Michigan | Fraser Blog

Five Stories That Matter in Michigan This Week – May 23, 2025

Thaddeus E. Morgan Recognized as a ‘Michigan Go To Lawyer’ for Construction Law in 2025 by Michigan Lawyers Weekly

Fraser Trebilcock Shareholder Thaddeus E. Morgan has been recognized by Michigan Lawyers Weekly as a ‘Michigan Go To Lawyer” in 2025 for Construction Law. “I am honored to have been recognized by Michigan Lawyers Weekly as a ‘Michigan Go To Lawyer’ for Construction Law,” said Mr. Morgan.

Why it Matters: Mr. Morgan is President of Fraser Trebilcock and has over 30 years of litigation experience in both state and federal courts in a wide variety of areas, including, commercial and business disputes, employment and shareholder litigation, construction, health care, real estate, insurance, and intellectual property. He is a former assistant prosecutor and assistant attorney general. Read more.

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Fraser Trebilcock Attorneys Secure Victory for Firm Client

The litigation team of Thaddeus E. Morgan and Andrew G. Martin obtained dismissal of a case for the firm’s client.

Why it Matters: The litigation team obtained dismissal of a case alleging assumption of a contract as part of a business acquisition rejecting plaintiff’s claim of the “mere continuation” doctrine. Learn more.

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NLRB Establishes Standard for Workplace Rules

The National Labor Relations Board (NLRB) has issued a ruling in Stericycle Inc., adopting a new legal standard for evaluating the lawfulness of employer work rules. Under the previous standard, an employer was not required to narrowly tailor its rules to promote its legitimate and substantial business interests without unnecessarily burdening employee rights.

Why it Matters: Workplaces may need to review existing policies to their employee handbooks to ensure compliance, and tailor their workplace rules to service legitimate business interests. Read more from your Fraser Trebilcock attorney.

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Organizing Your Business: A Step-by-Step Guide for Michigan LLCs

Starting a business involves critical choices that shape your success and safeguard your financial future. In Michigan, forming an LLC offers entrepreneurs a powerful way to protect personal assets, simplify taxation, and maintain management flexibility.

Why it Matters: Forming and maintaining an LLC in Michigan provides valuable liability protection and flexibility for your business. By maintaining proper governance, your LLC can serve as a solid foundation for your business ventures. Read more from your Fraser Trebilcock attorney.

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Navigating Bad Faith Claims: What Defense Attorneys Need to Know

Under the Michigan Uniform Trade Practices Act, an insurer is liable for penalty interest if it fails to timely pay a claim. “The purpose of the penalty is to penalize insurers for dilatory practices in settling meritorious claims, not to compensate a plaintiff for delay in recovering benefits to which he or she is ultimately determined to be entitled.”

Why it Matters: While it is important for insurers to train their claims professionals in background knowledge regarding bad faith law, including the factors above, there is no need to lead with fear. The biggest takeaway is that the opposite of “bad faith” is “good faith.” Therefore, claims professionals should be encouraged to utilize their best judgment with the information at the given time. Read more from your Fraser Trebilcock attorney.

Related Practice Groups and Professionals

Organizing Your Business: A Step-by-Step Guide for Michigan LLCs

1. Liability Protection: An LLC creates a separation between business and personal assets, protecting members’ personal property from business liabilities. This means creditors generally cannot seize your personal assets to satisfy business debts.
2. Tax Flexibility: By default, LLCs – considered “pass through” entities – don’t pay federal taxes directly. Instead, LLC members pay taxes for the LLC on their personal tax returns.
3. Management Flexibility: LLCs can be either member-managed (all owners participate in operations) or manager-managed (designated managers handle day-to-day operations).

This guide breaks down the steps needed to organize and manage an LLC effectively, helping you establish a solid foundation for long-term business growth and security.

What Distinguishes an LLC from Other Structures?

When choosing a business structure in Michigan, many entrepreneurs opt for LLCs due to their unique blend of protection and flexibility. Unlike sole proprietorships that offer no separation between personal and business assets, an LLC creates a legal shield that protects your personal property from business liabilities while maintaining the same pass-through taxation benefits. Compared to corporations, LLCs free you from many formalities like mandatory board meetings and minutes, while avoiding the double taxation issue that impacts traditional corporations.

