Free Enterprise - The FindLaw Small Business Law Blog

October 2016 Archives

It's one of the scary things about freelancing -- how do you get paid? Without a regular contract and paycheck, getting compensated for your services, and on time at that, can be a struggle. And most freelancers don't have the money to fight a protracted legal battle just to get paid.

And these aren't small or isolated problems. A recent Freelancers Union report indicated the average freelancer had to wait 98 days to get paid, 71 percent of freelancers cited trouble collecting payment, and freelancers lost an average of almost $6,000 in unpaid income in 2014 alone.

Fortunately for New York City's freelancers, help is on the way.

Small business owners can drive themselves crazy worrying about injuries -- not only do you have to be concerned with customer injuries, but with employee injuries as well. Either one could cripple your business, logistically or financially.

So how can you get a little piece of mind? Here are some of our best small business safety tips, from our archives:

You've gotten everything you think you can get out of your current gig, and you're ready to strike out on your own. But if your new startup is in the same field as your old job, you may run into one or two legal hurdles first. Understandably, employers don't like competing against ex-employees, especially those who took some proprietary information or an intimate knowledge of the business with them.

There are a few ways that companies try to protect their secrets, and you might need to be wary of them before launching your startup.

Following the FTC's push last year, the Better Business Bureau just revised their advertising code to include new rules for native, promoted, and sponsored advertising content which has not-so-subtly taken over social media and the internet. The ads that the BBB are targeting with the newest regulations are those promoted or sponsored posts on sites like Facebook, Twitter, and Instagram that are designed to trick the viewer into thinking the content is not advertising.

The new rule goes a step further beyond simply regulating deceptive sponsored, or promoted ads, but also regulates content that isn't even specifically an advertisement. For instance, the new rule recommends including a short, clear statement that explains who sponsored, provided, or paid for any and all content to be posted for a business.

The holidays are right around the corner. Most small business owners, especially those in retail, depend on the holiday shopping season to meet their year-end goals. However, while a small business may have a solid team of workers for 11 months a year, the time from Thanksgiving to Christmas often requires adding seasonal or temporary workers to the team.

If your business is considering hiring seasonal or temporary workers, the following 5 tips will help you figure out what to do.

If you own a small business, you want the best of the best working for you. And most entrepreneurs don't care where someone is from, so long as they can make the business the best it can be. But if you're looking at hiring non-U.S. citizens, federal and state immigration statutes can make that fairly difficult.

Here's what small business owners need to know about immigration laws, from our archives:

Employee wellness is a good thing. Employee wellness programs can be a good thing, so encouraging employees to participate in employee wellness programs can be a good thing. But forcing employees to participate in employee wellness programs lest they be charged for their health care insurance? That can be a bad thing, especially when employee wellness programs require employees to submit a significant amount of personal medical details in the process.

In an effort to protect employees who'd rather not divulge that kind of information, AARP is suing the Equal Employment Opportunity Commission over the rules governing what employers can do regarding employee wellness programs.

This month, the Securities Exchange Commission (SEC) fined Forcerank, makers of a fantasy stock market trading game, $50K in connection with their game. The fine was specifically for failing to file a registration statement and also for failing to sell their contracts through the national securities exchange. While Forcerank's game was offered as a game, the SEC explained that the offering of a financial reward and entry fee for games where players are essentially playing the stock market invokes various federal laws put in place to protect investors.

Forcerank's mobile phone games asked players to predict the performance of ten different securities. Forcerank kept 10 percent of all entry fees. Players were rewarded with points and some even won cash. Forcerank was also hoping to collect data about market expectations that could be sold to other investment firms.

As an employer, you should know that you can be held responsible for your employees' acts, and you should know that liability can extend to car accidents. But what if your employee was distracted at the time? What if they were texting or taking a phone call? Would it matter whether or not that call or text was work-related?

Here's how distracted driving laws could affect employer liability in the event of a car accident.

Venture capital funding for new drone startups is no longer on the rise. Despite the fact that the new FAA regulations that went into effect this past August provide certainty for companies looking to utilize drones, since the regulations were announced, drone startups have received less and less funding. Shockingly, from the second to third quarter this year, drone funding plummeted by by half.

According to MarketWatch, funding for drone companies has fallen by 59 percent since last year. In the second quarter of this year, $106 million was invested in 13 different deals. However, in the third quarter of this year, there was only $55 million invested into 8 different deals. For the companies that make drones, especially ones that are just starting up, this news is frightening.

