Free Enterprise: March 2012 Archives
Free Enterprise - The FindLaw Small Business Law Blog

March 2012 Archives

3 Things To Do Before You Sell Your LLC Interest

Guest post by Jennifer K. Halford, Esq.

Limited liability companies, or LLC's, are a popular choice for many business owners - especially when there is more than one owner.

This isn't surprising given the tax incentives and liability protection that an LLC can provide. And setting up an LLC on your own is possible.

Yet lately I have noticed that few business owners realize before they create an LLC that it is not simple to get out. Leaving your business is not as easy as selling your LLC interest to someone else. There are tax, securities, and personal liabilities that must be addressed.

To limit your liabilities, be sure to do these three things before you sell your LLC interest:

Your small business' identity means a lot to your bottom line. But when another entity infringes on your trademark, it may not always make good business sense to pursue a legal enforcement action.

Trademark enforcement actions can be costly, and may not be worth the potential benefits, one trademark expert writes for Inc. magazine. Suing for trademark infringement may also be damaging to your reputation in some cases.

Here are some real-world examples of when trademark enforcement actions may not be worth your while:

Two small-business groups are taking opposite sides as the U.S. Supreme Court begins three days of historic hearings about President Obama’s Patient Protection and Affordable Care Act.

The High Court’s decision on the Act, which many call “Obamacare,” will have a huge impact on small businesses, legal experts explain for Reuters. Currently, the law:

  • Requires employers with more than 50 employees to provide health insurance by 2014, or pay a penalty.
  • Requires states to establish health insurance exchanges to provide cheaper and easier access to insurance plans.
  • Allows states to enter into compacts, and allows insurers to offer policies across state lines.

A group called the Small Business Majority supports the Act, UPI reports. But another group, the National Federation of Independent Businesses, opposes the Act — and felt Justices on Monday were on their side.

Can You Fire Employees on FMLA Leave?

Can you fire employees on leave? The Family Medical Leave Act (FMLA) is a federal law that applies to many businesses. The FMLA leave law mandates certain minimum requirements and rights for employees who take unpaid leave.

The FMLA only applies to certain businesses -- and to certain leaves.

First and foremost, you should find out if the FMLA applies to you.

Typically, the FMLA does not apply to all employers or employees. The FMLA only applies to those employers who have more than 50 employees. Businesses must have had 50 employees for at least the past 20 weeks.

How Will the JOBS Act Affect Small Business?

The U.S. Senate passed the Jumpstart Our Business Startups Act (JOBS Act) on Thursday, ushering in a new era of investment regulation. Some are even calling the JOBS Act a small-business investment bill.

In some ways it is, as many of the provisions target startups hoping to make it big. Nonetheless, the JOBS Act potentially affects all small businesses seeking some type of outside investment. Therefore, all small business owners should know the following three things about the JOBS Act.

Small Biz Unaware of Health Reform Benefits

When it comes to running a small business, health care costs often top the list of financial concerns. When the Patient Protection and Affordable Care Act of 2010 (ACA) goes into effect in 2014, businesses with more than 50 full-time employees will be legally required to spend this money.

There has been much opposition to the ACA in the small business community for this reason. But a recent survey results suggest that small business owners are also unaware of the law’s potential benefits.

More Employers Asking for Facebook Passwords

Studies have shown that Facebook can be a useful hiring tool. Just a 5- to 10-minute perusal of a user’s profile can net more information than a basic personality test. It’s no wonder employers head to the site to check out prospective hires.

But one problem remains: Many users are now going private, cutting off their profiles from outside viewers. As a result, a new trend has emerged. Employers are reportedly now asking job applicants for Facebook passwords. Is this a good idea? Can you legally ask a job applicant for a Facebook password?

Bad checks can be a huge hassle for small businesses, and not just because of lost revenue. Getting even with the customer who wronged you can cost precious time and money -- and perhaps even affect your other customer relationships.

Bad checks generally fall into one of several categories: Insufficient funds, a closed account, stopped payment, or forgery. Your options to pursue payback may include a civil lawsuit, or even a criminal complaint.

Whichever path you choose to pursue, here are three tips to help kick-start your bad-check restitution case:

Employees who must travel to different work sites, or to different customer locations during the work day, generally must be paid for their travel time. But how employee travel time is calculated can be a bit complicated.

In general, the federal Fair Labor Standards Act controls issues regarding wages and hours, and describes when employees must be paid for work-related travel. Here are some general guidelines:

3 Things to Know When Injured Workers Return

You may have some employees who have been injured on the job. They may have taken some time off to attend to their health. As an employer, you may wonder what you should do when they return to work after being injured -- and what workers' compensation law has to say about it.

It depends on your state. Different states have different rules that govern what benefits previously injured employees should receive.

But in general, here is a quick rundown of three things you should know as an employer:

A major publishing company has revised its mandates for unpaid interns, in an apparent response to recent unpaid internship lawsuits. Should your small business follow suit?

Unpaid interns have sued Hearst Corporation and Fox Searchlight Pictures for allegedly violating wage and labor laws. The companies failed to follow federal standards for unpaid internships, the lawsuits claim.

Now Condé Nast, a division of New York-based Advance Publications, has issued seven new mandates for its unpaid internships, The Atlantic reports. The mandates state that interns:

Pre-employment drug testing is a common condition for a job offer. But once an employee is hired, when is it legal to ask for a drug test at work?

State laws often limit the situations in which an employer can conduct drug testing of current employees. In general, they include situations in which safety is an issue, or when an employer suspects an employee of illegal drug use. In all cases, an employer should have a written drug-testing policy.

Here are three scenarios in which drug testing at work is generally legal:

Mario Batali to Pay $5.25M in Tips Lawsuit

Mario Batali has agreed to settle a lawsuit filed by waiters, bussers, bartenders, runners and other employees working at a number of his New York restaurants. The $5.25 million class action settlement, which involves approximately 1,100 employees, covers accusations the celebrity chef and his partner illegally confiscated employee tips.

Plaintiffs in the Batali tips lawsuit claim the practice was widespread, and that it was in place at all of the chef's Manhattan eateries.

Time is money. But with American workers spending more and more time commuting to and from work, when is an employer required to pay for an employee's commute time?

In general, the federal Fair Labor Standards Act controls issues regarding wages and hours, and describes which commute situations must be compensated as "work time."

So when would an employer be on the hook for commuting time? Here are some general guidelines:

Paying for employee health insurance can take a bite out of a small business' budget. That's where the Small Business Health Care Tax Credit can come into play.

The tax credit is specifically designed to help small businesses and tax-exempt organizations cover the costs of employee health insurance, NJToday.com reports. It can be especially helpful if you're a small business that's offering employee health care for the first time.

However, not all small businesses can claim the health-care tax credit. Here's how to figure out if you qualify:

How Common Are Abusive Warehouse Conditions?

Apple Inc. has been under fire recently for working conditions in Chinese factories responsible for producing iPads and iPhones. But did you know that warehouse conditions in the United States may rival those found overseas?

A federal lawsuit filed on behalf of warehouse workers in a Southern California distribution center accuses three companies of falsifying pay records and forcing employees to work in unsafe conditions. The main defendant is Schneider Logistics, which handles Walmart goods.

Do you know where your products come from?

Does Your Email Marketing Violate Spam Laws?

Businesses these days need to use all types of tactics to get customers through the door. One popular -- and powerful -- marketing tool is the use of email.

Email is effective, but just make sure that your email marketing isn't violating the CAN-SPAM Act or other state spam laws.

There are several things you should be aware of. The CAN-SPAM Act does mandate certain requirements for emails. Some of these requirements include:

Do Your Employees Qualify for FMLA Leave?

Employers often wonder about their obligations under the Family and Medical Leave Act (FMLA). Which employees are entitled to time off, and what types of situations qualify for FMLA leave?

To begin, the FMLA is only applicable to private businesses that employ 50 or more employees for at least 20 weeks during the year. If applicable, employees are only eligible if they have been employed for at least 12 months and worked at least 1,250 hours during that time period.

Covered employees must be given up to 12 weeks of unpaid FMLA leave a year if a request is made for one of the following reasons:

Think Twice Before You Sue an Online Review Site

Almost every business has had a negative online review. You simply can't make everyone happy. But sometimes, a review goes beyond unhappy and is just downright mean -- and false.

What are you supposed to do when this happens? The site usually won't remove the comment even if you send a strongly worded request. Can you sue the online review site instead?

Well, you can, but you probably won't win.

Legal to Discipline an Injured Employee?

Sometimes employers want to discipline an injured employee. After all, accidents may occur because of the employee's negligence or bad behavior. Employers might wonder if there are any workplace injury laws that bar discipline.

It all depends. You might need to examine your employment or labor contracts. And, you probably need to scrutinize your disciplinary policies.

You also need to be careful about relevant OSHA statutes. You wouldn't want to be accused of retaliation.

Urban Outfitters Sued Over 'Navajo' Panties

Just months after it demanded the retailer stop selling merchandise branded with its tribal name, the Navajo Nation has sued Urban Outfitters. The chain is being accused of trademark infringement and violations of the Indian Arts and Crafts Act, which makes it illegal to falsely suggest a product is made by an American Indian.

The tribe's goal, though partly about money, is to protect its reputation, according to the suit. It finds the retailer's 'Navajo' panties, jewelry and flasks to be "derogatory and scandalous."