Free Enterprise - The FindLaw Small Business Law Blog

August 2013 Archives

'Dirtiest Hotel' Owner Loses TripAdvisor Lawsuit

The owner of the so-called "Dirtiest Hotel in America" has lost his TripAdvisor lawsuit for defamation.

Kenneth Seaton, owner of the Grand Resort Hotel and Convention Center in Pigeon Forge, Tennessee, filed a $10 million lawsuit against the travel website, alleging TripAdvisor used a flawed rating system based on unreliable rumors, Reuters reports.

But can a hyperbolic "Dirtiest" list be defamatory?

What Is a Startup 'Excubator'?

You've probably heard of "incubators" for new businesses, but what's a startup "excubator"?

Business incubators aim to fast-track the growth and success of startup and early-stage companies. Fledgling entrepreneurs can gain access to coveted capital, equipment-rich work spaces and guidance from industry experts -- if they're approved to participate in the incubator, that is. Some only allow startups to "incubate" for a few weeks.

But the industry is now abuzz about startup "excubators," which work with any startups that are willing to pay. Here's what this emerging model is all about, and what entrepreneurs need to know:

5 Legal Ways to Monitor Employees

Is it legal to monitor your employees? That really depends on what approach you take.

As invasive as it may sound, monitoring your workers can actually make them more productive, according to The Atlantic.

Of course, this doesn't mean that you should be a nit-picky, micromanaging stalker and watch your employees' every move(s). But when the situation calls for it, you may indeed need to monitor your employees. Here are five legal ways to do it:

Top 5 Tips for Choosing a Virtual Office Location

Need tips on choosing a virtual office location? Long gone are the days when brick-and-mortar offices were the only options around. Virtual offices are increasingly popular because of their convenience and practicality factors.

These days, many businesses (especially small businesses and startups) don't really require an actual brick-and-mortar location. Unless you run a business that requires constant in-person client or customer contact, a virtual office may be the perfect fit for you.

So with that said, here are five practical tips for choosing a virtual office location:

Are GameStop's Gifts to Managers Taxable Income?

Video game retailer GameStop has announced that managers at each of its 6,500 stores nationwide will receive free PlayStation 4 and Xbox One consoles before the year is out.

These consoles are by no means cheap, running between $400 and $500, but GameStop may be gifting the consoles as a way to educate their management on the much-anticipated products, reports Forbes.

These gifts may be work-related, but are GameStop's gifts technically considered taxable income?

More Small Biz Owners Skip Summer Break: Survey

More small business owners are putting their summer vacations or breaks on hold these days, reports The Associated Press. According to a survey conducted in the spring by American Express, many entrepreneurs who took a summer vacation last year are now opting to work this year instead.

Of the survey's participants, 49 percent said they planned to take off at least one full week this summer. That's down from 54 percent last year, and a high of 67 percent in 2006, the year before the recession began.

Why are most business owners choosing to skip summer vacation?

Dunkin' Donuts Franchisee to Pay Back Wages

A New Jersey-based franchisee that operates 55 Dunkin' Donuts stores was dunked in a wage and hour dispute over back wages.

An investigation by the U.S. Labor Department found violations of the Fair Labor Standards Act, according to the department's press release.

QSR Management, which operates franchises throughout New Jersey and Staten Island, New York, will have to pay nearly $200,000 to 64 employees for overtime and minimum wage violations, reports the Manasquan-Belmar Patch.

Do Sole Proprietors Need a Federal EIN?

If you're a sole proprietor, do you need an EIN?

An EIN or employer identification number, otherwise known as a taxpayer identification number (or TIN), is a nine-digit number that the IRS assigns to businesses to use for filing and reporting taxes, among other uses. The EIN is essentially a business' identification number for the IRS.

Chances are, if you're an established small business owner who's already dealt with paying, filing, and reporting taxes for your business, you may already have an EIN. But what if you're setting up a one-man (or one-woman) business? Do sole proprietors need an EIN as well?

Here's a general overview:

Before You Buy Office Space: 5 Legal Tips

What should you look out for before you buckle down and buy office space?

We recently went over tips on renting an office space, but buying property is a whole 'nother playing field. Before planning out your wall art, first figure out whether you should buy or rent your office space.

