How Trucker Training Impacts the Company’s Bottom Line

By Lisa 0

Training is vitally important in every industry, and even more so in industries such as trucking, which requires technical skills and is known for its related dangers.

Focusing on training in the trucking industry is for more than profit. It can help protect the safety of the company’s employees, as well as everyone else on the road. Here are three ways in which training for truckers can impact a company’s bottom line.

Decreased Number of Accidents

Increased driver training, and the subsequently gained experience, lead to fewer accidents. This can have a variety of positive impacts on your company’s bottom line. For one, it can help reduce your insurance costs. Next, it can prevent injuries to your existing drivers, relieving you from the job of to hiring and training new drivers. Finally, it can also help prevent lawsuits from on-the-road car accidents. 

How is this all possible? Firstly, according to Concentra, training can help reduce the overall number of accidents. Secondly, and just as importantly, is that it helps reduce your liability by showing that your company is trying to protect your drivers.  All we know is that training your truckers helps your company’s bottom line.

Improved Performance

Trucking companies can increase their bottom line by improving their performance across a variety of metrics, and proper training can help show drivers how to improve in a variety of ways, including safer driving, quicker times, better route selection and improved relations with customers and vendors. Improving these areas will lead to more sales, fewer costs and an improved bottom line. In particular, good training can lead to better fuel mileage. According to L3Harris, when drivers are armed with the proper tools and knowledge they can drive more efficiently. This ultimately adds up to the entire fleet becoming more efficient.

Increased Productivity

Training can show truck drivers a variety of important skills and techniques which can be invaluable towards increasing productivity and efficiency. Trucker training is about more than just learning to drive, but involves teaching business practices, loading techniques and using technology for better driving. Results of training translate to lower costs—and more money—for both the driver and your company.

There is a major shortage of truck drivers in the United States, meaning businesses need to do everything they can to save costs, find good truck drivers, and protect existing drivers through effective training practices. By providing good training, businesses can help protect and retain their truckers while at the same time improving their bottom line.

When you start a business, you’ll want to make sure that you have adequate protection against potential risks. Read more here about what kinds of protection you need!

Ways Your Business Might Be Violating the ADA and What to Do About It

By Lisa 0

The Americans with Disabilities Act (ADA) protects individuals with disabilities from discrimination. Nearly all public and private businesses serving the general public must comply. Even if you’re conscious about ADA compliance, there are several ways you may be violating the ADA without realizing it. 

Being Accessible

If your business serves the public, it must conform to minimum accessibility standards according to Title III of the ADA.

  • Can individuals with disabilities get into your building? The lack of a ramp, no curb cuts, or a too-high lip at the entrance can impede an individual’s access.
  • Parking spots need to be clearly marked, and there should be room for a van with a ramp.
  • A common violation that may not be immediately obvious is the lack of aisle space. If you sell merchandise, aisles should be wide enough to be wheelchair accessible.

It’s not only new buildings that need to be compliant with the ADA. Existing facilities must remove accessibility barriers. Your building may not have to remove barriers, however, if making the modifications would be too difficult or too costly. 

Providing Reasonable Accommodations

A reasonable accommodation entails modifying the work environment so that an employee can perform the essential functions of his or her job. For example, if the employee were to have a communication disability such as being deaf or hard of hearing, it would be the business’s responsibility to provide accommodations such as sign language interpreters.

However, if the accommodation would cause an undue hardship on the business, you as an employer would not be required to provide that accommodation. An undue hardship involves accommodations that would be too costly to the organization, drain its resources, lower job efficacy, or infringe on the rights of others.

Watching for Discrimination

Title I of the ADA focuses on protecting employees with disabilities from discrimination. Businesses with 15 or more employees must comply. This means you cannot let disabilities come into play when making hiring or firing decisions. When writing ADA-compliant job descriptions, the language you use should be careful not to discourage an individual with a disability from applying. Although, you don’t have to hire an individual if they cannot perform essential job functions with the help of reasonable accommodations

Remember, as an employer, you are also responsible for providing a non-discriminatory work environment. If you have employees who are harassing an individual with a disability, you need to address it.

Learning to navigate ADA requirements is necessary to protect your business from lawsuits and improve the lives of individuals with disabilities. Keep an eye out for common violations and address them promptly when they come to your attention.

How Much Protection Does Your Business Actually Need?

By Lisa 0

If you own a business, you need insurance to protect it. The world is unpredictable. Although you can take some precautions, you cannot control or prevent every problem. An unexpected weather event can damage your main facility. An unforeseen problem can injure someone using your product. Even as attorneys, we have malpractice insurance.  The amount of insurance protection your business needs depends on several factors.

Where Are You Located?

Basic liability and commercial property insurance should handle most issues that happen at your physical location. The cost and limits of that insurance are based on the location and nature of your physical space.

The reason an insurance adjuster will come to your location when you start a policy is because the insurance company needs to have an idea of any potential risks. A business located in a flood plain will have higher insurance costs than a business in a safer zone.

It also makes a difference if you are a brick and mortar business where many clients will come to you during the day or an online company with little direct customer contact.

What Do You Do?

Different businesses carry different kinds of risks. People can be injured in both a family restaurant and a skydiving expedition, but the types of injury and risks of injury are quite different. In the case of product liability, insurance looks at the type of product your company makes, and how risky it is to be on the market. Your legal team or insurance company will ensure that you meet the legal requirement for your type of business. They will also advise you of expanded coverage options if you run a higher risk business.

What Sort of Equipment Do You Have?

Your employees are your biggest asset as a business, but they can also suffer injury and bring claims against your company. The level of coverage you need can depend on the type of equipment you use. Even with standard safety procedures, people are injured by manufacturing equipment on a daily basis. Certain types of equipment also require regular maintenance and safety inspections. On the other hand, an office worker has less exposure to serious injury, requiring less in insurance coverage.

An uncovered claim can have a serious financial impact on your business. It can also take up time and energy as you work through the legal system. By making certain that your coverage is sufficient and up to date, you are protecting your business from the unexpected.

For all your business advice needs, Lum Law Group is here to help. Contact us to find out how we can best serve your needs!

3 Changes to the 2019 EB-5 Program You Need to Know

By Jessica Suotmaa 0

On July 23, 2019, the United States Citizenship and Immigration Services (USCIS) released the long-awaited update to the EB-5 investor program, the new EB-5 investor program modernization rules (“new rules”).  The new rules will go into effect beginning November 21, 2019, if Congress extends the program past the current expiration date of September 30, 2019.

So as long as you file before November 21, 2019, USCIS will review the petition with the old rules!  USCIS will not make a decision based on the following new rules if your Form I-526 Immigrant Petition by Alien Entrepreneur is filed before the new rules go into effect on November 21, 2019.

