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Legal Tools for Protecting Your Farm - 2018 Business of Farming Conference

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Presented by Ward and Smith, P.A. Attorneys at Law

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Legal Tools for Protecting Your Farm - 2018 Business of Farming Conference

  1. 1. William S. Durr P: 828.348.6062 F: 828.348.6077 E: wsd@wardandsmith.com Zachary F. Lamb P: 828.348.6038 F: 828.348.6077 E: zflamb@wardandsmith.com Devon D. Williams P: 919.277.9132 F: 919.277.9177 E: ddwilliams@wardandsmith.com AGRIBUSINESS
  2. 2. Disclaimer: This is not legal "advice" THE FINE PRINT 2
  3. 3. Civil v criminal Tort, statutory claims, contract claims Pleadings, discovery, trial Settlement Litigation/ Litigation Avoidance General overview of the litigation process Judgment Cost of litigation 3
  4. 4. MR DEPTRAI designer MR DEPTRAI designer Primary Methods for Asset Protection Corporate Entities Insurance 4
  5. 5. Insurance Types of insurance – property, liability, business Interruption, etc. Distinctions between coverage and duty to defend and value of each 5
  6. 6. Premises Liability and Waivers Duties owed to guests and trespassers Validity of waivers – regardless, they don't prevent you from being sued 6
  7. 7. What to do if you have been damaged by someone's actions or failure to act I have been sued (or I have received a "demand letter") – what do I do and not do? Practical Tips for Handling a Dispute 7
  8. 8. Formation of entity Why? • Limit liability – still need insurance • Tax efficiency • Separateness for selling or continuity • Trademark considerations General Process • File articles with SOS • Create internal documents (operating agreement, bylaws, minutes, shareholders agreement) • File annual reports with SOS Business Planning 8
  9. 9. Tax Considerations Choice of entity • S Corp v. LLC • Income tax driven • Beware real property in a corporation Present use valuation for property tax • Beware recapture of last 3 years if sell or cease use Estate tax • Does not affect most folks • Ability to plan with discounts if estate tax is a concern 9
  10. 10. Estate Planning Importance of having a plan • Intestacy and surprising results • Advance directives for incapacity Trusts might help • Avoid probate • Preserve assets for beneficiaries • Government benefit eligibility Estate Planning 10
  11. 11. Succession Planning for Business Unlikely to happen without long term planning Possible Scenarios • Transfer to family • Sale to key person • Sale to 3rd party Team approach • Accountant • Attorney • Financial Advisor 11
  12. 12. IRCA/I-9 Obligations of Employers Requirement to hire only individuals authorized to work in US • All employees must complete I-9 • All employees must provide required document(s) • Within 3 days if employment more than 3 days; on first day if employment less than 3 days Documents in support of I-9 E-Verify Requirements Caution re Employment Discrimination 12
  13. 13. Wage and Hour Requirements Requirements under the Fair Labor Standards Act • General Rule → Must pay all workers at least the applicable minimum wage and overtime pay, at 1.5 times normal hourly rate of pay for all hours worked in excess of 40 in a workweek • Good news → There are exemptions… 13
  14. 14. Minimum Wage and Overtime Requirements Overtime Pay • Generally, employers of agricultural workers are exempt from overtime payment o Will not apply if work performed on a farm is not incidental or in conjunction with that farmer's farming operation o Will not apply to operations performed off a farm if performed by employees employed by someone other than the farmer whose agricultural products are being worked on. Agricultural exemptions from: MR DEPTRAI designer MR DEPTRAI designer MR DEPTRAI designer 14
  15. 15. More Agricultural Exemptions From FLSA Agricultural exemptions from minimum wage: • An employer in agriculture who does not utilize more than 500 "man days" of agricultural labor in any calendar quarter of the preceding calendar year is exempt from minimum wage and overtime provisions of FLSA for that current year; o A "man day" is any day in which an employee performs agricultural work for at least one hour • Immediate family members • Those engaged on the range in the production of livestock 15
  16. 16. More Agricultural Exemptions From FLSA Agricultural exemptions from minimum wage: • Local hand harvest laborers who commute daily from permanent residence are paid on a piece rate basis in traditionally piece-rated occupations, and were engaged in agriculture less than 13 weeks during the preceding year • Non-local minors, 16 years of age or under, who are hand harvesters, paid on a piece rate basis in traditionally piece-rated occupations, employed on the same farm as their parent, and paid the same piece rate as those over 16. 16
  17. 17. Three requirements for exemption • Duties test • Salary basis payment • Wage more than $455 per hour (stay tuned) Duties tests (most common) • Professional • Secretarial • Executive FLSA changes on the horizon Minimum Wage and Overtime Requirements Overtime exemptions for non- agricultural workers 17
  18. 18. 0 1 0 2 0 3 Payment of all wages promised • Vacation default rule North Carolina Wage and Hour Requirements Records • Hours worked, rate • Burden of proof on employer Withholding wages after separation 18
  19. 19. Workers' Compensation The North Carolina Workers’ Compensation Act requires that all businesses which employ three or more employees, including those operating as corporations, sole proprietorships, limited liability companies and partnerships, obtain workers’ compensation insurance or qualify as self-insured employers for purposes of paying workers’ compensation benefits to their employees. 19
  20. 20. Workers' Compensation Exemption • farm laborers when fewer than 10 full-time, non-seasonal farm laborers are regularly employed by the same employer; • “sellers of agricultural products for the producers thereof on commission or for other compensation, paid by the producers, provided the product is prepared for sale by the producer.” 20
  21. 21. Employee vs. Independent Contractor • The increasing risk of miscalculation Interns and Volunteers Other Traps? 21
  22. 22. Questions? MR DEPTRAI designer MR DEPTRAI designer 22

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