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THIS ISSUE'S HEADLINES
DOL Solicits Public Comment on Independent Contractor Proposed Rule
Post-Closing Strategy for the Investor and Founder
SEC Adopts a New Definition of ÒAccredited InvestorÓ
Business Strategies for Growing and Maintaining Your Cybersecurity Team
Stay Informed – PLDO COVID-19 Resource Library
DOL SOLICITS PUBLIC COMMENT ON INDEPENDENT CONTRACTOR PROPOSED RULE
 On September 22, 2020, the U.S. Department of Labor (the ÒDOLÓ) released a proposed regulation addressing when a service provider should be classified as an independent contractor rather than an employee. The change is important to both employers and service providers as each may find it advantageous to characterize service providers as independent contractors rather than part-time, full time or temporary employees. DOL welcomes public comments to the proposed new rules for a thirty (30) day period following publication in the Federal Register or by October 26, 2020.
As PLDO Partner William F. Miller explains in his essay, U.S. Department of Labor Proposes New Rule on Independent Contractors, the putative employerÕs perspective and potential benefits of an Òindependent contractorÓ status include not having to withhold payroll taxes, pay for workers compensation insurance or include the individual in health insurance, 401(k) or other employee benefit plans. From the service providerÕs perspective, he or she receives the gross amount charged for services rendered, without reduction for payroll withholding taxes and some expense that do not qualify as employee business expenses may become tax deductible on the service providerÕs Form 1040, Schedule C.
To learn about the DOLÕs current approach to classification determination, which is based on the Òeconomic realityÓ test and a detailed overview of the proposed new rules, download his advisory here or click on the title above. If you would like more information, please contact Attorney Miller at 508- 420-7159 or email wmiller@pldolaw.com.
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POST-CLOSING STRATEGY FOR THE INVESTOR AND FOUNDER
 One of the most important steps to be taken after an investment has been made in a start-up company is to develop a leadership structure that will take the company to the next level. A new board of directors should be established and board governance policies implemented. Investors will want oversight and the opportunity to measure overall performance of the company. In addition, the directors will be responsible for addressing capitalization issues.
Taking the necessary steps is always challenging for the founders as their immediate focus is concentrating on product development, marketing and operational issues. However, a comprehensive management structure is critical to achieving company goals and builds positive relationships between the founders and investors Ð all of which impacts the companyÕs performance and will be important in later rounds of financing.
Understanding the dynamics between investor and founder and why transparency and communication are keys to striking the right balance are outlined in an advisory by PLDO Managing Principal Gary R. Pannone entitled, Post-Closing Strategy for the Investor and Founder. The article also provides practical insight into the business relationship and how certain challenges or changes may arise. This advisory is one in a series of informative business essays recently published by Attorney Pannone including Due Diligence Considerations for Entrepreneurs and Investors and Investment Structures in a Business Transaction.
If you would like to learn more about these issues or have other questions about related business matters, please contact Attorney Pannone at 401-824-5100 or email gpannone@pldolaw.com, and visit our online library of additional resources by logging onto Inside Business - Powered Up For Success.
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SEC ADOPTS A NEW DEFINITION OF ÒACCREDITED INVESTORÓ
 On August 26, 2020, the Securities and Exchange Commission (the ÒSECÓ) adopted amendments to the definition of Òaccredited investor.Ó The amendments permit investors to qualify as accredited investors based upon additional criteria focused on financial sophistication, in addition to the historic tests relating to their income or net worth. The amendments are significant because they expand the definition of accredited investors, and thus provide a benefit to smaller and development stage companies by increasing the pool of potential investors. The amendments become effective sixty (60) days after publication in the Federal Register.
The definition of Òaccredited investorÓ has always been extremely important because it determines which persons or entities may participate in private (unregistered) offerings of securities. Business attorney and PLDO Partner William F. Miller reviews the current definition and various exemptions in his latest advisory, SEC Adopts a New Definition of Accredit Investor and provides summaries of the amendments. If you have questions about this topic or other business matters, please contact Attorney Miller at 508- 420-7159 or email wmiller@pldolaw.com.
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STRATEGIES FOR GROWING AND MAINTAINING YOUR CYBERSECURITY TEAM
 A 2019 cybersecurity workforce study by the International Information System Security Certification Consortium or (ISC)2 concluded that a Òshortage in the global cybersecurity workforce continues to be a problem for companies in all industries and of all sizes.Ó The study reported that in the United States, for example, there is a shortage of 500,000 cybersecurity workers. To meet this demand, the United States cybersecurity workforce would need to grow by 62% and the global cybersecurity workforce needs to expand by 145%. This lack of qualified talent is the top concern among cybersecurity professionals as the gap exposes governments and businesses to substantial risks as threats from bad actors continue to grow.
Although it is not clear why this gap has grown so large and quickly, there are several theories behind this phenomenon, which PLDO Partner Brian J. Lamoureux describes in a guest column that was published in last monthÕs edition of Citrin CoopermanÕs cybersecurity newsletter, OnTRAC. The article also provides suggestions and recommendations for businesses to consider in their own organizations, including recruiting from within. The article is accessible in the newsletter on page 3 or you can access it by clicking Help Wanted: Shortage of Cybersecurity Experts Poses Challenges and Risks. If you would like further information, please contact Attorney Lamoureux at 401-824-5155 or email bjl@pldolaw.com.
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STAY INFORMED – PLDO COVID-19 RESOURCE LIBRARY
 As the COVID-19 pandemic evolves and we shift focus to a return to normalcy, information is key to addressing challenges that impact decision-making for our families, businesses and community. PLDOÕs team of attorneys continue to provide updates and advisories that our accessible in our online Resource Library. Among the featured articles include the following:
If you have questions and concerns about impacts to your organization, please contact your PLDO attorney directly in our Rhode Island, Massachusetts or Florida offices or call our toll free number at 866-353-3310 to discuss your legal matter. We are here to help.
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