In this article, we will cover the five most relevant changes to the popular EB-5 program.

 

1. Minimum Investment Increases

Likely one of the most important issues for those interested in participating in the EB-5 program is the minimum investment requirement. The new rules require each investor to invest a minimum of US$900,000 in a targeted employment area (TEA) and US$1.8 million if not. Previously the amounts were US$500,000 and US$1 million, respectively.

$500,000        ->    $900,000

$1,000,000     ->    $1,800,000

It’s important to note that these figures will not go down, but will adjust to inflation with an increase scheduled for every five years.  This means the next minimum investment increase will occur in 2024.

Pro Tip: Lock in your lower investment thresholds by filing a complete I-526 petition by the November 21, 2019 deadline!

 

2. Targeted Employment Areas are Rural

Where previously the TEA of low employment areas were determined by the State, now they will be determined by Department of Homeland Security (DHS).  This means California can no longer decide which areas of high unemployment can be designated as a TEA.

In addition, the New Rules state that where previously towns and cities with 20,000 residents or more could qualify for TEA even if they were located within a Metropolitan Statistical Area (MSA). The New Rules would disqualify towns and cities within MSAs to qualify for TEA status.  DHS is specifically allowing rural towns and cities with 20,000 residents or more, struggling with high rates of unemployment to qualify for TEA status.

Pro Tip: If you’re looking to invest in an EB-5 project after November 21, 2019, be sure to check whether it will still qualify as a TEA. If your project is no longer in a TEA area, your minimum investment will increase from $500K to $1.8million.

 

3. Priority Date Retention

Previously, EB-5 investors with approved petitions would lose their priority date if they had to amend their petition. With the new rules, EB-5 investors can keep their original petition approval date for the calculation of their visa priority date.  This means EB-5 investors can petition with subsequent Form I-526s and not risk losing their priority date placement.

Pro Tip: Since not all EB-5 projects work out, secure your EB-5 visa by submitting multiple I-526 petitions and use the priority date for the earliest approval!

 

To avoid the above rules, be sure to file a completed I-526 application before the November 21, 2019 deadline. Not sure if you have a good project? Need an experienced immigration attorney to review your petition? Contact our office for more information on how you can participate in the EB-5 investor program using the old rules before it’s too late!

4 Ways to Scrape Up Extra Funding for Your Business

By Lisa 0

Searching for additional funding for your business can feel like a business within itself. With so much information available, it can be overwhelmingly time-consuming to comb through it all to figure out which sources are credible and worth your time. Read on to learn four ways you can find extra funding for your business. 

1. Business Grants

Funding your business through business grants is an often-overlooked option. Grants are different from loans in that they do not have to be paid back, which can make them very appealing to some. However, applying for a grant can be a lengthy process of quantifying on paper why you are the best candidate for the grant.  In order to qualify for a grant, it’s best to hone your writing skills or hire a professional grant writer. 

It is also wise to search for grants on an ongoing basis rather than wait until you are desperate for money. Similar to school scholarships, grants come in all types and amounts, and each one is specific to the demographic it is meant for. When searching for grants, it is common to come across scams, so the best place to look for grants is on an official government website.

Resource: https://www.valuepenguin.com/small-business/small-business-grants 

2. Business Loans

Business loans can be a good source of funding for your business, but you should be careful. As a business owner, you need to know yourself well and decide if you are comfortable taking on debt that you may be personally responsible for.

One of the main reasons people apply for business loans is because they need the money to scale and have grown beyond their ability to fulfill orders. Always have your paperwork in order with your current data so that you can expedite your loan application process as soon as possible. Along with having a good credit score, you may have to meet additional requirements for having been in business for a certain length of time in addition to generating a certain level of revenue. 

Resource: https://sunwisecapital.com/bad-credit-loans/ 

3. Angel Investors

An angel investor is usually one person (as opposed to a hedge fund) who provides capital to businesses they believe in. While angel investors are wonderful to have, you cannot risk your business by depending on one. Finding an angel investor is as easy as searching the web, but the hard part is scheduling an opportunity to pitch to them and then nailing it.

Additionally, the financial blessings of angel investors often come with strings attached.  It is seldom free money. The terms of the investment vary for each situation. However, usually the investor becomes, at the very least, minimally involved in your business.

Think of an angel investor as similar to a hedge fund in the sense that you are beholden to the initially agreed-upon terms.   

Resource: https://donnagriffit.com/guides/the-ultimate-guide-on-how-to-find-an-investor-and-get-a-meeting/

Crowd-sourcing

Funding via crowd sourcing is not just for musicians and artists. Over the past decade, crowd-sourcing has become a respected avenue for acquiring business funding. Consider using government websites for crowd sourcing education in general, and then begin with Kickstarter as just one example of the format.

Resource: https://digital.gov/event/2019/04/09/federal-crowdsourcing-mobilize-citizen-scientists/ 

Now that you have a little more information about where you may be able to find additional money to fuel the needs of your growing business, go out there and get searching. 

Need more assistance setting up your new business? Consult Lum Law Group about legal complexities that might affect your business!

4 Assets That Can Help You Scale Your Startup

By Lisa 0

Just because you have a small-scale business operation doesn’t mean you have to forego a professional look and feel. In fact, securing a professional appearance is essential to the successes of all small businesses. Consider using these four assets to help your small business project a confident and high-level demeanor.

A Professional Phone Number

Voice over internet protocol (VOiP) is a technology that allows you to use broadband internet to make telephone calls. Using VoiP will provide you with cost savings and other advantages. One of the biggest advantages is that you can talk to your clients from anywhere in the world as long as you have an internet connection. VOiP services generally have excellent phone connections and can be bundled with other services such as voicemail, fax, caller identification, call forward, last number redial and more.

Small business owners may also consider purchasing a toll free line (subscription) to give your business further credibility.

A Professional Business Presence

Even if you’re operating out of your home, you can use a virtual office to direct mail to a real business address. The appearance of a physical business location will go a long way toward establishing the power of your brand.

Entrepreneurs have several choices in this matter. If you work completely on your own, you can share a co-working space with one or more individual. Many co-working spaces also offer mailing address only services for a fraction of the cost of having conference room and shared space access. Other options include setting up a virtual mailbox online that will provide you with a physical mailing address. Vitrual mailbox services provide alerts when it receives physical mail on your behalf,  allowing you to manage your mail online. 

A Powerful Web Presence

A website isn’t a luxury, it’s a necessity. However, these days it is not just enough to have a website.  You need a website that will help potential clients to identify your brand. A website with an attractive design, informational blog posts and other key elements will help establish your small business as a local authority in your industry.

