Free Enterprise: May 2011 Archives
Free Enterprise - The FindLaw Small Business Law Blog

May 2011 Archives

Email Receipt is Not Good Enough, Court Rules

E-commerce businesses might have concerns about their ordinary online sales transactions, in light of a new court ruling limiting the effect of email receipts.

In Simonoff v. Expedia, Inc., the 9th Circuit Court of Appeals has ruled that, where a federal law requires that merchants limit the disclosure of credit card information on printed receipts, an email receipt is not a "printed receipt."

But the court's ruling pertains only to cases brought under the Fair and Accurate Credit Transactions Act (FACTA).

This is a fairly narrow federal law. FACTA prohibits anyone that accepts credit cards from "print(ing) more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction."

New FTC Online Advertising Rules Coming

The current guidelines have made it clear that, regardless of technology, online advertisements must disclose material information, but MediaPost reports that the rules focus primarily on banner ads and websites.

Late last week, the Federal Trade Commission announced its plans to conduct a major overhaul of its May 2000 online advertising rules, known as the "Dot Com Disclosures."

In the early stages of development, the Commission has put out a request for public comments, seeking information on how it can adapt its online advertising rules to better comport with the technological and legal advances of the last 11 years.

Punishment for Hiring Undocumented Workers OK

If you live in a state or locality that is considering making it mandatory for employers to utilize the federal E-Verify system, or that wants to punish those who hire undocumented workers, pay attention.

In a 5-3 decision issued on Thursday, the Supreme Court upheld Arizona's mandatory E-Verify statute--which also revokes and/or suspends business licenses of employers who hire undocumented workers.

It may be time to start lobbying.

Small Biz Credit Cards Not Protected by CARD Act

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act") went into effect on March 22, 2009, but Congress exempted business credit cards.

This new consumer protection law changed the game for credit card companies and consumers, as we blogged about in 2009.

So two years into application of the new law, business credit card users remain at risk for many of the dangers Congress targeted with the CARD Act, reports the Pew Charitable Trust.

Consumers no longer risk exposure to two-cycle billing, unilateral APR increases, and certain fees. But since business cards lack these protections, and many business cards are still backed by their holders' personal credit, credit card companies have kept a "back door" open to the old practices.

New Use Tax Filing Rule for Calif. Businesses

When does a service business located in California have to register with the California Board of Equalization, and start filing yearly returns declaring (and paying) California use tax?

Since 2010, if your service business is a "qualified purchaser" under California Revenue and Taxation Code section 6225, your business must register for an account with the Board of Equalization (BOE). And once registered, you will have to file a use tax return every year.

Who is a "qualified purchaser" for purposes of California use tax, under Section 6225? A "qualified purchaser" means a person (or business) that meets all of the following conditions:

Calif. Sales Tax Cut 1 Percent on July 1

The California sales tax rate will be slashed 1% across the state on July 1st. That is, unless the legislators pass another new sales tax law that will extend the heightened sales tax across the Golden State.

Gov. Jerry Brown is calling for such an extension, reports the Sacramento Bee. California is facing a huge $9.6 billion deficit, and the higher sales tax could help bridge the gap and fund programs.

Californian residents and businesses have been filling the brunt of the higher sales taxes for a while. In certain parts of California, the sales tax has been up to 10.25%, so the 1% reduction would result in a 9.25% sales tax rate.

Airport Skycaps Lose Appeal Over Tips

Federal preemption has caused a group of American Airlines skycaps to lose their case on lost tips. The decision was made when the 1st Circuit found that the Massachusetts tips law that the skycaps were arguing for was preempted by federal law, namely the Airline Deregulation Act.

American Airlines originally offered free curbside check in for passenger's baggage. Most passengers tipped their skycaps around $1 per bag. In 2005, American began to institute a new policy, due to inflating costs, and began charging $2 for curbside check in, reports the AP.

As a result, many passengers probably were confused by the $2 fee, and believed that the fee was the skycap's tip. As a result, the tip income that skycaps normally received was drastically reduced, reports the AP.

Paid Vacation Laws: No Legal Right to Time Off

Compared to the rest of the world, Americans generally receive a pitifully low amount of paid vacation. Americans seem to want to live a life of work, based on our lack of paid vacation laws as well as the number of vacation time off the average American employee gets.

This can come as a surprise for foreign employers - after all, Americans generally get only two to three weeks of paid vacation time off, whereas our European counterparts can get up to 6 weeks of paid vacation time a year. And, unlike us, they actually take their full vacations.

Furthermore, U.S. employers are not mandated by federal law to give their employees vacation time. But, would it be a good idea?

Government Restaurant Loans Are Now Less Risky

You always heard restaurants carried a really high risk of failure, right? So why would restaurant loans have such a low default rate? Why would government guaranteed loans to restaurants look so safe to risk-averse banks?