If you're confident that you want to hunker down and pay the big bucks for a piece of property, keep these five tips in mind:

7 Business Write-Offs You May Not Know About

The world of business write-offs can be complicated, overwhelming and downright confusing. But doing your tax homework is worth it.

Any reasonable, ordinary and necessary expenses your business incurs to run smoothly may be fair game for write-offs. Those deductions can add up to a significant reduction in the amount of taxes you may have to shell out.

Here are seven business write-offs you may not know about:

Legal for Students to Work During the School Year?

Nearly 80 percent of students are working at least part-time during the school year, according to a new survey by Citigroup and Seventeen magazine. The data included students in high school, community college, online colleges, as well as public and private colleges and universities.

But is it legal for students to work? Generally yes; however, there are some legal limits employers need to know.

Here are some general guidelines:

Should You Cut Benefits for Spouses Like UPS?

UPS will be dropping health care coverage for some 15,000 employees' spouses, citing "costs associated with" Obamacare.

United Parcel Service told employees in a July memo that "limiting plan eligibility" is a prudent way to maintain coverage for current employees "now and into the future," especially in light of the Affordable Care Act (aka Obamacare), reports The New York Times.

Even if it's just to save a dime, should your business cut employee benefits?

Forever 21: Part-Time Shift Not Due to Obamacare

Teen clothing outlet Forever 21 is coming under fire on social media after a leaked memo declared that many of its full-time employees would be moved to part-time positions before the end of August.

While many cited Forever 21's move as a reaction to the Affordable Care Act (aka Obamacare), the retailer insists its decision was based on "projected store sales" and not the controversial health care law that includes an employer mandate, reports The Washington Post.

Even if Forever 21 is trying to skirt Obamacare, is it possible for a small business to simply demote its full-time employees to part time?

5 Dorm Room Startup Tips for College Entrepreneurs

Are you jonesing to strike it big with a dorm room startup that blossoms into a booming business?

College entrepreneurs who want to turn a dorm room startup into a sustainable business will need a considerable amount of seed money and mentoring -- along with a boatload of legal guidance -- before they become the next Mark Zuckerberg.

Here are a few legal tips for aspiring entrepreneurs:

Minn. Servers' Dine-and-Dash Lawsuit May Pay Off

From the looks of one court's take on a dine-and-dash lawsuit, employers may want to think twice before forcing servers to cover losses from customers who don't pay their bills.

In a recent dine-and-dash class action case, the Minnesota Supreme Court sided with 750 server and bartender plaintiffs who sued over the practice of employers passing on the loss from dine-and-dash restaurant patrons. The case now goes back to a lower court to determine how much money the servers should get in damages.

The court's decision is a warning to employers to steer clear of forcing servers to cover lost revenue for customers who don't pay.

Does Vacation Time Have to Roll Over?

As the summer vacation season winds down, small business owners may want to remind their employees on how their companies deal with remaining vacation time.

One of the most common questions: Does unused vacation time roll over into the next year?

State and federal employee protections often control how an employer can craft her business' vacation policies. So depending on your situation and which state you're in, you may be required to have vacation time roll over.

Collecting Customer Data: 3 Legal Ways to Do It

Collecting customer data is a hot-button issue for small business owners. On one hand, collecting customer data can have real value to shaping the direction of your business. On the other hand, collecting customer information can raise serious privacy concerns that may expose you to legal liability.

Fortunately, there are ways to reap the benefits of big data without incurring liability.

Here are three ways to legally collect customer data:

5 Types of Employee Leave You Must Allow

When an employee asks for a day off, an employer generally has discretion to approve it or not. But there are some types of leave that employers must allow.

There's a broad range of reasons for workers to request time off, including vacations, sick days, jury duty, and personal emergencies. Some time-off requests must be approved, though they don't always have to be paid.

Here's a general overview of five different types of employee leave that employers must allow:

Before You Rent Office Space: 5 Legal Tips

Let's face it, renting an office space can be a daunting task. Commercial leases allow for plenty of room to wheel and deal, which can be a double-edged sword. It gives you the opportunity to bargain for what you want, but the options can be overwhelming.

Fear not, business owner. Here are five legal questions to ask yourself before you rent office space:

Are Your Business Travel Expenses Deductible?

Are your business travel expenses deductible? It's good to know if your travel expenses qualify for deductions, because it can mean more money for you and your business.

