Free Enterprise - The FindLaw Small Business Law Blog

June 2017 Archives

When it comes to information security, many small businesses think they have nothing to worry about, or may not think they have information worth stealing. Who would even bother to wiretap your small business anyway?

However, small to mid size businesses are among the most frequent targets for cyber attacks and corporate espionage. While your data may not be valuable to others, ransomeware attacks may force you to decide how valuable your data is to your own business. Client lists, sales data, and other intellectual property may have value to your competitors or wrongdoers that you just don't anticipate.

A senseless act of violence, and tragedy, has resulted in a lawsuit against retail giant Walmart. In May 2017, the murder of Grant Nelson, an Uber driver, by 16-year-old Eliza Wasni, sparked national headlines for the utter depravity of the allegations.

The lawsuit against Walmart alleges that the store was negligent in allowing the 16-year-old Wasni to walk out of the store with a stolen Machete and a stolen hunting knife. The civil wrongful death case alleges that Walmart's security guards allowed Wasni to just walk right out of the store.

When summer comes around, businesses with outdoor areas, like patio dining, sidewalk shopping, or children's play areas, need to make sure that those areas are safe for both customers and employees.

Just like an injury that happens inside a business, liability can extend to an injury that occurs on a business's outdoor property. Also, employees can suffer work related injuries, and file workers' compensation claims, for injuries that occur due to working outdoors.

Below, are tips on how to avoid claims against your business due to injuries at your business's seasonal outdoor areas.

Ever wonder why buffets are such a good deal? Well, in the case of four Bay Area Chinese buffet restaurants -- Golden Dragon Buffet in Brentwood, New Dragon Buffet in San Leandro, Golden Wok Buffet in Roseville, and Kokyo Sushi Buffet in Hayward -- they could afford to keep their prices down because they were paying workers less than $6 an hour and forcing them to work 12-hour shifts with no overtime. Oh, and they were also cheating on their taxes.

Now three of the chain's operators are heading to jail, must pay back $4.5 million to their workers, and owe the state of California $1.5 million in back taxes.

Any time states move from marijuana criminalization to legalization, there are a multitude of legal issues to work out first. Not the least of which are: who can buy, who can sell, and how much. But some of the smaller questions turn out to be the hardest to answer. Like, who can transport the marijuana from production facilities to retail stores?

When Nevada legalized it last year, they thought they were doing the simple thing by requiring recreational marijuana to be regulated the same way as alcohol products in the state. But does that mean that Nevada's wholesale alcohol distributors are the only ones that can move pot from cultivation to customer? For now, yes.

It's officially summer, when many of us are heading out of the office and onto a lake, river, or ocean to partake in our favorite relaxing pastime. And while a little fishing can be good for the soul, a little phishing can be bad for business.

Cyber attacks using familiar looking domain names or email addresses or formats can be both difficult to detect and destructive to your company's data and security. So here's how to spot a phishing attack -- and not fall for the bait -- from our archives.

Starting a business is no simple task. It takes money, planning, time, effort, more money, fine tuning, and gumption. Unfortunately, business owners can let all that they've worked to accomplish be put at risk if they're not ready to withstand, fight, and pay for lawsuits.

Whether it's a contract dispute from a vendor, a customer slip and fall, or a wrongful termination case, being on the receiving end of a lawsuit can be a nightmare. However, if a business is properly insured and ready to manage their public image, even unwinnable lawsuits can be weathered with minimal disruption to revenues and profits.

As a general rule, non-compete agreements and clauses in employment contracts are difficult to enforce. First they must be narrowly tailored enough to be valid, and many courts are loathe to tell people where they can and cannot work. That is especially true in California in general and Silicon Valley in particular, where, as GeekWire notes, "non-compete agreements have long been considered unenforceable."

Not so farther north in Washington State, where Amazon was able to obtain a temporary restraining order against a former executive in its Web Services division, barring him from working from a company the retail monolith contends is a competitor. But that company, and the exec currently in legal limbo, claim Amazon has stretched the definition of competitor too far, to even include a customer company.

For bosses and employers, every spring and summer and holiday season, it's the same old thing. Employees either have children in school, or don't want to let go of their school years. It's that time of year when all your employees are vying for the same vacation time.

