Legalities of Contract Tracing Precautions

I appeared in court last week in a courthouse that I have not visited since March. I have plenty of cases there, but the judges have been very efficient at keeping attorneys out of the courtrooms. I had to attend because I had clients who were appearing.

When I arrived, security asked me a battery of questions including if I had any symptoms of COVID or if I had come in contact with anyone who had symptoms of COVID. They then took my temperature using a thermal camera. Once I was allowed into the courthouse, I was asked to fill out a half sheet of paper, detailing who I was, my contact info, and which courtroom I was to appear in. Finally, a bailiff escorted me to the courtroom.

All of these procedures felt a bit overboard to me, and I was concerned that I would have too high a temperature to be let in the building. I didn’t have any signs of COVID, but I know that thermal cameras can be very inaccurate at measuring body temperatures. I wondered if I would be black-listed if I registered higher than 100.4 degrees. Being escorted also seemed a bit silly since it’s a public building. Plus, they did not escort me out, which meant I was free to roam the premises. I didn’t, but it did seem to undermine the value of the original escort.

But this got me thinking, is this legal? What if I had refused to comply with one of these steps? I assume I would have been barred from entering the courthouse, but can they do that?

The short answer is yes, they can do all of these things, but I think it warrants some discussion.

What businesses (and government) are doing

Businesses and governments are pulling out all stops on the COVID prevention routines. I have seen some form of each of the following techniques:

Recording customer information

Taking names, phone numbers, and, possibly, email addresses.

Taking temperatures

The temperature that is most cited with refusing admittance is 100.4. I have heard stories of patrons being forced to wait for their temperature to reduce before being admitted, but I have never heard of anyone who was actually barred due to temperature.

I recently heard about someone who tested at 107, which would mean that they were dead. Eventually, their temperature came down and they were allowed into the establishment, but it begs an important question: what happens when the machine is clearly wrong?

Asking COVID-related questions

These questions normally include whether you have symptoms, which can be tricky since the list of symptoms is pretty long, and I am yet to hear of an establishment identifying what the symptoms are. Do you have to report if you have a headache but no fever? I don’t know. I imagine that many people lie about these questions. I’m not sure what value they actually have.

Limiting the number of customers on the premises

Limiting customers may be mandated by the government order. This limitation makes sense, but it can be applied in kind of silly ways. For example, I visited a local game store recently and the manager told me that he had to limit the store to five customers. He lamented to me that sometimes this meant separating families – a mother, father, and their four children, for example. One person would have to wait outside. But of course, that’s silly because those six people live together and don’t pose any additional risk by being allowed in together, not even to him.

Requiring the use of masks

This requirement is mandated by the government and makes perfect sense. Masks have been proven to reduce the risk of spreading the illness and pose no hazard to the wearer. If you disagree with me, don’t bother letting me know. I don’t care about your opinion, you are wrong.

Mandating social distancing

This is also an obvious solution to the problem. The little dots that businesses ask you to stand on help to keep space between people and reduce the spread of the infection.

Some places are using one or two of these strategies, and some places are using all of them.

Is it legal?

Businesses cannot refuse to serve someone based on a discriminatory reason, and, generally, when we consider limitations such as the ones listed above, we need to consider whether the limitations imposed satisfy a legitimate business purpose.

The legitimate business purpose is to limit the spread of COVID. That is clearly a reasonable purpose so the actions taken are legal because they are pursuing that purpose, even if it means that the business is refusing to serve some people.

Therefore, you can’t claim discrimination when a business makes you leave because you’re not wearing a mask. First, I’m not sure there is discrimination there at all. Requiring you to wear a shirt is not discriminating. Second, they are fulfilling a legitimate business purpose in protecting their employees and other customers.

But what about some of the other requirements?

For example, taking temperatures has been proven to not prevent the spread of COVID. Thermal cameras are frequently wrong, and not everyone who has COVID gets a fever. Further, the actual problem with COVID is that the vast majority of people have no symptoms at all, including fever. Therefore, arguably taking temperatures does not satisfy the legitimate purpose of limiting the spread of infection. Can businesses or governments use a method that doesn’t work and still satisfy the legitimate purpose?

