Free Enterprise - The FindLaw Small Business Law Blog

March 2017 Archives

Allowing customers to use credit cards at your store certainly boosts sales -- it's easy for customers to use, and they may be willing to pay more if they're not counting each dollar out of their wallet. But that doesn't necessarily mean it boosts revenue. Credit card companies charge retailers "swipe fees," sometimes as high as 3 percent per transaction.

While most retailers simply pass on this charge to consumers (in the form of higher prices), a New York law makes that illegal. So some Empire State retailers sued, claiming the regulatory scheme infringes on their First Amendment rights when labeling merchandise for sale. And the Supreme Court agreed, sort of. Here's a look.

A Pennsylvania man who was terminated from his job at a local school district has filed a rather atypical civil rights employment lawsuit. The former employee has asserted that the termination constituted an act of religious discrimination, as he was terminated after refusing to comply with a task that violated his religious beliefs.

While a case involving religious discrimination may sound more deplorable than atypical, the man's religion, Satanism, is likely to turn some curious heads. While Satanism is often associated with devil worshiping, witchcraft, and evil deeds, these are actually incorrect, and likely offensive, stereotypes. The organization is actually trying to do good things for the world.

Clearly, being a good corporate citizen has its advantages. Beyond helping your fellow man or doing good in the world at large, creating a positive image around your small business's brand can only help with customers. So you would think, considering the past month or so that Uber has had, that its largest competitor would be flying high.

But Lyft -- whose president just told Time, "We're woke. Our community is woke, and the U.S. population is woke" -- is far from leaving Uber in the dust. So does being a woke small business even matter? And if so, how much?

For some small businesses, legal compliance can often be a point of contention. Depending on what type of business is being run, the location can make a big difference when it comes to which regulations are enforced. For example, on the local level, a business located in a residential area may have to worry about things like a noise violation.

In addition to all the local ordinances that small businesses have to keep up with, there are also the larger, state and federal level violations that even small businesses are subject to. Here are three of the most common types of fines that get assessed against small businesses.

Just in case you thought the last fax machine was bashed into oblivion during the filming of Office Space, think again. Fax machines remain in existence, and apparently in use for marketing campaigns. So much so, in fact, that lawsuits based on junk faxes in violation of federal consumer protection laws have increased a hundredfold over the past eight years.

So where are these faxes coming from? Who are they getting sent to? And why are they illegal?

After all the time, money, blood, sweat, and tears you've spent building up your business, not protecting your trademark is almost like leaving on a week-long vacation with the front door to your home wide open. Without adequate protection for your trademark, another business can come along and profit off the goodwill you generated in the trademark, or worse, destroy the goodwill you generated.

Fortunately, if you have a logo, or some other copyrightable and identifiable design that identifies your company, you may not necessarily need to register your trademark or slogan to be protected. However, protecting an unregistered trademark will usually be more difficult than protecting a registered one, as additional proofs will be required.

The mail-order steak company, Omaha Steaks is seeking a declaratory judgment from a federal court to stop an apparently 'troll-like' ADA lawsuit. Despite the existence of the Americans with Disabilities Act since 1990, business still are regularly sued for violating the nearly three decade old law, even though tax credits and benefits allow compliance to be had on the cheap.

The legal action filed by Omaha Steaks is in response to a letter they received demanding that the mail order steak company update their website to be accessible to those with visual disabilities, which is required by the ADA. While there are currently no definite set of regulations that businesses are required to follow, that does not excuse businesses from being required to ensure that their websites are accessible. However, Omaha Steaks is asking a court to excuse them from liability as they were planning on delaying the update to their website until after the 2018 guidelines are released.

If you run a business, particularly one that isn't operated as a sole proprietorship, you should be rather careful about commingling funds. Using business funds to pay for personal expenses could run afoul of the law, contracts, ethical, and fiduciary duties.

Even if you operate a sole proprietorship, you may want to follow the following advice, that way, when the time comes to grow, your business doesn't have a questionable and difficult to understand financial history. It'll also make life easier come tax time.

There are some lawsuits that businesses just cannot avoid. Unfortunately, the most unavoidable lawsuits are the frivolous ones. Fortunately, the law and the courts provide a means to detect and dismiss frivolous claims early on, before a defendant is forced to spend significant money on defending a meritless claim.

Technology has revolutionized the world in so many ways, but with new tech comes new challenges for businesses. Currently, one of the ethical challenges facing businesses, both small and large, revolves around employee data collection and analytics. Because of the advances in both data collection and analytics, information can now be discovered easier than ever before.

For those unaware, many businesses have begun collecting and analyzing employee data for reasons other than fighting potential employee lawsuits. On the most innocent end of the spectrum, employers are using data analytics to improve overall employee morale. However, on the other end of this same spectrum, some employers are using employee data analytics to make discriminatory hiring decisions. When it comes to collecting and using employee data, where the line should be drawn has not been well established, either by law or societal standards.

