Recent Legal Developments – Business and Real Estate Law – And New Quick Facts

By July 24th, 2023

Blog No. 170 
July 25, 2023 
Reading Time: 7 Minutes
By Mack W. Borgen
2024 Listee – Who’s Who in America; University of California at Berkeley (Honors, Economics); Harvard Law School; National Award-Winning Author.

Call Me Anytime —

General Business Planning

or Corporate, Business or Real Property Law Matters


Quick Facts

AI Laws – It Was Only a Matter of Time …

New York recently began enforcing a first-of-its-kind AI law centered upon the use of AI in hiring. Under the new law, employers using AI technology in the hiring of new employees must inform the prospective employees and must submit audits showing that such AI systems are themselves “unbiased.” This is not a small matter — it is reported that AI technology is now used by as many as four in five employers for everything from resume screening to initial chatbot interviews. Unsurprisingly, AI hiring laws are currently being drafted in several states, and there is broad consensus that some form of federal guidelines will likely be needed.

West Hollywood – The Highest Minimum Wage in the Country

The “Fight for 15” protests for a $15 minimum wage have long since been surpassed in many jurisdictions. And now, as of July 1, 2023, West Hollywood, CA mandates the highest minimum wage in the country with a record $19.08 per hour mandate (Author’s Note: I have no idea why a more “rounded” number such as $19.50 or $20.00 wasn’t used). However, even here, the city enacted some limited relief for certain employers. For example, a business can apply for a one-year waiver if they/it can show that compliance would force (a) the filing of bankruptcy or (b) the reduction of its workforce by more than 20%.

While there are valid arguments both for and against the imposition of minimum wage requirements, a far more productive focus would be upon the constantly widening disparities of wealth and the (since the mid-1980’s) decline of our countries’ middle-class – and with it, successful, “middle-class” businesses.

Uses 95% Less Water – World Largest “Vertical” Farms Opens in Dubai

Scheduled to produce more than 2.0MM pounds of leafy greens annually and using a closed-loop watering system, the facility uses 95% LESS water than traditional farms. The facility is scheduled to still produce three (3) tons of output per day.

In light of the devastating water shortages especially in the Southwest U.S., it might be advisable to consider using such “vertical” farming. See also, Borgen, Mack W., “Fixing America – Idea 28 – Two Solutions to the Western States’ Drought and Water Shortage Problem,” March 13, 2023, at www.mackwborgen/com . .

More and More (Private) College Closings and Mergers

While students continue to flood into flagship universities and “brand-name” colleges, more and more smaller colleges and universities have been struggling. As a result, about 200 colleges have closed in the last decade. This is quadruple the number which closed in the prior decade. In addition, in the last four years alone, there have been 95 college mergers — compared with 78 over the prior 18 years!

The advantages of college merger can be compelling – broadening of enrollment base, diversification of programs, expansion of facilities, and efficiencies of scale.

And Some Universities Are Getting Larger (and Larger!)

As of the 2022-2023 academic school year, the following is a list of the countries’ largest ten (10) public universities.

1          Texas A&M                            College Station, TX    74,869 students

2          Univ of Central Florida          Orlando, Florida          68,442 students

3          Rutgers University                  New Brunswick, NJ    67,620 students

4          University of Florida              Gainesville, Florida    61,112 students

5          Ohio State University             Columbus, Ohio          60,540 students

6          Arizona State University        Tempe, Arizona          57,588 students

7          Univ of Illinois-Champaign    Champaign/Urbana, IL  56,644 students

8          Florida International               Miami, FL                   55,687 students

9          University of Minnesota         Minneapolis, MN        54,955 students

10        Univ of Texas at Austin          Austin, Texas              52,384 students

Special Thanks to Mr. Robert Badal

Recently, I have written a couple of articles about various aspects of corporate wrongdoing and the resultant fines, judgments, and settlements. As Idea 29 in my Fixing America series, I summarily outlined the need for some personal liability on the part of senior management for corporate wrongdoing. As Idea 30 and so that the U.S. public could more accurately assess the appropriateness of the amount of any fine, judgment, or settlement, I suggested that the media implement “perspective reporting” whereby the imposed amounts is compared to, for example, the defendant corporation’s annual earnings.

Mr. Robert Badal, a great friend and brilliant attorney, pointed out to me that possibly the reader should also be reminded that not only may such fines, judgments, or settlements be small in comparison to the firm’s annual earnings but also they are tax deductible! Consequently, albeit indirectly, the U.S. taxpayers “contribute” to the payments of these fines and settlements. This is an excellent point, and my thanks to Mr. Badal for adding this note.

Recent Business and Real Estate Law Developments

BofA Agrees to Another $250,000,000 in Bank Fraud Settlements

The Bank of America recently agreed to another $250.0MM in settlement of its multiple consumer frauds. $100.0MM will be used to reimburse customers, and $150.0MM are fines relating to its “double-dipping” on overdraft fees, knowingly withholding reward bonuses on credit cards, and opening customer accounts without their knowledge or consent.

This is especially disappointing since the BofA was supposedly trying it “clean up its reputation” after many prior settlements and judgments. Instead, it appears to be following the Wells Fargo model of consumer deceits.

