REPORT FROM COUNSEL

WINTER 2007/2008 ISSUE

CELEBRATING 40 YEARS

Peter R. Andrews graduated from Dickinson College in 1961, exactly 50 years after his maternal grandfather graduated from Dickinson. He continued on to Dickinson School of Law and earned his J.D. in 1964. From then until he joined CGA Law Firm on April 1, 1967, Peter was a U.S. Army Captain with Assistant Chief of Staff for Intelligence at the Pentagon.

After serving in the Army, Peter returned to York, PA and joined the law offices of Laucks and Monroe in 1967. At the beginning of his legal career, he focused primarily on real estate. As the years went by he added banking, financial development, corporate, condominium, business and commercial law to his practice.

Peter became a partner with CGA Law Firm in 1970. "I wanted to be a part of guiding how the firm would grow," he said. Throughout the years of guiding the firm, Peter has noticed two significant changes. His practice has become more specialized, as opposed to handling a broad assortment of legal issues. This is certainly a requirement in today's world. He also noted that it used to take five minutes to make decisions within the firm; now any changes must go through committees before they can be implemented.

Peter has served on several Boards over the years, Farm and Natural Lands Trust, Planned Parenthood, and Wachovia. Through his practice he is the Solicitor for several municipalities and sewer authorities. They are very important to him and contribute to his career by reinforcing personal contact with clients.

When Peter isn't at the office he enjoys skiing, tennis, traveling and is an aficionado of Jaguars. He also cherishes time spent with his wife, Sandra, whom Peter met while attending Dickinson. They have been married for 43 years and have two daughters and four grandchildren.

FIRM UPDATES

Events and Speaking Engagements

Attorneys Jeffrey Rehmeyer II and Andrew Paxton presented a seminar to the members of the York County Paralegal Association on intellectual property ownership, registration, and licensing.

Anne E. Zerbe presented a seminar sponsored by WellSpan Employee Assistance Program titled "Balancing Act: Supporting Employees in Need While Holding Them Accountable for Performance". She discussed issues on managing challenging employees and the legal aspect of handling performance-based issues. Anne is co-presenting at the 14th Annual Employment Law Institute on the subject of hiring and compliance with federal and state law.

Andrew Paxton is presenting at a National Business Institute seminar in Harrisburg titled "Helping Your Clients Select the Best Entity Option" on December 17, which will focus on fundamentals and key issues impacting entity selection, including tax and financing aspects.

Benjamin L. Pratt presented the last in a three part series at the Institute for Collective Bargaining and Labor Relations titled "Formulating Strategies for Successful Negotiations". Ben discussed how strategies take shape at the bargaining table through a simulated bargaining session.

Attorneys Andrew Paxton, Margaret "Mieke" Driscoll and Christian Dabb presented a seminar to the members of the Pennsylvania Self Storage Association on legal issues related to the operation and ownership of self storage facilities, including the PA Self Services Storage Facilities Act.

Honors, Awards and Appointments

Lawrence V. Young was recently elected and installed as the President of the Middle District Bankruptcy Bar Association for the 2007-2008 year. Larry was previously the President during 2004-2005 and served on the Board of Directors in the interim. He is the first President to serve two separate terms.

Benjamin L. Pratt was recently appointed to the Board of Directors for the New Hope Academy Charter School.

Charitable Giving/ Sponsorships

Frank H. Countess chaired the American Heart Association's annual Heart Walk at John Rudy Park, which raised over $85,000 for heart disease and stroke research.

Frank also co-chaired the Olivia's House World Premiere event and annual fundraiser featuring the premier of the PBS documentary on the organization. Over $100,000 was raised from the event to pay down their building mortgage.

CHILD SUPPORT OBLIGATIONS

By Richard K. Konkel, Esquire

Child support is a shared responsibility of both parents. No matter what custody arrangement exists between parents for the sharing of physical custody of a child, some sharing of financial obligations usually is ordered by the courts if one parent seeks child support from the other parent. In deciding whether a parent must pay child support, the courts focus on the earning capacity of both parents, and not simply on their actual earnings.

