Free Enterprise - The FindLaw Small Business Law Blog

March 2016 Archives

5 Legal Tips for Startups Seeking Venture Capital

You have a great startup idea and you are hoping to get funding from venture capitalists. To do so you will need to know in advance the kind of questions they will ask and how to communicate your big idea, formulating everything from an elevator pitch to a detailed analysis of the market.

In an effort to anticipate all the questions you may face when seeking venture capital, Forbes put together a list. It has 65 questions, some as basic as "where are you headquartered?" For our purposes, however, we'll focus on five critical areas and the legal issues you must be aware of when seeking investment.

Bank of America is paying $14 million to settle a class action lawsuit accusing the bank's Merrill Lynch unit of overworking and underpaying trainees. According to the lawsuit, trainees in Merrill's Practice Management Development program were forced to work 60 hours per week or more, including weekends, without being paid overtime.

Although the settlement only comes out to about $1,000 for each of the roughly 9,500 plaintiffs after legal fees, the settlement could teach business owners small and large about the perils of violating labor laws.

As a small business owner, you want to focus on making your product or service the best it can possibly be, and getting all the clients or customers you can. And what you may be overlooking is your legal liability to those customers and clients as well as to your staff.

As an employer, you could be responsible for a whole range of harms, from office pranks to car accidents. So how do you limit your employer liability and protect your business at the same time?

ADA Accessibility Lawsuits Target Hotels

In recent years, hotels in particular have felt the pain of failing to comply with standards outlined by the Americans with Disabilities Act (ADA). Access to public accommodations lawsuits are filed under ADA Title III, and reportedly, they are increasingly targeting hotels.

But almost all private businesses that provide goods or services to the public must follow the law, and businesses of almost all sizes fall under the ADA. So let's take a look at how hotels have been hit, so you can ensure your business is compliant and you don't find yourself targeted.

There are a lot of ways for startups and small businesses to raise capital, and most of them involve going to a large number of possible investors and asking for money. Modern technology has made this even easier, and modern securities laws have made it possible for small companies to raise up to $1 million from small investors without the expense of becoming a publicly traded company.

This crowdfunding functions a bit differently that your standard Kickstarter or GoFundMe project, and if you want to avoid SEC sanctions or lawsuits, you have to be a bit more careful about how you plan and advertise your crowdfunding campaign.

As a small business owner, you've already got to worry about everything from inventory and advertising to hiring and firing. And now that Obamacare is in full effect, that's just one more pan in your ever-more-crowded fire. Two provisions of the Affordable Care Act (ACA) only apply if you're an "applicable large employers" (ALE). So how do you determine if you're an ALE? And how do you comply with the ACA if you are?

ACA deadlines are fast-approaching (the 2015 Form 1095-C, Employer Provided Health Insurance Offer and Coverage, is due March 31), the mandatory IRS forms can be complicated, and the information required is extensive. So if your small business has more than 50 full-time employees, you've got a lot of questions to answer. Luckily, you don't have to answer them alone: a new special report from Thomson Reuters Checkpoint can help. (Disclaimer, Thomson Reuters is the parent company of FindLaw.)

Harvard Profs Urge MBAs to Buy Businesses

You earned a Master of Business Administration, but are you really ready to master a business? If you do not have to urgently earn a living and have capital to invest, searching for a small business to head up is a good idea for graduates, according to the Harvard Business Review.

An article by two Harvard Business School professors analyzes student post-graduate decisions and long-term work stability, suggesting that taking a job may pay off short-term but in the long run buying a business may be a better choice. Let's look at the reasoning.

A Fifth of Workers Would Sell Business Passwords, Per Study

A new study says that one in five employees would sell their work passwords, and of those nearly half would do so for a meager $1,000 or less. According to the survey of 1,000 office workers in private organizations of various sizes, conducted by the security company SailPoint, workers are "the weakest link when it comes to security."

Although this survey should be taken with a grain of salt -- the sample size is limited and the sponsor has an interest in heightening security fears -- let's take a look at what was found, as reported by Market Watch.

Square and Facebook Team up on Ads Data for Business

Data is worth its weight in gold now, or so we believe, which is why a partnership between Facebook and the digital cash register Square is making waves. The union between the two tech companies is intended to enable small businesses who use Square software to buy Facebook ads to access much data, thus closing the information loop between ads and sales.

"That's the holy grail," according to Saumil Mehta, Square's customer engagement lead, who spoke to The New York Times. "There's a lot of excitement around buying Facebook ads, but the critical missing link is: If I put down $5, how do I know if it worked?"

Chipotle's Social Media Policy Found Illegal

Corporations want engagement from their customers on social media. But they don't want labor complaining about them or their policies online. Doing that got one worker at Chipotle fired and now has the fast-food chain in the spotlight yet again.

