Industrial Growth Zones Created

The City of Chicago and Cook County recently announced the creation of an “Industrial Growth Zone” initiative in order to encourage industrial development in seven designated Chicagoland neighborhoods.  These neighborhoods are principally located in existing industrial areas on the south and west sides of the City.  The program is intended to incentivize industrial development in these neighborhoods by removing barriers to further development and by providing services to support property owners and industrial developers in their development efforts.  Specifically, the services to be provided are aimed at two primary impediments to development: evaluation and remediation of environmental conditions and maneuvering complex governmental regulations.

Much of the land located within the Industrial Growth Zone program has been previously developed and used for industrial purposes.  Accordingly, to redevelop these properties, a developer will first need to conduct a Phase I environmental site assessment and, depending on the identification of recognized environmental conditions, to perform some level of environmental remediation.  This can constitute a significant barrier to development as the cost to conduct the required testing and the possible costs associated with remediating hazardous environmental conditions may be substantial both in terms of costs and delays in commencing construction.  The Industrial Growth Zone initiative will provide qualified developers up to $130,000 of financial assistance for environmental evaluation and remediation efforts.  Specifically, developers may be eligible for $5,000 to update an existing Phase I environmental report and up to $25,000 to conduct a Phase II report.  Additional funds in the amount of $100,000 may be available to remediate environmental conditions.

Additionally, the initiative will establish a “concierge” program.  The concierge will serve as a single point of contact for providing assistance to developers in conducting site evaluation and working their way through voluminous and complex layers of governmental regulations and requirements.  The concierge will assist in making available a broad range of site data and documentation required in connection with the development of properties.  This data includes, among other things, zoning maps, aerial photos, surveys, ownership and real estate tax history, analysis of utility availability, flood plain classification, and providing information regarding the presence of wetlands and endangered species.  Having access to this information at the early stages of the development process will save a developer time and effort in conducting its due diligence, evaluating the suitability of a property for development, and commencing the process of obtaining required governmental approvals.

For further information regarding Industrial Growth Zones, real estate development and related issues, please contact:

Jeffrey M. Galkin at:

jgalkin@lgattorneys.com or 312-368-0100.

Restaurant Nutrition Labeling Provisions of the Patient Protection and Affordable Care Act of 2010

More than two-thirds of adults in the U.S. are overweight or obese.  Approximately one-third of consumers’ total caloric intake comes from foods consumed outside the home in restaurants and other retail food businesses.  In order to provide consumers with easily accessible nutrition information, pursuant to the nutrition labeling provisions of the Patient Protection and Affordable Care Act of 2010, the Food and Drug Administration (FDA) now requires the disclosure of certain nutrition information for standard menu items in restaurants.

FDA is now requiring disclosure of certain nutrition information for standard menu items in restaurants and similar retail food establishments that are part of a chain with 20 or more locations doing business under the same name and offering for sale substantially the same menu items.  These businesses will be required to provide calorie and other nutrition information for standard menu items, including food on display and self-service food.  This rule was originally to become effective on December 1, 2015, but the compliance date for the rule was extended to May 5, 2017.

To be covered by this rule, a business must satisfy several criteria.  Primarily, it must be a restaurant or similar retail food establishment.  Restaurants and similar retail food establishments include bakeries, cafeterias, coffee shops, food service facilities located within entertainment venues (such as amusement parks, bowling alleys, and movie theaters), food service vendors such as ice cream shops and mall cookie counters, food take-out and/or delivery establishments, such as pizza take-out and delivery businesses, quick service restaurants, and table service restaurants.

These new rules will require food service operators to revamp their menus, but presumably these changes will lead to healthier public.

For further information regarding this topic, please contact:

Jonathan M. Weis at:

jweis@lgattorneys.com or 312-368-0100.

Following Corporate Formalities are Really that Important?

Recently a dissolved corporation found out the hard way that corporate formalities do indeed matter to the IRS.

Urgent Care Nurses Registry, Inc. (Urgent Care) was incorporated in California on July 21, 2005, and was assigned a taxpayer identification number by the California Franchise Tax Board (board). On Aug. 1, 2008, the board suspended Urgent Care’s corporate charter pursuant to section 23301 of the Suspension and Revivor article of the California Revenue and Taxation Code, and on July 26, 2016, the California secretary of state certified that Urgent Care’s “powers, rights and privileges remain suspended.”

Urgent Care filed some income and employment tax returns for 2009 through 2013 but enclosed no payments. It failed to file other returns, and IRS prepared substitutes for returns and assessed all of the taxes in question plus a penalty for failing to file Forms W-2, Wage and Tax Statement. In January of 2015, IRS sent Urgent Care a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.