The parent with longer periods of physical custody is generally entitled to some child support even if he or she earns more than the other parent. A parent who is obliged to pay support may be entitled to a reduction of up to 20% of the recommended support order if he or she has overnight custody that amounts to 40% or more of the calendar year overnights.

Nurturing Parent Doctrine

Recently, a Pennsylvania father appealed a trial judge's decision that relieved the father's former wife from making any contributions to the support of their child. The former wife and mother was remarried and had recently given birth to another child. She was not working and was able to prove that the costs of infant child care and her loss of government benefits would put her at an economic disadvantage if she returned to work. The court relieved her of any child support obligations under the "nurturing parent" doctrine. Pennsylvania law has long recognized that, where a parent elects to stay at home with a young child, he or she may be excused from contributing to support.

In deciding whether to excuse such a parent, the courts consider the age and circumstances of the child who is the subject of the support proceedings. The courts focus on whether other sources of support are available to the child. Most often, the nurturing parent doctrine is asserted by mothers who wish to stay at home with young children. Application of the doctrine often places all responsibility for the child's support on the child's father by allowing mother to be held to a zero earning capacity. The nurturing parent doctrine is most often honored by the courts in cases where the father and mother who are presently parties to the case made a prior agreement between themselves for mother to stay home with the children.

In the case at hand, the father objected to the application of the nurturing parent doctrine where the child being "nurtured" was not the child whose support was at issue and was not a child of the father's. The Pennsylvania Superior Court found that whether or not the nurtured child was the same child whose support was at issue was not a controlling factor in deciding if the mother was entitled to nurturing parent status. Instead, the mother's earning capacity and the support otherwise available to the child at issue were the primary issues for the court's focus.

Many Pennsylvania county courts consider every parent responsible for paying some child support, no matter what his or her circumstances. Parents who seek relief from child support based on the nurturing parent doctrine are frequently denied relief. But a parent who chooses to stay at home with a young child is entitled to seek relief from the payment of support on the ground that the young child is in need of parental nurturing and that the fulfillment of that need prevents the care-taking parent from earning income.

IRS GETS TOUGH ON DEFERRED COMPENSATION

By Timothy J. Bupp, Esquire

The much-anticipated and much delayed rules from the IRS on the income tax treatment of deferred compensation are now available. At almost 400 pages, the rules are not exactly light reading for the average taxpayer. The regulations are effective as of January 1, 2008; however, taxpayers have until the end of 2008 to make any necessary changes to their deferred compensation plans to comply with the regulations.

The Internal Revenue Code has special tax rules for "nonqualified" deferred compensation plans. These are not to be confused with "qualified" employer retirement plans, like a 401(k) plan, or with bona fide vacation leave, sick leave, compensatory time, or disability pay or death benefit plans. The new regulations expand the already broad definition of what constitutes deferred compensation. Essentially, a plan provides for deferred compensation if an employee has a legally binding right during a taxable year to compensation that has not been actually or constructively received and included in gross income, and that is, or may be, payable under the plan in a later year.

The impetus for the new rules was a growing concern that some individuals were deferring money over which they still had control, and which they could receive basically whenever they wanted it. The memories are still fresh of top Enron executives cashing out their deferred compensation early and leaving the company financially floundering. In a nutshell, the new rules accomplish the following:

* limit the flexibility for the timing of elections to defer compensation;

* restrict distributions during employment to fixed dates, certain changes in control, or extreme hardship;

* prohibit acceleration of distributions of deferred compensation;

* prevent key employees of public companies from receiving deferred compensation due to severance from service until six months after severance; and

* require that deferrals of distribution dates or changes in the form of payment be made at least one year in advance of the scheduled distribution date.

If the rules are not followed, the tax consequences are significant. The participant is immediately taxed on the value of the deferred compensation once it is no longer subject to a substantial risk of forfeiture. On top of that, there is a 20% excise tax on the amount that is included as income. For good measure, there is also an interest penalty. To avoid such a scenario, employers and employees with deferred compensation plans should promptly come up to speed on the new rules and get appropriate professional help with making sense of, and responding appropriately to, the new IRS rules for deferred compensation.

If you need advice on compliance of your plans with the new deferred compensation rules, contact your CGA Law Firm estate law attorney.

