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Crenshaw, Ware & Martin PLC is pleased to announce that five of its lawyers have been named to Best Lawyers in America in the 31st Edition of Best Lawyers® in America.

Best Lawyers in America

Steven L. Brinker

• Business Organizations (including LLCs and Partnerships)

James L. Chapman, IV

• Admiralty and Maritime Law
• Commercial Litigation
• Litigation- Insurance
• Railroad

Donald C. Schultz

• Banking and Finance Law
• Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law
• Eminent Domain and Condemnation Law
• Litigation-Bankruptcy

W. Ryan Snow

• Admiralty and Maritime Law
• Commercial Litigation
• Construction Law
• Litigation – Construction

Darius K. Davenport

• Commercial Litigation
• Litigation- Insurance
• Real Estate Law

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Crenshaw, Ware & Martin, P.L.C. is pleased to announce that five of its lawyers have been selected for inclusion in the 2024 list of Virginia Super Lawyers® and Virginia Rising Stars. Through a selection and evaluation process that includes peer nominations, independent research and third-party validation of professional accomplishments, Virginia Super Lawyers® recognizes attorneys who have distinguished themselves in their legal practice.  Notably, only 5% of attorneys are selected to Super Lawyers and 2.5% to Rising Stars. The attorneys recognized in 2024 are:

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On April 18, 2024, Virginia governor Youngkin signed into law a statute governing Name Image and Likeness (NIL) payments to student-athletes, the first of its kind in the U.S.  House Bill 1505 goes into effect on July 1 and bypasses certain NCAA rules on payment to athletes enrolled in Virginia colleges and universities, setting a precedent other states have already begun to follow.   The statute allows state colleges and universities to create and negotiate NIL deals without NCAA input or restrictions. 

July 2021 marked a watershed even for student-athletes, as the NCAA rescinded rules restricting athletes from earning money from contracts with businesses that compensate them for endorsements, personal appearances, and commercials.  On April 17, the NCAA passed internal legislation allowing its member schools to be more actively involved in securing sponsorship and endorsement deals for athletes, including facilitating opportunities between third party businesses and athletes.  The interaction between the NCAA’s rules and state law such as the Virginia statute remains to be seen, though there appears to be some overlap.  It is possible statutes like the Virginia bill and other states’ enactments pressured the NCAA to liberalize their own rules.

The new Virginia statute opens a pathway for donors to work directly with schools on paying athletes.  Universities are required to develop and submit to the institution’s governing body institutional policies and procedures governing student-athletes’ use of NIL for compensation, with enforcement mechanisms.  The University may also use its own assets to incentivize NIL deals for their athletes.

Finally, the statute prohibits the use of a student-athlete’s NIL in connection with alcoholic beverages, adult entertainment, cannabis or controlled substances, performance enhancing substances, drug paraphernalia, tobacco, weapons or casinos and sports betting.  It also permits universities from restricting the use of the student-athlete’s NIL on “school time” – when engaged in academic, sports team, or athletic department activities.  Student-athletes may not use any institution’s facilities, apparel, uniforms, or any intellectual property in the NIL-associated activities, and are required to disclose draft agreements to the university prior to executing the agreement

The Virginia statute provides an example for other states to follow, and several have bills pending in their legislature.  Each state enacting a different statute makes it slightly more likely Congress will eventually supply a uniform federal standard, though the athletic community is likely years from such a national legislative leveling. Crenshaw, Ware & Martin enjoys the advantage of having attorneys with bar memberships in Virginia, North Carolina and Maryland.  Our firm can assist student-athletes with the structuring of NIL deals which maximize advantage to the student-athlete and ensure an even negotiation playing field.  Please reach out to Managing Partner Darius Davenport at DDavenport@cwm-law.com, Attorney Butch Bracknell at RBracknell@cwm-law.com, or any partner or attorney in the firm for assistance in navigating NIL territory.  Contract Crenshaw Ware & Martin at 757.623.3000.

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Reporting Entities

The entities required to report are very comprehensive.  Domestic reporting companies include corporations, LLPs, or any other similar entity created by the filing of a document with a secretary of state or similar office.  Foreign reporting companies are those private entities formed under foreign law that are registered to do business in the United States.

Exemptions, companies not considered reporting companies, include banks, credit unions, SEC-reporting companies, insurance companies and public accounting firms.  Additionally, companies that employ more than 20 employees on a full time basis in the U.S., that filed in the previous year federal income tax returns demonstrating more than $5 million in gross receipts, revenues or sales, and operates with a physical office presence in the U.S.  This exempts all Fortune 500 entities and many publicly traded companies.  The focus for CTA reporting is small business.

Beneficial Owners

A beneficial owner is an individual who directly or indirectly through any contract, arrangement, understanding relationship or otherwise exercises substantial control over the entity or owns or controls at least 25% of the equity interests of the entity.  “Substantial control” is defined as individuals who serve as a senior officer of the reporting company, have appointment or removal authority over the senior officers and board of directors; can direct, determine, or have substantial influence over important decisions within the company, or have any other type of substantial control over the company.  The categories likely includes all CEOs, COOs, CFOs, CMOs, and board members, as well as major equity holders.

