Written by Manny Schoenhuber
happy new year. Welcome to the 8th edition. USA Business Digest – Legal newsletter for European companies and US investors. We hope 2024 is a great start for you and your business. Thank you for your continued interest in this newsletter. I wish you and your business all the best in the new year.
I'm looking forward to—The goal of the first issue of each new year is always to provide an outlook on the new year.
This month, we will take a closer look at (1) reporting obligations based on the Corporate Transparency Act that came into effect in 2018; January 1, 2024(2) Final rule regarding classification of employees or independent contractors under the Fair Labor Standards Act; (3) The Committee on Foreign Investment in the United States focuses on threats and enforcement. (4) Status of global agreements on steel and aluminum.
As usual, this update is available in both English and German.
compliance
Corporate Transparency Act reporting rules come into effect January 1, 2024
The Corporate Transparency Act (“CTA”) is part of the Anti-Money Laundering Act of 2020 and is administered under the auspices of the U.S. Treasury Department’s Financial Crimes Enforcement Act (FinCEN). This is a United States law (31 US Code § 5336) enacted on January 1, 2021, aimed at combating money laundering and other illegal activities.
The CTA's reporting rules went into effect in 2016. January 1, 2024requires reporting entities to disclose certain beneficial ownership information and other data to FinCEN.
When evaluating a company's reporting requirements, you should ask the following questions:
- Which organizations are required to report and which are exempt?
- Who must be reported as a so-called “beneficiary”?
- Who is considered a “corporate applicant”?
- What are the penalties for failing to properly report?
If you need to report your company or U.S. subsidiary, you can do so at any time. Case-by-case analysis, a U.S. attorney should be able to assist you with these decisions. At Jackson Walker, we can reliably assist European companies and their subsidiaries with their CTA reporting requirements. If you need assistance with your CTA report, please feel free to contact us.
Generally, each entity should be analyzed separately. However, if the entity is registered to do business in a U.S. state, it may be a reporting company. Reporting companies include:
- Non-exempt domestic corporations, partnerships, and limited liability companies.
- foreign country An entity registered to do business in any state in the United States.or
- Any other organization established by filing with the Secretary of State or equivalent office.
There are exemptions for reporting companies, such as financial institutions and financial institutions, and it is also important to determine whether your company falls under any of these exemptions. Case-by-case analysis.
The reporting deadlines are as follows.
- Existing entities established or registered before January 1, 2024 must file an initial report with FinCEN by January 1, 2025.
- Reporting companies established or registered after January 1, 2024 but before January 1, 2025 must file their first report within 90 days.
- Reporting Companies Companies incorporated or registered after January 1, 2025 have only 30 days to file their first report.
From now on, corrections or updates to previously submitted reports must also be made within 30 days.
Of course, there are still some areas that are unclear, and we will continue to closely monitor further developments.
caveat: As with other government applications, bad actors can use the CTA to contact uninformed business owners to extract fees for worthless services or to hide government programs from private parties. or illegally obtain data. Therefore, always check with your attorney regarding CTA compliance requirements. ♦
employment
Final rule regarding classification of employees or independent contractors under the Fair Labor Standards Act
On January 9, 2024, the U.S. Department of Labor (“DOL”) issued a final rule regarding the classification of employees or independent contractors under the Fair Labor Standards Act (“FLSA”). This rule governs when an employer may classify a worker as an independent contractor under federal labor law.
The DOL relies on a six-factor “economic reality test” to analyze employee or independent contractor status under the FLSA. The six elements include, but are not limited to:
- Opportunities for profit and loss depending on management skills.
- Investments by workers and potential employers.
- The degree of permanence of the work relationship.
- nature and degree of control.
- The scope of work performed is an integral part of the potential employer's business.and
- skill and initiative.
This rule is certainly expected to face court challenges, as other rules under this administration and previous rules have faced. However, to avoid the legal risks and consequences of misclassifying a worker's status, employers should exercise caution and seek legal advice to ensure that all appropriate factors are taken into account. there is.
The final rule will become effective on March 11, 2024.
foreign investment
Committee on Foreign Investment in the United States expands focus on threats and law enforcement in 2024
The Committee on Foreign Investment in the United States (“CFIUS”) is an interagency committee authorized to review certain transactions involving foreign investment in the United States and certain real estate transactions by foreign persons. used for the purpose of determining the impact on US national security.
In 2024, CFIUS will most likely: (1) Introduce additional restrictions on investments in sensitive technology. (2) strengthen enforcement, compliance, and oversight activities; (3) Focus on supply chain resilience. (4) Continue to scrutinize cross-border transactions.
The increased focus on CFIUS enforcement will impact the risk assessment of voluntary filings and the importance of determining whether there is a mandatory filing obligation. Companies need to identify problems early and pre-empt costly investigations and enforcement actions.
There is currently increased scrutiny of the supply chain, including:
- Semiconductor manufacturing and advanced packaging.
- clean energy;
- Critical minerals and other identified strategic materials.and
- Pharmaceutical products.
As CFIUS expands its scope, national security due diligence to assess foreign investment risks is more important than ever. Companies will need to strengthen their supply chain due diligence in response to CFIUS’ focus on supply chain resiliency and expect to provide competency assurances to gain investment approval. is needed. ♦
trade
US and EU global agreements on steel and aluminum
The Global Deal on Steel and Aluminum is a joint U.S.-EU project to set mutually acceptable standards on carbon emissions and excess capacity to enable free transatlantic trade in metals. The goal for both parties is to ensure that their respective domestic producers and climate goals are not compromised.
The EU announced in mid-December that it would not reimpose retaliatory tariffs it previously imposed on U.S. goods in response to U.S. national security tariffs on steel and aluminum imports. Meanwhile, the United States will continue to allow European steel and aluminum imports into the United States up to a certain quota without levy.
This is still a developing story as both sides continue to make demands. The EU now wants to incorporate a new carbon border adjustment mechanism into the global deal. Meanwhile, the United States asserts its right to impose national security tariffs.
The extension agreement, which suspends discussions (for the time being), is scheduled to last until March 31, 2025.
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These materials are provided by Jackson Walker for informational purposes only, do not constitute legal advice, and are not a substitute for legal advice from a qualified attorney. The laws of other states and countries may be quite different from those described here. Use of these materials does not create an attorney-client relationship between you and Jackson Walker. Because the facts and outcome of each case vary, we cannot guarantee a specific outcome.
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