When it comes to motivating employees to perform, businesses frequently need to look beyond direct compensation. While the wages being offered may be competitive, in the market, other factors such as benefits, and even those pesky intangibles, can be critical to attracting and retaining top talent.

Apart from high salaries, high quality health insurance, good retirement benefits, large bonuses, and consistent merit raises, some employers wonder: what else can I do to attract and retain top talent. Below, you'll find three of the top incentives employers can offer.

A large class action lawsuit against the ride-sharing company Lyft had the proposed $27 million settlement approved Thursday. The settlement however fails to address the elephant in the room: should Lyft's drivers be classified as employees or independent contractors?

While the settlement is expected to provide drivers with additional pay to compensate for expenses such as insurance, gas, mileage, and other items, the lack of resolution of the employee or contractor issue has garnered much attention. However, the lack of resolution means that it may still be litigated in the future. As many critics have noted, the lack of resolution of this issue is critical for Lyft's operations and funding, as categorizing all the drivers as employees would create a legal, financial, and practical nightmare for the company.

Forever 21, the popular clothing retailer, is going on the legal offensive against Adidas, the athletic clothing and shoe goliath, which they have accused of being a trademark bully. Forever 21 recently filed a federal lawsuit, seeking declaratory relief against Adidas, after receiving another letter threatening to sue them over a trademark dispute related to the famous three stripe Adidas pattern.

Last month, Adidas threatened to sue Forever 21 if the chain refused to stop making and selling a few particular garments that had four stripe patterns. Over the past several years, Adidas and Forever 21 have been involved in various disputes over the three stripe pattern, and Forever 21 has yielded to the demands made by Adidas in the past. However, when Forever 21 received that last threat of litigation, rather than acquiesce again, they decided to ask the court to intervene to put a stop to Adidas's pattern and practice of unreasonably attempting to enforce their rather ubiquitous trademark.

A recent report released by the Federal Reserve Bank of San Francisco found systematic discrimination against older job applicants, particularly women. Researchers sent some 40,000 applications and resumes in response to 13,000 job postings in 12 cities spread across 11 states and found that "older applicants -- those near the age of retirement -- experience more age discrimination."

The news was even worse for older female applicants, who experienced more age discrimination than their male counterparts.

When a business partner is stealing from the business, it may be incredibly difficult to detect. Business partners legally have access to business accounts, merchandise, and more. However, misappropriation of any business assets could be considered not just a violation of the partnership under civil law, but could also be criminal acts. Partners are considered fiduciaries for each other.

If you suspect that your business partner is stealing, or misappropriating assets, deciding on the correct course of action is not easy. At the first suspicion, you should contact a qualified business attorney to help guide your investigation, and advise you on whether, when, and how to contact law enforcement, and potentially how to end the partnership without ending the business.

Depending on your business, and what was stolen, how you proceed could be critical to ensuring your business's survival.

The Americans With Disabilities Act mandates that employers provide reasonable accommodations for disabled employees, and offers guidance on what conditions qualify as disabilities: physical or mental impairments that substantially limit a "major life activity." It's fair to say that alcoholism can substantially limit major life activities if not addressed properly, and alcoholics, so long as they are "qualified to perform the essential functions of the job," are covered under ADA protections.

So what counts as a reasonable accommodation for alcoholics in the workplace? Are they entitled to access to alcohol?

MedBox, the company that promised to bring biometric medical marijuana vending machines into existence, was recently busted by the SEC for some rather deceptive practices, which surprisingly doesn't involve the controversial substance. Rather, MedBox was busted for deceiving investors by using fake earnings generated by a secret affiliate and not MedBox to claim the company had substantial revenue and was a marijuana industry leader.

The founder of MedBox, and the company itself, have settled the claims made by the SEC by agreeing to disgorge profits and pay fines, totaling over $12 million, and by the founder agreeing to not be a corporate director or officer of any public companies, and for him not to participate in any penny stock offerings. Others involved, including former corporate directors and officers, are still being investigated and/or pursued by the SEC for their involvement, or complacency (which likely won't suffice as a defense).

Between customers and employees, there's a lot to keep an eye on at your business. And given recent advancements in technology, there are more ways than ever to monitor patrons and staff. One would imagine there are a whole lot of laws out there as well, governing how, when, and where you can monitor your employees and customers, and what you can do with that information.

But that's not always the case. Sometimes it takes the law a little bit to catch up with technology, and an eagle-eyed small business owner might have come up with something before the courts have. So questions remain about the legal limits of workplace surveillance -- here are some of those questions, and a few places to turn for answers.

President Trump has already shown an animosity to Obama-era business regulations. That animosity looks like it could extend to federal overtime rules rewritten by the Obama administration.

Those new rules have been on hold since November of last year, and may never go into effect now that Trump is in charge.

There can be times when employees are just acting so strangely that managers or business owners have to ask themselves: Is my employee on drugs? Generally, if an employer has actual evidence of illegal drug use by on duty employees, then there will be good cause for immediate discipline including termination, particularly if they are putting the safety of others at risk.

