New mandatory labor poster must be displayed

Effective March 10, 2005, all employers, regardless of the number of employees, must display a new mandatory labor law poster under the federal Uniformed Services Employment and Reemployment Rights Act.  The employment rights mandated by the Act extends coverage to up to 24 months for employees called to active military duty.  Coverage was formerly only 18 months.  During this coverage period, the job security and benefits for the employee on active duty are guaranteed under the law.

In addition, there are five additional labor law posters required under federal law.  They are notices related to: 1) Equal Employment Opportunity, 2) Occupational Safety and Health, 3) Fair Labor Standard Act (minimum wage), 4) Polygraph Protection, and 5) Family and Medical Leave.

With respect to the required labor law posters under Illinois law, there are also six required posters.  These posters relate to: 1) Minimum Wage, 2) Equal Pay Act, 3) Victims’ Economic Security and Safety Act, 4) Workers’ Compensation, 5) Notice to Workers about Unemployment Insurance Benefits, and 6) Safety and Health Protection on the Job.

If you have any specific questions about whether or not your organization is in compliance with these or other mandatory labor laws, please contact Attorney Joseph R. Marconi with the Business Litigation & Practice Group.

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Effect of reinstatement on
involuntarily dissolved corporations

One of the primary reasons people incorporate their businesses is to enjoy limited personal liability relative to operating that business.  What does that mean?  Absent fraud, a person’s liability, in the event of judgment entered against the corporation, is limited to his or her investment in the corporation. 

Very often, however, oversight by the officers/directors/owners (principals) of the corporation results in the involuntary dissolution of the corporation.  How does that happen?  Most often it happens due to the failure to file a corporation’s Annual Report and to pay its Annual Franchise Tax.

Despite receipt of a Notice of Delinquency from the Illinois Secretary of State, principals often ignore the last opportunity to file their Annual Report.  The next correspondence from the Secretary of State is a Certificate of Dissolution.  Even then, no action is taken to return the corporation into good standing.  Yet, the operation of the business continues.

In the worst-case scenario, the principals incur liability to a secured creditor or a judgment creditor.  At this point, it is discovered the corporation no longer exists.  Now what?  Is there personal liability for any liabilities incurred by the principals subsequent to the date of dissolution?  Does reinstatement of the dissolved corporation absolve the principals of personal liability for liabilities incurred subsequent to the date of dissolution?

According to the Illinois Business Corporation Act (Act), failing to file an annual report shall result in dissolution, which terminates a corporation’s existence and prohibits it from carrying on business.  In addition, according to the Act, anyone, including directors, who acts in the name of the dissolved corporation without authority shall be liable for any liabilities arising out of such actions.  Finally, the Act permits reinstatement of dissolved corporations; and all actions taken during the period of dissolution are ratified.

Although reinstatement would appear to absolve principals of individual liability during the period of dissolution, Illinois Appellate Courts have held otherwise.  The Courts have held the reinstated corporation may be potentially liable in addition to the individual.  In other words, the corporation acts as an indemnitor or surety for the individual.  Individuals are not relieved of personal liability incurred during the period of dissolution.

Recommendations

In the event of an involuntary dissolution and subsequent liability for which the principals desire the corporation to serve as a source to satisfy a prospective judgment in this matter, they should do the following:

a) Prepare an Application for Reinstatement and submit with proper Filing Fee;

b) Prepare Annual Reports for all delinquent years and submit with proper filing

    fees, franchise taxes and penalties and interest.

Conclusion

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To avoid a similar fate, we all have options.  Generally, these options are known as health care directives.  In Illinois, they include the Health Care Surrogate, the Living Will and the Health Care Power of Attorney. This article is not meant to be an exhaustive discussion of this complex area.  Rather, it is designed to expose you to the subject in an effort to motivate you to take action to avoid enslavement through your silence.

If you have no Living Will or Health Care Power of Attorney, a Health Care Surrogate is available under very restricted circumstances.  The statute which authorizes the surrogate gives your attending physician the power to identify a qualifying condition and the power to determine you lack the requisite capacity to make decisions before he may name a surrogate from among a prescribed list of candidates.  Once the surrogate is named, he may make a decision on whether to forgo life sustaining treatment without judicial involvement.  The only problem with this instrument is the surrogate’s decision may not reflect your wishes.

A Living Will, on the other hand, is a written statement of your wishes concerning your medical treatment (it is not an instrument by which you dispose of your estate – that is called a "will").  It is what is known as an advance directive since it gives your health care providers your wishes in the event you suffer from an incurable and irreversible disease.  It comes into play only when your condition is terminal.  It does not, however, give an express direction to your health care providers as to whether you wish to have nutrition and hydration withdrawn or withheld. 

A Health Care Power of Attorney gives you the opportunity to choose an agent to act in accordance with your wishes and informs the agent what those wishes are.  The agent will have the authority to decide health issues, including the ability to consent, authorize, refuse, withhold or withdraw any type of medical care, including life-sustaining (including the provision of nutrition and hydration) treatment.  The Health Care Power of Attorney is the instrument by which you instruct your agent that you either: a) do not want to be kept in a permanent vegetative state; or b) due to religious beliefs, you want to be kept alive as long as possible.

In summary, a Living Will provides your health care providers with your intent.  However, it lacks empowering provisions.  A Health Care Surrogate, which may be used absent any documents signed by you, is more powerful than a Living Will but may result in actions contrary to what you would have wanted.  A Health Care Power of Attorney can provide you with what you want – executed by an agent in whom you have trust.

Do not become a Schiavo – free yourself and your loved ones from additional anguish at a time when you and they are suffering enough.  Make sure you include both a Living Will and a Health Care Power of Attorney as part of your estate plan.

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This article will focus on the Act’s alternative of the jurisdiction rules concerning class actions.  To that end, the Act amends the federal diversity jurisdiction rules specifically for class action suits.

The Act indicates that in specific circumstances, the federal district court will have original jurisdiction on the basis of diversity jurisdiction.  For the federal district courts to have original jurisdiction, the amount in controversy must be over $5 million (exclusive of interest and costs).  For reference, in non-class actions for the federal courts to exercise diversity jurisdiction, the amount in controversy need be only $75,000.  In addition, the class must meet one of three criteria.  The class must either (1) include class members from at least two different states; or (2) a member of the class must be a foreign state or a citizen or subject of a foreign state and a defendant must be a citizen of a state; or (3) a class member is a citizen of a state and a defendant is a foreign state or a citizen or subject of a foreign state.

However, even if the above criteria are met, it is not necessary for a district court to exercise jurisdiction over a class action if greater than one-third but less than two-thirds of the class members are citizens of the same state as the primary defendants.  But before declining jurisdiction, the federal district court must consider six issues ranging from whether the claims asserted involve matters of national interest to whether in the 3-year period prior to the filing of the suit, one or more class actions have asserted the same or similar claims.

These altered diversity jurisdiction rules also apply to a new category of cases called mass actions.  Mass actions involve instances where 100 or more persons seek monetary relief for claims involving common questions of law or fact and the claims are proposed to be tried jointly.  Of course, there are limitations on this rule, too.  For instance, mass actions do not include actions in which all of the claims arise from an event in a state in which the action was filed and that resulted in injuries in that state or a contiguous state.

Beyond the changes to the diversity jurisdiction rules, the Act also regulates coupon settlements, the notification by defendants of federal and state officials after a proposed settlement of a class action is filed in federal district court, and removal from state court to federal court of interstate class actions.  

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