It's never easy going into business for yourself, by yourself. But at the same time, it's never been easier. On the one hand, it's up to you to create the business plan, do market and competitor research, incorporate your business, secure funding, and handle the day-to-day business decisions. On the other hand, there are more free, online resources for taking care of all that than ever before.

But just because you can go solo as an entrepreneur, doesn't mean you necessarily should. Here are a few things to consider before becoming a "solopreneur."

The term 'due diligence' is something that most business owners should be familiar with. But the concept of 'human rights due diligence' is often overlooked. Quite simply, businesses need to be aware of possible human rights violations in order to avoid facing backlash from customers. For example, think about the clothing industry: major brands face pressures from consumers to not only keep their prices reasonable, but to also produce their products without using sweatshops.

Human rights due diligence requires businesses to look at the impact they have on the human rights of their employees, consumers, and everyone in their supply chain. While factory workers assembling a product in the US may have good jobs, benefits, and a decent standard of living, the lives of the overseas workers on the supply-chain might be living in poverty. Even if your business does not employ workers overseas, if your suppliers do, consumers may not see a difference.

Chances are, when you started your small business you couldn't have known just how many transactions would require contracts. And you certainly didn't get into business to read fine print all day. Still, certain contracts -- and even specific clauses -- can make or break your small business, so you need to know what you're doing.

No one can become a contract expert overnight, but there are some red flags to look out for when signing certain business contracts. Here are three of the biggest:

Being an entrepreneur or running a small business means that you have to wear many hats. One of the most important is the marketing and advertising hat. Making sure your potential customers know that you exist and know what you do is essential for any business that wants to survive.

So after you've done your research on how to reach your target market and you've selected the type of advertisement you want to run (print, internet, radio, etc.), you have to design your advertisement's content. Will you just let people know you exist? Are you going to offer a special promotion? Or, are you going to tell everyone why your competition's product is inferior? Regardless of what you say, you should make sure you know the limitations on what you can and can't say in advertising.

Below are 5 frequently asked questions from small business owners about advertising.

You founded your company around one great idea, and you want to protect it. Or that one great idea has led to a lot more great ideas and you need to protect those. And if your great idea is a new invention, product, or process, you're probably going to need a patent to protect it.

Unfortunately, patent law can be especially confusing, even for the experts. Here are five questions small businesses face when it comes to patents, and where you can find answers:

Last week, a federal judge in Northern California granted the motion to conditionally certify the class action case against Google for allegedly committing age discrimination against applicants. The lawsuit claims that programmers over the age of 40 were discriminated against in the application process at Google.

The judge's ruling means that the lawsuit can proceed to the next stage in the class action process of sending out notifications to potential class members. Google will likely be required to provide the contact information for anyone that fits within the case's definition for class members.

Just about every office has a dress code, whether it's as stringent as 'business professional only' or as lax as 'no flip-flops, please.' And while we might have minor quibbles with office attire requirements here and there, sometimes they seem downright unreasonable and down take into account an employee's special circumstances.

You might think that cancer is one of those special circumstances where employers might relax their dress code standards, but not all bosses are that reasonable. And some of them, apparently, are trying to force cancer patients who've undergone chemotherapy to wear wigs at work. Is that even legal?

Selling to big businesses can be intimidating for entrepreneurs and small businesses. Although making a deal with a big company can often be the key to success for small companies, it can also lead to the end if your small business can't meet or afford to produce for the big business demand.

After getting the deal done, scaling the business is frequently a substantial hurdle small businesses face. The following 5 legal tips will help your small business make that sale and deliver.

This isn't your parents' employer-employee relationship. In just the latest signal that what we consider the "workplace" is ever-evolving, a new survey of workers in the U.S. and five European countries found that 20 to 30 percent of the workforce engages in independent work. And not all of them are doing it by choice.

While some of us are happy to take on some side projects, others must cobble together enough independent work to make ends meet. Here's a closer look at the numbers, and what they could mean for your small business.

Married small business owners often overlook a common reason why some businesses fail: divorce. In most states, one spouse's small business can be considered a marital asset or marital property. When a couple divorces, assets need to be divided, and that small business can be a couple's largest asset. That's why it's important to make sure your business is divorce proof from the outset.

