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’Tis the Season

Peter and Michelle Wirth, co-owners of Mercedes-Benz of Springfield, stand in a showroom that is expected to see a heavy volume of shoppers looking to take advantage of end-of-year sales.

The names of the programs have become ingrained in consumers’ consciousness — December to Remember, Winter Sales Event, Wish List Sales Event, and many others — and the TV commercials are seemingly endless. But the year-end auto-sales initiatives have several goals, and have become a present for dealers and consumers alike.

The commercials started appearing during the football games and the Jeopardy! Tournament of Champions, among other places, a few weeks ago.

You’ve seen them … the ones where mom or dad, or perhaps their college-age daughter, looks out the window on a snowy Christmas morning to find a new car in the driveway with a big red bow on the roof or the hood.

The commercials, and there are a lot of them now with a host of themes, are part of what has become a very important — and generally very joyous — time for car makers, car dealers, and, yes, consumers: the holiday, end-of-year sales.

These campaigns all have names now — there’s the Toyota-thon, the Lexus December to Remember, the Mercedes-Benz Winter Event, the Lincoln Wish List Sales Event, and many others. And while it was once mostly a luxury-brand initiative, it’s now generally across the board.

“You have all this inventory being built based on how many vehicles the industry analysts believe are going to be purchased that year. Well, if they forecasted ’19 to be up, and it’s flat, right away you have probably more inventory than you need; this is going to be a great holiday for consumers.”

As for those commercials, while farfetched to some, they are, well, spot on in some respects.

Indeed, a growing number of consumers will ask for that red bow, and, yes, they do like to have it on the car as it sits parked in the driveway or garage on the holiday morning, said Ben Sullivan, chief operating officer for Balise Motor Sales.

“It happens more than most people might think,” he told BusinessWest, adding that, while some dealers will make timely and perhaps dramatic deliveries — even on Christmas Eve — most buyers will get the car (and the bow) a few days before and stash them somewhere.

And there should be more cars with ribbons on them in driveways this year, figuratively if not literally, said Robinson and others we spoke with, because this year’s holiday season is shaping up to be a big one for consumers.

That’s because, overall, auto sales in 2019 have been flat, which is still good considering how strong they’ve been for the past few years. But they were projected to be a few percentage points higher than last year.

Roughly 3% to be more precise, Sullivan went on, adding that 3% of 17 million (the approximate number of cars sold in each of the past few years) is a big number.

“You have all this inventory being built based on how many vehicles the industry analysts believe are going to be purchased that year,” he explained. “Well, if they forecasted ’19 to be up, and it’s flat, right away you have probably more inventory than you need; this is going to be a great holiday for consumers.”

But that’s only one of the reasons why this could end up being an extraordinary holiday sales period, said those we talked with, adding that, in addition to the traditional tax breaks for commercial vehicles — especially the first-year bonus depreciation deduction — a number of other factors are quite favorable.

Ben Sullivan says the holidays sales event help clear lots of cars in advance of the new model-year arrivals, while also helping manufacturers meet their goals for a given year.

These include gas prices — a little higher than earlier in the year, but still relatively low — as well as interest rates (low but projected to climb in 2020) and consumer confidence, which is still rather high as recession fears have eased in recent weeks.

But even in what would be considered more typical years, the holiday-season sale has become an effective vehicle for clearing lots of cars before the new models roll in, and also for introducing a brand to people who might otherwise overlook it.

That’s the case with Mercedes, which has been working hard in recent years to convince car buyers that its models (or some of them, anyway) are within their reach.

Peter Wirth, co-owner of Mercedes-Benz of Springfield, said the dealership, which draws from a large geographic area that includes Southern Vermont, Southern New Hampshire, Eastern New York, and Northern Connecticut, has been active in trying to introduce itself to consumers seeking a lower price range. And the year-end event has been one of many drawing cards.

Joe Clark, general manager of Steve Lewis Subaru in Hadley, said that car maker’s holiday sales event has a different name and different twist. The former is Share the Love, which partially explains the latter, which involves contributions to charities, which adds another ‘win’ to what was already a win-win-win scenario.

Subaru donates $250 for each car sold to a charity of the buyer’s choice, said Clark, adding that there are national and local options, and Steve Lewis matches with $50.

“In 2019, it took until July before all the ’18s had been sold off. In the meantime, all the manufacturers are making ’19s, and here we are coming into the end of the year; you want to start as clean as you can with the next model year.”

“Over the past few years, we’ve been able to raise more than $50,000,” he said, adding that, while Subaru doesn’t offer the same kinds of incentives as other makers — he says it doesn’t need to because the cars are priced appropriately — the charitable donations act as an incentive to bring consumers to the showrooms at the end of the year.

For this issue and its focus on transportation, BusinessWest talked with area dealers about these year-end sales and how they’ve become a different type of holiday tradition.

Opportunities Present Themselves

Tracing the history of the holiday sales push, Sullivan, who works for a company with more than a dozen brands in its portfolio, said that, traditionally, November and December were not big months for dealers, emphasizing the past tense.

Weather played a part in this, he said, as well as the fact that people are, by and large, focusing their time, attention, and spending dollars on the holidays and not a new car.

To spark some life into end-of-year sales activity, manufacturers, as a group, began to offer some of their best incentives at that time of the year, with the goal of hitting sales targets set roughly 12 months earlier.

Now, the deals, the incentives, and, yes, those red ribbons have become a tradition, and savvy buyers set their watches by it.

So much so that October has become a somewhat lackluster month for many dealers.

It wasn’t for Mercedes, which stages an annual certified pre-owned sale that month, said Wirth, adding that the Springfield dealership had a great October and was challenged to keep a good inventory of used cars on the lot.

But that’s another story.

This one is about the holiday sales events, which have, overall, done what they were designed to do — clear inventory and help manufacturers and dealers hit their numbers.

Joe Clark says Subaru’s ‘Share the Love’ year-end event provides consumers with still another reason to shop that brand at the end of the year.

And this year, the sales will be needed to do both, said Sullivan, noting, again, that sales have been flat and there are a lot of 2019s still on the lots that manufacturers would prefer to see gone by year’s end or at least early next year.

“In 2019, it took until July before all the ’18s had been sold off,” he went on, adding that some 2019 models, like the Toyota Tacoma, are still being built. “In the meantime, all the manufacturers are making ’19s, and here we are coming into the end of the year; you want to start as clean as you can with the next model year.

“So this year, in particular, will be interesting because it took so long to get the ’18s sold off, and now we have ’19s that we have to sell off,” he continued. “I expect that the manufacturers are going to do even more in this holiday season than they would typically in order to alleviate that stock level.”

Wirth said Mercedes has two major seasonal pushes — its summer sales program, designed to help dealers clear out inventory before the new model year arrives, and the year-end initiative, which helps meet annual sales goals.

The latter, the Winter Sales Event, is among the oldest in the business, Wirth noted, adding that Mercedes throws not only large amounts of marketing dollars at the program, but some attractive incentives as well.

“And we latch onto these programs on a dealership level because it’s not just marketing,” he told BusinessWest. “The deals are actually really good; if you’re in the market for a new car, November and December is a really good time to buy.”

Elaborating, he said that, while the incentives might not change on some of the models — and Mercedes has quite a few of them — for those months, the deals will become better for models where there is significant inventory and an opportunity to make a dent in it.

And unlike the deals presented by many manufacturers, those at Mercedes involve the latest models, in this case 2020s, as opposed to the 2019s on most lots.

Wirth told BusinessWest there isn’t a deep body of work when it comes to this dealership and the year-end sales events; after all, it opened just a few weeks before the holidays in 2017. But already some trends have emerged.

One involves commercial vehicles, and, yes, Mercedes sells a good number of them. Its vans, the mid-sized Metris and full-size Sprinter, can compete with other makes on price, and they have the Mercedes star on the grill, said Wirth, adding that some of the SUVs also qualify for what’s known as the Chapter 179 tax deduction.

“The accountants talk to their clients and say, ‘hey, you need to do something,’” he noted, adding that, while he can’t remember whether November or December was the top month for van sales last year, the other came in just behind.

