether a Roth IRA is an appropriate retirement vehicle for you.

Step 2: Contribute to a non-deductible, Traditional IRA up to the contribution limit.

Your contribution will most likely be non-deductible given the income limits, however, contributions to a Roth IRA are not tax deductible anyway.

Your contribution will be your “cost basis” for tax purposes.

Step 3: Convert your Traditional IRA to a Roth IRA. 

This process will be much easier if both your Traditional IRA and Roth IRA are held with the same custodian.

Do not confuse “conversion” with “distribution,” the latter of which could subject you to a 10% penalty if you are under age 59 ½ and receive more than the amount of your non-deductible contributions.

The amount of the conversion will be limited to the $5,500.00 (or $6,500.00, if over age 50) assuming that a new Traditional IRA is being opened just for this purpose.

If you are converting an existing Traditional IRA, the limit will be the balance of the account.  Keep in mind, however, that the amount of the conversion will have to be reported to the IRS as ordinary income, so it may be best to convert smaller portions of the existing Traditional IRA over a number of years.

In determining whether it would be better to convert smaller portions of a Traditional IRA over a number of years, consideration should be given to whether the amount of the conversion will bump you up to a higher tax bracket.

More likely than not, if requested, your custodian will leave one penny in your Traditional IRA account so that this process can be repeated every year.  (Be sure to ask if interested.)

If you deposit money into your Traditional IRA in increments, it is usually best to wait and covert the entire amount at one time.

Seek the advice of a tax advisor if you have more than one Traditional IRA (with deductible contributions) because of the “IRA Aggregation Rule” under IRC §408(d)(2).

Step 4: Make note of any income tax due as a result of the conversion to the Roth IRA.

The income tax due will be zero or close to zero if the non-deductible deposit into the Traditional IRA is followed by an immediate conversion into a Roth IRA.

If the conversion results in a higher tax bracket, or more income tax due than your budget allows, then work with your custodian to reverse the process by the October 15th deadline.

Step 5: Notify the Internal Revenue Service. 

Make sure that IRS Form 8606 is filed with the income tax return for each year that a backdoor Roth IRA contribution is made, in order to alert the IRS that the deposit into the Traditional IRA is non-deductible.  This will also help maintain records of the cost basis/amount of contibutions.

Roth 401(k) Plans Offered through Employer

For those who have access to a Roth 401(k) Plan through work, this could be a viable alternative – or addition to the Roth IRA.  Roth 401(k)’s have no income limits, but for 2016, the contribution limit is the same as for a regular 401(k) – $18,000 ($24,000 if age 50 or over).  Contributions can be made to both a Roth 401(k) and a regular 401(k) in the same year, so long as the contribution does not exceed the $18,000/$24,000 limit.

The most noteworthy distinction between a Roth IRA and a Roth 401(k), is that the Roth 401(k) is subject to the same minimum distribution rules as a traditional or regular 401(k).  Of the three vehicles, the Roth IRA offers the most flexibility in retirement, although contributions are more difficult during the accumulation years for high income earners.  The chart on page 3 can provide assistance in determining whether a Roth IRA, Roth 401(k), or a traditional or regular 401(k) is the best option for your particular situation.

 Designated Roth 401(k) Account Roth IRA  Traditional, Pre-Tax 401(k) Account
Contributions Designated Roth employee elective contributions are made with after-tax dollars. Roth IRA contributions are made with after-tax dollars. Traditional, pre-tax employee elective contributions are made with before-tax dollars.
Income Limits No income limitation to participate. Income limits:
• 2016- modified AGI married $194,000/ single $132,000.
• 2015- modified AGI married $193,000/ single $131,000.
No income limitation to participate.
Maximum Elective Contribution Aggregate employee elective contributions limited to $18,000 in 2015 and 2016 plus an additional $6,000 for employees age 50 or over. Contribution limited to $5,500 for 2016, plus an additional $1,000 for employees age 50 or over ($6,500). Same aggregate limit as Designated Roth 401(k) Account
Taxation of Withdrawals Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:
• On account of disability,
• On or after death, or
• On or after attainment of age 59½.
Same as Designated Roth 401(k) Account and can have a qualified distribution for a first time home purchase.  Note:
• Contributions (direct) may be withdrawn anytime, without tax or penalty (make sure a record is kept of contributions).
• Conversions may be withdrawn without tax (and without penalty, but only if held for 5 years).
Withdrawals of contributions and earnings are subject to Federal and most State income taxes.
Required Distributions Distributions must begin no later than age 70½, unless still working and not a 5% owner. No requirement to start taking distributions while owner is alive. Same as Designated Roth 401(k) Account.
* Source:  Internal Revenue Service.  This article is not intended to provide tax advice.  A tax advisor should be consulted when making a contribution, conversion or withdrawal from any retirement vehicle.

Linda Davis Friedland is an attorney in our Livonia office where she concentrates her practice on commercial litigation, employment and labor law, corporate and business law, estate planning, elder law, probate, trusts, guardianships and conservatorships. She may be reached at (734) 261-2400 or lfriedland@cmda-law.com.