An administrative law judge in Pennsylvania has ordered Chipotle to pay James Kennedy for lost wages, offer to rehire him, and to change and clarify its social media rules, according to the Associated Press. What does that mean for the rest of us?

Whether part of the new gig economy or the fulfillment of a lifelong dream, you've made it: you are your own boss. And with the great power of self-employment, comes the even greater responsibility of handling everything from taxes and insurance to retirement plans and lawsuits.

So how do you know which issues you'll need to tackle and how to tackle them? Here's a quick list of the five best legal tips if you're self-employed:

Legal Loopholes: 5 Tax Tips for Small Businesses

Being in business was always your dream. Now you are doing it and it's hard. Are there things you can do to hang on to some of that money you labored to earn when tax season comes?

Yes, there are. Let's take a look at five legal loopholes suggested by Incredibly, a small business capital management site. These tips will help you make the most of the money you do make, and give you an idea of options to talk about with a lawyer.

How to Legally Limit Worker Cyberloafing

Cyberloafing is the new word for procrastination and distraction at work. Surfing the web is the way we waste precious minutes of the day when we're paid to labor. The practice reportedly costs national businesses tens of billions of dollars annually.

Understandably, companies are interested in programs that can curb their workers' enthusiasm for the web's many temptations without impinging on the online activities necessary to the business. There are different ways to approach the problem and to block employee access and track activities.

Every successful small business needs a supply chain and relies heavily on having the right vendors and the right relationships with those vendors. So how do you stay on good terms with the businesses that keep you in business?

By creating and maintaining open lines of communication, sharing customers' expectations and future goals, and, most of all, avoiding a few common legal pitfalls. Here are some best practices for keep your vendor relationships health, productive, and legal.

Why Even a Small Business Needs an HR Department

You have a small business and you would like to see it grow. When you think of growth, however, and the direction you want to take, it does not include hiring a human resources manager or team.

But an article in Slate says that, in fact, HR is exactly what you need. Why? Mainly for regulatory compliance issues, but also to recruit talent. Let's take a look at what HR can do for you.

5 Legal Tips for Starting a Business

So you are thinking of starting a business and you have some ideas about what might work and inspire investment. But you are not quite sure how to go about starting up your startup, or even where to begin researching all the relevant legal issues. What do you do?

Start here. This list of tips on initial business steps should help get you started on creating a business that is legal and successful.

5 Tips to Protect Your Business From Crime

You try not to worry too much about crime. After all, positive thinking proponents suggest that whatever you worry about manifests. Still, you need to put some processes in place to protect your business from crime.

Here are some tips on simple systems, inspired by a Startup Donut list, that you can implement to make your business safe, inside and out. With these in place, you'll have more time to focus on good things, like growth.

Are you really in business if you're not online? While some small business websites are extensions of a brick and mortar shop, others represent a company's entire occupation. And all are catering to a connected customer base.

Whatever your Internet presence, navigating online advertising, sales, social media, and cybersecurity can be a daunting task for any small business owner. Here are a few legal tips to help your online business:

Etsy Fights Gender Bias With New Parental Leave Policy

In order for parents and children to bond, they need time together, especially in the child's early stages of life. With that in mind, Etsy has joined other employers in instituting a family leave policy that applies to mothers and fathers equally and is generous by American employment standards.

The move may have been influenced by the personal experiences of the company CEO, Chad Dickerson, who in 2014 adopted a child and spoke publicly about his leave. He reportedly took full advantage of the then-existing policy for parents, reports Fast Company. But Etsy is not the only company adopting a gender neutral and generous policy, nor the first.

Ex-CEO of Tulsa BBB Gets 37 Months Prison for $1.8M Fraud

You can't judge a book by its cover and you can't judge a person by their titles. Former Oklahoma Senator and Tulsa Better Business Bureau CEO, Rick Brinkley, is going to prison for fraud and tax evasion.

Accused of stealing $1.8 million from the BBB, Brinkley must turn himself in on April Fools Day, ironically, to serve a 37-month sentence resulting from his guilty plea last summer. He was sentenced last week and the hearing was revealing, according to Oklahoma's News on 6.

As a small business owner, you know that tax season is here. As a smart business owner, you know it's always better to have a plan. So what's your tax plan this year? Or next?

Here's why tax planning is so important for small businesses, and a few items to add to your small business's tax plan.

Lessons From Volkswagen: Don't Fire Whistleblowers

We like to think that we don't punish people for being ethical and honest. But it happens. That is one reason why whistleblower laws exist. They protect people who speak truth to power at great personal risk ... and if you are ever tempted to fire one of your employees for calling attention to wrongdoing in your business, think again.

Those "troublemaker" types not only do the right thing when they speak out about wrongs, they can sue you for firing them. The case of a Volkswagen employee, just filed in Michigan state court and reported by Courthouse News Service, illustrates this well.