Another trend involves the last few months of the year becoming some of the busiest of the year, something that has pretty much always been the case for luxury imports. In fact, the week between Christmas and New Year’s might be the busiest of the entire year, although the week before the holiday is also quite busy, said Wirth, adding that the perception that the very best time of year to buy a car is toward the end of December may well have something to do with this.

But he said the dealership strives to make it a good experience regardless of the month or the date.

Overall, the year-end tax breaks on commercial vehicles have long made November and December strong months for those types of transactions, said Sullivan, adding that, over the past several years, the holiday sales events have broadened the scope of activity to pretty much all brands and all types of vehicles. They’ve made October a somewhat lonely month for dealers, but November and December a time of excitement and, well, anticipation as they wait to see what the incentives will be.

“It’s much like a Christmas present for dealers — we have to wait to open it up when they say ‘the event is now on, and here are the consumer incentives you’ll be able to offer,’” he explained, adding that the numbers are generally known by the middle of November.

And while dealers and consumers are on the receiving end of presents, Subaru’s annual holiday event puts another group in that category — regional and national nonprofits.

“It’s not about car sales or how much you can save on a car,” said Clark. “It’s about Subaru doing what’s right and raising a bunch of money for some great charities.”

Like all the other programs, though, it provides consumers with a reason — or some additional reasons — to shop at the end of the year, he went on, adding that, over the years, the Steve Lewis dealership has supported groups and agencies ranging from area schools to the Dakin animal shelter. This year, the beneficiary will be Cooley Dickinson Hospital’s Cooley Cares for Kids program.

While there are some inventory-clearing motivations for the holiday-sales event, generally Subaru doesn’t have excess-inventory issues, he noted, and, in fact, keeping a supply on the lot is the main challenge.

That’s a Wrap

As he talked while walking through the Lexus dealership on Riverdale Street, Sullivan gestured to the ornate red ribbons atop each of the models on the floor.

He said they’re supplied by a local maker, and generally start appearing on car roofs a few weeks before Thanksgiving. He didn’t say whether this year’s order was larger than normal, but he certainly implied that more ribbons — again, figuratively if not literally — will be needed this year.

That’s because, as he said, this is shaping up to be a joyous a holiday for consumers — one right out of one of those commercials.

George O’Brien can be reached at [email protected]

Accounting and Tax Planning

Complicating Matters

By Kristina Drzal Houghton, CPA, MST

Year-end tax planning in 2019 remains as complicated as ever. Notably, we are still coping with the massive changes included in the biggest tax law in decades — the Tax Cuts and Jobs Act (TCJA) of 2017 — and pinpointing the optimal strategies. This monumental tax legislation includes myriad provisions affecting a wide range of individual and business taxpayers.

Among other key changes for individuals, the TCJA reduced tax rates, suspended personal exemptions, increased the standard deduction, and revamped the rules for itemized deductions. Generally, the provisions affecting individuals went into effect in 2018, but are scheduled to “sunset” after 2025. This provides a limited window of opportunity in some cases.

Kristina Drzal Houghton

Kristina Drzal Houghton

The impact on businesses was just as significant. For starters, the TCJA imposed a flat 21% tax rate on corporations, doubled the maximum Section 179 ‘expensing’ allowance, limited business interest deductions, and repealed write-offs for entertainment expenses. Unlike the changes for individuals, most of these provisions are permanent, but could be revised if Congress acts again.

For your convenience, this article is divided into two sections: individual tax planning and business tax planning. Be aware that the concepts discussed in this article are intended to provide only a general overview of year-end tax planning. It is recommended that you review your personal situation with a tax professional.

INDIVIDUAL TAX PLANNING

Age-old Planning

Postpone income until 2020 and accelerate deductions into 2019 if doing so will enable you to claim larger deductions, credits, and other tax breaks for 2019 that are phased out over varying levels of adjusted gross income (AGI). These include deductible IRA contributions, child tax credits, higher-education tax credits, and deductions for student-loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. In some cases, however, it may pay to actually accelerate income into 2019. For example, that may be the case where a person will have a more favorable filing status this year than next (e.g., head of household versus individual filing status), or expects to be in a higher tax bracket next year.

“Generally, the provisions affecting individuals went into effect in 2018, but are scheduled to ‘sunset’ after 2025. This provides a limited window of opportunity in some cases.”

If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA in 2019 if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2019, and possibly reduce tax breaks geared to AGI (or modified AGI).

It may be advantageous to try to arrange with your employer to defer, until early 2020, a bonus that may be coming your way. This could cut as well as defer your tax.

Capital-gain Planning

Long-term capital gain from sales of assets held for more than one year is taxed at 0%, 15%, or 20%, depending on the taxpayer’s taxable income. The 0% rate generally applies to the excess of long-term capital gain over any short-term capital loss to the extent that it, when added to regular taxable income, is not more than the maximum zero-rate amount (e.g., $78,750 for a married couple).

YEAR-END ACTION: If the 0% rate applies to long-term capital gains you took earlier this year. For example, if you are a joint filer who made a profit of $5,000 on the sale of stock bought in 2009, and other taxable income for 2019 is $70,000, then before year-end, try not to sell assets yielding a capital loss because the first $5,000 of such losses won’t yield a benefit this year. And if you hold long-term appreciated-in-value assets, consider selling enough of them to generate long-term capital gains sheltered by the 0% rate.

Itemized Deductions

Among the most prominent tax changes for individuals, the TCJA essentially doubled the standard deduction while modifying the itemized-deduction rules for 2018 through 2025. For 2019, the inflation-indexed standard deduction is $12,200 for single filers and $24,400 for joint filers.

YEAR-END ACTION: With the assistance of your professional tax advisor, figure out if you will be claiming the standard deduction or itemizing deductions in 2019. The results of this analysis will likely dictate your tax planning approach at the end of the year.

Some or all of these TCJA provisions on itemized deductions may affect the outcome:

• The deduction for state and local taxes (SALT) is limited to $10,000 annually. This includes any combination of SALT payments for (1) property taxes and (2) income or sales taxes.

• The deduction for mortgage interest expenses is modified, but you can still write off interest on ‘acquisition debt’ within generous limits.

• The deduction for casualty and theft losses is eliminated (except for disaster-area losses).

• The deduction for miscellaneous expenses is eliminated, but certain reimbursements made by employers may be tax-free to employees.

• The threshold for deducting medical and dental expenses, which was temporarily lowered to 7.5% of adjusted gross income (AGI), reverts to 10% of AGI, beginning in 2019.

TIP: Depending on your situation, you may want to accelerate deductible expenses into the current year to offset your 2019 tax liability. However, if you do not expect to itemize deductions in 2019, you might as well postpone these expenses to 2020 or beyond.

Charitable Donations

Generally, itemizers can deduct amounts donated to qualified charitable organizations, as long as substantiation requirements are met. The TCJA increased the annual deduction limit for monetary contributions from 50% of AGI to 60% for 2018 through 2025. Any excess is carried over for up to five years.

If you are age 70½ or older by the end of 2019, have traditional IRAs, and particularly if you can’t itemize your deductions, consider making 2019 charitable donations via qualified charitable distributions from your IRAs. Such distributions are made directly to charities from your IRAs, and the amount of the contribution is neither included in your gross income nor deductible on Schedule A, Form 1040. But the amount of the qualified charitable distribution reduces the amount of your required minimum distribution, which can result in tax savings.

YEAR-END ACTION: Absent extenuating circumstances, try to ‘bunch’ charitable donations in the year they will do you the most tax good. For instance, if you will be itemizing in 2019, boost your gift giving at the end of the year. Conversely, if you are claiming the standard deduction this year, you may decide to postpone contributions to 2020.

For donations of appreciated capital-gain property that you have owned longer than one year, such as stock, you can generally deduct an amount equal to the property’s fair market value (FMV). Otherwise, the deduction is typically limited to your initial cost. Also, other special rules may apply to gifts of property. Notably, the annual deduction for property donations generally cannot exceed 30% of AGI.

If you intend to donate securities to a charity, you might choose securities you have held longer than one year that have appreciated substantially in value. Conversely, it usually is preferable to keep securities you have owned less than a year.