Attorneys Present on Bullard-Plawecki Employee Right to Know Act

CMDA MMRMA ERKAAttorneys Haider Kazim and Andy Brege were at Bay College in Escanaba earlier this week giving a training presentation to MMRMA members. The training addressed the maintenance and disclosure of personnel files under the Bullard-Plawecki Employee Right to Know Act and highlighted the United States Supreme Court decisions of Brady v Maryland and Giglio v United States. The presentation also covered the due process right to disclose evidence. If your governmental entity or company is interested in a similar presentation, please contact either attorney.

Haider A. Kazim is a partner in our Traverse City office where he concentrates his practice on municipal law, insurance defense, and law enforcement defense and litigation. He may be reached at (231) 922-1888 or hkazim@cmda-law.com.

Andrew J. Brege is a partner in our Grand Rapids office where he concentrates his practice on municipal law, law enforcement defense, and litigation. He may be reached at (616) 975-7470 or abrege@cmda-law.com.

Case Law Update: City of Fraser v. Alameda University

CASE LAW UPDATE

The following Case Law Update summarizes a recent important case.  It is provide to help clients stay up-to-date on recent case law developments in education law. For further information, please contact Patrick Sturdy.

City of Fraser v. Alameda University
January 14, 2016;  2016 WL 166023

Patrick Sturdy 2016In this matter, the City of Fraser filed suit against Alameda University for violating the Michigan Authentic Credentials in Education Act, MCL 390.1601.  Defendant is an online university incorporated in the Caribbean.  Interactions with students take place through the defendant’s website.  Between 2004-2009, 16 employees, all police officers with the City of Fraser, obtained online degrees from the defendant college.  None of the employees had to complete coursework for the degrees, but after obtaining their degrees, 11 employees used the degrees to increase their salaries between $1,000 – $3,000 per year.  Additionally, the City reimbursed 11 employees with educational allowances.  Overall, the City of Fraser paid $143,848 to the employees for the purchase of the Alameda degrees.

On January 31, 2013, the City sued the college alleging that it violated the Michigan Authentic Credentials in Education Act.  The City argued the college lacked credentials for accreditation under both state and federal law.  The college asserted, among other arguments, that the City waived its right to sue because it knew of the situation in 2007 and yet continued to accept defendant’s degrees for its employees.  The trial court ruled in the City’s favor and awarded the City $600,000 for 6 degrees issued after the Act took effect in 2005.

The Court of Appeals ultimately agreed that the college issued fraudulent educational credentials in Michigan but found that the statute of limitations barred all but one of the City’s claims, remanding the case to determine the appropriate amount of damages for the one remaining claim.

Patrick R. Sturdy is a partner in our Livonia office where he concentrates his practice on education law, intellectual property, business law, and employment and labor law. He may be reached at (734) 261-2400 or psturdy@cmda-law.com.

Employee Handbooks are Essential for Small Businesses

Chris Schultz 2016Clients frequently question the value of preparing an employee handbook.  Many small business owners do not provide employees with an updated, legally-sound handbook due to the anticipated time needed to develop it and/or the belief that it is not necessary since they have good relations with their employees.  Providing all employees with information on the company’s policies and guidelines, employee programs, attendance rules, and other work-related rules is one of the most important tools an employer can utilize to protect the company from employee disputes and legal liabilities.

An employee handbook minimizes misunderstandings and can be used as a communication tool between the company and its employees. A well-written handbook defines the job responsibilities and expectations of employees, outlines the employer’s obligations to its employees, and defines workplace expectations.  Further, it sets uniform policies and procedures for addressing complaints, requesting time off, safety protocol, time keeping, and other workplace issues.

An employee handbook is also an opportunity to distribute the company’s employee benefit guide.  Employees may not fully understand or appreciate all the benefits being offered to them, either at no cost or subsidized, by the employer.  This includes paid vacation time, 401(k) plans, healthcare benefits, medical insurance at reduced rates, short-term disability and paid holidays.

Another significant benefit of an employee handbook is that it confirms and reiterates to each employee that an employee’s rights to employment are “at will,” meaning any employee may resign at any time, for any reason, or for no reason, and that any employee may be terminated at any time, for any reason, or for no reason.

From a liability perspective, an employee handbook can be used as evidence in a court action brought by an employee to demonstrate that certain acts are prohibited by the employer.  Many employment, harassment, and wrongful termination claims can be defeated by establishing the rules and procedures of the workplace in the event violations of those rules and procedures led to disciplinary action, including termination.

A company’s existing employee handbook should be updated to address new concerns. As social media accounts become more prevalent, employers should consider adding a policy that addresses what communications are prohibited and the consequences of misuse of social networking related to the workplace. Employers should consider placing limits on posting confidential or proprietary company information, as well as photos taken at the workplace.  It is imperative, however, that the policy, both as written and in practice, does not violate any rights given to employees under the National Labor Relations Act.  To avoid subjecting the company to liability for claims of invasion of privacy, employers must understand the boundaries and apply the agreed-upon policy in a consistent and thoughtful way.

Attorneys at CMDA regularly counsel clients with developing and updating legally-sound employee handbooks that protect companies from employee disputes and legal liabilities.

Christopher G. Schultz is the managing partner of the Firm and concentrates his practice on representing businesses in many areas of the law. Additionally, he assists clients with estate and elder law planning. He can be reached at (734) 261-2400 or cschultz@cmda-law.com.