Michigan recognizes both single-member and multi-member LLCs, treating them virtually identically for formation purposes. Whether you’re a solo entrepreneur seeking control and simplicity or a team dividing ownership and responsibilities among multiple members, the LLC structure adapts to your needs. Single-member LLCs enjoy sole decision-making authority and straightforward sole proprietorship-like taxation, while multi-member LLCs distribute ownership, split profits according to agreed terms, and are taxed like partnerships by default.

The management structure you choose further tailors your LLC to your specific business needs. In the default member-managed structure, all owners actively participate in day-to-day operations and can legally bind the company in contracts and agreements. For businesses preferring separation between ownership and management, the manager-managed option allows designated individuals (whether members or not) to handle operations. This flexibility makes LLCs particularly attractive for entrepreneurs who want protection without excessive corporate formality.

Although Michigan doesn’t legally require an operating agreement, working with your attorney to create one strengthens your liability protection and clarifies how your business will function – from ownership percentages and capital contributions to profit distribution and decision-making protocols. This internal document becomes especially crucial for multi-member LLCs to prevent misunderstandings and establish clear procedures for everything from routine operations to member changes and potential dissolution.

Step-by-Step Process for Creating a Michigan LLC

Step 1: Choose a Name for Your LLC

Michigan requires that your business name be “distinguishable” from other businesses in the state. Your Michigan LLC name must include “limited liability company,” “limited company,” “LC,” or “LLC.” You cannot use words like “corporation” that suggest another type of entity.

To check name availability, you can search the Michigan business name database through the Department of Licensing and Regulatory Affairs (LARA) website.

Step 2: Designate a Registered Agent

A registered agent is the person or business you appoint to receive and forward important legal and tax documents. Michigan requires your registered agent to have a physical address (no P.O. boxes) in Michigan and be available during normal business hours.

Step 3: File Articles of Organization

The document required to form an LLC in Michigan is called the Articles of Organization. You can file online, by mail, or in person with the Michigan Department of Licensing and Regulatory Affairs. The filing fee is $50 (as of April 2025).

Your Articles of Organization must include:

- LLC name
- Purpose of the LLC
- Registered agent information
- Whether the LLC will be member-managed or manager-managed (if manager-managed)
- Name and signature of the organizer

Step 4: Create an Operating Agreement

Again, while Michigan doesn’t legally require an operating agreement, it’s strongly recommended to create one to establish how you’ll run your LLC. This is especially important for single-member LLCs to help prove the LLC is being operated as a separate legal entity in court, and for multi-member LLCs to define rights and obligations among business owners.

Step 5: Obtain an EIN (Employer Identification Number)

An EIN is also called a Federal Tax ID Number or Federal Employer Identification Number. If your LLC has more than one member, it must obtain an EIN from the IRS, even if it has no employees. Single-member LLCs may use the owner’s Social Security Number instead, but an EIN is recommended for privacy.

Step 6: Open a Business Bank Account

Keep your personal and business finances separate by opening a dedicated business bank account. This helps maintain the liability protection of your LLC by showing it’s truly a separate entity.

Managing Your Michigan LLC

All LLCs doing business in Michigan must file an annual statement with LARA by February 15th each year. The filing fee is $25 (as of April 2025). If you form your LLC after September 30, you don’t need to file a statement the following February.

Here are a few best practices for managing your LLC, mitigating risks, and remaining compliant on an ongoing basis:

1. Maintain Separation: Keep business and personal finances strictly separate with dedicated accounts and records.
2. Document Decisions: Record major business decisions, especially for multi-member LLCs.
3. Update Your Operating Agreement: Review and update your operating agreement as your business evolves.
4. Keep Good Records: Maintain detailed financial records, meeting minutes, and membership changes.
5. Stay Compliant: File annual statements on time and keep your registered agent information current.
6. Consider Professional Help: Consult with an attorney periodically to ensure ongoing compliance.