Fortunately, there are ways to protect a small business after a divorce has been filed. Nonetheless, it is a good idea to protect the business from division before divorce happens. To understand your situation, you first need to know if your business will be separate or community property.

If you forgot to divorce-proof your business before filing for divorce, your only option may be to give up other assets, such as the house, cars, or retirement accounts in order to maintain control of your business.

It's probably a question that was unthinkable just a few short years ago. But with more states legalizing recreational and medical marijuana (and a whole lot more with bud bills on the ballot), it may be time for small businesses to rethink their office pot policies.

Denver-based software company Flowhub and social media networks High There! and MassRoots have weed-friendly offices, allowing cannabis consumption on the clock. So is this trend just for weed industry startups in Denver? Or should you be letting your employees get high nine to five?

It happens all too often that when a small business owner wants to retire they realize that they have no exit strategy. Sometimes the lack of an exit strategy is due to the expectation that a child will take over running the business. Unfortunately, what often gets overlooked is that not having an exit strategy can leave that child in a situation where much of the business is lost.

The sooner a small business owner recognizes the need for an exit plan (aka a succession plan), especially if that plan is simply to transfer the business to their kids rather than sell it off, the better off the business will be. The following checklist, while broad, should help small business owners plan their exit and transfer the business to their kid(s).

One NYC pharmacy has intentionally decided to discriminate against their male customers in order to raise awareness for gender price discrimination. If you had to re-read that, it is understandable as the logic is baffling. The pharmacy instituted a policy whereby men must pay a 7 percent tax, while women do not have to pay the tax. The owner of the store claims that the tax on men represents the average, lower price on products marketed to men.

In what could have just been a cute ploy to get shoppers through the doors, or to get the public to even discuss the shop's very existence, instead the store has actually followed through on violating the civil rights of half their customer base. Although the store claims their actions are not discrimination, because in practice men are just paying what would have normally been charged and women are receiving a 7 percent discount, the store owner's explanation still describes a textbook example of gender discrimination.

Hurricane Matthew recently brought natural disaster insurance issues to many a small business's doorstep. Stores, shops, and service providers were faced with wind and flood damage, as well as a loss of business following the storm. And for some who turned to their insurance carriers for coverage, they may have been surprised to find it wasn't covered under their policy.

Make sure your small business doesn't suffer the same fate -- ask these six questions, and make sure you have the answers.

Most entrepreneurs start and end their careers as a sole proprietor. However, the more successful ones eventually incorporate, and the most successful ones start, run, and sell, multiple businesses at the same time. For the serial entrepreneur, there is no one right way to go about structuring multiple businesses.

Sometimes a serial entrepreneur will have multiple businesses all focused in one industry. For instance, a surf shop owner may own the surf store, as well as make surf boards, bikinis, offer surf lessons, sponsor a professional surf team, and make surfing videos. Apart from being one of the most motivated surfers to ever ride a wave, this serial entrepreneur would really benefit knowing the different kinds of corporate structures and how to structure multiple businesses.

Data and security breaches have become so common they're almost considered the cost of doing business these days. Even the most careful businesses may not be able to prevent a breach that compromises customers' private information. And as embarrassing as a data breach may be, it can be particularly harmful to customers if their information falls into the wrong hands.

Unless you're doing business solely in Alabama, New Mexico, or South Dakota, you're legally required to notify customers about a security breach, and you may need to take steps to mitigate or remediate injuries caused by the breach. But state laws can differ on the definition of applicable breaches, the level of harm that necessitates notice, and the notice required, among other things. Here's a look.

There's not much upon which nearly all business owners agree, but they are fairly unified in denouncing patent trolls. You know, a shadowy company that's only in the business of litigation, snapping up patents on the cheap and, instead of producing something new or putting them to good use, are content with suing the pants off anyone making a similar product or using a similar technology.

And patent trolls aren't just a minor nuisance -- they can bankrupt startups and small businesses, and stifle innovation before it can get started. While several anti-troll statutes have stalled in Congress, the Federal Trade Commission hopes that new proposals will reduce nuisance infringement litigation. But will it work?

More information is being discovered in relation to Wells Fargo's recent scandal, showing that nearly 10,000 small businesses were also victims of the banking giant's illegal and corrupt up-selling practices. Despite CEO John Stumpf claiming ignorance as to whether small businesses were affected when he testified before the House Financial Services Committee, Senator David Vitter has discovered that thousands of small businesses have been affected by the fraudulent practices.

