Free Enterprise - The FindLaw Small Business Law Blog

April 2017 Archives

Corporate espionage is not just a plot device that moves along the plot of James Bond movies, it's also a real thing that actually happens, allegedly at least. A recent class action lawsuit, filed by a ride share driver is alleging that Uber used a top secret spyware program called "Hell" to track Uber drivers that were also driving for their competitor Lyft in order to offer incentives to those drivers to spend more time on Uber than Lyft.

The class action is alleging claims under federal wiretapping, and California's unfair competition and privacy laws. If the allegations are proven, there could be some rather severe consequences for Uber.

While the flashy pseudo-sharing economy start-ups like Uber, Lyft, Instacart, and TaskRabbit are known for popularizing the building of empires off the exploitation of contractors, the current trend is pushing away from the contractor-based employment model.

As many companies that utilize contractor based services have learned in the past, mischaracterizing employees as contractors can be a costly, multi-million dollar, mistake. Here are the top three advantages for businesses that choose to hire full time employees rather than rely on contractors.

Maybe you started a family business because you want to love who you work with, to keep the profits in the family, or to establish a brand that will last generations. Or maybe you were just born into it. Either way, managing family members in the workplace may be very different than maintaining those relationships at home. Especially when financial, corporate, and employment laws are involved.

Here are five tips for managing relatives in a family-run small business, from our archives:

Entrepreneurs are optimists by nature -- no one starts their own business to see it fail. And the last thing most small business owners are thinking about when they're starting up is declaring bankruptcy. But failure is a fact of life, and not all businesses make it.

That said, declaring bankruptcy doesn't necessarily mean your small business is a failure. Plenty of big businesses have declared bankruptcy only to rebound stronger than before. But what happens to your business after declaring bankruptcy will depend on the type of bankruptcy you file. Chapter 7 and Chapter 11 are two of the most-filed types of bankruptcies for small businesses, so let's see how they stack up.

The Americans with Disabilities Act is perhaps the civil rights law that businesses fear the most. Stories abound of businesses that were sued out of existence for violating state disability access laws that mirror the federal law, and most of these stories focus on how a small business was "extorted" out of business by allegedly unscrupulous ADA plaintiffs and lawyers. Rarely do these stories explain that the ADA plaintiffs face discrimination when businesses fail to comply with the law and put in the legally required accessible features.

These attitudes contribute greatly to the continued discrimination, and to make matters worse, over the past few years, businesses have been successful in limiting the rights of access discrimination plaintiffs to bring legal actions under various state laws. Most recently, new legislation signed by Arizona Governor Doug Ducey will make it more difficult for Americans with Disabilities Act plaintiffs to file lawsuits against businesses with architectural barriers in that state. While many businesses are rejoicing in the new legislation, disability advocacy groups are anything but pleased with the new rules.

As we've said here before, patents can be vital to your small business. Beyond protecting your inventions and ideas, patents can add value to your business for investors or a possible future sale. And yet many entrepreneurs and small business owners fail to file for patents for fear that the process is too complex.

But the United States Patent and Trademark Office is aiming to change that perception and the reality of filing for patent protection. Here's how:

Would a small business by any other name be just as successful? When it comes to naming your business, you've got to think about everything from how that name will look with a nice logo to how it will resonate with customers and clients. And you've got some legal considerations, too.

From incorporating and trademarks to website URLs, here's some of our best legal advice for naming a small business, from our archives:

When it comes to the world of 3D printing, businesses that can benefit from the new technology need to be cognizant of the liabilities, which can be numerous. Like nearly every other business, 3D printers might be best served by contracting around those liabilities.

For instance, a company that is only engaged in printing objects according to their customer's design may want to require their customers to sign indemnification agreements before commencing to print. That's because a manufacturer could face exposure to liability for injuries caused by items or products manufactured in their facility, even if the manufacturer had nothing to do with the design.

A lawsuit out of Harris County, Texas, is making headlines due to the rare allegation of Christian on Christian religious discrimination. While normally discrimination is considered to be a result of one group/class of individuals being favored over a different group/class, sometimes discrimination can occur from within a single group.

Like in this Texas case, individuals can face discrimination for religious, ethnic, or other reasons, because the perpetrators have unrealistic expectations about their own group/class. The Harris County case is alleging that the woman was discriminated against because she was not Christian enough. Specifically, the employee was demoted after complaining about and refusing to distribute religious literature, and she eventually felt forced to resign after her opposition was ignored. Most surprisingly, the employee was told that she "needed to examine her walk with Jesus," whatever that was intended to mean.

When you open a family business, you love the people you work with. But let's face it, none of us like our coworkers all 40 hours out of the week. And when you're working with family, those office tiffs can spill over into the home.

So when it comes time to sever ties with an employee who also happens to be related, things can get a little dicey, both personally and legally. Here's how to handle it.