Conclusion

Forming and maintaining an LLC in Michigan provides valuable liability protection and flexibility for your business. By following the steps outlined in this guide and maintaining proper governance, your LLC can serve as a solid foundation for your business ventures.

Remember that while this guide provides a comprehensive overview, consulting with a Michigan business attorney for your specific situation is always recommended, especially for complex ownership structures or specialized industries.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions. When it matters in Michigan, we are the trusted legal advisors for businesses and individuals.

Andrew G. Martin is an experienced registered patent attorney with history working in the automotive, electrical, and agricultural industries. He regularly advises startups and small businesses on the patent and trademark prosecution process, assisting clients from start to finish. You can reach him at 517.377.0834 or at amartin@fraserlawfirm.com.

Michigan Sales Tax Applies to Credit Card Surcharges

For many Michigan businesses, it can be almost impossible to run a business without accepting credit or debit cards. However, the fees from these transactions, the charge merchants pay to their customer’s credit card issuer and credit card network when they accept credit card payments like from Visa, Mastercard and other issuers, can eat into profits. The average credit card processing fee ranges between 1.5% to 3.5%. As a result, a number of Michigan businesses pass this cost back to the purchaser as “surcharge” for the convenience of using a credit card as a means of payment.

Recently, the Michigan Department of Treasury provided guidance on the application of a Michigan sales tax on credit card “surcharges” for businesses. The Michigan Department of Treasury considers the surcharge added to a customer’s bill a “service cost” or “other expense of the seller” under the General Sales Tax Act, making it part of the taxable “sales price” of a transaction.

For example, if a business sells $50 in goods, accepts the customer’s credit card as payment and passes on the $2.99 processing fee as a credit card surcharge to the customer, the business must collect and remit the 6% sales tax on $52.99, not just the original $50 retail price.

According to the Michigan Department of Treasury:

“A payment processor provides a financial service for the seller for which it imposes a fee on the seller. Since that fee represents a cost or expense for which the seller is responsible, the fee is fairly characterized as a ‘service cost’ or an ‘expense of the seller.’ Thus, the fee is part of the sales price and thus part of the tax base. For these reasons, Treasury concludes that the credit-card surcharge is part of the sales price as a ‘service cost’ or ‘any other expense of the seller.’”

Action Steps for Business Owners:

1. 1. Review current pricing and surcharge practices.
  2. Adjust point-of-sale systems to correctly calculate tax on the total amount, including surcharge add-ons.
  3. Ensure that point-of-sale system accurately marks surcharge on the customer’s bill or receipt as a taxable item.
  4. Update accounting procedures to ensure proper tax remittance.

Compliance with this guidance is important. Failure to do so may result in underpayment of taxes due to the State of Michigan, potentially subjecting your business to penalties and interest. If you have any questions about how this guidance applies to your specific situation, please contact Paul McCord or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

Michigan’s Repealed “Right-to-Work” Law Takes Effect

On Tuesday, February 13, 2024, Michigan’s repeal of the prior “right-to-work” law governing private-sector workers went into effect. The result of the repeal is that private-sector unions may permissibly negotiate to impasse, and enforce, “union security” provisions requiring membership in, or financial support through “Beck Objector” fees, of those unions. See NLRB FAQ’s.

Michigan’s “Freedom to Work” law enacted under Republican Governor Rick Snyder became effective in 2013. That law prohibited public and private sector employees from being required, as a “condition of employment,” to belong to a labor union or to pay a “service fee” in lieu of membership. The 2013 law invalidated any collective bargaining provision to the contrary, and prohibited enforcement of such unlawful provisions.

In 2023, Governor Gretchen Whitmer signed into law legislation repealing the Freedom to Work law insofar as it applies to private-sector employees. Governor Whitmer also signed a separate bill that would similarly repeal this prohibition as to public sector workers in the event the U.S. Supreme Court reverses a 2018 decision that essentially adopted similar “right-to-work” principles with respect to public sector employees and unions, which reversal has not occurred. So, the present change does not affect the current prohibition of a membership requirement in a public sector collective bargaining agreement.