On Sept. 28, 2015, Urgent Care timely sought review in the Tax Court. On July 28, 2016, IRS filed a motion to dismiss for lack of jurisdiction, contending that the petition was not filed by a party with capacity to sue. The Court directed Urgent Care to respond to the motion to dismiss on or before Sept. 2, 2016, which it failed to do.

The Tax Court granted IRS’s motion to dismiss for lack of jurisdiction on the ground that Urgent Care lacked legal capacity to prosecute the case.

The Court said that since Urgent Care’s corporate powers were suspended in 2008, and there was no indication that it has since received a certificate or revivor or become current on its California tax obligations, it lacked the capacity to sue.

Is your corporation in good standing and are its books and records up to date? Shouldn’t they be?

If you have any questions or would like to discuss this article or any other legal concern you have, please contact:

Morris Saunders at:

msaunders@lgattorneys.com or at 312-368-0100.

The Americans with Disabilities Act: Employers Must Engage in the Interactive Process

A recent 7th Circuit Court of Appeals decision emphasizes the steps an employer must take to accommodate an employee with a disability.  The American’s with Disabilities Act (“ADA”) is a federal statute that applies to any employer of 15 or more employees.

In Eymarde Lawler v. Peoria School District No. 150, a teacher (“Lawler”) with PTSD was hired by School District 150 (the “School District”) and worked without incident for 4 years.  Lawler’s PTSD symptoms began to manifest in 2010.  She was initially given a leave of absence, and then transferred to a school for students with emotional and behavioral problems.  Lawler had no prior experience teaching children with severe behavioral problems but never-the-less earned a satisfactory rating after the first year.  The following year, after several stressors in and out of school (including witnessing the aftermath of a shooting and being concussed by a student), Lawler’s psychiatrist opined that the events had retriggered her PTSD and that Lawler should be transferred away from such a stressful environment.

The School District refused the transfer request, instead performing an accelerated review that labeled her job performance unsatisfactory and terminating her.  Lawler sued for, among other things, failure to accommodate her PTSD under the Rehabilitation Act.  The Rehabilitation Act requires the same analysis as the ADA.

Under the ADA, the employer (and the employee) must engage in the “interactive process” to find a reasonable accommodation for the employee’s disability.  After the request from Lawler (supported by a psychiatrist’s professional opinion) for a transfer to a less stressful environment, the school district was required to make a reasonable effort to explore possible accommodations, such as looking for open positions in other schools or reducing the number of students with behavioral or emotional disorders in Lawler’s classroom.

In this case, the facts in the record suggest that the School District made no attempt to look for another position for Lawler.  “The school district simply sat on its hands instead of following-up with Lawler or asking for more information.”  The court vacated the summary judgment award initially granted to the School District and remanded the matter for trial.

It is vital that employers covered by the ADA take employee requests for disability accommodation seriously and explore available options.  By failing to engage in the interactive process, the School District now faces the prospect of liability for failure to accommodate Lawler’s disability.

If you have any questions regarding an employer’s responsibilities or an employee’s rights under the Americans with Disabilities Act, please contact:

Robert Cooper at:

rcooper@lgattorneys.com or (312) 368 0100.

Cook County Raises Minimum Wage

On October 26, 2016, the Cook County Board passed an ordinance to gradually increase the minimum wage to $13.00 per hour by 2020. The Cook County Board’s action follows the lead of the City of Chicago which in 2014 passed an ordinance to gradually increase the minimum wage in Chicago to $13.00 per hour by 2019.

The first increase is effective July 1, 2017, raising the minimum wage from $8.25 to $10.00 per hour. The minimum wage will increase again on July 1, 2018, to $11.00 per hour; on July 1, 2019, to $12.00 per hour; and on July 1, 2020, to $13 per hour. The ordinance applies to any business or individual that employs at least one employee who performs at least two hours of work in any two-week period while physically present within the geographical boundaries of Cook County, with limited exceptions.

The ordinance also requires Cook County employers to provide notice to their employees regarding their rights under the ordinance, including: (i) conspicuously posting a notice at each facility within Cook County; and (ii) providing a written notice to employees with their first paycheck issued after July 1, 2017.