Unfortunately, there are going to be times when an employer is going to have to deny a vacation request. This can often be difficult as employees can truly be upset when they are denied the ability to use their accrued vacation time.

Here are three tips to help you deny an employee's vacation request:

You've got your brand new small business idea -- you just need a place to launch. And finding the perfect space for your venture can be a complex equation of location, decor, amenities, and square footage. Finding the right landlord and lease is also essential, and, unfortunately for startups, landlords might be a little more hesitant to rent to businesses with little track record, or they may ask for additional clauses to ensure they get their rent.

One of those is a personal guarantee, which more and more commercial landlords are insisting upon from tenants. So how does it work? And can you get out of one?

Renee Rayton, a former sheriff's deputy and marijuana regulation compliance officer from Pitkin County, in Colorado, was recently indicted in an extensive interstate marijuana trafficking ring. Rayton's indictment, along with three others, issued June 7, raised the number of individuals charged in connection with the operation to 20.

Rayton was hired by Scott Pack to provide legal compliance consulting for his marijuana businesses. While there wouldn't seem to be a problem with a marijuana entrepreneur seeking legal compliance consulting, Rayton was subject to a law that requires industry regulators to wait six months between leaving a regulatory position for a job in the industry they were regulating. She was reportedly paid $8,000 per month for six months.

The First Amendment provides strong protections to protesters that express their views in public. However, when a protester's actions go beyond free expression in public, businesses can face unintended, and sometimes intended, casualties. And while there may be legal remedies, sometimes enforcing those remedies will be impossible.

For example, if a protester throws a brick through a shop's window, the individual protester can be held both criminally and civilly liable. The First Amendment does not protect against violent or destructive acts against other people's, or the public's, property. Businesses are often faced with the uncomfortable decision of pursuing an individual protester or the protest organizers for compensation, filing an insurance claim, or just eating the costs.

Last week, former U.S. Attorney Eric Holder shared detailed findings of his investigation into sexual harassment claims at Uber with a subcommittee of the company's board of directors. While the results of that investigation are unlikely to be made public, the fallout can't be kept a secret.

On Tuesday of last week Uber fired more than 20 people in response to multiple probes into the company's corporate culture and conduct, and this morning the company confirmed its second-most powerful executive, Emil Michael, is out as senior VP of business. And, considering neither investigation is over, more changes could be upcoming.

Chipotle is facing a lawsuit that no business was expecting. A Chipotle "apprentice," or assistant manager in training, from New Jersey, has filed a lawsuit claiming the company failed to comply with the Department of Labor's new overtime rule.

If you're a bit confused, you are not alone. The DOL's new overtime rule was temporarily blocked by a federal judge in Texas last November, before the law ever went into effect. The block is only temporary until the case gets finally resolved, or the DOL changes the rule. However, the NJ Chipotle apprentice is asserting that the Texas judge's ruling does not apply to private employers. As such, he is seeking to not only seeking to recover damages for himself, the lawsuit is seeking class action status to recover all Chipotle employees' unpaid overtime that would have been paid under the new rules.

'This is not Alabama in the 1940's,' said Tishay Wright in a news release regarding a racial discrimination lawsuit she filed against her ex-employer, Southland Construction. 'No one should be treated this way in America in the year 2017.'

The treatment to which she referred included racist comments from company owners Kenneth and Anita Hayden, culminating in a Confederate flag-bedazzled purse as a Christmas gift, along with photos of the pair dressed as Donald Trump and a supporter, complete with a Confederate flag draped over Wright's desk. "This country is going backwards and it has to stop," Wright said.

Giving to charity might be among the last things a business person expects to land them in legal trouble. However, depending on how a business goes about making those charitable contributions, and eventual tax deductions, there could be serious legal consequences (including jail time).

For starters, not all charitable contributions are going to be deductible. While that shouldn't stop your business from contributing, you may want to think twice about to whom your business contributes. Also, when businesses offer incentives to employees, or inducements to customers, to donate, there are additional hurdles and considerations.

Here are three legal tips to help with your business's charitable giving.