Per data collected by researchers available at unionstats.com, in 2022, close to 39,000 private sector workers in Michigan were covered by a collective bargaining agreement but were not union members paying dues or service fees. Now, those individuals may permissibly be required to pay dues or fees if “union security” provisions are bargained into, or “suspended” in, applicable collective bargaining agreements. In that event, affected employers could be required to fire bargaining unit workers who refuse to pay dues or fees under the enforcement of a lawful union security clause.

Employers with unionized workforces should anticipate attempts by unions to enforce “suspended” union security clauses or negotiate such provisions into future collective bargaining agreements, and plan accordingly. If you have questions about the new law or require assistance, please contact David J. Houston or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Five Stories That Matter in Michigan This Week – June 2, 2023

Governor Whitmer Announces Initiative to Grow Michigan Population

Governor Whitmer made news at this week’s Mackinac Policy Conference by announcing a new initiative to grow Michigan’s population, which has remained relatively stagnant for the last few decades. The initiative will include the formation of a new “Growing Michigan Together Council,” which will develop a plan to attract new residents to the state and keep those currently in Michigan.

Why it Matters: A lack of population growth has inhibited Michigan’s economic growth, and hindered businesses’ efforts to find talented people to fill open jobs.

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Assets of Marijuana Business Skymint to be Auctioned

As we reported earlier, Skymint Brands was placed into receivership on March 7. Now, almost three months later, the receiver has determined that the best course of action for the receivership estate and the creditors is to sell off the assets of the business.

Why it Matters: While Michigan has experienced strong sales of recreational marijuana, prices per ounce have fallen significantly, making it difficult for many dispensaries to generate profits. The fact that Skymint’s assets were put into receivership is also noteworthy, as state court receivership has become an alternative to bankruptcy for distressed cannabis companies. Because cannabis is still illegal at the federal level, companies can’t access federal bankruptcy to reorganize or liquidate.

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Fiscal Responsibility Act of 2023 Passes

Earlier this week, the federal government passed the Fiscal Responsibility Act of 2023, which raised the debt ceiling and allowed the government to continue borrowing.

Why it Matters: With the passing of this act, the federal government avoids any possibility of default or shutdown, which can have sweeping effects at every level of government. This also allows the government to continue investing in infrastructure and economic development.

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June 5 Business Education Series

During this two-presentation dynamic program, attendees will learn about the SBA 504 Loan from the MCDC (Michigan Certified Development Corporation), and Government Contracts from APEX (formerly known as PTAC Procurement Technical Assistance Centers).

Why it Matters: The SBA 504 Loan presentation you will learn the basics of SBA 504 loan, the benefits and how to qualify and apply. MCDC is a non-profit certified by the US SBA to administer the SBA 504 Loan Program in Michigan. The SBA 504 loan provides small businesses with low-rate, long-term loans for building purchases, construction, machinery and equipment. In addition, these loans require a smaller down payment than what traditional lenders can offer, allowing the business owner to preserve capital. Learn more and to register.

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Client Alert: IRS Announces 2024 Adjustments for HSAs & Excepted Benefit HRAs

The IRS has released its 2024 annual inflation adjustments for Health Savings Accounts (“HSAs”) as determined under Section 223 of the Internal Revenue Code. Specifically, IRS Revenue Procedure 2023-23 provides the adjusted limits for contributions to a HSA, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2024.

Why it Matters: HSA contributions for an individual will increase in 2024 to $4,150 from $3,850 in 2023, and the minimum deductible on a HDHP for an individual will increase to $1,600 in 2024 from $1,500 in 2023. Read more from your Fraser Trebilcock attorney.

Related Practice Groups and Professionals

Labor, Employment & Civil Rights | Dave Houston
Cannabis Law | Sean Gallagher
Employee Benefits | Robert Burgee

Five Stories That Matter in Michigan This Week – May 19, 2023

Plans for Binational Electric Vehicle Corridor Announced

On Tuesday, May 16, the United States and Canada announced plans to launch a binational electric vehicle corridor stretching from Kalamazoo, Michigan, to Quebec City. The corridor will include fast EV chargers approximately every 50 miles along the 872-mile route.