Study after study has shown that the implicit biases people hold about race, gender, national origin, and sexual orientation, are a very real problem in today's society. Implicit bias refers to the stereotyped expectations that individuals place upon others as a result of societal and environmentally programmed assumptions. Unfortunately, because implicit bias is difficult to detect, management can frequently be completely oblivious to it.

For employers, implicit bias can result in discrimination lawsuits, not to mention catastrophic public relations nightmares. However, one area that employers can really target to reduce implicit gender bias involves employee performance reviews and feedback. Because performance evaluations are critical when it comes to an employee's career advancement, a biased review can have significant and detrimental effects.

Here are tips on how your business can avoid gender bias during performance evaluations. While there is no magic bullet to end discrimination, there are some simple steps that can minimize an employer's risks.

An Unruh Civil Rights Act lawsuit filed in Orange County, California, against an Albertson's grocery store over a clerk's statement to a customer should serve as a lesson to businesses small and large. That lesson is to train employees how to treat customers with respect and dignity. Implicit racial bias is a real problem that only education and training can help to prevent.

The grocery store is being sued because a clerk asked a customer a rather loaded question about whether the customer planned to pay with food stamps. At first blush, one might not think this statement is discriminatory or offensive. However, the question assumes a fact about a customer based upon a perceived notion of what a person on food stamps looks like.

A regional labor court in Sao Paulo, Brazil has done what American courts have either not done or not had the chance to do: ruled that Uber drivers are employees and not independent contractors. As such, the court ordered Uber to pay the driver who brought the case 80,000 reai (approximately $25,000) and provide employee benefits like holiday pay and contributions to a severance fund.

So is this case an outlier when it comes to Uber's employee/contractor distinction, or could it signal an ominous trend for the company?

The dreaded b-word. No small business owner wants to think of their company going under, but in some cases it's inevitable.

But not all bankruptcies equal total failure. Chapter 11 bankruptcy can allow your business to reorganize, remain open, and repay your debt. Here's a look.

Google currently appears to be in damage control mode in order to defend itself against Federal Labor Department allegations of a gender pay gap. However, Google has brought all this on itself. For nearly three years, the tech giant has refused to comply with federal compliance investigators' document requests. While the official labor department complaint indicates a preliminary finding of a gender pay gap, the primary issue comes from Google's failure to turn over documents and information.

While Google isn't well known as being a government contractor, the company does in fact receive quite a bit of money for doing government work. However, unlike other federal contractors that accept being subjected to federal compliance reporting to prevent discrimination, Google is asking the court, and world, to just take their word for it, that the tech giant does not discriminate against women when it comes to pay.

Some allergies are serious physical ailments, such that an allergic reaction can be debilitating, substantially limiting your major life activities. George Hirmiz, claimed his Wi-Fi allergy, or sensitivity due to "long-term exposure to high levels of electromagnetic voltage," was such an affliction, and that his employer, a Travelodge Hotel in Chicago never accommodated his disability and even fired him in retaliation for filing a complaint about the hotel's voltage levels to the Occupational Safety and Health Administration.

Travelodge said it fired Hirmiz because he was caught napping in the hotel lobby while a fight erupted nearby. Hirmiz sued, but neither the trial court nor the Seventh Circuit Court of Appeals were too sympathetic to his plight.

This week, the New York City police department settled a lawsuit brought against it by the US Department of Justice on behalf of an HIV positive man who was denied a job as a dispatcher. The settlement includes $85K in damages, plus a job offer to employ the plaintiff into the position for which he applied.

The man applied for the position in the summer of 2013 and received a conditional job offer. However, the offer was revoked in December 2013 due to medical disqualification, after he had disclosed his HIV status. The DOJ filed suit alleging that having HIV is considered a disability for the purposes of ADA discrimination, even when no symptoms are present.

Small businesses will go to great lengths for good publicity, and even a little bit of backlash can be good for the bottom line. Just take Black Forge Coffee House in Pittsburgh, PA -- the store employs loyalty cards not unlike many food and beverage service stops, with customers getting a hole punched in the card for each purchase and the promise of a free coffee down the line. But while Black Forge's cards may look similar to other businesses' on the front, the back features head shots of politicians and people unpopular with the shop's owners, making every hole punch look like a hole in the head.

Most of the politicians included on the card are Republicans, so it's no surprise that President Donald Trump was included on the latest iteration. But could punching a hole through a miniature printout of the president's be construed as a threat? Or is it all good fun under the First Amendment?

When it comes to accommodating breastfeeding employees, businesses small and large can benefit from having a written policy. Under federal law, employers with 50 or more employees are required to accommodate employees that need to breastfeed during the 12 month period after giving birth, so long as the accommodation does not create an undue hardship on the employer. Furthermore, if your state's laws provide more protection for nursing mothers, or apply to smaller employers, then state law will apply over the federal laws.