TIP: If you donate to a charity by credit card late in the year — for example, if you are making an online contribution — you can write off the donation on your 2019 return, even if you do not actually pay the credit-card charge until 2020.

Alternative Minimum Tax

Briefly stated, the alternative minimum tax (AMT) is a complex calculation made parallel to your regular tax calculation. It features several technical adjustments, inclusion of ‘tax preference items,’ and subtraction of an exemption amount (subject to a phase-out based on your income). After comparing AMT liability to regular tax liability, you effectively pay the higher of the two.

YEAR-END ACTION: Have your AMT status assessed. Depending on the results, you may then shift certain income items to 2020 to reduce AMT liability for 2019. For instance, you might postpone the exercise of incentive stock options (ISOs) that count as tax preference items.

Thanks to the TCJA, the AMT is now affecting fewer taxpayers. Notably, the TCJA substantially increased the AMT exemption amounts (and the thresholds for the phase-out), unlike the minor annual ‘patches’ authorized by Congress in the recent past.

TIP: The two AMT rates for single and joint filers for 2019 are 26% on AMT income up to $194,800 ($97,400 if married and filing separately) and 28% on AMT income above this threshold. Note that the top AMT rate is still lower than the top ordinary income-tax rate of 37%.

Education Tax Breaks

The tax law provides tax benefits to parents of children in college, within certain limits. These tax breaks, including a choice involving two higher-education credits, have been preserved by the TCJA.

YEAR-END ACTION: If you pay qualified expenses for next semester by the end of the year, the costs will be eligible for a credit in 2019, even though the semester does not begin until 2020.

Typically, you must choose between the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The maximum AOTC of $2,500 is available for qualified expenses of each student, while the maximum $2,000 LLC is claimed on a per-family basis. Thus, the AOTC is usually preferable. Both credits are phased out based on modified adjusted gross income.

The TCJA also allows you to use Section 529 plan funds to pay for up to $10,000 of K-12 tuition expenses tax-free. Previously, qualified expenses only covered post-secondary schools.

TIP: If your student may be graduating in 2020, you may want to hold off and pay the spring 2020 tuition in early January 2020. The student can usually use this credit to offset their own 2020 tax liability even if the parent’s income exceeds the thresholds.

Estimated Tax Payments

The IRS requires you to pay federal income tax through any combination of quarterly installments and tax withholding. Otherwise, it may impose an ‘estimated tax’ penalty.

YEAR-END ACTION: No estimated tax penalty is assessed if you meet one of these three ‘safe-harbor’ exceptions under the tax law. These exceptions consider the timing of quarterly estimates as well as your withholdings. You should review your payments with a tax professional prior to year-end.

BUSINESS TAX PLANNING

Depreciation-related Deductions

Under the TCJA, a business may benefit from a combination of three depreciation-based tax breaks: (1) the Section 179 deduction, (2) ‘bonus’ depreciation, and (3) regular depreciation.

YEAR-END ACTION: Acquire property and make sure it is placed in service before the end of the year. Typically, a small business can then write off most, if not all, of the cost in 2019.

1. Section 179 deductions: This tax-code section allows you to ‘expense’ (i.e., currently deduct) the cost of qualified property placed in service during the year. The maximum annual deduction is phased out on a dollar-for-dollar basis above a specified threshold.

The maximum Section 179 allowance has been raised gradually over the last decade, but the TCJA gave it a massive boost. In 2017, the deduction limit was $510,000, and the phase-out threshold was $2.03 million. Those figures rose to $1 million and $2.5 million in 2018, and $1.02 million and $2.55 million in 2019.

However, note that the Section 179 deduction cannot exceed the taxable income from all your business activities this year. This could limit your deduction for 2019.

2. Bonus depreciation: The TCJA doubled the previous 50% first-year bonus depreciation deduction to 100% for property placed in service after Sept. 27, 2017. It also expanded the definition of qualified property to include used, not just new, property.

Note that the TCJA gradually phases out bonus depreciation after 2022. This tax break is scheduled to disappear completely after 2026.

3. Regular depreciation: Finally, if there is any remaining acquisition cost, the balance may be deducted over time under the Modified Accelerated Cost Recovery System (MACRS).

TIP: A MACRS depreciation deduction may be reduced if the cost of business assets placed in service during the last quarter of 2019 (Oct. 1 through Dec. 31) exceeds 40% of the cost of all assets placed in service during the year (not counting real estate). Additionally, many states, including Massachusetts and Connecticut, do not recognize bonus depreciation. This should be included in your planning considerations.

Travel Expenses

Although the TCJA repealed the deduction for entertainment expenses beginning in 2018, you can still deduct expenses for travel and meal expenses while you are away from home on business and in other limited situations. The primary purpose of the expense must meet strict business-related rules.

If you travel by car, you may be able to deduct your actual expenses, including a depreciation allowance, or opt for the standard mileage deduction. The standard mileage rate for 2019 is 58 cents per business mile (plus tolls and parking fees). Annual depreciation deductions for ‘luxury cars’ are limited, but the TCJA generally enhanced those deductions for vehicles placed in service in 2018 and thereafter.

TIP: The IRS recently issued a ruling that explains when food and beverage costs are deductible when those costs are stated separately from entertainment on invoices or receipts.

QBI Deductions

The TCJA authorized a deduction of up to 20% of the ‘qualified business income’ (QBI) earned by a qualified taxpayer. This deduction may be claimed by owners of pass-through entities — partnerships, S corporations, and limited liability companies (LLCs) — as well as sole proprietors.

YEAR-END ACTION: The QBI deduction is reduced for some taxpayers based on the amount of their income. Depending on your situation, you may accelerate or defer income at the end of the year, according to the figures.

First, however, it must be determined if you are in a ‘specified service trade or business’ (SSTB). This includes most personal-service providers. Then three key rules apply:

1. If you are a single filer with income in 2019 below $160,725 or a joint filer below $321,400, you are entitled to the full 20% deduction.

2. If you are a single filer with income in 2019 above $210,700 or a joint filer above $421,400, your deduction is completely eliminated if you are in an SSTB. For non-SSTB taxpayers, the deduction is reduced, possibly down to zero.

3. If your income falls between the thresholds stated above, your QBI deduction is reduced, regardless of whether you are in an SSTB or not.

TIP: Other rules and limits may apply, including new guidelines for real-estate activities. Consult with your tax advisor for more details about your situation.

Business Repairs

While expenses for business repairs are currently deductible, the cost of improvements to business property must be written off over time. The IRS recently issued regulations that clarify the distinctions between repairs and improvements.

YEAR-END ACTION: When appropriate, complete minor repairs before the end of the year. The deductions can offset taxable business income in 2019.

Estimated Tax Payments

A corporation (other than a large corporation) that anticipates a small net operating loss for 2019 (and substantial net income in 2020) may find it worthwhile to accelerate just enough of its 2020 income (or to defer just enough of its 2019 deductions) to create a small amount of net income for 2019.

YEAR-END ACTION: This will permit the corporation to base its 2020 estimated tax installments on the relatively small amount of income shown on its 2019 return, rather than having to pay estimated taxes based on 100% of its much larger 2020 taxable income.

Bottom Line

These are just some of the year-end steps that can be taken to save taxes. As previously mentioned, be aware that the concepts discussed in this article are intended to provide only a general overview of year-end tax planning. It is recommended that you review your personal situation with a tax professional.

Kristina Drzal-Houghton, CPA, MST is the partner in charge of Taxation at Holyoke-based Meyers Brothers Kalicka, P.C.; (413) 536-8510.

Law

Breaking Up Is Hard to Do

By Amelia J. Holstrom

On Nov. 3, 2019, news broke that the McDonald’s board of directors voted to terminate CEO Steve Easterbrook for having a consensual relationship with an employee.

Early reports indicate that, after a three-week internal investigation, McDonald’s board found the relationship to be inappropriate and in violation of its policies, including its standards of business conduct, which prohibits employees with “a direct or indirect reporting relationship” from “dating or having a sexual relationship.” McDonald’s makes clear in its policy that “it is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company.”

Amelia J. Holstrom, Esq.

Amelia J. Holstrom, Esq.