Why it Matters: In announcing the plans, officials said the plan would increase domestic manufacturing, strengthen supply chains and create jobs while supporting climate and alternative energy transportation goals.

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Michigan Cannabis Sales Surpass $245 Million in April

Cannabis sales peaked over $245 million in April, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $238,211,384.43, while medical sales came in at $7,842,858.60, altogether totaling $246,054,243.03.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market over-saturation that the industry is contending with.

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May 24 Business Education Series

During this two-presentation dynamic program, attendees will learn about the SBA 504 Loan from Coty Gould with the MCDC (Michigan Certified Development Corporation), and Government Contracts from Mike Hindenach with APEX (formerly known as PTAC Procurement Technical Assistance Centers).

Why it Matters: The SBA 504 Loan presentation you will learn the basics of SBA 504 loan, the benefits and how to qualify and apply. MCDC is a non-profit certified by the US SBA to administer the SBA 504 Loan Program in Michigan. The SBA 504 loan provides small businesses with low-rate, long-term loans for building purchases, construction, and machinery and equipment. In addition, these loans require a smaller down payment than what traditional lenders can offer, allowing the business owner to preserve capital. Learn more and to register.

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Fraser Trebilcock Welcomes Paula C. Spicer to the Firm

Fraser Trebilcock is pleased to announce the hiring of attorney Paula C. Spicer who will work primarily in the firm’s Lansing office.

Why it Matters: Ms. Spicer joins Fraser Trebilcock with expertise in complex real estate and commercial transactions, property tax appeals, health care facility formation, business operations, zoning law, and structuring of high-complexity laboratory facilities. Ms. Spicer also worked as an attorney in multi-family affordable housing financing through HUD (Housing and Urban Development). Learn more.

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CRA Publishes April 2023 Data, Average Price Hovers

Per data released by the Cannabis Regulatory Agency, the average retail price for adult-use sales of an ounce of cannabis is $87.76, a small increase from $86.87 in March. This is still a large decrease from April 2022, where the average price was $133.19.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions.

Related Practice Groups and Professionals

Energy, Utilities & Telecommunication | Mike Ashton
Business & Tax | Paula Spicer
Cannabis Law | Sean Gallagher

Michigan Repeals “Right-to-Work” Law

Michigan’s “Freedom to Work” law, effective since 2013, currently prohibits public and private sector employees from being required, as a “condition of employment,” to belong to a labor union or to pay a “service fee” in lieu of membership. The current law also invalidates any collective bargaining provision to the contrary, and prohibits enforcement of such unlawful provisions.

Governor Gretchen Whitmer signed into law legislation repealing the Freedom to Work law insofar as it applies to private-sector employees. The repealer will be effective as of March 30, 2024. Governor Whitmer signed a separate bill that would similarly repeal these prohibition as to public sector workers in the event the U.S. Supreme Court reverses a 2018 decision that essentially adopted similar “right-to-work” principles with respect to public sector employees and unions. That decision ruled that it is a violation of public workers’ first amendment speech rights to be required to join or financially support public sector labor unions through mandatory “service fees.”

When the new law takes effect, it will, for the first time since 2013, be legal for private-sector unions to negotiate and enforce “union security” requiring membership in, or financial support through “Beck Objector” fees, of those unions. See NLRB FAQ’s

Per data collected by researchers available at unionstats.com, in 2022, close to 39,000 private sector workers in Michigan were covered by a collective bargaining agreement but were not union members paying dues or service fees. Now, when the new law goes into effect, those individuals will be required to pay dues or fees. Employers can be forced to fire bargaining unit workers who refuse to pay dues or fees under the enforcement of a lawful union security clause.

Private Sector employers in Michigan have approximately one year to prepare for the effective date of the new law. Employers with unionized workforces should anticipate attempts by unions to enforce “suspended’ union security clauses or renegotiate such provisions into future collective bargaining agreements, and plan accordingly.