EMPLOYMENT LAW UPDATE: EMPLOYERS MUST COMPLY WITH NEW I-9 FORM

By Anne E. Zerbe, Esquire

Chair Employment and Labor Law Department/Co-Chair Litigation Department

On November 7, 2007, the U.S. Citizenship and Immigration Services (USCIS) issued a revised Form I-9, Employment Eligibility Verification, and Handbook for Employers, Instructions for Completing the Form I-9 (M-274). Employers are required to document on Form I-9 that all citizen and non-citizen employees who are hired after November 6, 1986, are eligible to work in the U.S and that their identities match the information on their employment authorization documents in accordance with the Immigration Reform and Control Act of 1986 (IRCA). The revised Form I-9 complies with the document reduction requirement of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (IIRIRA) which reduced the number of documents Employers may accept from newly hired employees during the employment eligibility verification process.

In keeping with the IIRIRA, five documents that establish proof of birth or identity and employment eligibility have been removed from the list of acceptable documents Employers may accept when completing the Form I-9. The documents that have been removed are: Certificate of U.S. Citizenship (Form N-560 of N-570); Certificate of Naturalization (Form N-550 or N-570); Alien Registration Receipt Card (Form I-151); the unexpired Reentry Permit (Form I-327); and the unexpired Refugee Travel Document (Form I-571). According to USCIS, the forms were removed because the forms had insufficient features to deter counterfeiting, tampering and fraud.

Additionally, one document was added to list A of the list of acceptable documents: Unexpired Employment Authorization Document (I-766).

Further, under the new instructions on completing Form I-9, an employee is no longer required to provide a Social Security number in Section 1 on Form I-9, unless he or she is employed by an Employer who participates in the Social Security Administration's E-Verify Program. As of November 7, 2007, Form I-9 with the revision dated June 5, 2007, is the only version of the form that is valid for use. However, the Department of Homeland Security (DHS) will publish a Notice in the Federal Register that provides Employers with a thirty (30) day period, beginning on the date of publication of the Notice, to transition to the new Form I-9. We recommend that Employers begin using the revised Form I-9 as of November 7, 2007.

Employers do not need to complete a new Form I-9 for existing employees, unless these employees undergo employment re-verification after November 7, 2007. Employers must require employees to complete Section 1 of the form at the time of hire, which is the actual beginning of employment. Employers must complete Section 2 by examining the employee's documents evidencing identity and employment eligibility within three (3) business days of the date employment begins.

Employers should also keep in mind that it is unlawful to discriminate against work eligible individuals because of national origin or citizenship status. Employers cannot specify which documents the employee can present for identity in employment verification purposes.

USCIS issued a revised Handbook for Employers (M-274). Both the revised Form I-9 and the Handbook are available at www.uscis.gov. The Handbook for Employers contains instructions for completing the Form I-9, discusses photocopying and retaining the Form I-9, and addresses instructions for recruiters, as well as providing Employers with a list of unlawful discrimination and penalties. The Handbook also contains instructions on re-verifying employment. Employers should keep in mind that they must retain completed Forms I-9 for all employees for three (3) years after the date they hire an employee or one (1) year after the date employment is terminated, whichever is later. If Employers chose to store Forms I-9 electronically, Employers must implement a security program to safeguard the information, and to insure that the information can be searched and retrieved.

Employers should use the revised Form I-9 for all employees hired after November 7, 2007. Employers who fail to complete the revised Form I-9 maybe found to have committed "document abuse" and will be subject to fines and sanctions. Employers should also review the new instructions for completing Form I-9, and provide those instructions to new employees hired after November 7, 2007. Employers must retain appropriate paperwork, and may choose to maintain copies of documents presented by the new hire that comply with the revised list of acceptable documents to establish identity and employment eligibility. Employers should keep in mind that Employers are given three (3) days Notice prior to inspection of the Employers Form I-9 upon inquiry by Department of Homeland Security (DHS), U.S. Office of Special Counsel (OSC) and Department of Labor (DOL). The Employer must make Forms I-9 available upon request at the location where DHS, OSC or DOL requests to see them.