McDonald’s is not the first large corporation to find itself in this type of predicament. Companies like Boeing, in 2005, and Best Buy, in 2012, have parted ways with chief executives based on alleged relationships with employees. The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.

You may be asking, can companies do that? Can they fire someone for a consensual relationship? Yes, they can — and so can you.

Love Hurts

It isn’t any secret that people spend most of their waking hours at work. Not surprisingly, office romances sometimes bloom. What better place to meet your soulmate, right?

From the employer’s point of view, dating in the workplace can spell trouble. Office romances create many problems. Because employers cannot prevent their employees from developing emotions, it is important to address workplace romances well in advance of any potential problems.

Workplace dating is a recipe for disaster in more ways than one. In addition to decreasing morale and productivity, when true love goes sour, employees often cannot work with each other anymore, or worse, workplace romances can ultimately lead to sexual harassment and/or discrimination and retaliation claims.

“The decision to remove an employee at any level involves consideration, but to remove an employee at the top of the ladder should be no different.”

Assume, for example, that a superior and subordinate have been dating for some time. Their romance fizzles, and things end. What if the subordinate now claims to have felt pressured into the relationship? A supervisor’s relationship with a subordinate is most damaging to the company because of the legal consequences.

In Massachusetts, when a supervisor engages in harassment of a subordinate, even if there is no direct reporting relationship, a business is automatically liable for that harassment.

I Would Do Anything for Love, but I Won’t Let Supervisors Date Subordinates

How should you combat workplace romances? Employers can adopt policies on personal relationships in the workplace that specifically prohibit supervisors and managers from engaging in any romantic relationships with employees at the company, including direct and indirect subordinates.

If you choose to adopt such a policy, it should state that such relationships raise ethical and fairness issues and problems with favoritism and morale, and that they will not be tolerated. Employers should also spell out what will happen if such a relationship is discovered.

Some employers confront the couple, indicate that, if they wish to continue the relationship, one must resign, and let the employees decide who will resign. Other employers confront the employees and terminate the employment of one or both of them effective immediately. It depends on the stance your business wants to take.

Love Rules

What if you don’t want to prohibit such relationships at your workplace? Another approach used by some employers is to have employees in a relationship enter into a ‘love contract.’

Such a document essentially memorializes, in writing, the consensual nature of the employees’ relationship. Be careful here, though. Love contracts are not prospective, as they will not limit the company’s liability for future sexual harassment and/or discrimination and retaliation claims. They may only be helpful to demonstrate that there was a consensual relationship between the employees before and at the time the employees signed the contract.

You Oughta Know

All employers can learn a valuable lesson from the situation involving McDonald’s. Each employer should consider how it wants to handle workplace romances before one becomes an issue for its business. Having a plan or policy in place could save you a lot of heartaches … I mean, headaches.

(The author wishes to thank Neil Sedaka, Nazareth, Meat Loaf, Don Henley, and Alanis Morissette for their wise lyrics about love.)

Amelia J. Holstrom is a partner with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively practicing labor and employment law. Holstrom specializes in employment litigation, including defending employers against claims of discrimination, retaliation, harassment, and wrongful termination, as well as wage-and-hour lawsuits. She also frequently provides counsel to management on taking proactive steps to reduce the risk of legal liability; (413) 737-4753; [email protected]

Workforce Development

More Than Clothes

Maria Pelletier found confidence — and a job — with the help of Dress for Success.

Applying for jobs can be a daunting task, especially if one does not have the right tools or preparation to nail the interview. Dress for Success, an international not-for-profit organization, is working toward helping low- to middle-income women achieve economic independence by boosting confidence and providing valuable skills, a network of support, and the right suit to get the job done — literally.

When Maria Pelletier lost her job in August 2017 — the first time she had ever been fired in her life — she felt like she hit rock bottom.

“It was the last thing I was expecting,” she said. “It really set me back and made me question who I am and what I’m able to do.”

Pelletier began collecting unemployment, and although she was applying for jobs, she wasn’t getting hired, and she couldn’t figure out why.

“I was just doubting myself,” she said. “I kept thinking, ‘why are they not hiring me? What is going on?’”

“We’re finding out where they want to work, how we can get them in the door, and what’s their path to move up the ladder and have career success, because ultimately, our goal is to help women gain economic independence.”

Fortunately, she stumbled upon a program called Dress for Success Western Massachusetts, which she says gave her the confidence she needed to get back on track. When asked about her journey through the program, Pelletier had three short words: “where to begin?”

The most important thing Dress for Success did for her was get her confidence back up. Pelletier applied and went through the Foot in the Door program, a course that helps women enter the workforce. She was able to get a job part-time at the Post Office while going to classes for the program.

Then, in April 2018, she got a full-time job as lead Client Service specialist at Baystate Medical Center, and has been working there ever since. In that role, she answers phone calls coming into the hospital, and hopes to continue to learn more about her department and grow into new responsibilities.

“The interview skills and the classes we were taught reinforced on my skills I already had,” she said. “It was just bringing it back out to the forefront and saying, ‘yes, you can do this.’”

Sense of Sisterhood

That, said Executive Director Margaret Tantillo, is exactly what Dress for Success is about — giving women the confidence they need to get into the workforce, whether it is their first time or they need a little help to get back out there.

While the name entails part of the organization’s mission, to supply women with clothing for a job interview — or a few days of outfits once a job is secured — from the Dress for Success boutique at the Eastfield Mall, this is only part of the mission. “The suit is the vehicle, or just one aspect of what we’re able to do,” Tantillo said.

She told BusinessWest there are two workforce-development programs, and a third on the way, designed to help women become financially independent and confident in themselves.

Foot in the Door, launched in 2016 to help underemployed and unemployed women enter the workforce, is a collaboration between Springfield Technical Community College and Holyoke Community College instructors, who provide training on the interpersonal skills that are necessary for any workplace.

Margaret Tantillo says Dress for Success offers women a community of support — a sisterhood of sorts.

Within three months of graduating from this program, 70% of women, on average, are either in school and/or working, Tantillo explained. Program directors also make sure to prioritize putting women in jobs that are the right fit for them.

“We really work with our participants to find out what their interest is and what their skillset is,” said Tantillo. “We’re finding out where they want to work, how we can get them in the door, and what’s their path to move up the ladder and have career success, because ultimately, our goal is to help women gain economic independence.”

Having a good relationship with employers and referring agencies in the region is a big part of this, and Tantillo said practice interviews are available for women who finish the program successfully so they can receive feedback before going into the real interview. Some even get jobs right from the practice round.

On a more personal level, Dress for Success offers the Margaret Fitzgerald one-on-one mentorship program for women who are looking for jobs or recently entered the workforce. Each participant is paired with a professional woman in the community to work with on an individual basis.

“They are able to form a relationship so they can guide and support women in terms of whatever their unique, individual need is,” said Tantillo, adding that the program recently received an anonymous donation of $25,000. “The women who have come through that have had some really good results.”

She added that having a role model is a big part of women finding success in the programs, as many of them have not been fortunate enough to have role models in their lives.

The name of the program comes from a female mentor herself. Margaret Fitzgerald was a secretary and the only woman in the Physics department at Mount Holyoke College in the 1970s. She was called “mom” by many of the women enrolled in that program and acted as a mentor, advocate, and friend to the students. The female leaders in this program hope to do the same thing for their participants.

The newest program, The Professional Women’s Group, is set to launch in January 2020 with help from Eversource. It will focus on promoting employment retention and career advancement by providing valuable information, tools, and resources while creating a safe environment for participants to network with other professionals.

“They have a real sense of responsibility because what they do doesn’t just impact them, it impacts the next person we refer to that employer. It’s interesting to see how people respond when they feel like they’re part of something bigger.”

This group of women will be recruited from other programs and aims to help them especially in the first six months of a job, which are critical in terms of how people perform.

“The unemployment rate is lower, so there are more people in jobs that need the instruction and guidance about how to retain a job,” Tantillo said.

This new program, she explained, is intended to supplement the ones already in place at Dress for Success, and is framed around five pillars: workplace etiquette, work/life balance, financial health, health and wellness, and leadership and civic responsibility.

“We provide them with a community of support,” she noted. “We’ve had women talk about how they feel like this is a sisterhood and that they’ve never felt so supported before in their lives.”