In the past decade, 34,138 government guaranteed loans have gone to full-service restaurants. More than any other industry. The limited-service restaurant industry--drive-ins, take-outs and fast-food--came in second, reports The Wall Street Journal.

The borrowed bucks run big, too. Full-service restaurants borrowed $8.15 billion. Limited-serve restaurants borrowed $5.03 billion. Only the hotel sector borrowed more, according to the National Association of Government-Guaranteed Lenders (NAGGL).

How Do Right To Work Laws Work?

As of this moment, 22 states and the District of Columbia have in place right to work statutes--a subset of union law that preserves the choice of workers to decide whether or not they wish to join a union that exists at their place of employment.

Because right to work law specifically deal with collective bargaining agreements and employer treatment of non-union employees, it's especially important for you to understand how they function and may limit your actions.

As you may already know, federal law protects the rights of employees who wish to unionize and engage in collective behavior. Congress, however, has generally left it up to the states to legislate union law when employees do not wish to be part of the organization.

Senate Kills Federal Innovation Research Program

The U.S. Senate voted this week to kill a bill to reauthorize the popular SBIR (Small Business Innovation Research) program, reports the New York Times.

SBIR, a program to encourage small businesses to explore commercialization of technology, reserves 2.5% of federal research and development (R&D) funds for small businesses. Thus, says SBA, SBIR enables small businesses to compete for federal R&D funds with larger enterprises.

In an example of legislative perversity, the bill's author, Sen. Olympia Snow (R-Maine), flipped her vote this week to oppose cutting off debate. Thus she voted to kill her own bill, reports the Times.

So why does a senator administer a poison pill to her own bill? Especially a bill that passed Sen. Snowe's own Senate committee by a vote of 18-1?

Cost-Cutting VoIP Solutions for Businesses

All businesses are on the lookout for cost-effective ways to run things.

And Voice Over Internet Protocol (VoIP) telephone service is something most business owners should at least consider. It could end up helping your bottom line.

For small business owners, or even larger businesses, VoIP can offer communication solutions that are cheaper than traditional phone systems - and arguably just as reliable. Using a VoIP provider can cut down on phone costs, adding to a firm's bottom line.

Since VoIP systems are not only gaining steam, but popularity, it seems that cost-conscious businesses should try to integrate some VoIP solutions into their daily business to save money. Such as:

Dentist Must Pay $80K in Yelp Review Case

Be careful what you sue for. Especially if you sue for defamation. California dentist Yvonne Wong sued Yelp.com and a patient's parent who posted a negative review on Yelp.com.

In Wong's Yelp review case, first Yelp won a dismissal. Now the patient's parent who wrote the review has won too. And Wong has to pay over $80,000 in attorney fees and costs to Yelp and the patient, reports mediapost.com.

More and more people are turning to online reviews from sites like Yelp.com. A favorable review from Yelp can make a business boom. But a negative review can draw blood. A negative review can wreck a business, or destroy a professional's reputation.

So Yelp reviews are a double-edged sword. And it looks like a new industry has arisen to deal with online slash jobs.

Starbucks Sued by EEOC for Firing Dwarf

A Starbucks EEOC suit is in the works, and it's the perfect example of how not to violate the Americans with Disabilities Act.

After requesting a stool or small stepladder to help her reach the coffee-slinging equipment, the manager at an El Paso Starbucks fired newly-hired barista Elsa Sallard.

She is a dwarf.

Could Michigan's Business Tax Come to Your State?

Michigan's Business Tax has been simplified - and small businesses statewide will be affected.

Businesses used to have to comply with a confusing business tax structure, which included a 4.95% tax, a 0.8% modified gross-receipts tax, and a 22% surcharge.

In a recent move, the Michigan legislature has approved a new tax structure - a flat 6% tax on larger publicly traded companies, eliminating the gross-receipts tax and surcharge.

The tax reforms also brought in a new pension tax and raised income taxes on Michigan residents, reports The Wall Street Journal.

Could Michigan's new tax structure come to your state?

IRS Offers Small Business Webinar

Every small business has to balance decisions about basic daily operations against obligations imposed by federal tax laws. 

With that in mind, small business owners (or aspiring owners) can join in on an IRS Small Business tax webinar on Wednesday, May 18 at 11:00 a.m., Pacific time, reports the Everett Daily Herald.

This IRS webinar has been put together as part of Small Business Week, May 16-20.

"When you're running a business, you don't need to be a tax expert, too. But you do need some basics to stay tax compliant so your business can thrive," said Faris Fink, IRS Commissioner for the Small Business and Self-Employed Division, in an IRS press release.

How to Keep Web Businesses Out of COPPA Trouble

For many businesses, expanding to the internet seems almost like a necessity.

But, did you know that having an effective web privacy policy can be essential to avoiding some legal headaches? The Children's Online Privacy Protection Act (COPPA) requires websites to do some very specific things - even if your business does not target the "under age 13" group.