If you have questions about the new law or require assistance, please contact David J. Houston or your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Michigan Supreme Court Eliminates Mandatory Case Evaluation Requirement for Tort Cases, Effective January 1, 2022

The Michigan Supreme Court, by Order dated December 2, 2021, eliminated the mandatory case evaluation requirement for all tort cases in Michigan courts, effective January 1, 2022. This change, and others, are reflected in amendments to Michigan Court Rule 2.403.

Under the amended rule, the parties may stipulate to, and the court may approve, an alternative dispute resolution process, such as mediation or facilitation in the discovery plan. However, case evaluation remains the default method of dispute resolution.

The Supreme Court also did away with Michigan Court Rule 2.403(O), which outlines a party’s potential liability for costs to the extent it rejects a case evaluation award. According to the soon-to-be-deleted rule:

“If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party’s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the case evaluation.”

As of January 1, 2022, there will be no liability for an opposing party’s costs when a party rejects the case evaluation and proceeds to trial, even if they do not prevail at trial or by way of motion.

The new rule also reduces the number of days in advance the parties must submit case evaluation materials from fourteen (14) to seven (7).

These changes will give parties to litigation and their legal counsel more control and flexibility over how they develop and execute their litigation strategies.

If you have any questions about these issues, please contact your Fraser Trebilcock attorney.

Morgan, Thaddeus.jpg Thaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at tmorgan@fraserlawfirm.com or (517) 377-0877.

Matthew J. Meyerhuber is an associate at Fraser Trebilcock focusing on general litigation, environmental law, and real estate. Matthew can be reached at mmeyerhuber@fraserlawfirm.com or 517.377.0885.

Michigan House and Senate Pass Bills Imposing 45-Day Data Breach Notification Requirement

The Michigan House of Representatives recently voted to approve legislation that will impose a 45-day data breach notice requirement on Michigan businesses. House Bills 4186 and 4187, which were passed on December 16, 2020, will become law if signed by Governor Whitmer. Identical bills were passed by the Michigan Senate on December 10.

Data security is a major concern for many businesses across industries. A report issued by the FBI, Department of Health and Human Services, and Cybersecurity and Infrastructure Security Agency in October warns of “an increased and imminent cybercrime threat” to businesses, particularly those in the health care sector. Recent revelations of a sophisticated cyberattack on the U.S. government shows how vulnerable even the most secure systems are to a breach. This new legislation, if enacted, will impose new obligations on Michigan businesses when a data breach occurs.

Key Provisions of New Legislation

The legislation requires a “covered entity” to provide notice within 45 days to state residents whose “sensitive personally identifying information” (PII) was exposed in a data breach.

A “covered entity” includes an individual or a sole proprietorship, partnership, government entity, corporation, limited liability company, nonprofit, trust, estate, cooperative association, or other business entity, that has more than 50 employees and owns or licenses sensitive personally identifying information, or a franchisee of any of the foregoing.

The scope of PII that gives rise to an obligation to notify state residents in the event of a data breach includes a state resident’s first name or first initial, and last name, in combination with one or more of the following data elements that relate to that state resident:

A nontruncated Social Security number.
A nontruncated driver license number, enhanced driver license number, state personal identification card number, enhanced state personal identification card number, passport number, military identification number, or other unique identification number issued on a government document that is used to verify the identity of a specific individual.
A financial account number.
A state resident’s medical or mental history, treatment, or diagnosis issued by a health care professional.
A state resident’s health insurance policy number or subscriber identification number and any unique identifier used by a health insurer to identify the state resident.
A username or electronic mail address, in combination with a password, security question and answer, or similar information, that would permit access to an online account affiliated with the covered entity that is reasonably likely to contain or is used to obtain sensitive personally identifying information.

All covered entities and third-party agents are required to implement and maintain reasonable security measures designed to protect PII against a breach of security. The legislation lays out a long series of factors covered entities must consider in developing reasonable security measures, including the size of the covered entity and the amount of PII it maintains and processes.

If a covered entity determines that a breach of security has or may have occurred, the covered entity must conduct a good-faith and prompt investigation into the scope and extent of the breach.

