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USDOL issues proposed regulations on white-collar exemptions
On March 7, 2019, the U.S. Department of Labor (USDOL) issued proposed regulations that would increase the minimum weekly salary to qualify for the Fair Labor Standards Act white-collar exemptions from $455 per week ($23,660 per year) to $679 a week ($35,308 a year). These new proposed regulations are intended to replace the USDOL’s 2016 […]
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On March 7, 2019, the U.S. Department of Labor (USDOL) issued proposed regulations that would increase the minimum weekly salary to qualify for the Fair Labor Standards Act white-collar exemptions from $455 per week ($23,660 per year) to $679 a week ($35,308 a year).
These new proposed regulations are intended to replace the USDOL’s 2016 regulations raising the minimum weekly salary to $913 per week ($47,476 per year), which were held by the U.S. District Court for the Eastern District of Texas to be invalid about one week before those regulations were set to take effect.
The USDOL came up with the $679 weekly salary level by using the same methodology that it used when the weekly salary level was increased to $455 in 2004 — by setting it at approximately the 20th percentile of earnings of full-time salaried workers in the lowest-wage census region (the South) and in the retail sector. The proposed regulations would also allow employers to count non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the minimum salary level, provided that the bonuses or incentive payments are paid annually or more frequently. The U.S. Department of Labor is not proposing any automatic increases in the minimum salary level, but is proposing that the salary level be updated every four years after notice and public comment.
The U.S. Department of Labor is also proposing to increase the annual salary threshold for the “highly compensated employee” exemption from $100,000 to $147,414. To qualify for the “highly compensated employee” exemption, an employee must meet the annual salary threshold and must satisfy at least one element of the executive, administrative, or professional exemption.
The proposed regulations do not include any changes to the duties’ requirements for any of the white-collar exemptions.
New York’s minimum salary level to qualify for the executive and administrative exemptions is currently higher than $679 per week in all regions. However, New York does not set a minimum salary level for the professional exemption, so if these regulations take effect, employers may need to review the salary levels of professional employees to ensure that they meet the new threshold.
In addition, New York’s minimum salary level for the executive and administrative exemptions is “inclusive of board, lodging, or other allowances and facilities” while the federal salary level must be “exclusive of board, lodging or other facilities.” So, if these regulations take effect, an employer that uses housing or meal allowances to meet the New York salary threshold will still need to ensure that the new federal salary threshold is met when those housing or meal allowances are not counted.
The U.S. Department of Labor has also posted on its website (www.dol.gov) answers to some frequently asked questions and a fact sheet regarding its proposed regulations. Comments to the proposed rule can be submitted through the Federal eRulemaking Portal within 60 days after the proposed regulations are published in the Federal Register.
Subhash Viswanathan is a member (partner) at Bond, Schoeneck & King PLLC in Syracuse. This viewpoint is drawn from the firm’s New York Labor and Employment Law Report. Viswanathan represents employers in many different industries — including colleges and universities, public school districts, health-care institutions, manufacturing establishments, not-for-profit corporations, and restaurants — on labor and employment issues.
Ithaca College to establish analytics labs in School of Business
ITHACA — Ithaca College recently announced it will establish a pair of business analytics laboratories in its School of Business this fall. The two dedicated business analytics lab spaces at the college will “provide students with hands-on experience to help them thrive in a world that relies on data to drive innovation,” it said in
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ITHACA — Ithaca College recently announced it will establish a pair of business analytics laboratories in its School of Business this fall.
The two dedicated business analytics lab spaces at the college will “provide students with hands-on experience to help them thrive in a world that relies on data to drive innovation,” it said in a news release.
The endowment to create the lab spaces, in the Roy H. and Dorothy D. Park Center for Business and Sustainable Enterprise, was established by John J. Neeson, a 1984 Ithaca College School of Business alumnus. Neeson’s gifts support the creation of the Neeson Business Analytics Lab and the Neeson Digital Marketing and Analytics Lab and establish the John Neeson ‘84 Endowed Software and Database Fund to support software updates and future upgrades to the Neeson Business Analytics Lab, the college said.
One of the two forthcoming lab spaces is currently an electronic classroom that will be upgraded with modern workspaces. Business administration students will use the classroom, as will students who choose to take advantage of the School of Business’s minor in analytics, the release stated. Classes in the new lab space will be open to all students at Ithaca College, not only those who are enrolled in the School of Business, the college noted.
The second space will also receive an upgrade, “transforming from a technology-free conference room to a robust analytics lab where students can conduct research and develop projects.”
“The analytics labs in the School of Business will provide students with resources and hands-on experience that will empower them to understand and adapt to evolving business trends across all industries,” School of Business Dean Sean Reid said in the release.
Students will study “how to apply customer relationship management (CRM) systems, making marketing decisions based on customer activities and communications,” added Scott Erickson, a professor and chair in the college’s Department of Marketing. “They will also develop skills in using predictive tools such as regression, neural networks, decision trees, and clustering, all of which will help prepare students for the new, data-driven environment in marketing.”
Bond law firm appoints leader of new pro bono committee
Bond has appointed John H. Callahan as pro bono leader of this committee. He is a long-time member of the Syracuse–based firm, former chair of its litigation department, and a current member of its management committee. The firm’s new pro bono policy encourages lawyers to work up to 50 hours per year on pro bono
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Bond has appointed John H. Callahan as pro bono leader of this committee. He is a long-time member of the Syracuse–based firm, former chair of its litigation department, and a current member of its management committee.
The firm’s new pro bono policy encourages lawyers to work up to 50 hours per year on pro bono matters — sometimes more than that for significant matters such as a trial — and receive credit for this work toward their annual billable-hour goal, the firm said in a news release. “Such credit allows attorneys, especially younger ones, to take on pro bono matters while gaining valuable experience,” Bond stated.
“We have always believed in providing legal services to the underserved in our communities. In fact, we have seen a continual and growing need for pro bono work that our attorneys are responding to …,” Kevin M. Bernstein, chair of Bond’s management committee, said in the release. “As a litigator, John has a solid understanding of the court system and how many of our communities’ poor fall through the cracks. We are empowering the committee to identify those in need, including many of our charitable, religious, civic and educational institutions, and manage the pro bono efforts of the firm.”
The pro bono committee will include a representative from each Bond office to assist the pro bono leader in identifying “meaningful opportunities” in each of the communities in which the law firm operates.
Business so Tweet: how Twitter drives business growth beyond marketing
Taber is part of a new style of business. She uses Twitter threads to discuss often controversial industry topics with other industry professionals, the media, and the general public. But far from using Twitter as a “shock jock” or promotion for her brand, the social-media platform is the bread and butter of her business model.
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Taber is part of a new style of business. She uses Twitter threads to discuss often controversial industry topics with other industry professionals, the media, and the general public. But far from using Twitter as a “shock jock” or promotion for her brand, the social-media platform is the bread and butter of her business model. Taber is not in marketing. She is a serial entrepreneur with a startup caviar business, a consulting firm, a podcast, and a book proposal.
Taber is focused on efforts to improve and directly contribute to best practices in indoor farming. She originally developed the podcast series to educate would-be farm and food entrepreneurs on basic best practices before they get started. Too often, she found she was being called in to help clean up preventable messes in her consulting practice. With an ounce of prevention as her goal, Taber determined that there was a market for her expertise — one that also provided education to the general public, and could generate a revenue stream that didn’t depend on intensive travel. Her tone for both the podcasts and Twitter is direct — her wordplay exceptional. Surprising to Taber — and part of a growing trend in social-media enterprise — was how much more business she generated with her Twitter account than the actual podcast itself.
In December 2018, Taber received serious engagement from thousands, including a comment from Twitter itself, on a Twitter thread explaining aquaculture, ocean stability, and algae farming featuring bite size information transposed with pictures of Jason Momoa (the titular star of “Aquaman”). Her followers appreciate her mature, humor-filled, and educational approach.
When asked why she used Jason Momoa to teach about green technology, she quoted prominent Youtuber Contrapoints: “The internet is not ancient Athens — it’s Rome. We’re not in the forum [debating the issues of the day] — we’re in the circus.” By making good information funny, accessible, and fun to read, Taber directly converted that and other threads into publications, additional paid work, and exposure and leads for others featured in her social media.
“Twitter threads that take off tend to be the ones that come from the heart,” Taber says. The concept of growing one’s business through Twitter is that of “edu-tainment.” She likes Marvel action movies and identified with a guardian of the ocean archetype. The success of the thread wasn’t luck; it reflected how well she used the tool of Twitter.
Content creators like Dr. Taber derive direct revenue from her podcast audience. Twitter posts generate revenue by directing clients and consumers to the Farm to Taber podcast and boosts her monthly Patreon revenues. Patreon is a direct-pay system where content consumers can financially support content creators. It works the same as a donation via Paypal or Venmo, with some creators adding new or expanded content behind an up-charge paywall.
Taber’s goal is to call attention to industry gaps and help everyone- from ag-tech investors to laypeople- gain a grounded understanding. They find her and hire her through Twitter. But why do both Twitter and podcasts if Twitter is such a business engine? Taber describes the benefits of podcast development for a subject-matter expert. “Media that you have to read is more expensive to consume, and podcasts are audible, easy to listen to. Podcasts are more enduring than Twitter. Podcasts are more monetizable than Twitter. And video is way more work and investment, so I’m not set up for that yet.”
Taber has been strategic in using the tools that work for her mission. She intends to make her business by changing the way industry does business. One of her major focus areas is where industry needs to provide leadership.
“There is all this marketing out here teaching you to think that it’s your job to fix the world with your shopping cart. It’s got us tying ourselves in knots as consumers. There is a lot of anxiety about our duty as shoppers, and the truth is there’s only so much that shopping can really accomplish …. it’s important for industry to do right, not just tell a pretty story about doing it right.”
Taber started a recent Twitter thread on the parallel between the emotional attachment people have with stuff based on the Marie Kondo method of letting things go in order to build a better environment for people, and the connections she sees in reluctance or outright hostility to innovation through evidence-based agriculture.
Social media has been perceived by business as either a leisure activity or a marketing tool. Large and small corporations grasp the power a champion or influencer wields in selling products through lifestyle branding. However, when we examine how news media tracks tweets and solicits engagement from Twitter followers, we start to understand that far from a dying platform, Twitter is the face of a new marketplace for business growth. Instead of banning office workers from social media or using it solely as a megaphone to shout out the next press release, consider the 261 million potential clients worldwide looking for knowledge and engagement. Business is learning to master the communication skill methodology for effective social media. It has been slow to grasp the evidence that this new marketplace has 69 million U.S.–based eager and, once authentic trust is built, loyal customers — and the majority of what “sells” in this sphere is expertise.
At the end of the day, Dr. Taber is a professional working to educate her clients on how to provide a healthy, sustainable food system through ethical labor practices and consumer safety. She uses Twitter and the Farm to Taber podcast series to grow her business and share her expertise on the agricultural industry.
Taber brings 20 years of experience in the sustainable and conventional agriculture business, throughout the U.S. and internationally. You can reach her through LinkedIn at: https://www.linkedin.com/in/sarah-taber-0103b827/ and at https://www.farmtotaber.com.
Hanah Ehrenreich is a business advisor at the SBDC at Onondaga Community College. Contact her at h.ehrenreich@suny.occ.edu
Global Intangible Low-Taxed Income: A Shiny New Tool in the IRS Toolbox
Congress passes the tax laws, the Treasury Department collects the Tax revenues, and the IRS oversees the reporting and collection process. The Tax Cuts and Jobs Act (TCJA) of 2017 added a new U.S. revenue stream — global intangible low-taxed income, or GILTI. Those owning an interest in a foreign corporation should take note, as
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Congress passes the tax laws, the Treasury Department collects the Tax revenues, and the IRS oversees the reporting and collection process. The Tax Cuts and Jobs Act (TCJA) of 2017 added a new U.S. revenue stream — global intangible low-taxed income, or GILTI. Those owning an interest in a foreign corporation should take note, as the new GILTI rules are an attempt by Congress to subject more income of foreign corporations to U.S. income taxes.
We already have numerous tax laws aimed at discouraging profit-shifting abroad for tax advantages. U.S. businesses selling to foreign-related parties must make sure they do not run afoul of the transfer pricing rules, and all U.S. persons (individuals, corporations, partnerships, and trusts and estates) must include certain types of income of a controlled foreign corporation (CFC) on their U.S. tax returns. The GILTI rules are another tool for taxing foreign profits. They are effective for tax years of a CFC that begin after Dec. 31, 2017.
Don’t be fooled by the reference to intangible income: A foreign corporation selling tangible property can still have global intangible low-taxed income. GILTI is income (with certain exceptions) of a CFC that is in excess of a standard rate of return on the tangible assets of the CFC. The GILTI rules require a U.S. person (individual, domestic corporation, partnership, or trust or estate) owning at least 10 percent of the value or voting rights of a CFC to include its share of the GILTI income in its U.S. taxable income, regardless of whether any amount was received from the CFC.
A foreign corporation in a high-tax jurisdiction can still have GILTI. Domestic C corporations are eligible for a U.S. foreign tax credit based on 80 percent of the taxes paid by the foreign corporation that are attributable to the GILTI income, but they are the lucky ones. Individuals, partnerships, S corporations, and trusts and estates receive no tax credits for foreign taxes paid on the GILTI income they must include on their U.S. returns. Thus, whether the foreign corporation’s income is low-taxed only impacts C corporations, not anyone else.
A domestic C corporation is also eligible for a deduction equal to 50 percent of the GILTI income required to be included on its return, effectively lowering the tax rate on the GILTI income from the regular corporate tax rate of 21 percent to an effective rate of 10.5 percent (before any allowed foreign tax credits). There is no corresponding deduction for individual taxpayers or other entities.
A CFC is a foreign corporation owned more than 50 percent by U.S. shareholders who each own at least 10 percent of the corporation. Attribution and look-through rules apply, so the determination of whether a foreign corporation is a CFC may not be straightforward.
However, a simple example of a CFC would be a wholly owned foreign subsidiary of a U.S. corporation. Another common example is a foreign business operated as a corporate entity and owned by a U.S. citizen or resident.
In order to calculate GILTI income, one must first understand a few additional terms. Tested income (or loss) is the shareholder’s share of a CFC’s gross income (exclusive of certain designated income items already dealt with under other sections of the U.S. tax code) less the share of the CFC’s deductions allocable to that gross income. Qualified business asset investment (QBAI) is the average of the foreign corporation’s aggregate adjusted bases of its tangible assets used in the production of the tested income. Deemed tangible income return (DTIR) is deemed to be 10 percent of QBAI, less certain specified interest expense. GILTI is the CFC’s tested income less DTIR. Essentially, GILTI is the net income of the foreign corporation not already subject to U.S. taxation and not deemed generated by the tangible assets of the business.
Here is a hypothetical example to demonstrate the GILTI calculation.
John Richards is a U.S. citizen who has been living in France for the past 20 years. He, through his wholly owned French corporation Vélo Extraordinaire, manufactures specialized bicycle parts used by many Tour de France riders. He sells the parts exclusively to French distributors. This is the only foreign corporation in which he owns any stock. Prior to the TCJA, he did not have to report any of Vélo’s corporate profits on his U.S. individual income-tax return unless he received distributions from the corporation. Now, he must annually calculate and include the GILTI income.
Vélo generated $2 million in sales in 2018, none of which is excluded from tested income. It had $1.7 million in expenses, all allocable to the sales income. It had $4,000 of interest expense attributable to a loan used to purchase manufacturing equipment. Its average adjusted bases in the manufacturing equipment used in the production of the bicycle parts is $250,000. The corporation’s GILTI can be calculated as follows:
Tested income: $2,000,000 – $1,700,000 = $300,000
DTIR: (10 percent * QBAI) – specified interest expense = (10 percent * $250,000) – $4,000 = $21,000
GILTI: Tested income – DTIR = $300,000 – $21,000 = $279,000
Conclusion: John will need to include $279,000 of GILTI income on his U.S. tax return and pay U.S. taxes at ordinary income rates on that income.
This is a general overview of the new GILTI rules and the calculations involved. All along the way there are more specific definitions and computational rules. For example, special aggregation rules apply when a taxpayer has an ownership interest in multiple CFCs. Additionally, there is an election that individuals can make to be treated as a corporation for purposes of reporting the GILTI income, effectively allowing a foreign tax credit and lower rates on the GILTI income. The election is not without a downside, as the GILTI income, net of any taxes paid on that income, remains taxable when distributed. But if no election is made, any later distributions of the already-taxed GILTI income have no further tax consequences. Last but not least, states have their own rules regarding the treatment of this income that must be considered.
Planning is critical. With proper planning, taxpayers can best navigate these complex rules and minimize the potential tax burden associated with this new IRS tool.
Linda Bruckner is a partner at Sciarabba Walker & Co., LLP and a member of the firm’s International Tax Group. Contact her at: lbruckner@swcllp.com
CenterState CEO announces finalists for Business of the Year awards
“We are proud to honor these member businesses for their outstanding success, and the role they play in strengthening the region,” Robert Simpson, president and
Road and Bridge Funding Needed in Upstate New York
Our local roads and bridges are in need of serious investments. New York State Comptroller Thomas DiNapoli forecasts $89 billion in unmet local infrastructure needs over the next 20 years with as much as $27.4 billion needed for bridges alone. The responsibility to take care of these major infrastructure costs, however, lies on the backs of local
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Our local roads and bridges are in need of serious investments. New York State Comptroller Thomas DiNapoli forecasts $89 billion in unmet local infrastructure needs over the next 20 years with as much as $27.4 billion needed for bridges alone. The responsibility to take care of these major infrastructure costs, however, lies on the backs of local taxpayers with 87 percent of the state’s roads and half of the state’s bridges up to localities to maintain. That is why state assistance programs like Consolidated Local Street and Highway Improvement Program (CHIPs) are essential to everyone’s safety.
For decades — recognizing the high cost of road repair and maintenance that involves specialized grinding and paving equipment, asphalt, sealants, paint, etc. — the state has funded CHIPs to assist localities and help reduce the local tax burden. In Albany, however, adequate funding for what most would consider basic infrastructure needs in Upstate is not a guarantee during budget time. For many years, funding for CHIPs remained flat. But thanks to a focused, collaborative effort between state representatives and local highway superintendents, CHIPs funding has increased in recent years. In early March, local highway superintendents traveled once again to Albany to advocate for the program. This year, we’re asking for annual increases over five years. A five-year increase would give localities a chance to plan and address repairs before roads need major rehabilitation, which is several times more costly.
Adequate state funding for our roads and bridges helps ensure our basic safety needs are met. It ensures safety for kids who board school buses each day, safety for families traveling to where they need to be on a daily basis, and safety for our first responders. Additionally, safe and passable roads help businesses keep customers and indicate to potential investors that our communities are open for business.
In addition to CHIPs, other state programs like PAVE-NY, BRIDGE-NY, and Extreme Winter Recovery also assist localities in maintaining roads and bridges and reducing the local tax burden. In this year’s proposed budget, however, funding for Extreme Winter Recovery has been eliminated. I am pushing for the restoration of these funds so that localities can invest in projects that will endure winter weather.
William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us or (315) 598-5185.
Accountability Makes Good Government
As various U.S. House of Representatives committees gear up for a season of investigations and hearings on President Trump and his administration, many people are worried that progress on the nation’s challenges will grind to a halt. I would argue just the opposite — the wheels of government are turning in favor of accountability. Our
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As various U.S. House of Representatives committees gear up for a season of investigations and hearings on President Trump and his administration, many people are worried that progress on the nation’s challenges will grind to a halt. I would argue just the opposite — the wheels of government are turning in favor of accountability.
Our system rests squarely on the notion that government officials — whether elected or appointed — need to be accountable to the people they govern. They are responsible for their behavior, their decisions, and the policies they support. They are answerable for their use — and misuse — of the funds and resources they’re given.
They are — or ought to be — just as accountable for the remedies they fail to pursue as for the actions they do take. Accountability safeguards our Constitution, our laws, and our democracy.
Which is why the weakening of accountability in our system over the past few decades ought to worry all Americans. It has become difficult, for instance, to question a president — a problem that preceded the current occupant of the White House. Presidential press conferences, which once were free-wheeling affairs at which presidents faced sustained questioning from reporters well-versed in their policies, are barely held these days. They are passing from view — and President Trump’s habit of using Twitter to communicate over the heads of people who ask hard questions may well set the course for the future.
In fact, politicians and bureaucrats at all levels have become quite skilled at avoiding accountability. During my years in Congress, I considered it a key task to find out who was responsible for particular decisions — whether the administration was Republican or Democrat. It was difficult then, and has become more so with time.
Meanwhile, it has been reassuring over the past two years to see several national news outlets step up their scrutiny of public officials in Washington, but it remains true that overall there is less investigative journalism than there once was.
That is a problem because it’s simply human nature to want to avoid being held responsible. If policies are going well and are well received in the polls and by the public, of course, officials fight to take their place in line and garner the credit. If something goes wrong, they fight to get out of the line.
In our system, every official has to answer to some other official. This is a reassuring quality in a governmental structure, but only if officials actually exercise their responsibilities. That’s why the media are so important as a backstop.
Which raises another issue. A lot of players ought to be exercising oversight: members of Congress, the government’s inspectors general, the media — we even have an entire agency, the Government Accountability Office, dedicated to the task. But for them to do their work, the system also needs transparency. Almost every day you see signs of officials hiding what they do from the public — often without real merit.
I’ve always been quite skeptical of the argument that we ought not to let this or that piece of information become public. National security is often invoked, or trade secrets, or some other rationale for drawing a veil over the government’s activities. Even when citizens or reporters file Freedom of Information requests, these can be ignored, or turned down.
The problem with this, of course, is that it’s anti-democratic. How are we supposed to make reasoned decisions about who and what we want to see in our government if we don’t know what’s going on and who’s responsible for it?
Perhaps the most famous hallmark of Harry Truman’s tenure as president was the motto he placed on his desk: “The buck stops here.” There’s a reason why it’s so famous, and why people still consider it a standard they wish other politicians would set for themselves.
Americans want officials who will step up and take responsibility for their decisions. They want political leaders who will hold themselves accountable to the public. And they want to see public officials exercise the responsibility handed them by the Constitution to hold others accountable. That the House is moving to do so is not a detour from governing, I believe; it’s the essence of good government.
Lee Hamilton is a senior advisor for the Indiana University (IU) Center on Representative Government, distinguished scholar at the IU School of Global and International Studies, and professor of practice at the IU School of Public and Environmental Affairs. Hamilton, a Democrat, was a member of the U.S. House of Representatives for 34 years, representing a district in south central Indiana.
KATIE TASCIONE recently joined Dermody, Burke & Brown, CPAs, LLC as a senior associate in its Syracuse office. She is part of the accounting firm’s tax department and comes to Dermody, Burke & Brown with four years of previous experience in public accounting, the firm said. Tascione previously worked for Firley, Moran, Freer & Eassa,
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KATIE TASCIONE recently joined Dermody, Burke & Brown, CPAs, LLC as a senior associate in its Syracuse office. She is part of the accounting firm’s tax department and comes to Dermody, Burke & Brown with four years of previous experience in public accounting, the firm said. Tascione previously worked for Firley, Moran, Freer & Eassa, CPA, P.C.; PwC (Boston); and Sciarabba Walker & Co., according to past People on the Move news published by CNYBJ. She received a bachelor’s degree in accounting and bachelor’s degree in business administration, with a finance concentration, from Ithaca College. Tascione also earned a master’s degree in taxation from Bentley University. She is working to complete the certification process to earn her designation as a certified public accountant (or CPA).
Key Private Bank has promoted ALICE CHENEY to associate relationship manager. In her new role, she will work with her team to build existing client relationships and uncover new business. Cheney joined Key Private Bank in Syracuse in 2012 as a relationship associate. She also worked at KeyBank as a teller and assistant branch manager.
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Key Private Bank has promoted ALICE CHENEY to associate relationship manager. In her new role, she will work with her team to build existing client relationships and uncover new business. Cheney joined Key Private Bank in Syracuse in 2012 as a relationship associate. She also worked at KeyBank as a teller and assistant branch manager.
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