Business travel expenses are incurred anytime you spend money on a work-related travel cost. This can include expenses like car rental, airfare, lodging, and even dining or entertainment (if you have to take a client out, for example). Some of these may be tax-deductible and can help your business save some money when Tax Day rolls around.

Here's a general overview of when your business travel expenses are and aren't deductible:

Warning: Don't Get Sued for Selling Knockoffs

A small business in Washington state was slapped with a lawsuit after an undercover shopper for Coach bought five allegedly counterfeit Coach items at the local antique store. What can you learn from their ordeal?

Pegasus Memorabilia's owner Sherl Stocking was flabbergasted that the Coach products at issue -- including a pair of glasses sold for $9.95 -- were alleged fakes, claiming that he had bought them used at a trade show in Las Vegas, reports Seattle's KING-TV.

How can your small business avoid the same mistake?

Using Gmail for Business? Don't Expect Privacy

If your business uses Gmail, don't expect privacy. In a recent court filing, Google's lawyers made it clear that Gmail users have no "legitimate expectation of privacy" in email they send or receive via Gmail.

Most disconcerting of all, the news comes on the heels of two secure, subscription email services shutting down due to "outside pressures," reports Gizmodo.

Here's what this means for businesses and what you can do about your Gmail privacy:

Just How 'At Will' Is At-Will Employment?

How "at will" is at-will employment, really? Can you, as an employer, fire your employee for literally any reason under the sun and face no repercussions for doing so?

At-will employment is one of the most common forms of employer-employee relationship. It essentially means that an employee can be terminated without "just cause" (reasonable, articulable grounds) or warning, and that courts will typically deny the employee any claim for loss from the dismissal.

But is it really all as simple as it sounds? Nothing legal really is, and it's always best to be careful. Here's a breakdown of what at-will employment really means:

IRS 'Income Underreporting' Notices: What to Do?

Have you received a "Notice of Possible Income Underreporting" from the IRS? If so, take a deep breath and relax a bit -- you're certainly not alone.

The IRS has sent the letter to thousands of small business employers, asking them to review and confirm that they accurately reported their income on last year's tax returns. So far, some 20,000 employers across the country have received the letter, according to The Washington Post.

If you're a small business owner, here's what you need to do:

Legal to Refuse Service Over Tattoos?

Is it legal to refuse service because of a customer's tattoos? The rapper known as The Game says that's what happened to him at a restaurant in California on Sunday, though the restaurant denies this.

While the popular mantra of "No Shirt, No Shoes, No Service" has prepared barefooted and shirtless patrons for possibly being refused service (because of possible liability and safety concerns), what about tattoos?

What should you know about your business' practices when it comes to inked patrons who like to show off their body art? Generally speaking, here are some legal issues to consider:

Tracking Customer Returns? Don't Get Sued

Is your business keeping tabs on customers' merchandise returns? If so, your company could potentially be vulnerable to a lawsuit.

A number of major brands -- including Best Buy, J.C. Penney, Victoria's Secret, Home Depot and Nike -- are tracking customer returns as a security measure. Recently, however, Best Buy was slapped with a privacy lawsuit for engaging in the practice.

But do the security benefits outweigh the lawsuit risks? Here are some potential pros and cons of tracking customer returns:

Top 5 Tips When Checking References

Checking references for a prospective job candidate often isn't as easy as it sounds. Sure, you've already gone through the tedious process of sifting through piles and piles of resumes, and conducting many time-consuming interviews. But even after all that, there's still one last hurdle before you can ensure that you've really hired the right candidate.

What is that step, exactly? Checking references. What types of references should you ask for? How many should you call before you feel comfortable with your hiring choice?

Here are five tips to keep in mind when checking references:

Should Your Business Be Held in Trust?

Most business owners already appreciate the benefits that incorporation or partnership can provide. But should entrepreneurs consider having their small business held in a trust?

Once you understand how trust ownership works, along with some of the pros and cons, your business may be ready to benefit from being held in a trust, with you as a beneficiary.

Here are the basics of what you need to know:

Baby 'Learning' Apps Are Misleading: Complaint

If you're a developer in the baby learning app market, be careful about what educational benefits your baby app promises. A number of companies are under fire for making educational claims that allegedly aren't backed by scientific evidence.

A nonprofit child advocacy group has filed complaints with the Federal Trade Commission, challenging the idea that such apps are anything more than just entertainment.