The category does not include minor children if the parent or legal guardian is reported, an individual acting as a nominee, intermediary, custodian or agent on behalf of another individual (for example, an incapacitated individual remains the beneficial owner, not his or her custodian), an employee of the reporting company (not a senior officer with little control), an inheritor whose interest is a future interest through inheritance or expectancy, and creditors unless the creditor exercises substantial control or owns or controls at least 2 of the equity of the company.

Content of the Report

Reporting is simple:  it is purely identity based.  The CTA simply mandates a small business ownership registry.  Beneficial owners must report the entity’s full legal name, trading/DBA names, address of the entity, jurisdiction of formation/registration and the federal taxpayer ID number (EIN).  Each beneficial owner must report his or her full legal name, birthday, home address, an identifying number from a driver’s license, passport or similar document, and an image of the same approved document.

Timing, Penalties and Other Considerations

Companies in existence before January 1, 2024 must file initial reports no later than January 1, 2025.  Newly formed companies created after January 1, 2024 must file their initial reports 90 days after receiving notice of their creation or registration.  Companies have 30 days after a change in ownership to include updated information, and also have 30 days to correct inaccurate information after discovery of an error.

Individuals and entities covered by U.S. sanctions have preexisting financial constraints in place.  Even so, the CTA is an additional check on ownership by sanctioned individuals or entities.

Any person who provides false information or fails to comply with reporting requirements is liable for civil penalties of up to $500 per day that the violation continues.  Violators are also subject to criminal penalties of up to 2 years imprisonment and fines of up to $10,000.  Pragmatically, it is likely most enforcement usually will be handled as a civil matter, except for bad faith failures to file accurately or nonreporting designed to evade taxation or advance some other criminal activity, or to undermine a national security interest.  Nonreporting could also have adverse consequences in mergers and acquisitions or during creditworthiness reviews.  Banks, for example, will likely reformat their credit applications to validate reporting compliance.

Many nonprofits are covered, in that every nonprofit organized in the U.S. has a corporate formation on which the nonprofit status is grounded.

Finally, small businesses who are mandated reporting entities can consult FinCEN’s Small Entity Compliance Guide for assistance in filing and reporting. 

Crenshaw, Ware & Martin is ready and able to assist companies and organizations with their compliance obligations, and is pleased to offer your business an advisory session on reporting obligations.  Contact Managing Partner Darius Davenport at DDavenport@cwm-law.com, attorney Butch Bracknell at RBracknell@cwm-law.com, or any of the firm’s attorneys by email, or call the firm at 757-623-3000.

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The new rule establishes “economic dependence” as the standard for determining status, and prescribes six equally weighted factors to consider when classifying a worker:

• Opportunity for the worker to attain more profit or loss depending on managerial skill, business acumen, or judgment;
• Investments by the worker and the potential employee –  investments that are capital or entrepreneurial in nature augur toward independent contractor status;
• Degree of permanence of the work relationship – longer term work arrangement, frequency and intermittency, and year round work relationships affect this determination;
• Nature and degree of control – how much direction the worker is given regarding how and when the worker performs work tasks, including scheduling, supervision, and price-setting;
• Extent to which the work performed is an integral part of the potential employer’s business – how important the work is to the overall business’ success;
• Skill and initiative – how much “ownership” does the worker employ with regard to his tasks, and how important are his or her skills to the end product?

A worker may not voluntarily waive employee status – he or she either is or is not an employee for the purposes of classification.  Business owners must alter their labor arrangements to benefit from workers with independent contractor status, rather than negotiating status as a term of the commercial relationship.

The new rule constitutes a totality of the circumstances economic reality test.  No factor or group of factors is more significant than others at the outset, though on analysis of specific facts, certain of the factors may become more weighty or important.

Finally, the IRS “20 factor” test for employee/independent contractor classification are not irrelevant to the USDOL 6 factor analysis.  Rather, the 20 factor test can likely best be binned into the six factor categories to give them meaning.  For example, IRS Factor 6, Continuing Relationship, is relevant to USDOL Factor 3, degree of permanence of the work relationship.  IRS Factor 15, Significant Investment, is germane to considering USDOL Factor 2, Investments.

The new FLSA classification rule does not represent a watershed rule change, but rather an effort by USDOL to provide businesses, advisors, and courts more useful direction on classification, both to give clear guidance to businesses and to help workers protect their own rights to certain entitlements and protections.

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Darius’ interview focuses on an area of law practice that is not necessarily intuitive to business owners – cybersecurity, data protection, and digital resilience.  Just as steel was the most important commodity to business in the first half of the 20^th century, and computers and silicon chips were vital to the second half, Darius notes data is the coin of the realm for business in the digital age – no data, no business.  Crenshaw, Ware and Martin sets the pace in Virginia with its progressive, business-focused, risk-informed cybersecurity and data protection practice, and can help businesses from training and employee policies to breach investigations and mitigation.  Drawing on a 100 year old tradition of business counseling, Crenshaw, Ware and Martin has one eye on the present, helping businesses reach their goals today, and one eye on the future, counseling businesses and offering services allowing them to grow into tomorrow.  Please reach out to Darius or any of the attorneys in the Cybersecurity and Data Privacy practice group for more information on how the firm can help your company secure its data and manage risk

CoVABIZ Article

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Our very own Alexander McDaniel has been admitted to the Supreme Court of the United States of America!

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