Chances are, you opened your small business because you believe you can do it better than anyone else. And better usually means differently. Maybe you have a unique take on an old concept, you've figured out a more efficient means of production or delivery, or you invented something completely brand new. Either way, doing the same thing as your competition might be the furthest thing from your business plan.

Which is why you might've also raised an eyebrow at a recent Entrepreneur article encouraging business owners to start copying their competitors. It turns out the magazine is not telling you to plagiarize or steal marketing plans, and the article has some worthwhile advice. So we decided to build on it, with a legal spin. So here's how to copy your competitors, legally.

When it comes to urban businesses, the fight to provide customer parking is often fraught with local, state, and federal restrictions and requirements, not to mention local politics. However, businesses can learn a lesson from a small business in Albuquerque that ignored the permitting process and just painted the curb in front of their door to designate a loading zone.

In most locales, there are specific rules and regulations as to when a curb can be painted to designate a specific type of parking, or prohibition against parking. Red curbs mean no parking, yellow curbs are for loading zones, and white curbs are for valets or passenger pickup and drop off.

The summer wedding season is here, and whether you're a photographer, musician, florist, or chef, it's time to cash in. Weddings and wedding services can be a unique business opportunity, and at the same time they can provide some unique legal challenges to vendors.

So here are three tips on keeping it fun, profitable, and legal this wedding season.

Adidas, the sportswear and athletic shoe company, is on the receiving end of a trademark infringement lawsuit filed by the organizers of the popular annual art show, Art Basel. The lawsuit alleges that the shoe company manufactured a limited edition shoe that had the trademarked phrase "Art Basel" printed directly on the shoe's tongue.

While many Art Basel fans found these limited edition sneakers to be highly desirable, Art Basel contends that Adidas did not have permission to use the trademark. The shoes that were distributed for free by Adidas, however, quickly found their way onto online marketplaces and were selling for hundreds of dollars. Additionally, Adidas mobilized marketers to report on the limited edition shoes at the event.

Points are a great way to keep score in an athletic contest. Law enforcement also likes to use them to track traffic offenses on your driver's license. But issuing points for work absences, especially those due to illness or medical emergency? Not so great, and possibly illegal.

Walmart has an extensive and infamous point system tied to employee attendance, and a new report from a workers' advocacy group says the company is unlawfully using the system to punish workers for medical absences.

After former engineer Susan Fowler published a blog post detailing numerous instances of sexual discrimination and harassment during her time at Uber, the company knew it had to get the investigation and response right. So it turned to the man who was once America's former top prosecutor, former U.S. attorney general Eric Holder and Tammy Albarran, his partner at the Covington & Burling law firm.

Axios is reporting that Holder has completed his investigation and the results could be presented to Uber's top brass sometime this week. So what did Holder find? And will his findings be made public?

Lexmark International is a worldwide laser printer and imaging company with over $3.7 billion in annual revenue. Impression Products, on the other hand, has 25 employees and less than $15 million in annual sales. Yet this small business David took a Goliath to the Supreme Court, and won.

In what could be a big win for small businesses nationwide, the Court held that subsequently purchasing an already-sold and patented item does not violate patent law. And just like that, a seemingly esoteric corner of intellectual property law could mean millions for consumers and small businesses.

The California legislature has passed a bill that would expand parental leave laws in the state to cover more small to midsize businesses. Currently, the laws requiring parental leave only apply to employers with 50 or more employees. This bill, if approved by Governor Jerry Brown, would require employers of 20 to 50 employees to also offer parental leave.

Proponents of the new law are hopeful that Governor Brown has changed his tune, as last year he vetoed a similar bill in the interest of protecting small businesses. While small businesses are likely to feel the costs the worst, the expansion to businesses as small as 20 employees would provide nearly 3 million more Californians with the option to take parental leave.

Your small business debts have outgrown your ability to operate, but you’re not ready to call it quits on your entrepreneurial dream. So before debt collection turns into a nightmare, you might consider Chapter 13 bankruptcy.

As opposed to other forms of bankruptcy, Chapter 13 may allow you to repay and discharge your debts over time, avoiding a liquidation of business assets and possibly allowing your small business to remain open. So how long does repayment last? And when will the debts be discharged under Chapter 13?