Employers are subject to significant penalties for non-compliance with the ordinance, including, but not limited to, fines in the amount of $500 to $1,000 per each day of non-compliance. The ordinance also establishes a private cause of action for employees who may recover damages against an employer in an amount equal to three times the amount of any underpayment, in addition to the employee’s attorneys’ fees and costs. An employer’s failure to comply with the ordinance may also violate other laws including the Illinois Wage Payment and Collection Act, Illinois Minimum Wage Law, and Federal Fair Labor Standards Act, which also provide for an employee’s recovery of damages, interest and attorneys’ fees.

If you have any questions regarding the minimum wage applicable to your business or your obligations under the new Cook County Ordinance, please contact:

Kristen E. O’Neill at:

koneill@lgattorneys.com or 312-368-0100.

Have You Planned For The Disposition Of Your Digital Assets?

Many of us have accounts with Facebook, Twitter, Instagram, Google Mail, and similar accounts, digital files such as photos, music, movies, and also online accounts with banks, merchants and others. These types of files and accounts are often referred to as digital assets. Have you ever thought about what would happen to those digital assets upon the disability or death of the owner? Does anyone have the right of access? Does anyone have the right to keep the asset or to destroy (discontinue) it? If nothing is done, the keeper (“custodian”) of those digital assets may eventually terminate the asset and delete them.

Digital assets are generally governed by a complex set of Terms of Service, which are drafted to protect the provider of the service – not the user.

Illinois recently passed The Revised Uniform Fiduciary Access to Digital Assets Act, which may provide certain fiduciaries with access to your digital assets. This Act, while appearing to provide access to a deceased user’s digital assets, may not provide complete access. So, what should you do?

  1. Make an inventory of your digital assets and make sure it is accessible to those whom you trust. Include the name of the internet site, your user name and your password, and if applicable your account number and other relevant information.
  1. Provide in your estate planning documents that your trustee, executor or other fiduciary has the power to be granted access to your digital assets. OR, perhaps you do not want anyone else to be granted access. In that event you should expressly prohibit access to anyone else.

If you would like to discuss your estate planning, including the disposition of your digital assets, please contact:

Morris R. Saunders at:

312-368-0100 or at msaunders@lgattorneys.com.

 

Illinois Employee Sick Leave Act

The Illinois Employee Sick Leave Act was signed by Governor Rauner on August 19, 2016, and will take effect on January 1, 2017.  Though misleadingly titled “Employee Sick Leave Act,” the Act does not require employers to provide sick leave benefits to their employees. Rather, the law requires employers who provide sick leave benefits to their employees to allow their employees to take such leave for absences due to the illness, injury, or medical appointment of the employee’s child, spouse, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent, or stepparent. The leave must be granted on the same terms under which the employee is able to use sick leave benefits for his or her own illness or injury.  The term “personal sick leave benefits” is defined in the Act to include time accrued and available for absences due to personal illness, injury, or medical appointments.

The Employee Sick Leave Act does not require employers to adopt or even to retain sick leave policies. While the new law allows Illinois employers to limit the amount of personal sick leave benefits available for the care of family members to “not less than the personal sick leave that would be accrued during 6 months” at the employee’s personal sick leave accrual rate, the law specifically provides that it does not expand the maximum period of leave to which an employee is entitled under the Family and Medical Leave Act, which generally applies to employers with at least 50 employees.

Illinois employers that have policies that otherwise provide for sick leave as required by the Act do not have to modify their policies to expressly provide sick leave for family care.  The Act also makes it unlawful for employers to discharge, threaten to discharge, demote, suspend, or discriminate against employees for using sick leave benefits, attempting to exercise their rights to use sick leave benefits, filing a complaint with the Illinois Department of Labor, alleging a violation of the Act, cooperating in an investigation or prosecution of the Act, or opposing any policy, practice or act that is prohibited by the Act.

If you would like to discuss this or any employment related matter, please contact:

Mitchell S. Chaban at:

mchaban@lgattorneys.com or 312-368-0100.

Time is of the Essence When Challenging the Validity of a Will

An interested party has six months from the date a will is admitted into probate to challenge the validity of the will.  This deadline is set by statute is strictly enforced. See 755 ILCS 5/81(a) (West 2010).  Regardless of whether the will is being challenged for undue influence, lack of capacity, fraud, forgery, or revocation, the will must be challenged within six months of admission.

The First District Appellate Court upheld the dismissal of a will contest where a party had leave of Court to file a will contest, but did so four days after the sixth month will contest deadline.  In re Estate of Mohr, 357 Ill. App. 3d 1011, 1015, 830 N.E.2d 810, 813 (1st Dist. 2005).  After the sixth month window has passed, the court no longer has jurisdiction to hear the will contest. Id. This approach provides a level of certainty to the probate process but harshly penalizes those who do not act quickly.