However, due to the minimal needs of breastfeeding mothers, as well as the minimal requirements under federal law, creating a policy that not only complies with the law, but also makes your employees happy, is actually rather simple. Generally, an office breastfeeding policy needs to include the following basics:

To the chagrin of many a traveler, airlines continue to insist on overbooking flights, i.e., taking reservations and payment from more passengers than there are seats on the plane. And there are better and worse ways for airlines to handle these dilemmas of their own making.

The first and generally the best way is to bribe ticketholders out of their reservations: waive enough cash, free tickets, airline miles, or hotel rooms at a passenger, and they'll agree to be bumped to a later flight. The last and generally worst thing to do is to send cops onto the flight to drag a doctor out of his seat. Guess which strategy United Airlines went with Sunday night?

A new report issued by the Treasury Department's Inspector General is calling into question the IRS's practice of seizing the bank accounts of small businesses suspected of laundering money. In essence, the IRS was seizing money with no evidence of criminal wrongdoing and refusing to return the money without getting a cut.

The report explains that, from 2012 to 2015, the IRS seized over $17 million dollars from small businesses for allegedly structuring bank deposits. In many of these cases, the business owners were completely innocent of any wrongdoing, but were faced with the choice of agreeing to a return of a lesser amount than was seized, or trying to fight it out in court to get their money back (which is a costly, and uncertain, process).

Starting a home business can be filled with pitfalls beyond the question of whether or not your productivity suffers if you work in pajamas. Frequently, zoning laws and other rules or regulations will apply to a home business.

Zoning laws limit the way in which land owners and residents can use their own properties. Generally, zoning laws distinguish between residential, commercial, and industrial properties, and can prohibit areas zoned for one use to be used for other uses. Depending on what your home business entails, and how the area where your home is located is zoned, you could face legal consequences for operating a home business.

While the Equal Employment Opportunity Commission had already ruled that gay, lesbian, and bisexual employees were protected from discrimination in the workplace under Title VII of the Civil Rights Act, the majority of courts had not followed suit. Until now.

This week, the Seventh Circuit Court of Appeals (covering Illinois, Indiana, and Wisconsin) held Title VII's prohibitions on sex discrimination in the workplace extend to discrimination based on sexual orientation, thus protecting gay and lesbian employees from workplace discrimination.

When you're just opening the doors to your small business, you're probably thinking more about dollars and cents rather whether a patent or a trademark makes more sense. But considering your intellectual property may be your business's most valuable asset, protecting those ideas, images, and creations should be at the top of your entrepreneurial to-do list.

So if you're wondering where to get started in securing your intellectual property rights, here is some of our best IP advice for new small business owners, from our archives.

Businesses small and large are always engaged in the struggle of attracting top talent. While health insurance, foosball tables, and fancy automated coffee machines may please some of the employees some of the time, to attract and keep top talent, offering more fringe benefits is often key.

For employers seeking a more mature workforce, one of the most lucrative fringe benefits that can be provided is subsidized, or even on-site, daycare. Despite how much working parents like on-site daycare, there are a few significant drawbacks to providing the service to employees, outside of the high costs. Fortunately, there are alternatives that small businesses can pursue to enlarge the carrot at the end of a parent-employee's stick.

Doing business in the food service industry comes with certain risks. Along with the normal profit-loss and customer satisfaction worries that all small businesses face, restaurant owners also need to be concerned with their customers' safety -- and not just from food poisoning or slip-and-falls. With eating comes the risk of choking, along with the subsequent risk of lawsuits if someone is inured or killed choking on food at your restaurant.

But are you legally required to train your restaurant employees in first aid, CPR, or the Heimlich maneuver?

An argument over low-calorie beverage sweeteners might not appear to have an earth-shattering impact on intellectual property law. But when the legal arguments involve getting more patent lawsuits out of the tiny Texas district where almost all suits are brought by patent trolls, that's exactly what a case before the Supreme Court might do.

Last week, the Court heard arguments in TC Heartland LLC v. Kraft Foods Group Brands LLC, and a ruling may alter where future patent cases are filed.

After last year's fake account scandal that rocked Wells Fargo, the bank still seems to be suffering from a public perception nightmare as they have faced several employment lawsuits, including whistleblower retaliation claims. The most recent claim, brought by Robert Trojan, the fired CEO of the Consumer Finance Association, claims that the day after he put his concerns, regarding a conflict of interest, in writing, he was fired by a Wells Fargo executive.

While these allegations do not involve the fake account scandal, the claim involves more than just a retaliatory termination. In addition to being fired, Trojan claims that an email was circulated that harmed his reputation in the industry by suggesting his termination was related to misconduct or impropriety on his part. However, Trojan's lawsuit alleges that his termination was related to bringing the conflict of interest to light that an auditor was not independent because it had dealings with three unnamed CFA members.