We see this in other areas. Consider the security theater that occurs before getting on a plane. Taking off your shoes almost certainly does not prevent attacks on airplanes, but we do it anyway. I actually read an article years ago (that I cannot cite due to lack of memory) that discussed how the FBI conducted a test whereby it was able to smuggle an outrageous number of bombs aboard airplanes. My point is that these security requirements are allowed despite not being very effective so it stands to reason that judges will also allow the taking of temperatures to enter a store or government building.

In short, yes, I think the security theater will be allowed, and if you refuse to comply with the requirements, they can refuse to admit you.

Rollover into a Business Startup (ROBS)

I was recently contacted by a potential client that asked about using a rollover into business startup (ROBS) to fund his new business. I had heard of a ROBS, but I didn’t know much about how it worked so I decided to do some research.

A ROBS account (a very unfortunate acronym, in my opinion) allows a new business owner to use his or her retirement funds to start their new business. That means that they can use money from their 401(k) or traditional IRA without paying taxes or penalties so long as the money is used correctly for the new business.

How a ROBS Works

First, the entrepreneur must form a C-corp. Unfortunately, a C-corp is the only permitted business entity. C-corps tend to be more complicated to maintain, and an S-corp or an LLC would generally have tax benefits to the owner.

The entrepreneur then sets up a retirement account for the new business. This could be a traditional 401(k) plan or a profit-sharing plan. Then the owner transfer funds from his or her personal retirement account to the business retirement account. There are no penalties or taxes paid for this transfer. That’s the point of the ROBS. Using those funds, the company retirement account buys shares from the company. Those funds are then available as cash for the company.

Requirements to form a ROBS

The business owner must have an eligible retirement account. Most accounts are eligible except for Roth IRA’s and Roth 401(k)’s. The owner must also have at least $50,000 in retirement funds. This is not technically a rule, but the costs of forming and funding a ROBS can be steep and anything less than $50,000 won’t make sense.

Lastly, the business owner must be a legitimate employee of the business. This usually means that they must work at least 1,000 hours a year. Owners must be careful not to overpay themselves because that would get them into trouble with the IRS and Department of Labor (DOL).

The funds must be used for the business. They cannot be used in any way for personal use. This makes sense because if the owner could use the money for personal gain, he or she would essentially be taking the money out of the retirement accounts without paying taxes or penalties. Obviously, the IRS and DOL would prohibit that kind of use.

ROBS Costs

There is usually a high upfront fee required by providers. The fee is usually around $5,000. The ongoing costs can be as high as $150 per month to maintain the ROBS.

There are some other costs associated with a ROBS. Employees are allowed to invest in the exact same way that the owner does, meaning they can invest in the retirement plan and use those funds to buy shares of the company. The owner is obligated to educate his or her employees about these options.

(“Rollover for Business Startups (ROBS): The Ultimate Guide”, Dennis Shirshikov, “Rollovers as Business Startups (ROBS): What You Need to Know”, Steve Nicastro)

ROBS: good idea or bad?

I think whether a ROBS works for an individual is based greatly on who that individual is and what they plan to do with the money.

The main benefit of a ROBS is that you can fund your startup with your own money. Therefore, you have no investors and no debt costs. If your business does well, your retirement funds can increase greatly.

The main problem is the risk of losing your retirement funds. If you’re comfortable with risk, then you might feel fine putting your funds on the line. If you have a lot of retirement funds, you may not be risking your entire retirement, and if you’re young, you have plenty of time to build up your retirement accounts before you actually retire.

The nature of the business matters, too. If you’re investing in a franchise or something with a proven model, the risk is a lot lower than starting a brand-new business. Most new businesses fail or aren’t very profitable. Picking an industry, you know and a business model with a good track record will help mitigate that risk.

The last risk is the fact that you have to make the retirement plan available to your employees. For most small businesses this is not a problem, but I could see a situation where the ownership shares could get a bit diluted. The owner would need to keep an eye on this in certain circumstances.