A Loyal Network

You are your own biggest asset. What you know and how you keep your customers happy is, perhaps, the biggest factor in scaling your business. By providing the best possible products or services, you’ll keep customers happy.  By keeping in touch with your previous customers and bringing them back as repeat customers, you are forming a network around your small business.  Doing so can lead to word-of-mouth, or testimonial marketing, a recognized economical method of getting more customers.

Remember that every business was once a startup. The key to scaling it is to wisely use assets available to you, including your own talents. 

If you’re growing your business and need legal advice, we’re here to help! Contact us today to discuss how we can help you.

4 Ways to Build a Socially-Responsible Business

By Lisa 0

Customers are increasingly choosing to patronize businesses that aim to do the right thing and act responsibly. People are now basing purchasing decisions in part on a business’ behavior. Here are some ways that your business can be more more socially responsible.

Be Active in the Community

Participating in the wider community through both charitable initiatives and volunteering will show customers that your business cares. This demonstrates that something beyond profit governs your activities. Charitable donations are a way of giving back to the community, and your customers definitely take notice. Even if you give a little bit of money or some of your time, the satisfaction that you and your business will derive will be immense. When you support the community, the community will support you in turn.

Look into Solar Energy

Reducing your business’ carbon footprint by going solar is not only socially responsible, but  it can help your bottom line, too. Besides the environmental impact, there are plenty of profit-driven motivations that make solar energy sensible. After investing the upfront cost of installing the solar panels, your electricity bills will be greatly reduced. Once installed, these systems can last for 20 to 25 years, which, given there are tax incentives for turning to solar power, make the change worthwhile. At the same time, you are doing your part to reduce greenhouse gases.

Adopt a Code of Ethics

Your corporate behavior affects both your employee’s morale and your business image in the community. You can impact how your company does business by incorporating behavior rules and standards. This code then becomes part of how employees do their jobs, governing their employment evaluations.  This code of ethics can include various rules that mandate respect and a requirement to follow rules and regulations. It can proactively define what constitutes bad behavior to shape employee expectations.

Create Incentives

Employees will behave in a more socially responsible way when it is worth their while. By offering awards for workers who engage in socially responsible behavior, you provide an incentive for them to become good examples to other employees. This will trigger a domino effect in among your employees. Examples of incentives could include corporate programs meant to teach the right kind of behavior, including ethics training and credit for time spent engaging in socially responsible activities.

As a business owner, you have a multitude of ways to make your business more socially responsible. Any initiative should start from the top, so why not get started today?

For more advice on how your business can act responsibly, we are happy to help with our consultation services. Check them out today!

 

3 Interview Questions to Stop Asking in California

By Jessica Suotmaa 0

If you’re a small business owner who isn’t accustomed to hiring, you’re probably unaware that many of the common interview questions from “back in the day” are now illegal to ask in California. We’ve divided this article into two sections: the three questions you need to stop asking now, and the three questions you should’ve stopped asking yesterday. Read on for how you can protect your business from employment discrimination claims.

Stop Asking These Questions Today!

1. “What are you making now?” Or, “How much were you making at your previous position?”

Remember when job ads would require a “five year salary history” in the cover letter? Those days are gone in California.

Previously, hiring managers might ask how much a job candidate was making, or is currently making, and decide which candidate would be the “cheapest” to hire.  Hiring managers may also offer different compensation packages based on current or prior salary history. As a result, if there was a wage gap between men and women, that wage gap was further increased with each new job offer.

California passed AB168 in 2017, which went into effect January of 2018, prohibiting employers from asking for a “salary history” or inquire how much a candidate is or was making at a previous position.

Note: If a potential hire reasonably requests a “pay scale“, you are required to provide it.  AB2282 clarifies that a pay scale is a salary or hourly wage for the open job position and does not have to include bonuses or other benefits.

2. “Have you ever been convicted of a crime?” or “Check here if you have criminal convictions.”

Gone are the days of asking an applicant about their criminal history at the interview.  California requires employers to discover any criminal history in the background check process. The bill, AB1008 was signed into effect in 2017 following the lead of San Francisco and Los Angeles cities, banning employers with five employees or more from asking about a candidate’s criminal history on job applications.

You don’t begin the background check process until after you have extended an offer of employment. You cannot run a background check before offering the position to the candidate.  If the background check results prevent you from hiring the candidate, you are required to follow these steps:

  1. Inform the candidate of the results and explain why you’re rescinding the offer.
  2. Provide a copy of the background check report (if available).
  3. Allow the candidate five (5) days to respond and defend themselves.
  4. If the candidate responds to the decision, you are to wait five (5) more days to consider his or her defense.

Note: The exception to the rule are employers who run medical facilities and hire employees who have access to drugs.

3. “How’s your credit score?” Or, “Will you consent to sharing your credit report?”

Where previously potential employers could obtain an applicant’s credit information as part of the on-boarding process, California now limits it to certain occupations.  You can no longer slip in credit consent forms into the offer package, nor can you judge a candidate’s hire-ability based on their credit report.

California limits the use of credit history in employment decisions, but does not outlaw it.  The following are exceptions to the rule:

  • Department of Justice employees
  • Managerial position
  • Peace officer or Law enforcement officer
  • Any position wherein a credit check is required by law
  • Position wherein an employee would regularly access credit card information
  • Position where an employee is a signatory for an employer’s bank or credit card account, or authorized to transfer funds
  • Position that involves access to confidential or proprietary information
  • Position that involves access to $10,000 or more of cash.

 

Are you not sure what you can ask now? Do you have questions about your job description? Contact us today!

 

3 Interview Questions You Didn't Know Were Illegal

By Jessica Suotmaa 0

You may prepare legally sound interview questions for your job interview.  Maybe you consulted an HR company, asked a mentor for a copy of their interview questions, or purchased a set. However, did you know that the interview does not just consist of the questions you prepared?

The interview starts as soon as you speak to the candidate. It can start in an email thread where you schedule the interview. It can start over the phone when you called the verify information. And lastly, it can start in the waiting area when you’re just shaking hands. Keeping this in mind, here are the three interview questions you didn’t know were illegal.

1. Where are you from?

While this question may seem like innocent small talk to you, it can lead to uncomfortable answers and a feeling of discrimination. This is especially true if you learn that your candidate is not a U.S. citizen, is an immigrant, or part of a special group.

The California Fair Employment and Housing Act (FEHA) prohibits employers from discriminating candidates based on their national origin, race, ethnicity, or ancestry.

We recommend avoiding this question all together by focusing on the “legal right to work in the U.S.” (also known as “work permit”) rather than the standard greeting.

2. Where do you live?

Another common small talk question often asked by employers to see how far the candidate lives from the workplace.  The question leads to talk about commute, method of transportation, and the cost and time it takes to travel to and forth. However, this is a loaded question that suggests you are discriminating a candidate based on the neighborhood they live in.

Note: You can still ask a candidate if they are willing to relocate.

3. What is your availability?

Employers who require overtime work or weekend engagements may ask this question to weed out candidates with religious observances or family responsibilities.

If you were asking these questions, don’t feel bad. A 2015 survey found that one in five employers were asking candidates illegal questions without knowing they were illegal.  But now that you know, you have no excuse.

Still fuzzy on the details? Give us a call and let’s talk.

Should I be worried about Social Security Administration's "No Match" Letter?

By Jessica Suotmaa 0

Starting March 2019, the Social Security Administration (SSA) has been sending out letters demanding employers to correct a discrepancy between names and social security numbers. This letter is called a “No Match letter” for short.  These “Employer Correction Request Notices” (ECRN)  were common before 2012. Under the “Buy American, Hire American” directive, the SSA has resumed sending out “No Match” letters to employers. The letter promotes hiring US citizens over undocumented workers.

In this article, we will address the two situations you may be in, the first where as the employer you receive a “no match letter”, and the second, where your employer informs you they have received a “no match letter” about you. Read on to determine how worried you should be about the ECRN, or no match letter.

What Employers Should Worry About

The New York Times reports that in California’s San Joaquin Valley alone, over sixty percent of the 39,978 employees employed by a total of 49 businesses have received SSA’s no match letters.  Clearly, a “no match letter” is not uncommon and even you could receive one as a small business owner with employees.

The first step is to realize that there are many reasons why you might be receiving that “no match letter”. Don’t assume receipt of the letter means your employee lied or is working illegally.  Here are a few of the legitimate reasons why you received a “no match letter”.

  • typo on your W2/W3 forms
  • typo on the I-9
  • employee name change
  • transposition of numbers
  • identity theft
  • Sometimes the letter is generated by a typo, a name change, or even identity theft.  This is one of the reasons SSA wants employers to cooperate.

The second step is to realize the consequences of a mismatch to you.  While SSA is not threatening you with a fine or penalizing late responses that exceed the sixty day window, that does not mean it won’t affect you later.

As an employer, if you’re withholding federal income taxes, social security, and medicare then you’re also having your employees fill out a Form I-9, Employment Eligibility Verification.  Part of being prepared for an Immigration & Customs Enforcement (ICE) raid or audit is having updated I-9 forms for all your employees, and having proof that you addressed all “no match letters” received from the SSA.

In other words, an unaddressed “no match” letter from SSA proves you were aware that your employee(s) were unauthorized to work or even illegally present in the United States.  To avoid the hefty fines of noncompliance with immigration laws, employers should address employees regarding their “no match letters”. Here’s what to do:

  1. Verify that it was not your mistake by checking your Forms W2 and W3 for the last seven years. If it is your mistake, prepare corrections/amended forms and submit to the appropriate location. Submit a copy to SSA and keep a copy for your records.
  2. Prepare a letter to your employee with a copy of the “no match letter” from SSA and mail it to their address. Keep a copy of the letter. Document responses, if any.
  3. Prepare a declaration for your employee to sign proving you had the discussion and they received a copy of the “no match” letter. Have the meeting with your employee, then give them a copy of the signed declaration while keeping the original. Send a copy to SSA.
  4. If your employee resigns or disappears, document the exact dates of your contact and their disappearance in their file.

If you have questions on how to address the “no match” letters, contact our experienced immigration and employment attorneys today!

What Employees Should Be Worried About

The purpose of providing your social security number to your employer is for the planning of your future. Your employer is required to withhold and deposit your taxes, social security and medicare withholding to your social security account. A mismatch means that you’re not receiving money that belongs to you. As such, SSA’s notification is actually a favor to employees.

If your employer notifies you of a “no match letter”, you should review your I-9 and contact SSA.

However, if you’re notified of a “no match letter” and you know exactly why, then you may have a problem.  Here are a few common ways a no match letter could be intentionally generated:

  • using a purchased SSN
  • providing a borrowed SSN
  • stealing a deceased person’s SSN
  • creating a made-up SSN
  • sharing one SSN with several people

If you’re misusing the system then understand that the consequences could include deportation.  Do not show false documents to your employer as this could mean trouble. While SSA is not currently sharing information with ICE, the records remain.  As such, it could come up later in the future.

If faced with immigration consequences, contact an immigration attorney for additional information. Remember, you have employee rights too!

The 3 Benefits of Improving Workplace Safety

By Lisa 4

Workplace safety is important for employees and businesses alike. Without it, chaos takes over and employees tend to trust their employers a whole lot less. Here are three benefits of improving the safety of your workplace.

Improved Employee Morale

The definition of morale, according to the Merriam-Webster Dictionary, is the confidence, enthusiasm, and discipline of a person or group at a particular time. This describes exactly what happens when a company improves the safety of its workplace. Feeling safe in a workplace makes employees bond together and form better relationships with each other. Observe this when your company holds demonstrations or drills for fires, tornadoes, or intruders. Practicing for danger is a great way to boost employee morale. This is due to the fact that the employees can treat the drills as real-life scenarios. In the real case of an emergency happening, people are more prone to help each other stay safe and calm. This simple safety activity builds confidence, enthusiasm, and discipline in workplace relationships.

Improved Organization

Staying safe in the workplace is much more than practicing drills. Many safety improvements help the workplace stay more organized, which in turn improves efficiency and employee productivity. Incorporating safety measures such as fire alarms, security systems, and network safety are all wonderful ways to keep employees safe in their place of work. If employees know that they’re safe while at work, they will more likely work harder, thus benefiting the business. No one wants to worry about if he or she will get out in time if there’s a fire or whether his or her car will be broken into while at work. By taking precautionary measures inside and outside the building, you will make your employees feel much safer and happier while at work.

Less Employee Turnaround

In order for an employee to stay in a job for more than a few months, he or she needs to feel safe and secure in the workplace. Forgoing safety precautions is not only bad for your employees, but it is also bad for business. The higher the number of your employees who leave, the more individuals your business will have to hire. The hiring process takes a considerable amount of resources, time, and effort on the part of the business. The gap in manpower may also negatively affect your business. By incorporating employee safety into your company’s goals, you will effectively encourage your employees to stay in their jobs. As a bonus, you’ll even save money in the long run.  

There really are no good reasons to forgo business safety, and there certainly are no good reasons for boycotting the law. Bringing extra safety precautions into a business not only benefits the employees, but the employer as well. Benefits such as improved employee morale, enhanced organization, and less employee turnaround will work to your business’ advantage.

Need help with an employee dispute? Lum Law has the tools and experience to help.

4 Characteristics of Wildly Successful Startups

By Lisa 0

If you’ve studied successful startups, you might think that what makes a startup take off or remain permanently grounded is just luck–or a fluke. While all startups are unique, and there’s no guaranteeing that one will be a success, there are certain characteristics of startups that help them succeed better. Here we list the characteristics that every successful startup needs to ensure they cover.

Location, Location, Location

Where you place your startup is of great importance. Entrepreneurs should take into account several factors, including the visibility of signage, rent, utilities, and the relative safety of the area. This isn’t just a matter of choosing the right neighborhood in your city. It’s also about choosing the right city. You want to make sure your startup is located in a city that will be conducive to its growth but not so competitive that it’ll be washed out. Even if your startup is based online, you still need to consider practices like choosing shorter domain names and having a worthwhile host.

Business Sense

A startup can really teach you about the ins and outs of running a business. However, while there’s plenty you’ll learn through trial and error, there’s plenty more that needs to be grasped before you open your doors. As a startup founder, you should have a thorough comprehension of basic budgeting, hiring needs, and marketing. Be sure to hire people who have at least some startup experience.

Pacing

The most successful startups didn’t start raking in mountains of cash overnight. They got to reach their impressive heights because of discipline. As much as you might long to be a smash right out of the gate, you need to work your way up the ladder of success. Make a multi-year plan of things you hope to accomplish by certain dates. This will help you know what to strive towards. Then you can follow the steps and check-in with yourself regularly. Remember, consistency is key!

A Strong Legal Foundation

You need to consider what sort of business you want your startup to function as. You could be an S-corp, which lets owners and workers share income easily but caps the number of allowable shareholders at 100. You could be an LLC, which allows business assets to be kept separate from personal ones in the event of financial hardship, but you’ll have to cover self-employment tax. You could be an LLP, which can be more cost-effective but are restricted by some states. You could also be a proprietorship, which gives you singular reins of your organization but which makes you culpable for any marks on the business. This is a decision you shouldn’t make lightly.

When creating a startup, entrepreneurs can get stuck on having the most innovative idea above all else. While that’s certainly important, they shouldn’t forget about basic standards to follow. All of these characteristics are common among successful startups because they are sensible and important when it comes to sustainability.

Before you go anywhere with your startup, you need to make sure that you have all your legal bases covered. Lum Law Group would be happy to answer your questions and help your new business get started!

 

What You Need To Know About Limited Liability Companies (LLC) and Employer Identification Numbers (EIN)

By Jessica Suotmaa 0

In December 2017, the Internal Revenue Service (IRS) introduced updates regarding the issuance of Employer Identification Numbers (EIN), or Tax Identification Number (TIN), to Limited Liability Companies (LLC). The rule went into effect in January 2018, however, since the IRS typically offers taxpayers a grace period to transition to the new regulation, the IRS will begin enforcing said changes in May 2019.  In this article, we will explain the upcoming changes and how they may affect your application for an EIN.

Husband and Wife Owned LLC

By default, the IRS treats Single-member LLCs as disregarded entities. This means your single-member LLC will be taxed as a sole-proprietorship.

In California, and other community property states, the IRS considers a husband and wife “partnership” a single-member LLC, or disregarded entity. This means that a husband and wife LLC “are not eligible to be qualified joint ventures“.

LLCs formed by husband and wife in non-community property states should apply for an EIN as a partnership.

Single-Member LLC with No Employees

Since a single-member LLC is tied to your social security number, the LLC does not require an EIN. The exception is if you have employees or if you are required to pay excise taxes.

To file taxes for your single-member LLC, you must use your Social Security Number (SSN) or TIN, and file a Schedule C, Profit and Loss from Business, with your Form 1040, Individual Tax Return.

To fill out a Form W4, Employee’s Withholding Certificate, or Form W9, Request for Taxpayer Identification Number and Certification, for your LLC, you can also use your individual SSN or TIN.

LLCs and Responsible Party

The responsible party in an EIN application is not just the person who signs the application.  Rather, the Responsible Party is the person who can make changes to the entity with the IRS, and the person the IRS contacts regarding matters related to the EIN or LLC.

While the Responsible Party should be the person who has control over the LLC and its assets, it does not have to be the only person who has that power.  It is important to know that you can only select one Responsible Party for the purposes of federal taxation. You can change the responsible party of an EIN using Form 8822-B, Change of Address or Responsible Party for Business Entities.

If you are forming a single-member LLC, you must be the Responsible Party for that EIN. You would include your social security number on the Form SS-4, Application for Employer Identification Number, and check box “Other” while writing in “Disregarded Entity”.

If you are forming a multi-member LLC, you must choose a member of that LLC to be the Responsible Party. Since multi-member LLCs are taxed as partnerships by default (Form 1065), the Responsible Party should be a “partner” in the partnership.

Who Can Be a Responsible Party?

Where previously you could form an LLC using another entity and EIN as the Responsible Party, now you can no longer do so.  The Responsible Party must be a “natural person”, not a corporation or any other entity.

The new requirement means that any LLC seeking an EIN must apply using an SSN or Individual Taxpayer Identification Number (ITIN) belonging to the Responsible Party.

If the LLC is owned by another entity, e.g., “parent company”, the Responsible Party of the parent company entity must be listed as the Responsible Party of the LLC in the EIN application.

Foreign Individuals with no ITIN or SSN

If you’re not a U.S. citizen or Permanent Resident and have no ITIN or the need for an ITIN, you can still apply for an EIN for your LLC.  When you fill out the SS-4 application, be sure to write “Foreign” on the line requesting a TIN.

 

Do you have further questions on obtaining an EIN for your LLC? Contact us for additional assistance.

Scheduling a Meeting for Your Startup? 3 Locations to Consider

By Lisa 0

Startups already have it tough without having to worry about where to meet–those coffee house meetings get expensive after a while. Entrepreneurs have enough on their plate, between gathering financial resources and pitching projects, to have to worry about what address to send people for the next meeting. If you have a startup, you understand all of the struggles that are prevalent in the early days of a business, and how much you need a place where you can come up with solutions to your problems quickly with your partners and employees. While you might not yet have an office space to hold your work meetings, there are plenty of places available for meetings. We’ve compiled a list of a few of the best ones below.  

Library

The public library is one of the best places to hold meetings for your startup. First of all, in many public libraries, you can reserve private rooms. Secondly and even more importantly, you have access to lots of information that you can either find in book format in the library or order from another one. You also have access to wi-fi and even computers if you don’t have enough. Another option is a university library, which will give you access to an even larger amount of resources, but a public library will suffice if you don’t have access to a university library. A couple of the few downsides of using a library as your meeting place is that your meeting location might change depending on the other events that the library is holding, and university libraries might have more restrictions on who they allow to use their resources.

Meeting Room

Reserving a meeting room at a conference center is another option. Like a library, you’ll have access to wi-fi, and you might even have access to their computers. This option is also great because they are used to having people use these spaces for the very purpose of holding meetings. A formal meeting room has access to business tools and technology as an added bonus. This option can be less than desirable, however, if you need to pay for it, and it won’t give you the same level of access to information that a library will give you.

Chamber of Commerce

Your local Chamber of Commerce might be a great place to hold a meeting. First of all, if you have a membership, a meeting room should be free. It will have wi-fi, and it also has rooms that are designed for work meetings. But you’ll need to check with your local Chamber of Commerce to find out which rooms are available and if there’s a fee if you aren’t already a member. There are also Chamber of Commerce membership benefits that could make it worth your while to join.
While you have a lot of hurdles to overcome as a new business, there are a lot of resources available. Check out your city, and then make a decision based on your needs.

For all your business law needs, get in contact with Lum Law Group and see how we can help!

California's Community Property Law and How It Could Affect Your Business

By Jessica Suotmaa 0

Did you know that California’s community property law could affect your business? Business owners should be aware when selecting their business type to take California’s community property laws into consideration.  You do not need to be divorced to be affected by the community property law.

What does “community property” law mean?

California is a community property state, meaning spouses own an equal, 50% and 50%, share of their pooled resources (acquired during marriage).  Not all states have community property law, and not all community property states have the same distribution expectation. For example, Texas has equitable distribution community property law, meaning a spouse can be awarded an equitable share of property depending on how much they contributed to the acquiring of the property. However, in California it’s important to remember that a spouse does not need to contribute to the community property in order to be entitled to fifty percent of it.

If in California, your husband has a 9-5 salary job and you own your own home business which takes off and becomes the primary income for your family, and if you decide to get divorced, your husband could take 50 percent ownership of your business even though he’s not even sure what you do.

What counts as business community property?

All of it. Business property can include the brand, real estate property, equipment, intellectual property such as patents and trademarks, contracts, and even your reputation. Your prenup should include all relevant business assets.

Protect your business from the beginning

When drafting your partnership, shareholder, or operating agreements, be sure to include requirements that will protect you and your partners or fellow shareholders in the event that one of you marries and then divorces. These requirements should include:

  • Prenuptial agreement waiving the spouse’s interests in the business;
  • Disallow the selling or gifting of shares without mutual agreement or chance to purchase the shares in order for existing shareholders to further control the company;

A good contract or business attorney can assist in drafting the necessary provisions to protect your business from a bad divorce.

Treat yourself like an employee

Many business owners either don’t take a salary, or invest their salary back into the business.  This isn’t an issue until you are married and your spouse complains that your business is your baby. Then you get divorced and suddenly your spouse claims that you never shared your income with him or her. As a result of you not sharing your income, your business now becomes your spouse’s business.

Avoid losing your business and start paying yourself wages. Take a salary and treat yourself as an employee. Consider a S-corporation elect or talk to a qualified business attorney for the options that best suite your unique situation!

Lum Law Group has been handling business contracts and corporate accounts since 1965. Contact us for reliable advice!

4 Tools All Startups Need to Start Up Successfully

By Lisa 0

It’s definitely exciting when you first embark on a new startup. However, like any other business venture, it can be risky. While there is a chance of making a sizable amount of money and becoming financially secure, there is also a chance of going bust. Hence the importance of capitalizing on as many personal tools as possible for guaranteed success. Here are four tools to make your startup an immediate success.

Organizational Software

In any startup, leadership is of paramount importance. One of the best ways to exhibit leadership is to  ensure everyone is on the same page. Luckily, in this day and age there is a whole host of organizational software available to even the smallest business or startup.  Organizational software can provide a digital drawing board for easy remote work, and instant responses that traditional meetings, agendas, and minutes cannot.  Certain organizational software programs are cloud-based, and can also manage your team’s time, online meetings, client documents, and customer outreach.  As a startup business owner, your investment in good organization software will become the foundation that your company expansion is built on.

One example of organizational software is Trello board.

Point of Sale Software

Point of Sale (POS) software is crucial for today’s businesses. Modern POS systems include features to protect customer data from cyber threats, which is a must if you’re aiming for PCI compliance.  

Setting up POS software for your business may seem like a daunting process, but it is actually much easier today than it used to be. In fact, there are even POS systems that can run off of a tablet or mobile phone. All you have to do is follow the provided step-by-step instructions to set it up. Be sure to allow yourself a couple of days to set it up fully before you expect to use it.

The Right Business Structure

There are a number of ownership structures you can utilize for your startup, including sole proprietorships, limited liability partnerships (LLP), C-Corporations, and limited liability companies (LLC).  The ideal business structure for you depends on the type of goods and services your business offers, taxes, and the extent to which you’re willing to be personally liable for the business outcome.  If you’re unsure which business structure best suits your business needs, do contact an attorney and tax professional for additional guidance. 

Keep in mind that there are many states that will not allow your startup to be an LLC if the service you are providing requires some type of state license. Moreover, you may even need a business license. Whichever ownership structure you decide upon, we can help you set it up effectively.

A Trademark

A trademark can become your startup’s most valuable asset.  Trademarks are important intellectual property for your startup because it a trademark becomes your business’ brand.  Trademarks are vital to protecting your business, as they help you preserve your brand name, logo, slogan, website domain name and much more. You will want to consult an intellectual property attorney for additional information on how to make intellectual property part of your business strategy. 

Contact Lum Law Group and ask us how we can provide you with the tools to  establishing a successful startup business today!

Are attorneys' fees tax deductible?

By Jessica Suotmaa 0

Now that we’re deep into tax season after the 2017 tax reform (The Tax Cuts and Jobs Act of 2017), it’s a good time to review whether your attorneys’ fees are tax deductible.  Deducting legal fees on your tax return can help offset the high cost of hiring professional legal assistance, sometimes justifying the need for an attorney.  At Lum Law Group, we believe that proper legal advice should be readily available to even the smallest of businesses–at the right cost.  Helping our clients deduct their legal fees on their federal tax returns is just one of the ways we help our clients and potential clients save money.

 

Business Tax Deductions

The new tax laws do not prevent businesses from deducting necessary legal expenses.   Individual business owners, such as sole proprietors and single-member limited liability companies (LLC) or independent contractors can still list legal costs directly associated with their trade or business on Schedule C of the Form 1040 Individual Tax Return.  List the “ordinary and necessary” legal fees on Line 17 of your Schedule C.

Examples of “ordinary and necessary” deductible attorneys fees:

  • legal fees for negotiating, drafting, and reviewing contracts (“business expense”);
  • legal fees for researching and registering intellectual property (“business expense”);
  • legal fees for rental property management, conservation, and maintenance (“rental expense”);
  • legal fees for suing a client for outstanding invoices (“business expense”);
  • legal fees for suing a vendor for services not rendered (“business expense”);
  • legal fees for suing a tenant for rental property damage (“rental expense”); and
  • legal fees for evicting a tenant who stopped paying rent (“rental expense”).

Businesses that file partnership or corporate tax returns can deduct two types of legal expenses: the legal and professional fees associated with your trade or business, and the startup business expense for new businesses and startups.  These can be deducted under “Deductions” on the Form 1065 or Form 1120.

Examples of legal costs for startup deduction:

  • legal fees for registering your business with the state, e.g., incorporation;
  • legal fees for business consultation;
  • legal fees for preparing corporate records and bylaws; and
  • legal fees for preparing partnership and operating agreements.

Where businesses and individuals may end up paying more taxes is in settlement

Individual Tax Deductions

Where previously you could deduct up to two percent of your gross income on your individual tax return (Form 1040) by itemizing deductions, now you cannot. The new tax bill has eliminated most of the miscellaneous itemized deductions for the individual tax return.

 

Real Estate Legal Fees

While you cannot itemize and deduct your real estate related attorneys’ fees on your federal tax return, you can still reduce your overall tax liability.  You can add the legal fees associated with the purchase, maintenance, or sale of the property to the value of the property, thus increasing its value. It is not an immediate tax deduction, but it will reduce any gain on the property if you sell it later.

Exceptions

There’s always an exception or “loophole”, and in legal fee deductions it’s the legal fees in settlements associated with employment discrimination suits, especially whistle-blower cases.  However, note the legal fee deduction cannot exceed your annual gross income.

 

Business & Individual Tax-free Income

In taxes there’s credits, deductions, and then there’s tax free. What’s tax-free and requires a lawyer? Compensation from personal injury suits (no interest and no punitive charges), court awarded attorneys’ fees, and statutory attorneys’ fees.

 

Settlements Taxable

The bad news is that your settlements are now fully taxable since attorneys’ fees are no longer deductible. This means that if you win a lawsuit, or settle the case outside court, for an award of $10,000, and your attorney takes a fifty percent cut, you are liable to pay taxes on the full $10,000.

 

If you pay more than $600 in legal fees in a year, your attorney will be required to provide a Form 1099-MISC for that expense, which you can use to prepare your taxes. If you have any questions regarding a 1099 from us, or fees that can or cannot be deducted, please contact our office!

How much will the attorney charge me?

By Jessica Suotmaa 0

Hiring a legal professional can be intimidating for the average person. Maybe you’re starting a business and realizing you need some advice.  Or you have questions about trademarks or intellectual property in general. Perhaps you’ve been asked to sponsor someone for an employment visa. For whatever reason you’re considering hiring an attorney, a central question on your mind is: “How much is the lawyer going to charge me?”  In this article, we break down a couple of the different ways attorneys can charge for their services so that you can be better informed prior to your initial appointment with an attorney.

1. Attorneys Can Charge Hourly

Much like a wage employee, most attorneys will charge for their services on an hourly basis.  The hourly cost for an attorney can range anywhere from $100 an hour to the thousands.

When you see advertisements for a “free consultation” with an attorney, it’s important to also ask what their normal hourly rate. Don’t be lured in by the promise of “free” and then be charged for everything else later.

Keep in mind attorneys will usually have a separate rate for Paralegal work. Unless it’s a solo attorney law office with no employees, attorneys often delegate work to paralegals and legal assistants.  The hourly rate for a Paralegal is set by the attorney, so you should ask how much they will charge you for it, but is often significantly lower than the attorney’s hourly rate.

Inside Tip: Always ask an attorney for an estimate of how much time/money they believe your case will require. Many entrepreneurs and small business owners are surprised by how affordable attorney services can be compared to non-attorney services, such as online services or “preparation” services.

2. Attorneys Request Retainers

When an attorney charges by the hour, they will often request a retainer, or deposit, to ensure they’re paid for their services.  You’ll know the minimum amount the attorney estimates your case will cost  from the retainer amount. This does not mean the cost cannot exceed the retainer, but it does give you a ballpark idea.

Inside Tip: You can try requesting a “cap”, or maximum amount you’re willing to spend, when negotiating your retainer agreement with the attorney.

3. Attorneys Charge for Costs

An attorney’s hourly rate does not include costs, fees, or external services, unless specifically mentioned.  This is important if you’re hiring an attorney for work that involves filing fees, messenger services, background checks, or multiple hearings. Attorneys may charge for printing fees, binding fees, folders, postage, mileage, parking, and filing fees.  Many law offices will bill these individually, allowing them to add up at the end. Some law firms charge a flat rate for costs. Few lawyers don’t charge for most office costs, only external costs, such as filing-, court service-, and messenger fees. Others will request a separate retainer to cover their costs.

Inside Tip: Since you might not be aware of all the costs your attorney will incur in the process of your case, ask your attorney to list out all costs and an estimated total on the retainer, or fee agreement. 

4. Attorneys Can Offer a Flat Rate

It is common for attorneys to offer a “flat rate” cost structure.  We’ve seen it most in intellectual property registration, such as trademark registration, and immigration. The reason is that it usually involves preparing and filing a form, preparing necessary evidence, and responding to issues as they arise.  In the examples of trademark registration and immigration application, the attorney is heavily involved in the beginning, and then only needs to monitor the case after submission. This means the attorney is not continuously involved in your case, unlike with litigation, mediation, or patent prosecution cases.

Attorneys may also offer a flat rate fee if you’re very specific in your needs. For example, you only need the attorney to review a contract.  Or you need an attorney to draft a non-disclosure agreement according to your specific situation.  In these cases, an attorney can estimate the amount of time it will take him to complete the task after obtaining enough details.

Insider Tip: If you are budget conscious, ask the attorney for a flat rate but offer to keep the attorney on speed dial for your next legal hire. 

5. Attorneys Can Charge Monthly or Annually

Just as large corporations have in-house corporate counsels working for them, small business owners can contract an attorney as their “go-to-legal-counsel”.  A long-term arrangement will usually have a set time period for which the attorney will charge either a monthly or yearly rate.  The attorney will set parameters for what they are able to help you with during this time period, for example legal advice, drafting letters, drawing up contracts, or reviewing legal documents.  Similarly, the contract attorney may also set limits by excluding high-cost and time-consuming matters requiring litigation, or outside referrals for matters that are outside of his expertise.

Insider Tip: Hire an attorney for a short contract first to see how you work together before keeping them on long-term!