Many businesses do not realize that their websites need to be COPPA compliant.

Businesses that need to comply with COPPA include:

(1) businesses that are directed at children under the age of 13; and

(2) a general audience website that collects personal data from children, or has actual knowledge that some site visitors are children.

Who Can Apply for SBA Disaster Loans?

The U.S. Small Business Administration (SBA) offers special SBA disaster loans. With massive flooding striking several states along the Mississippi delta, finding these resources takes on sudden urgency.

These loans are not just for small businesses. And not just in agriculture. They are even available to homeowners and renters, once the President, Secretaries of Agriculture or Commerce, or the SBA declare a disaster.

With the recent Mississippi flooding, FEMA's website lists disaster declarations by area. Since April 19th, FEMA has listed disaster declarations in fourteen states, most along the Mississippi River. In the state of Mississippi, declarations now cover fourteen counties, reports CNN.

So who qualifies for SBA disaster loan assistance?

Are Seasonal Employees Entitled to Overtime?

The sun is shining, and it's finally getting warm out there - it's almost summer! Many businesses tend to pick up extra customers over the hot summer months, and in turn employers may want to pick up some seasonal employees.

Which ultimately begs the question - are these seasonal employees entitled to overtime wages?

Wage costs, including overtime, are a big factor in the hiring decisions of many business owners. Estimating costs can go a long ways towards figuring out how many extra hands you can afford to bring on.

But first, it is important to distinguish what a seasonal employee is.

Batali's Restaurants Sued Over Waiters' Tips

Restaurant owners, if you thought you would avoid employee wage claims if you duplicated Iron Chef America champ Mario Batali's tip pool, think again.

Batali's restaurants distribute the server tip pool on a percentage plan. Wait captains get the most, bartenders get a percent, and backwaiters get the least.

But last July, Batali's server staff sued, claiming not that the tip pool distributed unfairly, but that a 4-4.5% house retainage from the wine sales portion of the pool to cover wine education violated the federal Fair Labor Standards Act.

With the Batali employees' lawsuit, does the house taking 4% to 4.5% of the wine sales portion of the tip pool create problems under the federal Fair Labor Standards Act?

Are Employee Handbooks Enforceable Contracts?

When will the law consider an employee handbook the company gave out on Day One a contract enforceable against the employer?

If an employee handbook, sometimes called an employment handbook, makes promises about employee health benefits, severance pay, or grounds for dismissal, can the employee hold the employer's feet to the fire on promises made there?

Shoplifters: What Are Your Legal Rights?

If you run a business that is open to the public, one of your main concerns may be shoplifting, which costs retailers millions of dollars in lost revenue every year.

While detaining a suspected shoplifter can open you up to legal liability, you are not without recourse.

Your actions may actually be covered by the shopkeeper's privilege.

How to Hire Summer, Seasonal Employees

Business spikes in summertime for some companies, at the holidays for others. Whenever the work crunch comes, companies need to add seasonal employees.

Busy times mean profitable times, so long as seasonal add-on workers can give you a leg up on your competition. But hiring errors get magnified during any busy season. Some tips for avoiding those errors, as described by Inc. magazine, include:

Can Eminent Domain Actually Help My Business?

People generally think eminent domain is a bad thing, as they picture property owners being forcibly removed from their long-time homes.

But it doesn't have to be that way, especially for small businesses.

Eminent domain is actually a valuable and vital tool for economic development.

Could My Business Get Kicked Off Facebook?

Complexions, a New York based spa, recently saw itself kicked off Facebook after a spa with the same name based in California complained about intellectual property infringement.

There was no prior notification.

As it turns out, Complexions is not alone. Dozens of business and well-known websites have been summarily kicked off Facebook for alleged infringement without a prior investigation by the social network.

Tax Incentives for Moving into Blighted Areas

One of the bigger stories out of San Francisco of late is Twitter's planned move into the Tenderloin--a blighted area riddled with shuttered restaurants, graffiti, and crumbling facades.

Considering a move into the suburbs, Twitter managed to brokerage a deal with the city wherein it promised to move into the Tenderloin if the city would provide tax breaks.

Employee Car Accident: Who is Liable?

When you decide to permit an employee to drive a company vehicle or even their own vehicle while on the clock, you're opening yourself up to liability for any damage or accidents the employee may cause.

In order to make proper decisions regarding company cars and employee driving, here are the four situations, via the legal principle of vicarious liability, that are most likely to result in employer responsibility for employee car accidents.

Is it Legal to Poach a Competitor's Employees?

There have been a lot of news lately of top executives in Silicon Valley jumping ship to work with company rivals.

The fact is that competition for talent is fierce in most high-stakes industries with limited employee pools, causing companies to go above and beyond normal recruiting methods. But the question remains:

Is employee poaching actually legal?