Bottom line is that the ROBS may work for the right person in the right business. Rules need to be followed, but if you handle everything correctly, this could be a low-cost way to fund a new startup.

Conducting Trials via Zoom

Many courts have opted to use Zoom or other video conferencing platforms to conduct their courtrooms since the pandemic hit in March. For most status dates and procedural issues, these conferencing platforms work fine. In my experience, they are a bit slower than in-person court, but they generally get the job done.

However, I do not think they should be used for trials, especially jury trials. There are numerous reports of Zoom fatigue and the inability to develop trust via video conferencing. Trials are already marathons for the attorneys, judges, and jurors. Considering what we know about Zoom fatigue I can’t imagine how everyone is going to manage an entire trial via conferencing software, let alone how effective the trial will be at doing justice. It’s hard enough to convince people while arguing in-person, arguing via Zoom will make our jobs that much harder.

Zoom Fatigue

Zoom fatigue is real. Participating in a video conference takes more energy and is more taxing than an in-person conversation. The primary reason for this is that we rely on nonverbal cues constantly during an interaction, and video conferencing simply does not convey all of those cues.

When we don’t get the cues we are used to, our brains have to work harder to figure out what’s going on. We don’t necessarily notice the extra work happening, but it takes a toll on us in the way of fatigue. When your brain is working overtime, it’s hard to relax into the conversation.

Further, when we don’t have all of the information we are used to, we become more insecure about our place in the conversation. For example, delays in response from people we are communicating with can shape our opinion of those people in a negative way. A 2014 study showed that even a delay of 1.2 seconds over conferencing systems made people perceive the responder as less friendly or focused.

There is also the added pressure of having a camera, and potentially 12 other people, staring at you the entire time. During a normal meeting or trial, the spotlight isn’t on one person the entire day. That’s not to say that people don’t pay attention to you, but you’re not as aware of their gaze. Having everyone see you all the time forces you to perform constantly, which can be exhausting. (“The Reason Zoom Calls Drain Your Energy”, Manyu Jiang)

Science Supports my Position

A study was conducted in 2011 where researchers compared how trust was developed via telephone, video conferencing, and face-to-face interactions. They discovered, unsurprisingly, that trust was built much faster via in-person communication as compared to the other two forms.

Face-to-face > video conferencing > telephone

The reason face-to-face was better at building trust had to do with the information we get by communicating in-person. Specifically, researchers tied trust to eye contact and other body language. Video conferencing does not allow for eye contact, which can reduce participants’ trust levels significantly.

However, that’s not the end of the story. The researchers found that groups communicating via video conferencing could reach the same levels of cooperation as the face-to-face groups, but that it took several more rounds of the experiment to accomplish. They found that deception was high in early meetings, not because of a lack of desire to cooperate, but due to a lack of knowledge of the other participants’ intentions. We read intentions via physical clues like mutual gaze and posture, which can’t be experienced over a conferencing platform. (“Video Conferencing and Trust”, VSee; “Being There versus Seeing There: Trust via Video”, University of Michigan)

Zoom Trials are a Bad Idea

Convincing people to do anything requires trust. As attorneys, we develop trust with a judge or a jury over specific amounts of time that have been established over hundreds of years. I might see a judge a couple of times a week on various cases so I can develop trust with him or her over time. But juries are different. Our relationship is heavily regulated by the court. My concern is that the above studies show that we will need more time to build trust with a jury via video conferencing than we would have in-person. However, I doubt that any changes will be made to courtroom procedure to take this lack of trust from the jury into consideration.

That, coupled with the fatigue that naturally occurs via video conferencing, will make jury trials extremely challenging. There is doubt that our world will adapt to our changing times, especially as more research is done into the use of video conferencing software. But until then, I don’t want my clients to be the test cases for this new form of lawyering.

Personally, I am recommending to all of my clients that we don’t conduct any trials via Zoom until we understand how to better argue our cases via this new medium.