It may not be much of a relief, nor will most believe Wells Fargo, but the bank claims that the small business customers that were affected were included in the original count of the consumer retail accounts that were affected. However, the Consumer Financial Protection Board directly contradicted Wells Fargo statement on this issue, stating that the 2 million accounts already identified didn't include small business accounts.

The impact of Hurricane Matthew in Florida wasn't as severe as expected, but that's not to say everyone escaped unscathed, and there might be more to come as the storm circles back in the Atlantic. And small businesses can feel a double impact of the storm -- initial property damage coupled with a downturn in business afterwards.

If you're a Florida small business, here's some guidance on handling property insurance claims and a loss of business following Hurricane Matthew.

Amazon customers have become accustomed to prompt deliveries, but it may come at the cost of knowing that Amazon is being sued by its delivery drivers for labor violations. The same attorney that reached a $100 million settlement against Uber on behalf of its drivers is now the champion for drivers in Amazon's Flex program.

Like Uber, Amazon Flex allows drivers to sign up via an app, work the hours they want to work, and use their own device and vehicle. The primary difference is that Uber drivers transport people while Amazon Flex drivers deliver Amazon's packages to people.

If your business manufacturers a product, you may need to consider purchasing product recall insurance. Just like it sounds, product recall insurance protects your company if a recall is issued for one of your products. Policies are available for both first-party and third-party coverage.

While nearly all manufacturers know that product liability insurance is essential, product recall insurance is often overlooked. Product liability insurance will cover losses sustained as a result of injuries or damages caused by a recalled product, but what about when a product is recalled without having caused injuries or damages? Also, what about the losses sustained by the company because of the recall, including shipping costs, costs to remediate, and the costs for public and media relations?

Whether it's the grind of your 9-to-5 or the allure of making it on your own, you may be considering taking your talents on the road as a freelancer. The good news is that it's probably easier than ever to find a freelancing gig; the bad news is that it can still be hard to make a living freelancing. Remember, you'll be in charge of everything, from client acquisition and retention to production to contracts.

Here are some legal issues to consider when pondering the leap from employee to freelancer.

We're guessing you didn't go into business to get buried in paperwork. You may be thinking that a bunch of legalese will only bog your startup down, but the right set of contracts will serve to clarify things down the road. And putting the work in early will only mean a clearer path to success ahead.

Clear and concise contracts can be the difference between smooth sailing and a storm of litigation, so here are five tips regarding startup contracts, from our archives:

California is paving a new way for employers to help with the retirement crisis using the new California Secure Choice Retirement Plan. This is a state sponsored retirement account for the employees of small businesses that traditionally could not afford to provide employees with a retirement plan. The plan, which Governor Jerry Brown has signed into law, will allow millions of Californians to start saving toward their retirement. If others states follow California's lead, Fortune notes, this type of plan could help alleviate the retirement crisis in the US.

The California program provides access for private sector employees of small businesses (with 5 or more employees) with the opportunity to participate in low-risk, low cost, portable retirement saving and investment plans. The program also requires that employers provide automatic enrollment, as well as direct payroll deductions.

The most iconic record store in Berkeley, California, Amoeba Records, is in the process of renovating their store to provide an independent medical marijuana dispensary with a storefront shop in what used to be their jazz section. Citing the decline in record sales over the past decade, the store's owners hope that the pot dispensary will provide the necessary capital needed to keep the record store's doors open.

Having just celebrated their 25th anniversary, Amoeba Records has been approved by the City of Berkeley's City Council to be one of the city's half-dozen medical marijuana dispensaries. The San Francisco Amoeba Records store has had a medical marijuana evaluations clinic operating independently in a separate space located within the store since 2014.

This year, President Obama issued an executive order preventing businesses that are awarded federal contracts from retaliating against employees who discuss their wages with each other. Prior to this executive order prohibiting retaliation for employees being transparent regarding their pay, an employer (that has more than $10,000 in annual federal contract work) could prohibit employees from discussing their wages with each other.

The issue of pay transparency is somewhat controversial and not everyone agrees that it is the best method of closing the gender wage gap. Under the new rule, employees may share information about how much they make, and if they learn how much others make, they can disclose and discuss that too (so long as that information is not provided as part of their job function). The purpose of this new rule is to allow employees of medium to large sized federal contractors to close the gender pay gap through transparency.