6. Attorneys Can Start For Free

When the attorney says “you don’t pay unless we win”, it means that the attorney will not charge for legal services until your case has been resolved and you’ve received a settlement (money).  This is called payment on a “contingency-basis”, wherein the law firm will work for free until you receive compensation.  Personal injury, worker’s compensation, malpractice, and employment attorneys commonly use the contingency payment model.  The attorney will take a percentage of your settlement, ranging from thirty to eighty percent. For example, if you were to “win” a settlement of one million dollars, and your fee agreement states your attorney takes sixty percent, then your attorney will give you a check for four hundred thousand dollars.

If you do not win your case, then in most cases you will not owe the attorney anything. Be sure to carefully read your fee agreement to see for what fees and costs, if any, you’ll be responsible.

Insider Tip: To determine whether it is worthwhile for you to pursue your case, ask the attorney for an estimate of how much cash you’ll receive from the settlement. This is especially important if it’s a class-action law suit, or any settlement where you’ll have to divide your portion with others.

 

While attorney fees can seem high, keep in mind that many attorneys are open to negotiation.  What you see on an ad, or hear on the phone, may not be the only method, fee, or cost.  Always read the fine print of your fee agreement or retainer before signing it, and don’t be afraid to ask questions if you have any.

Did you find our explanation of fee structures and payment methods clear? Find out how Attorney Lum would charge for your case!

How to Plan for These 5 Deadly D's of Business Partnerships

By Lisa 0

Your partnership may be going along smoothly without a worry in sight. However, it’s important that you and your partner talk about what you would do in the case of certain events. Some of the subjects can be difficult to talk about, but it is better that you are prepared for whatever may happen.

Disinterest

No matter how excited you are for your business, you can’t always know how excited your partner is going to be during the long run. There needs to an exit clause within your partnership agreement that allows your partner to leave if they are more interested in other career opportunities. You will need to put in place that your partner will not be financially compensated if they leave due to disinterest.

Divorce

When your partner goes through a divorce, it is going to be difficult to deal with their ex. Since California is a community property state, they will most likely have a stake in your business due to their marriage with their partner. It is important to get a lawyer involved in order to deal with an ex-spouse who wants to take as much as they can get their hands on during a divorce. Even when an ex is just trying to stick it to the one they are divorcing, it is easy for you to get caught in the crossfire.

Source: https://www.mentalhealthamerica.net/separation-and-divorce

Drug Addiction

One thing that will keep any business from flourishing is someone who is addicted to drugs. What often begins as an innocuous use of prescription pain management solution can easily spiral out of control. As conventional substances cease to provide the relief they once did, users begin seeking stronger substances such as fentanyl or heroin. This doesn’t make someone bad, it just means that they need help. It is important to confront your partner when you feel as though they might be sliding down a slippery slope. If they are not willing to get the treatment they need, you may need to push them out of the partnership. There are legal ways that you can do this with the help of an attorney.

Source: https://www.therecoveryvillage.com/fentanyl-addiction/treatment-rehab/

Default

When your partner has financial issues of their own, it could begin to affect you as well. If they are so far behind on their payments that they are defaulting, their creditors could come after your business. This is why it is important to have your business protected by articles of organization. A limited liability partnership will disallow creditors from levying your business income or targeting your business assets. 

Death

The last thing that you will want to talk about with your partner is the potential of death. However, there are times when untimely deaths happen in a partnership. It is crucial to sit down with your partner and an attorney to go over what is going to happen in the event that one partner dies. They need to put in their will what will happen to their stake in the business.

Source: https://justwillsandlegalservices.co.uk/latest-news/happens-business-partner-dies/


While having a partnership comes with certain obstacles, there are still great advantages to starting a business with someone you trust and love working with. Before long, you can have all of the legalities in place that will help you have a partnership in a safe and easy way.

If you need help in establishing a partnership or starting a business, let Lum Law Group help!

3 New Changes for H1-B Filers in 2019

By Jessica Suotmaa 0

Here at Lum Law Group, we have already begun preparing H1-B petitions on behalf of our clients.  If you plan on filing this year, do not wait till mid-March (it might be too late!) Contact our office for answers and assistance on filing your H1-B petition this year!

On January 31, 2019, DHS has issued the  final H1-B ruling. on the anticipated H1-B processing changes.  On January 31, 2019, USCIS published the final H1-B ruling.

1. Having a U.S. Master’s Degree Helps

USCIS’ new “reverse selection order” will apply to the upcoming FY 2020 filing season. If you’re unsure as to what the word “reverse” refers to, here’s how the random visa selection used to work:

  1. Select 65,000 from a pool of advanced degree exempt “regular” bachelor’s degree holders.
  2. Select 20,000 from a pool of master’s degree holders.

Here’s how the current selection will work:

  1. Select 65,000 from a pool that includes both “regular” bachelor’s degree and advanced degree holders.
  2. Select 20,000 from a pool that includes the remaining master’s degree holders.

The selection order reversal will increase the chances of a advanced degree holder to “win” the H1-B lottery by an estimated 16%, and decrease the chances for a bachelor’s degree only employee to be selected.

2. Early Elimination via Pre-registration

The new pre-registration requirement will require the employer (company) petitioning for employees to first register the employee electronically.  The electronic registration will be quick and easy, requiring only basic information such as the employee’s name, citizenship, passport number, job title, and whether the employee has a U.S. master’s degree.

But, it will only be open for a limited period of time, possibly only 14 days (the minimum). During this time, petitioners can delete an inaccurate registration and resubmit, as well as edit a registration prior to submission.

USCIS will then select from pre-registered petitioners. What this means is that many will be rejected at the pre-selection process and not allowed to join the H1-B visa lottery selection.

USCIS states the purpose of pre-registration is to reduce the number of H1-B petitions it receives, screen for duplicates, and to reduce H1-B fraud and not for eligibility purposes. However, the inclusion of a “U.S. Master’s Degree” in the pre-selection process suggests USCIS may prefer U.S. master degree holders over other pre-registrations.

3. H1-B Filing More Affordable

The new rule goes in-depth on the cost analysis of the new implemented changes to H1-b non-immigrant visa processing. The report analyzes both agency savings and petitioner savings.  Where previously petitioners would have to hire someone, either in-house or external, to prepare Foreign Labor Certificate and the entire Form 129 – H1-B Specialty Occupation Worker, the pre-registration would reduce the cost of trying.  A failed pre-registration screening will result in the petitioner saving significant amounts of money in preparation fees and USCIS filing fees.

In addition, many small businesses who did not have the budget to apply for H1-B given it’s high-entrance cost and risk of failure can now more readily join the lottery.

 

Now that we’ve highlighted the three key takeaways from the new H1-B rule, you might wonder about premium processing? On January 28th, 2019, USCIS published a press release stating it will resume premium processing cap H1-B petitions for FY 2019.  Please contact us if you have any questions regarding this issue.