As I have written previously, it is the opinion of this author that until some form of direct and personal financial liability or criminal liability is imposed, these types of “no-admission-of-wrongdoing” settlements will continue. They will be included as line-items in corporate budgets, and they will be written off and viewed as merely a “cost of doing This is despite the fact that double-dipping, fake accounts, and other forms of “junk fees” are nothing less than straight fraud. Please see my recent article entitled “Fixing America – Idea 29 – The Need for Some Direct, Personal Liability of Senior Management for Corporate Wrongdoing.” (Blog No. 167, June 6, 2023, at ).

Employment Law

– Birthdate Ban – Prohibition of Many/Most Age-Related Inquiries –

More states are enacting prohibitions against employers’ asking age-related questions or even obtaining age-disclosing information. For example, Colorado’s new law (effective July 1, 2024) prohibits Colorado employers not only from inquiring about a prospective employer’s age or date of birth but also from asking about or obtaining information about a prospective employee’s dates of attendance at or date of graduation from schools and colleges. As always, there are normal exceptions relating to jobs which themselves have age-based requirements such as those involving the sale of alcohol or driving of certain types of equipment. It should be noted that this Colorado law applies not only to employers based in Colorado but also multi-jurisdictional companies which advertise and hire within the state. Under Colorado’s law, there is not a private right of action, but substantial fines can be imposed by Colorado’s Department of Labor and Employment.

Authors Recommendation: It may be prudent to routinely advise prospective employees’ of their right to redact any information about their age (including any university graduation date(s)).

Corporate Transparency Act (the “CTA”)

– New Federal Reporting Requirements on Small Businesses –

The CTA’s effective date of January 1, 2024, is coming soon. With it comes a series of reporting requirements to be made to the US Department of Treasury FinCEN division. These new reporting obligations are under the CTA legislation which, in turn, is a part of Congress’ Anti-Money Laundering Act of 2020.

Basically, these reporting requirements apply to small companies with fewer than 20 employees and require them to report certain “beneficial ownership” information. Adding to the list of a business’ burden, the idea is that the data from such reporting can be used to create a national registry of beneficial ownerships of companies. Then, this “national registry” can be used to more effectively combat money laundering, tax fraud, etc. Companies. Even (indeed especially) small companies will normally be required to make only a one-time filing in order to provide beneficial ownership information. There are many exemptions – such as (a) large corporations with more than 20 employees, more than $5.0MM gross receipts or sales, and an operating presence at a physical office in the US., (b) publicly-traded companies, (c) venture capital funds, (d), trusts, and (e) subsidiaries etc.

The reporting content focuses upon identifying the “beneficial owners” of the companies, their date of birth, complete address, and some unique identifying number (e.g., from a passport or state-issued driver’s license etc.).

Implication. Basically, this new CTA reporting just adds to the complexity of business formation and operation in the U.S. and arguably reinforces the necessity, in this author’s opinion, of having close and competent (i) business, (ii) employment, and (iii) tax counsel (or an experienced CPA firm) both at the formation stage and during the operational phases of one’s business.

Real Estate – Managing Commercial Real Estate Taxes

in Today’s Challenging Commercial Real Estate Market

There are multiple examples of the poor state of our country’s commercial real estate market. In San Francisco, an office building which was worth $300.0MM in 2019 just sold for less than $70.0MM. Also, the owners of San Francisco’s premier downtown shopping mall recently announced that they are abandoning the property due to plunging sales, high vacancies, and low retail foot traffic. Similarly, the vacancy rates for downtown office space in Los Angeles is 24% and 22% in San Diego.

Many local jurisdictions are seeking ways to address this issue and to minimize the attendant consequences. For example, Boston recently announced a major plan to offer huge (and long-lasting) tax breaks to owners of commercial buildings which convert their buildings to residential space. Also, property owners and their counsels should closely review the possible use of Proposition 8. It was adopted shortly after the 1978 passage of California Prop 13, and under Prop 8, property tax assessments may be reduced when there is a decline in market value. Basically, the combined effects of Propositions 8 and 13 is that the taxable value of locally assessed real estate is limited to the lesser of its fair market value or its base year value (usually the year of acquisition or construction).

In addition to close tax assessment reviews, sometimes — with the advice of real estate and tax counsel — commercial property owners should closely identify all alternatives – even the most “creative” alternative such as initiating direct negotiations with governmental and quasi-governmental authorities and/or utilizing the many ground lease alternatives which might help preserve at least some long-term value in the property.

Employment Law – Family Medical Leave Act Continues to Expand

There are now 14 states which have family and medical leave programs – including California, New York, New Jersey, Oregon, Washington, and Minnesota. They vary slightly in details (e.g., applicability, time of permitted paid leave), but the common themes are that if a person has been employee (full-time or part-time) for at least X months (e.g., 12 months) and/or worked at least Y hours (e.g., 1,250 hours) over the past year, then they should be entitled up to 12 week of paid leave for (a) serious medical conditions, (b) bonding leave for biological, adoptive or foster parent), (c) family care lease (care for a family member with a serious medical condition), (d) safety leave (time off for victims of domestic abuse, sexual assault, or even stalking of the employee or a family member of such employee), and (e) qualifying exigency leave (relating to an employee being call to active military duty).

Despite the existence of these Family and Medical Leave Act, it is estimated that only about 50% of employees in the U.S. qualify especially because of the minimum 50-person employees’ requirement. 

Copyright 2023 by Mack W. Borgen. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, except in the case of brief quotations embedded in critical articles or reviews, without prior written permission by the author.



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