There are precious few exceptions to this rule and most of the exceptions involve mistakes in the form of the will contest.  E.g. Filing in wrong division was curable after the six month expiration, as was misnomer of one of the parties. In re Estate of Howell, 867 N.E.2d 559, 561, (5th Dist. 2007); In re Estate of Morgan, 2015 IL App (3d) 140176-U.

However, even after six months have passed, all is not necessarily lost.  Certain related tort claims can be filed after the six month expiration where the will contest remedy was not available.  A tort claim for intentional interference with inheritance is where:

“[o]ne who by fraud, duress or other tortious means intentionally prevents another from receiving from a third person an inheritance or gift that he would otherwise have received is subject to liability to the other for loss of the inheritance or gift.” Restatement (Second) of Torts § 774B (1979).

This claim might be actionable where the executor of the admitted will intentionally hid the admission of the will from one of the interested parties, so long as the admitted will deprived the aggrieved party of some part of his or her inheritance.

The Illinois Supreme Court has twice held that these claims may be pursued after the closure of the six month will contest deadline under certain circumstances.  In re Estate of Ellis, 236 Ill. 2d 45, 52, 923 N.E.2d 237, 241 (Ill. 2009); Bjork v. O’Meara, 2013 IL 114044, 986 N.E.2d 626 (Ill. 2013).  While the tort claim would not disturb the validity of the will, it would provide a right to sue the executor under the will for monies the interested party would have received, but for the admission of the improper will.  Under this tort action, key questions will include: was the will contest remedy available to the aggrieved party during the six month window; and would the will contest have fully compensated the aggrieved party if it had been timely filed.

Rather than shoehorning a will contest into a tort claim, an interested party who believes that a will is improper should act quickly to protect his or her rights.

If you have any questions regarding will contests or intentional interference with inheritance, please contact:

Robert Cooper at:

rcooper@lgattorneys.com or (312) 368 0100.

Taxpayer Held Liable For Withholding Tax Penalty After Agent Embezzles The Funds

Plaintiff was the owner of a corporation which was the owner-operator of five McDonald’s restaurant franchises. Plaintiff paid certain withholding penalties assessed against him and sought to recover penalties and related interest paid to IRS for the corporation’s alleged failure to make Federal tax deposits and pay taxes regarding its payroll taxes.

Plaintiff alleged that beginning “some 30 years ago,” the corporation engaged an outside payroll service to process all aspects of the corporation’s payroll, including the issuance of paychecks to the corporation’s employees, the withholding of federal and state taxes from these paychecks, the preparation of employment tax returns, and the depositing of withheld taxes with the IRS. The corporation would electronically transfer the funds necessary for payroll and associated taxes from its bank account to a third party payroll service. Plaintiff claimed that it “reasonably relied upon the outside payroll service and the clearinghouse bank to discharge their duties to remit withheld employment taxes to the IRS,” but instead, “the payroll service and/or the bank absconded with the timely submitted Federal Tax Deposits, which were not remitted to the IRS, resulting in the imposition upon Plaintiff of penalties and interest.

Plaintiff claimed that it learned that its payroll tax deposits to the IRS and had been embezzled, perhaps by the bank or the payroll service. It was later informed by representatives of the U.S. Treasury Inspector General’s Office that the bank was the subject of a Federal grand jury investigation. Plaintiff alleged that:

Through no fault of Plaintiff, unscrupulous third parties illegally diverted the EFTs intended for the payment of Plaintiff’s payroll taxes to their own purposes and failed to tender such amounts to the IRS. Plaintiff reasonably relied on [the payroll service] to tender its tax deposits to the IRS and exercised reasonable business care and prudence in so doing. An employer, like Plaintiff, is entitled to rely on a professional payroll tax service, such as [payroll service], to deposit payroll taxes from the employer’s sufficient available funds with a federal-authorized depositary, like [the bank], and to thereby discharge the employer’s obligations under the Internal Revenue Code and related Treasury Regulations to pay over withheld payroll taxes.

The Court held that, “at the heart of this action is plaintiff’s contention that its good faith delegation-to a third-party agent-of the responsibility to pay taxes in a timely manner may constitute “reasonable cause.” The Court concluded, as many other courts with similar facts have concluded, “a taxpayer may not avoid the adverse consequences of the failure of its agent to perform the taxpayer’s responsibility to timely file and pay federal taxes.”

If you have any questions regarding withholding tax liability, please contact:

Morris Saunders at:

msaunders@lgattorneys.com or (312) 368-0100.

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