Opening New Doors

Confidence. Community. Sisterhood.

These key words mentioned above several times are what Dress for Success instills in women utilizing its programs. And these women want to succeed not only for themselves, but for each other.

“The flip side is, now, when they’re in a job, they have a real sense of responsibility because what they do doesn’t just impact them, it impacts the next person we refer to that employer,” Tantillo said. “It’s interesting to see how people respond when they feel like they’re part of something bigger.”

For Pelletier, she gained not only a community of support, but a second chance.

“I was at rock bottom, and I said, ‘OK, let me try this. Let me see where it goes from there,’” she said. “They can either kick me to the curb or they can say, ‘hey, come on in.’ And luckily, they said, ‘come on in.’”

Kayla Ebner can be reached at [email protected]

Community Spotlight

Community Spotlight

Some of the municipal leaders who spoke with BusinessWest about economic development and progress in Ludlow.

For more than a decade now, the Ludlow Mills project, a 20-year initiative that is changing the face of that historic complex and bringing jobs, new businesses, and new places to live to this community, has been the dominant talking point when it comes to the subject of economic development here.

But municipal officials are quick to point out that it’s just one of many intriguing stories unfolding in this town of around 21,000 people, the sum of which adds up to an intriguing, very positive chapter in the history of this community across the Chicopee River from Indian Orchard.

Indeed, there are a number of both municipal and private-sector commercial projects in various stages of development that are keeping town officials busy, and providing ample evidence that this is a community on the rise — in many different respects.

On the municipal side of the equation, construction of a new elementary school, approved by town voters in the spring of 2018, is underway. The facility, to be called Harris Brook Elementary School, will essentially combine the Chapin Street and Veterans Park elementary schools, two aging structures, under one far more efficient roof. It is being constructed on the playing fields adjacent to the current Chapin school.

“It’s always a balancing act. You want to give the students the world, but there’s only so much we can do within the constraints of our budget.”

Meanwhile, construction will soon begin on a new senior center that will replace a facility deemed generally unsafe and largely inadequate for the town’s growing senior population.

“We’re in the basement of a 115-year-old building that used to be a high school and junior high school,” said Jodi Zepke, director of the Council on Aging, adding that the long corridors in the structure are difficult for seniors to navigate. “We’ve done a lot with what we have, but it’s time for a new building.”

The town is also implementing a new communication system, a central hub for police, fire, and EMT services, and has embarked on an extensive renovation of Center Street, the main business thoroughfare, a project in the planning stages since 2008 and deemed long-overdue, said Town Administrator Ellie Villano.

“This is a MassDOT state construction,” she said, explaining that the Commonwealth is paying for the changes to the road. “It widens Center Street and adds a center turn, bike lanes, and new sidewalks.”

All this will make Center Street more presentable and easy to navigate for visitors to two new fast-food restaurants that will take shape there in the coming months — a Wendy’s and a KFC.

These various developments present a combination of benefits and challenges — benefits such as tax dollars and additional vibrancy from the new businesses, and challenges when it comes to paying for all those municipal projects. But the former should definitely help with the latter, said Derek DeBarge, chairman of the Board of Selectmen.

“One of the challenges is that a number of these big projects have all happened at the same time,” added Todd Gazda, superintendent of Ludlow schools. “We’re having to essentially prioritize all of these things, which are all important projects.”

For the latest in its long-running Community Spotlight series, BusinessWest talked with a number of town officials about the many forms of progress taking place and what they mean for the community moving forward.

From the Ground Up

“Revenue, revenue, revenue.”

That’s the word DeBarge repeated several times when asked about the motivating factors behind all the recent municipal projects.

“My concern is obviously trying to do better with our taxes,” he said, adding that a growing senior population, many of whom are living on a single income, is also at the top of the list. “As this revenue is coming in, with the solar, the KFC … it’s all tax-based revenue for us. And the more revenue that comes in, the better we can do for our departments, and that means the better we can do for our tax base, and that’s better for our constituents and for everyone.”

Elaborating, he said that, while town officials have worked hard to secure grants for these municipal projects — and they have received quite a few — the town must bear a good percentage of the cost of each project, which presents a stern budget challenge.

Ludlow at a glance

Year Incorporated: 1774
Population: 21,103
Area: 28.2 square miles
County: Hampden
Residential Tax Rate: $19.82
Commercial Tax Rate: $19.82
Median Household Income: $53,244
Median Family Income: $67,797
Type of government: Town Council, Representative Town Meeting
Largest Employers: Hampden County House of Correction; Encompass Rehabilitation Hospital; Massachusetts Air National Guard; Kleeberg Sheet Metal Inc.
*Latest information available

Education, and the need to modernize facilities, is just one example of this.

Gazda said the town has been doing a lot of work on the schools recently to improve the quality of educational services provided to students, and one of the top priorities has been to do it in a cost-effective and fiscally responsible manner.

“It’s always a balancing act,” he said. “You want to give the students the world, but there’s only so much we can do within the constraints of our budget.”

Gazda noted that maintenance costs on both Chapin and Veterans Park elementary schools, both built around 60 years ago, had become exorbitant. So a decision was made to put forth a proposal to the Massachusetts School Building Authority.

“We’re currently under budget and ahead of schedule,” he said of the $60 million project, adding that the new facility is slated to open in the fall of 2021 with an estimated student enrollment of 620 to 640 students.

About 10 minutes down the road on the corner of State Street and First Avenue, the new, 18,000-square-foot senior center is under construction and due to open in roughly a year.

Like the new school, its construction has been prompted by the need to replace aging facilities and provide the community with a center that is state-of-the-art.

“It’s no secret that there’s more people over 60 than under 20, and that population of seniors is only going to continue to grow,” said Zepke. “We just took a hard look at the numbers, and we can barely accommodate what we have now.”

As for the new communications system, Ludlow Police Chief Paul Madera says this will make communication between all town entities and the central hub much easier, using radio rather than having to pick up a phone.

“All of our communication systems are in need of refurbishing, so the most prudent and fiscal approach was to combine them all together,” he said, adding that this project, with a price tag of more than $4 million, includes the implementation of a public-safety dispatch which combines police, fire, and EMS services into one center.

While these initiatives proceed, the town is undertaking a host of initiatives aimed at improving quality of life and making this a better community in which to live, work, and conduct business.

Ludlow CARES is one such effort. A community-run organization, it was launched with the goal of educating children and their parents on drug and alcohol abuse in response to the opioid epidemic. Now, DeBarge says it has spread to become much more than that, and has inspired other towns and cities to adopt similar programs.

“It has gotten huge to a point where it has gotten other communities involved with their own towns in a similar way,” he said.

Another organization, the Michael J. Dias Foundation, serves as a resource and a home for recovering addicts.

All these initiatives, DeBarge, Madera, and other town officials agreed, reflect upon the tight-knit community that Ludlow has become.

It Takes a Village

As nine town officials sat around the table informing BusinessWest about everything going on in Ludlow, they spoke with one voice about how, through teamwork at City Hall and other settings, pressing challenges are being undertaken, and economic development — in all its various forms — is taking place.

“Our staffs are doing a tremendous job,” Madera said. “They’re wearing multiple hats doing multiple jobs. There’s always room for improvement, but the fact is, they have to be given credit because they’re the boots on the ground.”

And they are making considerable progress in ensuring that this community with a proud past has a secure future.

Kayla Ebner can be reached at [email protected]

Road Game

Coming of Age

Editor’s Note: This is the second installment of a new series for BusinessWest — car reviews of a sort. These are first-person looks, and some commentary, about some of the vehicles — and issues — that are, let’s say, in the news.

The author found driving the Stinger to be, well, an adventure.

When last we left our heroes — yes, I’m a huge Rocky & Bullwinkle fan and still have a ‘WhatsamataU?’ T-shirt (oldest thing I own) — we were talking about how no one’s driving cars anymore and SUVs now rule the earth.

While that’s an exaggeration (and Bullwinkle loved to exaggerate), it’s not far from the truth. SUVs are the big sellers, and cars are taking, well, a back seat.