4 Writing Tips for Your Business Blog

You blog and know that content is the biggest buzzword in marketing, followed by storytelling. But you aren't a marketing expert and it's not always obvious to you what kind of topics to post about on your business blog.

You need a to-do and not-to-do-list. So, here are four tips, adapted from a list by the marketing group Adhere, that will minimize your anxiety and customer alienation, and maximize your business's web presence.

Your small business is expanding. And not just down the block -- you're eyeing overseas customers via online sales. Growing your customer base is always a good idea, but advertising, selling, and shipping to multiple international jurisdictions can carry its own legal complications.

Do these foreign countries have different advertising laws? How are you and your customers taxed? And how much is it going to cost to get your products to your new customers? Here are a few tips for selling to international customers online.

Unpaid internships are a fact of small business life. And for startups just getting off the ground, interns can be an incredibly valuable resource. Unfortunately, they can also be an incredible legal headache, costing you more in court than you would've spent on paid employees.

But it doesn't have to be that way. Here are five ways to avoid legal trouble if your startup is hiring unpaid interns:

Should a Small Business Hire a Big Law Firm?

You are going into business and you know you need some stuff -- computers, a printer, maybe an office, definitely a website, and possibly some employees. Do you also need an attorney? And if so, how do you know whether to go with a big fancy firm or a small law office or even a solo practitioner?

Much depends on what you are doing, your business, and what you hope to achieve. But there are some general principles to keep in mind when deciding whether to go big or go small. And you may find that going small serves more purposes than just saving money.

How Justice Scalia's Death Impacts Your Business

The legal community is still adjusting to the reality that Supreme Court Justice Antonin Scalia died last month. His absence leaves the outcome of many cases more difficult to predict than before. Let's look at how the high court influences your small business and a few cases that illustrate this.

When we think of Supreme Court cases, we generally think of civil rights, most likely, and not matters that impact small businesses on a daily basis. But actually as workers or employers we're impacted by a wide range of matters awaiting resolution by the nation's highest court.

Sure, there's nothing like a friendly face to represent your small business. But between salary, benefits, taxes, interviewing, training, and firing or replacing, that friendly face can get expensive. So why not replace all your friendly faces with the latest smartphones?

One Swedish entrepreneur is way ahead of you. Robert Ilijason has opened the country's first unstaffed, no-cash convenience store, a revelation for penny-pinching business owners looking to cut down on their HR overhead.

Current estimates value the health app market at around $10 billion. Everyone wants to get in shape, and they want easy access to their health data to help boost their fitness and wellbeing. The trick is giving them access to that data, and storing it, without violating medical privacy laws.

Faced with the uncertainty of whether federal statutes like HIPAA apply to health tracking apps, the Department of Health and Human Services released new guidance to developers and vendors to make sure their health apps are HIPAA-compliant. Here's what you need to know:

Small Business Truth-in-Ads Tips

You're bombarded with ads every day, so you know they can be annoying and even put you off a product entirely. Yet you too are in business and must promote, so you're tempted to create an ad campaign that makes claims you can't back with facts. Don't, and here's why.

The Federal Trade Commission (FTC) regulates advertising to ensure its truth. There are also state consumer protection laws that dictate what claims advertisers can make, as well as rules specific to certain media or industries. All regulators look at the whole of an ad, depending on where it is placed -- context, not just text. So let's explore the elusive concept of truth as broken down by the FTC.

4 Tips to Avoid a Lawsuit Over Your Business Website

You created a business website to attract customers, present your products, and increase engagement on the Internet. Your site looks slick and you are pretty happy with it. But do you have your bases covered? Make sure that you don't end up with a lawsuit on your hands by following these four guidelines.

Ah, Spring: the return of sunshine, flowers, and the office March Madness pool. By now, those carefully inked brackets and employees surreptitiously streaming games are as ubiquitous as conference calls and Reply Alls.

Like the inexorable passage of time, you may be powerless to eradicate March Madness pools from your office, but that doesn't mean they need to derail your company's productivity for an entire month. Here are the best ways for your office to handle March Madness this year.

Are You a Joint Employer?

You don't want full responsibility for your workers and so your business avails itself of one of the many schemes that exist to employ people without being their employer. This saves you money and headaches and it seems to be working out great. You don't pay for insurance or sick days, just labor.

The US Department of Labor (DOL), however, now understands that this is what American businesses are increasingly doing and is trying to ensure that workers don't end up laboring without any of the protections of employment. In January the agency issued guidance to employers to help them determine whether they are joint employers, and it's important to know this to ensure that you and your business stay within the law and do right by your workers.

Given the trouble some companies have gotten into with their employee performance reviews, it's fair to wonder whether they're going the way of the fax machine. And while some businesses are scrapping performance reviews altogether, others are trying to modify them to avoid employee lawsuits.

So if you're not ready to ditch your employee performance reviews just yet, at least make sure they aren't illegal, and hopefully won't get you sued.