However, if an employer only has a suspicion that an employee is on drugs, then more evidence should be gathered before any decisions are made or actions taken. If the drug use is related to a medical condition, then there may be protections under disability law and seeking an attorney's assistance is recommended. Alternatively, if there is a problem with the use of illegal, and even legal, recreational or recommended, drugs (i.e. marijuana and alcohol), then disability protections will not apply.

Class action lawsuits provide similarly aggrieved parties to file legal claims together. When it comes to businesses and their customers, class action lawsuits often address defective products, widespread billing fraud, or illegal business practices. Any lawsuit can be scary for a small business, but a class action suit can be catastrophic.

But businesses might be getting a little help from an increasingly corporate-friendly Congress. The House yesterday passed legislation that would place new restrictions on class-action lawsuits. Here's a look at the Fairness in Class Action Litigation Act and what it might mean for your small business.

Over the last few decades, electronic music has grown at an electrifying rate. Now, all someone needs to qualify as a musician is a computer and some software to mix up songs other people made.

Capitalizing on the changing times, a new startup is hoping to mix up the music world of remixing by bringing order to the current chaos. The company, MetaPop, has created a new platform for not just the fans and creators of remixes, but also for the music labels that spend countless dollars on lawyers trying to enforce their copyrights.

It’s getting to be that time of year when the country struggles with tax forms, tax returns, tax software, tax laws, tax people, tax bills, and everything else to do with taxes. For business owners, tax season is even more hectic as not only are individual returns due for owners, but they must get all their employee, and contractor, tax forms out, or face serious penalties.

Apart from having someone to lean on during the troubling, and taxing, times between New Years and mid-April, there are a quite a few benefits to spouses running a business together. The partnership loophole (a.k.a. electing out of partnership status) is one of the benefits and is likely the most regularly used avenue for married business partners to avoid filing the dreaded 1065.

Getting a business venture started or making a product via a crowdfunding project can be exciting. Seeing supporters, or backers, putting their money into your project can be uplifting. Just don’t forget about the IRS.

Many people who get funded often wonder whether the money received from crowdfunding is taxable. Despite the lack of specific guidance from the IRS, the answer is yes, crowdfunded monies are taxable income for the year that they are received, with limited exception. Fortunately, there are a few things that crowdfunding startups, individuals and businesses can do to maybe save a few bucks and avoid tax troubles.

You don't have to look any further than most PR and marketing materials to see Uber's impact on startup financing and the sharing economy. New companies are constantly touted as "The Uber of ..." and analysts refer to any disruption of an industry as "Uberization." Even when the ridesharing giant isn't announcing further expansion into yet another state or country, it's hard to take your eyes off Uber.

But for the past two weeks, all of that media attention has been for all the wrong reasons. Scandal after scandal riddled Uber in late February and early March, leaving the company's image reeling, and that doesn't include the announcement it lost almost $3 billion in 2016. Here's a look:

It doesn't matter whether your political leanings tilt toward the left or the right -- we can all agree that we're living and working in a pretty emotionally charged news environment right now and there are no signs of it calming down any time soon. Democrats, Republicans, and everyone else in between (and further out on the political spectrum) are all finding something to shout about, and they're not leaving their opinions at home when they commute to work.

When politics seep into the workplace, your small business can suffer -- from lost productivity to internal strife. So how do you manage political conflict and strong emotions in the office and keep your business on track during times of political struggles? Here are a few answers.

Starting or running a business frequently involves lines of credit. As business owners know, inventory must be acquired, rents must be paid, and wheels need to keep on turning. Many entrepreneurs just starting out frequently rely on their own personal credit to get their businesses off the ground.

However, depending on the type of business structure you choose for your business, your personal credit score may have a negative impact on your business.

While racial, cultural, religious, and other forms of diversity are celebrated in American culture, businesses often find that their teams lack diversity. For businesses, small and large, diversity is a good thing as it can provide a multiplicity of perspectives within an organization. And diverse perspectives can help your business attract diverse customers and clients.

But how do you recruit diverse candidates and increase workplace diversity without actually discriminating? Below you'll find 3 tips to help legally improve workplace diversity.

Any entrepreneur or small business owner knows: successful business owners and productive employees often have strong personalities. And if you get too many strong personalities in one office, you're bound to have some conflict.

Sometimes a little creative conflict can be beneficial to your business -- driving employees to be their best or challenging old ways of doing things. Other times, internal strife can tear a company apart. So how do you manage your employees' emotions and conflict in the workplace? Here are a few tips:

The business world is filled with unscrupulous people who are always willing to test the limits of decency and legality when it comes to making a buck. Bribery is one of those things that small business owners need to be cognizant of, as even trusted employees can be compromised, and innocent gifts misconstrued.

Although there are vaguely specific rules about what can be considered a gift, or perhaps a campaign contribution, or donation, businesses need to be careful that these are not construed as bribes. Furthermore, monitoring for employee kickbacks is highly recommended.