These days, people need a good reason to drive a sedan, or several of them. Which is a nice way to segue to the Kia Stinger, the coolest, baddest sedan you’ve probably never heard of. Truth is, you’ve probably seen one and gone ‘what the heck is that?’ You could answer your own question if you, or the car in question, happened to be moving slowly enough to see the word ‘Stinger’ or the Kia logo. Or you were at a red light. It’s probably the latter, because the Stinger doesn’t move slowly. But we’ll get to that later.

Let’s get back to that ‘never heard of’ part. There are reasons for that.

First off, they don’t make many Stingers — it’s a specialty car of sorts and certainly not a big seller. Secondly, it’s made by Kia, which, although it’s made some serious strides in recent years, is still … Kia, a relative newcomer known mostly for making solid, economical cars with lots of value.

And that’s being kind. The company had a reputation, just like Hyundai did 20 to 25 years ago and Honda and Nissan (yes, I know, it was Datsun back then) did 40 to 45 years ago for making practical but uninspiring — and, yes, cheap, cars. Those brands grew up, and Kia has as well.

“It’s a wonderful vehicle — we’ve received a lot of positive response for it; most of the time, when we get them in, they sell out within 48 hours.”

The Stinger provides all the evidence you need, but there’s plenty more, said Mike Spanilo, general manager of Balise Kia in West Springfield, adding that the new Telluride, an in-demand, mid-sized SUV, is certainly making people rethink what ‘Kia’ means.

“It’s a wonderful vehicle — we’ve received a lot of positive response for it; most of the time, when we get them in, they sell out within 48 hours,” he said, adding that Kia now has a deep lineup of cars and SUVs that attract area buyers in all age groups.

Spanilo, who has been with Balise for more than 20 years now and sold GM and Chrysler products most recently, said he came to Kia with some preconceived notions that he soon realized were quite dated.

“My perspective on this, coming from two American-made brands, is that I was pleasantly surprised at what I found when I got here — because I had never driven a Kia before I got here,” he said. “If you’ve gotta sell ’em, you’ve gotta like ’em, and that has not been a difficult thing for me to transition to; this brand has definitely come a long way.”

Looking Sharp

All this brings us to the Stinger, and also … Jose Perozo, a sales associate at Balise Kia, whose story sounds a little like that of Victor Kiam. Sort of.

You remember him — probably. Maybe not. He’s the guy who owned Remington shavers and, later, the New England Patriots — thankfully, not for very long; one of his teams went 1-15. Anyway, the line he used in his commercials for Remington was, “I liked the shaver so much, I bought the company.”

The Stinger blends concept-car looks with performance and value.

Perozo bought a Kia a few years back and liked them so much he went to work selling them. And while selling them, he absolutely fell in love with the Stinger. So much so, he bought one.

Coincidentally, he was bringing his home just a few hours before he took this writer along for a ride — not in his car, but the other Stinger on the lot.

To say that he could barely control his excitement would be an understatement. Every time he accelerated, and every time he thought he saw a Camaro, Mustang, or Charger driver looking over in what he perceived to be envy, you could see some discernable pride in ownership.

And that speaks quite loudly and effectively not only for this model, but the whole Kia lineup.

You don’t have to put the Kerwood Derby on your head (best Bullwinkle plotline ever; Google it) to know that Riverdale Street isn’t a good stretch for test-driving a car. There’s a ton of traffic, red lights that stay red for an hour or two, and long stretches where you have to go in the direction opposite from the one you want to in to get where you want to go.

Fortunately, a U-turn and a few of those lights later, you’re on that stretch of Route 5 that includes the North End, Memorial, and South End bridges, where the Stinger can begin to show what it can do. And after a quick trip over the last of those bridges and onto I-91, you can really get the idea.

The Stinger GT2 we drove ($51,000 fully loaded; top of the line) has a twin-turbo V-6 that delivers 360 horses and goes from zero to 60 in about 4.7 seconds. Drivers can choose a number of ‘modes’ for travel, or the car can pick one itself. These include ‘economy,’ ‘comfort,’ ‘smart,’ and ‘sport.’ The last of those options is obviously the most fun.

As Perozo punched the accelerator while in sport mode, the Stinger showed off its considerable straight-line speed, which is just one of its many positive traits. Others include the exterior design — it has concept-car looks — decent amounts of handling and comfort, optional all-wheel drive, and the requisite bells and whistles in the infotainment category — Apple CarPlay and Adroid Auto are standard.

While the Stinger has many of the safety features available on luxury brands — and even some non-luxury brands — today, it doesn’t go overboard, if you know what I mean.

And the trunk even passes the golf-club test, which, as we all know, is what the experts look for when scoring a vehicle. Forget those JD Power awards — can you get the golf clubs in the trunk?

And there’s something else. While the Stinger has many of the safety features available on luxury brands — and even some non-luxury brands — today, it doesn’t go overboard, if you know what I mean.

(Warning: old-man rant coming!) If you don’t know what I mean, cars that will alert you when to brake or if there’s a vehicle in your blind spot are fine, for the most part. Cars that flash the speed limit for the road you’re on and then make it blink on and off when going above it, and cars that not only alert you if you’re drafting from the center of your lane but yank you back to center, well … I have people yelling at me and telling I’m doing something wrong all day long; I don’t need the car to do that, too.

The Stinger doesn’t do any of that. What it does is almost defy categorization. It’s a luxury car, but not like most. It’s a performance vehicle, but not like most. It’s a muscle car (well, sort of, but not really) that’s not like most. And it can compete with cars in all those categories. It isn’t inexpensive — the entry-level, four-cylinder model is priced at $34,000 — but that’s far less than most of the luxury brands it competes against, and there is considerably more value.

Kia has indeed come of age, and the Stinger is just one of the models that makes this clear.

Speed Thrills

You’re wondering about that Kerwood Derby thing, aren’t you? See, there was this guy on Candid Camera (yes, from the early ’60s, I know), a co-host of sorts named Durwood Kirby who was bland and, quite frankly, dumber than a bag of hammers. The makers of Rocky & Bullwinkle spoofed the name in an episode all about a derby that had magical powers and could make its wearer the smartest person in the world. Guess you had to see it.

If you did, you’re getting old; you need to feel younger. Test driving a Stinger will certainly help.

As for this series of car reviews, in the true spirit of Rocky & Bullwinkle, tune in next time, when ‘O’Brien Vettes a Chevy,’ or ‘O’Brien takes on all Challengers.’

George O’Brien can be reached at [email protected]

Travel and Tourism

Taking Flight

When the Connecticut Airport Authority (CAA) launched nonstop flights on Frontier Airlines from Bradley International Airport to Miami on Nov. 14, it marked yet another success in the airport’s goal of expanding destinations for customers, particularly budget, non-stop flights.

“We are excited to launch Frontier Airlines’ non-stop to Miami from Bradley International Airport,” said Kevin Dillon, executive director of the CAA.  “Frontier Airlines’ low-cost model is a key addition to our route structure. We are pleased to offer our passengers this additional travel option along with the high level of customer service that Frontier offers to its customers.”

The non-stop service will operate seasonally starting through April 2020 on Tuesdays, Thursdays, and Sundays, aboard an A320 Neo aircraft. The outbound flight departs from Bradley at 8 p.m. and arrives at Miami International Airport at 11:23 p.m. The inbound flight leaves Miami at 3:55 p.m. and arrives at Bradley at 7:04 p.m. 

Frontier Airlines also operates non-stop flights from Bradley to Denver, Orlando, and Raleigh-Durham. Non-stop flights to Orlando operate year-round, and the non-stop flights to Denver and Raleigh-Durham operate seasonally.

“We’re happy to expand our service at Bradley International Airport with non-stop flights to Miami,” said Daniel Shurz, senior vice president of Commercial for Frontier Airlines. “These new flights are an affordable and convenient option for travel to South Florida to explore the unique dining, sunny beaches, and endless activities. We appreciate the support of the community and look forward to continuing our outstanding partnership with the airport where we now offer four non-stop destinations.”

When the CAA took over operations at Bradley in 2013, it was handling roughly 5.5 million passengers a year. Now, that figure is more than 6.6 million.

Recent years have seen Bradley launch low-cost, non-stop service to Pittsburgh on Via Airlines, and to St. Louis on Southwest Airlines. Meanwhile, internationally, the daily Aer Lingus flight to Dublin introduced in 2016 has becoming increasingly popular with business and leisure flyers, and last year the airline committed to another four years at Bradley.

Passenger Experience

These developments, among others, have contributed to six straight years of passenger growth since the CAA began managing the airport in Windsor Locks in 2013. When the CAA took over operations at Bradley in 2013, it was handling roughly 5.5 million passengers a year. Now, that figure is more than 6.6 million.

And it’s not just flight expansion, but improvement in amenities as well. Bradley has added new eateries in recent years, such as Phillips Seafood and Two Roads Brewery. It also saw the opening earlier this month of Natalie’s Candy Jar, a self-serve candy store with more than 400 different sweet treats, beverages, and candy-related gift items.

“Natalie’s Candy Jar is a popular brand with a national footprint, making it a key addition to Bradley’s customer experience,” Dillon said. “The store’s unique and fun atmosphere, coupled with the high quality of candy, sugar-free treats, and gifts, will be well-received by travelers of all ages.”

Meanwhile, Travelers Aid International has begun serving Bradley’s passengers with a guest-service volunteer program. Travelers Aid currently operates similar guest-service volunteer programs at four other airports: New York JFK, Newark Liberty, Washington Dulles, and Washington Reagan.

These service-focused improvements have all helped Bradley International Airport earn a spot in the prestigious ranking of five best airports in the U.S. by Condé Nast Traveler three years in a row.

Dillon hopes readers keep the accolades coming for Bradley’s planned, $210 million ground transportation center, which recently broke ground for construction. When it’s open, passengers will be able to fly into Bradley and connect to the transportation center via a walkway from the terminal. All the rental-car companies serving Bradley will be located there, as well as 830 spaces of public parking.

The transportation facility will also serve as a transit hub for the various bus services into and out of Bradley, as a connecting point to the rail line that now connects New Haven with Springfield.

—Joseph Bednar

Autos

Moving into the Fast Lane

Mike Howard, assistant manager of ATG Westfield, stands by one of the many trucks for sale at the facility on Southampton Road.

John Paulik summed things up by saying that “something had to give.”

That’s how he described some conflicting forces within the truck sales and service industry in the Northeast, specifically an ongoing pattern of consolidation among many of the players, as well as a desire for some of these players to stay independent.

Again, something had to give. And it did.

While in most respects it looks like a merger, he called it a “joint venture,” the coming together roughly a year ago of Tri State Truck Center of Shrewsbury and McDevitt Trucks, which owned the Patriot Freightliner dealership on Southampton Road in Westfield — along with three other dealerships in New Hampshire and one in Vermont — to create Advantage Truck Group, or ATG.

This larger entity, a comprehensive dealer network, is now the largest Daimler Trucks North America (DTNA) dealer network in New England, said Paulik, its senior vice president and general manager, and it uses this size and geographic reach to, well, its advantage as it specializes in sales, service, and support of DTNA’s Western Star and Freightliner branded trucks.

“Merging all these locations under one roof just made a good deal of sense on a number of levels — central management is a great advantage,” he said, noting that there are economies of scale to be gained and other benefits from the sheer size and scope of the operation. “Another advantage is that we’re not competing against one another anymore.”

Paulik said ATG’s customer base is broad and diverse, meaning it includes large fleets, small owner-operators in myriad businesses, and just about everything in between, including municipal vehicles, ambulances, and utility trucks. For entities of all sizes, keeping trucks on the road is the obvious goal, and ATG supports them in this quest in a number of ways.

For example, it has the largest parts network in New England, supported by a fleet of 25 parts-delivery vans that provide daily service to customers. There’s also an on-site maintenance program and on-call access 24/7/365 to emergency roadside assistance.

But while the business keeps rolling — that’s an industry term — and the merger, or joint venture, is working as those who orchestrated it had hoped it would, there are a number of challenges to continued growth, said Paulik, especially the recruitment of a skilled workforce.

“These small businesses can’t afford to have their vehicles down — that’s their livelihood. When their truck is down, we help get it back on the road again.”

And by workforce, he means much more than diesel technicians, although that’s a big part of it. Indeed, the challenge extends to every facet of the business.

“The biggest story for us is finding employees — not only technicians but parts people, warehouse workers, and those in truck sales,” he explained. “It’s all down the line.”

As a result, ATG works with local schools and the state’s workforce system to bring attention to the many attractive career opportunities within the trucking and transportation industry.

“We’re working to help young people interested in the trades and all aspects of this industry,” Paulik went on. “Yes, there is a huge problem with hiring technicians, but a dealership is more than just technicians; a dealership has many job titles.”

Backing up a bit — something else they do in this industry — Paulik said there were a number of forces that brought Tri State Truck Center and McDevitt Trucks together. Primarily, though, it was the size, strength, and flexibility that such a union can provide that made it attractive.

“DTNA has been promoting dealer consolidation for some time — it’s looking for regional rather than individual dealers,” he explained, adding that there were several reasons why such consolidation was somewhat slow to develop in New England — primarily because several of the locations were family owned, well-established in their respective markets, and wanted to stay independent.

But given the current climate, it simply made sense to bring the two companies and their various locations under one central ownership.

“This was the right time to do this — to create a regional truck dealership group,” he told BusinessWest. “This gives the customers a higher level of support, and it aligns the two dealers.”

Thus, the ATG name is now over the door of the sprawling Westfield facility, as well as those in Shrewsbury, Seabrook, N.H., and Westminster, Vt. Affiliated McDevitt dealers in both Lancaster and Manchester, N.H. are also part of the ATG dealer network.

The Westfield location, which, like the others, is well-situated off major arteries (in this case the Mass Pike, Route 20, and Routes 10/202), sells more than 100 trucks on average each year, and will service more than 700 vehicles of all sizes, from 18-wheelers to municipal vehicles, such as DPW and trash trucks.

ATG’s commitment to providing the highest standard of service for its customers is rooted in its dedication to Elite Support, said Paulik, referring to a collaborative initiative between Daimler Trucks North America and its dealers to improve the customer experience at Freightliner and Western Star dealerships. Elite Support certification involves a rigorous continuous-improvement process that covers all areas of customer service, overall quality of workmanship, rapid diagnosis, turnaround times, robust parts availability, and exceptional customer amenities. Both the ATG-Shrewsbury and ATG-Westfield locations are Elite Support-certified, he noted, and the company is taking the necessary steps to achieve certification at its other Freightliner and Western Star dealer locations.

ATG is adding resources and expanding other customer-support initiatives across its dealer network, he went on, including a “warranty on wheels” program for Freightliner and Western Star vehicles that enables warranty work to be performed by ATG technicians on site at customer locations, and service vans in each state that provide on-call access 24/7 to emergency roadside assistance for a wide range of vehicle brands. Meanwhile, dedicated service and support staff at each dealership have access to information systems that have been integrated across all ATG locations to give customers real-time visibility of parts inventory and service and repair status.

These are just some of the advantages that come with this joint venture, said Paulik, adding that the customers, which, again, come in all sizes, are the real beneficiaries.

Elaborating, he said that, while ATG handles a number of large fleets, including those for Stop & Shop, Burke Oil, and Regency Transport, among many others, the majority of its customers are smaller, locally based businesses that rely on their trucks to keep products moving and revenue coming in.

“We focus on local businesses, and we treat smaller businesses like large ones,” he told BusinessWest. “These small businesses can’t afford to have their vehicles down — that’s their livelihood. When their truck is down, we help get it back on the road again.”

Looking down that road, Paulik said the creation of ATG will continue to bring benefits for the dealers in the group as well as the customers they serve.

As he said at the top, something had to give, and what has emerged from this joint venture is a dealership group well-positioned to stay in the fast lane for years, and decades, to come.

— George O’Brien

Law

Cannabis, Marijuana, and Hemp

By Chris St. Martin and Sarah Morgan

Late last month, the U.S. Department of Agriculture published regulations on domestic hemp production. However, there remains significant confusion surrounding the legality of cannabis, marijuana, and hemp.

Chris St. Martin

Sarah Morgan

This confusion comes from state and federal governments’ shifting approaches to regulating these industries. It is even more difficult to understand the legal framework surrounding retail sales, which include hemp and CBD products, as well as marijuana products sold by state-licensed dispensaries. In this article, we hope to provide some clarity regarding what the laws say about cannabis and how they are being enforced.

What Is Cannabis?

Cannabis is a plant genus, or family, composed of three species: Cannabis sativa, Cannabis indica, and Cannabis ruderalis. The species have physical variations between them that allow them to grow in different environments, flower at different periods during the growth cycle, and contain different chemical properties (see discussion on cannabinoids below) that produce different sensations when ingested.

Strains (think, ‘flavors’) produced from the Cannabis sativa species tend to incite feelings of euphoria, boost energy and creativity, and lead to a more head-focused high. Cannabis indica, alternatively, primarily affects the body, and is often helpful in reducing muscle aches and pains and inducing sleep. For these reasons, strains cultivated from indica plants tend to be more useful for medicinal purposes.

“THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis.”

Cannabis ruderalis is somewhat between sativa and indica, and has lower yields, but can often be cross-bred with other species to create medicinal strains. The stems of this species can also be used to make clothing and textiles.

The flowering buds of the cannabis plant produce a resin that contains cannabinoids, which are unique chemical compounds found only in cannabis and interact with different receptors in the user’s central nervous system to produce the effects described above.

The ratio of the cannabinoids in a particular strain depends on the genetics of the plant from which it is derived — in other words, how the plant has been bred by selectively combining sativa and indica plants to emphasize particular cannabinoids over others and create a unique strain with individualized characteristics.

More than 100 cannabinoids have been identified, most notably THC and CBD.

THC, or tetrahydrocannabinol, is the cannabinoid responsible primarily for producing the psychoactive effect, or the ‘high,’ commonly associated with ingesting cannabis. Although THC is most notable for its psychoactive properties, it has also been purported to have medical benefits on the user and can be used to treat a variety of conditions, including seizures, inflammation, pain, nausea, depression, and anxiety.

CBD, or cannabidiol, has anti-anxiety effects on the user and is utilized primarily for its purported medicinal benefits. It does not produce psychoactive effects (in fact, it may lessen the psychoactive effects of THC), and, for this reason, although CBD and THC have similar medicinal benefits, some people may choose to ingest only CBD to avoid feeling the ‘high’ brought about by THC.

CBD can be extracted from the resin of the cannabis plant and can be processed into essential oils, tinctures, and other non-smokable forms. CBD can even be added to body-care products and applied topically.

Marijuana or Hemp?

The term ‘marijuana’ is generally used to identify cannabis that is cultivated for its intoxicating effect on a user. Marijuana was made effectively illegal under federal law with the passage of the Marijuana Tax Act of 1937.

The Legislature later classified, and criminalized, marijuana as a Schedule 1 narcotic under the Controlled Substance Act of 1970, during the nascent ‘war on drugs’ declared by President Nixon. Classification as Schedule 1 — alongside heroin, LSD, and ecstasy — means that marijuana is deemed to have no currently accepted medical use and a high potential of abuse.

Public sentiment has recently begun to reject this classification of marijuana and the total federal prohibition. Although, at this writing, marijuana remains illegal at the federal level, 11 states, including Massachusetts, and the District of Columbia, have passed laws legalizing marijuana for recreational use, and 23 others have legalized the use of medical marijuana. Since 2016 in Massachusetts, individuals age 21 or older may possess up to an ounce or more on their person and up to 10 ounces in their homes without violating Massachusetts law.

The Cannabis Control Commission (CCC), the agency tasked with regulating the state’s marijuana industry, provides further information regarding the Massachusetts law on its website.

Cannabis that is selectively bred for non-intoxicating properties is considered ‘hemp.’ Industrial hemp is one of the oldest cultivated crops in the world and is useful in formulating textiles, rope, paper, plastics, insulation, oil, and body-care products. Because of this selective breeding, hemp plants contain only trace amounts of THC, but their CBD levels are unchanged.

“State and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies.”

Hemp is cultivated to enhance its distinctively versatile qualities, such as longer, more fibrous stalks and shorter leaves, rather than for the leaves and flower buds for which marijuana plants are cultivated. Because of this, hemp cannot be consumed as an intoxicant. Nevertheless, the Controlled Substances Act did not distinguish between marijuana and hemp (since both are technically cannabis) in classifying marijuana as a Schedule I substance; therefore, hemp was swept up in the heyday of the war on drugs and made illegal.

Changing Legal Framework

Under the Farm Bill of 2018, the U.S. Congress, for the first time, legalized the production and sale of hemp at the federal level, eliminating its status as a Schedule I narcotic. The Farm Bill and regulations define hemp as cannabis containing not more than 0.3% THC. Cannabis plants containing any quantity of THC above that amount are classified as marijuana, and remain illegal under federal law. In late October, the USDA published interim regulations on hemp production, which means they are subject to change after a public comment period but were effective immediately.

These regulations also set forth licensing requirements, procedures for testing THC levels and disposal of non-compliant plants, and rules governing other aspects of the industry.

The FDA has taken a more cautious approach, citing concerns about whether CBD is safe to consume in food and supplements. In an April 2019 statement, the agency sought to clarify its position on hemp products. The statement indicated that enforcement resources are directed toward illegal sales of CBD products that claim to prevent, diagnose, treat, or cure serious diseases, such as cancer.

However, it also stated that it is unlawful to introduce CBD-containing food into interstate commerce or to market CBD products as dietary supplements.

This means that effectively all CBD food products, including those derived from legally grown hemp, are unlawful, according to the FDA. The only hemp products that can be legally added to foods are hulled hemp seed, hemp-seed protein powder, and hemp-seed oil, because the seed of the hemp plant contains neither CBD nor THC.

The FDA has undertaken to develop CBD regulations, but despite repeated urging from the USDA and members of Congress, the former FDA commissioner indicated that that the rule-making process around CBD food products would be more complex than conventional products and could take years.

Massachusetts legalized hemp production as a component of the same 2016 law that legalized recreational cannabis. However, after the change of law at the federal level, both the state Department of Agricultural Resources and Department of Public Health issued policy statements on the same day imposing strict rules on hemp products. These two statements echo the FDA’s prohibitions on adding CBD to food products and making health claims about CBD.

What Can We Buy and Sell?

These state and federal legal developments have created a confusing CBD marketplace. Stores everywhere are selling CBD products intended for human consumption and making health claims about such products. However, both types of sales are illegal, according to state and federal agencies. Consumers, retailers, growers, and other stakeholders are looking for information about what is legal, what is not, and why there is so much ambiguity.

CBD derived from marijuana remains illegal under federal law. However, the U.S. attorney in Massachusetts has indicated he will not direct his office’s resources to federally prosecute cannabis companies that are permitted under state law, a move that has allowed the cannabis industry in Massachusetts to flourish. Under this state’s regulatory regime, marijuana products containing CBD, as well as THC, can be bought and sold at cannabis dispensaries that are licensed by the CCC.

Retailers in Massachusetts sell cannabis flower, edibles, concentrates, and other forms of marijuana containing both THC and CBD. CCC regulations do not classify edible marijuana products as food, allowing dispensaries to sell CBD-infused edibles without contravening the state Department of Public Health’s policy.

In contrast, despite the federal and state legality of producing hemp, some of the most popular hemp-derived CBD products — food and supplements — cannot be sold under either state or federal law. Nevertheless, the CBD industry may avoid total extinction, since CBD can be added to topical lotions and other cosmetics without defying the laws.

Non-food CBD products, however, represent a small percentage of the potential uses of CBD, and the loss of a valuable opportunity for introducing additional, more profitable products containing CBD into the marketplace adds further demand for the FDA to promulgate its promised CBD rules. Furthermore, hemp can be legally sold for rope, clothing, building material, and other non-ingestible uses, but hemp farmers have stated that Massachusetts currently lacks the manufacturing infrastructure necessary to process the plant for these purposes.

Chris St. Martin and Sarah Morgan are both litigation associates at Bulkley Richardson; (413) 781-2820.