As we head into the new year, it’s a good idea to take a peek at some of the rules and regulations that will affect businesses after January 1. According to local experts, most of the changes are occurring in the areas of estate planning and employment.
DIGITAL ASSET ACCESS AND POWERS OF ATTORNEY
According to Jill Sasser, an estateplanning attorney with Vancouverbased law firm Landerholm P.S., business owners should review their business succession plan in light of two recent pieces of legislation. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) went into effect June 2016. This Act sets the standards about when a fiduciary (such as a trustee or a person holding power of attorney) can access digital assets on any device (including iPhones and tablets). These assets include Facebook, email and Pinterest accounts; software; and online banking, investment and bill-paying accounts.
“If you have any sort of online accounts, you have the power to control whether someone has access to those after you die or become incapacitated,” said Sasser.
Before UFADAA, federal hacking laws prevented a fiduciary from accessing digital assets. Also, said Adam Anderson, an attorney with regional law firm Jordan Ramis PC, consumers rarely read lengthy boilerplate user agreements for buying a song on iTunes or setting up an email account – it turns out that such assets are often not transferrable, or are not really an asset at all but instead are a license that expires at death. Standard estate planning and fiduciary laws weren’t keeping up with such limitations.
UFADAA grants fiduciaries access to digital assets, but it’s not unlimited personal access. For example, fiduciaries cannot impersonate the account holder by posting on Facebook or sending emails. Instead, UFADAA limits access to what is “necessary to carry out fiduciary duties.”
Per the Act, by default digital assets are not private. However, Anderson recommended that any power of attorney document specifically give the authority per UFADAA to access digital assets. Anderson also advised that business owners inform fiduciaries about what digital assets exist and keep a list of electronic accounts and passwords in a safe deposit box.
If you want to prevent a fiduciary from accessing a particular account, you need to specifically set privacy restrictions on that account. There’s no single button to push, however. Every online company manages accounts differently; Sasser said that account owners must check with each company to determine how to set privacy settings.
And speaking of powers of attorney, the Uniform Power of Attorney Act takes effect January 1. This act repeals and replaces the current power of attorney act. All powers of attorney that were valid before January 1 will continue to be valid. However, after January 1, 2017 a power of attorney must be either notarized or attested/signed by two disinterested witnesses. Other items of interest include that powers of attorney are presumed to be immediately effective unless stated otherwise, and unless the document specifically provides that it will continue to be effective even if the principal becomes incapacitated, it will terminate at that point. An agent under the power of attorney cannot make healthcare decisions unless the power of attorney specifically grants that authority.
EMPLOYMENT LAW
The biggest news in employment law is what is NOT going to happen. The Obama Administration proposed a revised definition of the salary test under the Fair Labor Standards Act, and this revised definition was supposed to take effect December 1, 2016. However, a Texas court has placed an injunction on the new regulations, and with the Trump Administration taking the reins in a few weeks, it is unclear whether the new regulations will ever see the light of day.
At issue is the change in threshold for exempt (nonhourly) employees. The original threshold was $455/week; the new definition doubles that to $913/week. That is, unless an employee makes at least $47,476 per year, they must be treated as hourly employees.
Paul Guppy, research director at the Washington Policy Center, called the injunction a “relief to the business community” because if the new definition goes into effect, “literally overnight, hundreds of employees would shift from management to hourly,” which would mean substantial changes to human resource policies, procedures and software.
“The Washington Policy Center has fewer than 20 employees, and it would be a massive headache for us,” said Guppy. “It’s a completely arbitrary and artificial distinction invented by the government and businesses see it as a burden to job creation.”
James Sikora, an employment law attorney at Landerholm, said that a lot of employers had prepared for Dec. 1 deadline, and are now wondering whether to just leave the changes already put in place, such as bumping up salaries for exempt employees, or return to the old definition. Rescinding salary increases, of course, raises morale issues. Reclassifying employees as hourly raises risks associated with tracking hours and ensuring overtime is correctly compensated. Either way, said Sikora, it’s a financial or an administrative burden. Employers who haven’t acted yet are wondering if they should wait and see or make changes anyway. Sikora recommended business owners keep a close eye on what is going on with the case, and make sure they are in compliance if new regulations go into effect. He said setting a Google news alert for the topic and regularly reading industry websites were two good ways to stay up to date.
The new minimum wage limits, set by ballot initiative 1433, will also affect businesses, said Sikora. The wage goes up to $11 in January, then gradually increments to $14.23 by 2022. Sikora said it is hard to tell what the potential ramifications will be. Certainly, it is a more substantial increase than previously.
“Smaller businesses will have to plan more carefully when hiring, as the wage ramps up,” said Sikora. “And the other thing is potential wage compression.”
He explained the latter concept as similar to a spring – if you bring up the lower employees to a new wage level, in the next couple years existing employees in the next tier up may expect raises as well.
“It’s uncharted territory – the next three years will let it play out,” Sikora said.
A LOT OF SPECULATION
While the changes to laws were not particularly sweeping this year, there is a great deal of speculation about what the next four years will bring. Anderson said there was a lot of uncertainty with estate planning, because Trump has stated he plans to eliminate the federal estate tax. State-level estate taxes are closely linked to the federal tax, and Anderson said “it would be interesting to see what happens to state estate taxes if the federal one went away. Broad revision to state plans may be necessary.”
Guppy identified healthcare and tax policy as two more issues that may significantly affect businesses as the new Administration flexes its regulatory muscles.
For healthcare, he predicts that health savings accounts, a national healthcare market (similar to auto insurance), and “patient-centered care” will be watchwords. He also suspects that some of the Affordable Care Act mandates, which “have made healthcare so expensive” will be repealed.
As for taxation, Anderson thought Trump’s Administration may reduce the corporate tax rate to 15 percent. Guppy expects a “Reagan-type stimulus plan.”
“Reducing tax rates at the federal level would be a huge shot in the arm for the American economy – it would act as a massive stimulus to job creation,” said Guppy.
According to Guppy, Trump has plans to give middle-class Americans a 35 percent tax cut and reduce the current seven tax rates to three.
At the state level, Guppy said, there is concern about how renegotiation or restriction of international trade will affect Washington state – reputed to be the most trade-dependent state in the country. But, he added, if the national economy starts growing at 4 percent, our state will benefit and that may balance out the chilling trade effect.
“We’ll have to wait to see what [Trump] actually does,” Guppy stated. “He’s an untested leader with bold ideas but we don’t know what his style of governing will be like – will he match his behavior to campaign promises?”