If a covered entity determines that a breach has occurred, it must notify state residents whose PII was acquired in the breach, as expeditiously as possible and without unreasonable delay. Notification must occur within 45 days of a determination that a breach has occurred unless law enforcement determines that such notification could interfere with a criminal investigation or national security. Written notice must at least include the following:

The date, estimated date, or estimated date range of the breach.
A description of the PII acquired by an unauthorized person as part of the breach.
A description of the actions taken to restore the security and confidentiality of the PII involved in the breach.
A description of steps a state resident can take to protect against identity theft, if the breach creates a risk of identity theft.
Contact information that the state resident can use to ask about the breach.

A covered entity may provide substitute notice in lieu of direct notice, if direct notice is not feasible because of excessive cost or lack of contact information. Under the legislation, the cost of direct notification to state residents is considered excessive if it exceeds $250,000 or if notice must be provided to more than 500,000 state residents. Substitute notice must include a conspicuous notice on the covered entity’s website (if it has one) for at least 30 days, and notice in print and broadcast media.

Penalties for Noncompliance with Notification Requirements

A covered entity that fails to comply with the notice requirements set forth in the legislation faces potentially steep fines. Penalties may include a civil fine of not more than $2,000 for each violation, or not more than $5,000 per day for each consecutive day that the covered entity fails to take reasonable action to comply with applicable notice requirements. Aggregate liability for civil fines for multiple violations related to the same security breach shall not exceed $750,000.

This legislation is not yet law, but soon may be. This article touches upon many of the important provisions of the legislation, but there are additional details to be aware of. Businesses and other entities covered by this legislation should take steps to assess their preparedness to comply with the new obligations imposed by these bills. If you have any questions, or require assistance in planning for the implications of this legislation, please contact Fraser Trebilcock shareholder Thad Morgan.

Thaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at tmorgan@fraserlawfirm.com or (517) 377-0877.

Fall in Michigan: Safely Handling Deer/Automobile Accidents

You did the right thing… you did not swerve but have hit a deer… now what?

During the next couple of months there will be thousands of deer/car accidents in both rural and suburban Michigan. In fact, statistics suggest that there will be over 50,000 deer/car accidents during the 2020 calendar year. The Michigan State Police report that 80% of these accidents will occur between dawn and dusk, but they are not limited to rural areas. Indeed, for example in the Lansing area alone, Meridian Township had 129 car/deer accidents, and Delta Township had 128 deer/car accidents in 2018. Simply stated, if you drive enough, there is an excellent chance that at some point in time you will be involved in a car/deer accident.

When that happens what should you do?

First, and foremost, if it is still drivable, get your vehicle as far off the traveled portion of the highway as possible. Activate your hazard warning flashers but stay in your vehicle! Getting out of your vehicle places you in a zone of danger that you need to avoid at all costs. The adrenaline will be flowing right after the accident but control it and think safety. Use your cell phone and call 911 which, hopefully, will dispatch a police car to the scene. Regardless, you should receive a police report number even if a police car is not dispatched to the accident. This is important so that you can provide your insurance company with evidence that the accident was a car/deer accident as opposed to a collision claim. Car/deer accidents (or other car/animal accidents) are covered under what is referred to as the comprehensive insurance coverage of your auto policy. Typically, your comprehensive coverage will have a substantially lower deductible than your collision coverage. You will need to check with your insurance agent to determine your “out-of-pocket” costs of repair.

Finally, remember that if you wish to keep the deer you may do so. You will need to advise the responding police officer that you would like a highway deer kill permit. The police officer will then give you a tag to transport the deer. If you take the deer that you have hit without a permit you could be in trouble with law enforcement or the Department of Natural Resources. Keep in mind too that even if you are not a fan of venison there are organizations that would be happy to accept the donation of your deer.

Most importantly, stay safe after your unavoidable car/deer accident.

Fraser Trebilcock Shareholder Gary C. Rogers has firsthand experience with car/deer accidents, having been involved in four himself; Gary is recognized as one of the top civil defense attorneys in the area of automobile related cases, and he has co-written Michigan No-Fault Law-The Insurers’ Perspective, a handbook for handling claims under Michigan’s No-Fault Automobile legislation. Gary can be reached at grogers@fraserlawfirm.com or (517) 377-0828.