The FTC complaints can be seen a potential warning for app developers, and not just those developing apps for babies.

Restaurants Being Sued for Showing Cable TV

Does your restaurant, cafe, or bar feature cable TV so patrons can watch "Wheel of Fortune" or your favorite international programming?

If so, then you'd better make sure you have the proper type of license or commercial account from your cable or satellite provider -- otherwise, you could soon face an expensive lawsuit.

Nationwide, many small restaurants are being sued, or threatened with lawsuits, for improperly showing cable TV at their businesses. What's behind these legal threats?

McDonald's Franchisees Furious Over Costs

Many McDonald's franchisees are furious over the rising costs of running their businesses, and they're complaining directly to the company.

McDonald's is struggling to sell burgers as it is, and now a (Caution: Hot) brewing franchisee revolt is on the horizon, Bloomberg reports. From sky-high costs to a lack of control, franchise owners' patience with corporate is wearing as thin as a soggy French fry.

Here are a few of the McDonald's franchise owners' top complaints:

Small Business Travel Expenses Soar: Report

Small business travel expenses have soared higher than big business travel expenses, according to a new report. That could mean big deductions for your company come tax time.

On average, small businesses spend 24 percent more per year on travel expenses than their big-business counterparts, according to Concur, a business travel and expense management company that recently issued its "Expense IQ Report" for 2013.

Where is all that money going?

Business Bankruptcy: Which Type Is Best for You?

New companies don't always become roaring financial successes. Unfortunately for many small businesses, bankruptcy will be a reality.

Take heart, small business owner, there are several ways in which a company can declare bankruptcy. Depending on your company's financial situation, knowing the differences can help you get your business up and running again.

Which type of bankruptcy will work best for your business? Here's a general overview:

5 Reasons to Hire a Small Business Attorney

As an entrepreneur, you probably take pride in doing things on your own. So why would you ever want to hire a small business attorney?

Business owners know that there aren't enough hours in the day to get everything accomplished. With so many tasks demanding your attention, chances are you're not only bound to overlook some important considerations, but you may not fully understand the legal implications of your actions either.

With that said, here are five reasons you may want to consider hiring a small business attorney:

Debit Card 'Swipe Fee' Cap Struck Down

A federal judge has sided with retailers seeking a lower cap on debit card swipe fees charged by banks.

A victory for retail groups and a setback to banks, U.S. District Court Judge Richard Leon held last week that the U.S. Federal Reserve didn't have the authority to set the limit the way it did in 2011, and made the cap higher than Congress intended.

The swipe fee ruling may affect small businesses across the country.

Should You Have an Employee Pets Policy?

Should your business have an employee pets policy?

Dogs are man's best friend and cats are the best companions, so it's only natural for many employees to want to bring their furry little comrades to the office with them.

Since pets at work are not strictly illegal in most places, should your workplace implement a pets policy that allows them? Here are some pros, cons, and tips on what your possible pets policy should include:

Apple Sued Over Employee Bag Searches

Two former Apple Store employees are suing the tech giant for subjecting them to daily bag searches to discourage theft -- time that allegedly was not included in their hourly pay.

While the suit is based in federal court in San Francisco, the two plaintiffs have worked in stores across the country. They're seeking class-action status to sue on behalf of the nation's Apple employees for being denied compensation due to this alleged "customary practice" in Apple's showrooms, reports Reuters.

Bag searches for theft prevention are by no means limited to Apple, and this suit may have lasting changes for businesses nationwide.

TGI Fridays Franchisee Fined $500K for Cheap Booze

The nation's largest TGI Fridays franchisee has been fined $500,000 for serving customers cheap booze when they'd ordered the good stuff.

The Briad Group, which runs 70 TGI Fridays nationwide, agreed to pay the fine after an investigation revealed that eight of its New Jersey restaurants were serving customers lower-quality liquor when they'd ordered premium-quality alcohol, reports The Associated Press.

How did these franchise restaurants allegedly get away with it?

5 Clauses Every Employment Contract Should Include

There are certain clauses every employment contract should include. A good employment contract will make it crystal clear (or at least close to it) what exactly the parameters of the job are and what an employer’s expectations are. You’re trying to eliminate the element of surprise.

You probably already know to include certain things in your contracts, such as the terms of employment, job title and responsibilities. But here are five other terms every employment contract should contain: