Free Enterprise - The FindLaw Small Business Law Blog

May 2017 Archives

Maybe you're expanding and you want more space. Or maybe you found a better deal closer to customers or clients. Or maybe you just got stuck with a deadbeat landlord. Whatever the reason, your small business is looking to change locations. But there's just one problem -- your current lease isn't up yet.

You obviously don't want to pay rent on space you're not occupying, so how do you get out of your commercial lease early, without owing the remaining rent? There may be options.

Depending on what kind of business you are running and the depth of your business's attorney's expertise, it is rather likely that you'll need to hire more than one attorney. For most businesses, this is more a question of "when" than "if."

Whether or not you actually need to hire an attorney into your business, or just retain different kinds of attorneys will vary based on the size of your business, and the size of the task at hand. Most small businesses can make do with just one attorney in-house, or one outside attorney acting as general counsel. However, as the need arises, that in-house attorney, or outside general counsel, will need to bring in other attorneys to fill those needs.

Uber has long promised Big Apple drivers they can "cash in on the action" of ridesharing. And just months after settling a lawsuit over allegations of misleading claims about how much drivers could earn, Uber is now admitting it mischarged its drivers for years, to the tune of about $900 per driver.

And with some 50,000 drivers in New York City, that could mean Uber owes underpaid drivers around $45 million in back pay.

A Northern California farmer from Tehama County is facing a federal court action seeking nearly $3 million in fines. The federal case is part of the ongoing saga of John Duarte, who is alleged to have damaged federally protected wetlands when he plowed his own field in 2012.

The case alleges that Duarte failed to obtain the necessary permits required by the Clean Water Act from the Army Corps of Engineers. The permits were allegedly required because Duarte's land was near, and contained, "waters" owned by the US government. The case has drawn quite a bit of attention, not just for the fact that a farmer is being fined for working their own land, but also because the implications of a precedent setting ruling could have a significant impact on farmers nationwide.

Last month, an 18-year-old manager of a Texas Chipotle was arrested for placing a spy camera in the women's bathroom. Joanny Castillo was charged with invasive visual recording, but that wasn't the end for him or for the company.

A new lawsuit claims the location's general manager, along with Chipotle upper management, attempted to cover up the spying scandal, going so far as to direct another manager to get off the phone with police when she called to report the incident.

Even if your small business is filing for bankruptcy, there may still be some debts you'll need to repay. And who you'll need to repay -- and who you'll need to repay first -- will depend on how your creditors are classified. By the same token, if a client or customer is declaring bankruptcy, there's still a chance you'll get paid. And whether -- and when -- you'll get repaid will also depend on how your small business is classified as a creditor.

Therefore it's important to understand some bankruptcy terms from both sides of the coin. For instance, do you know which of your creditors are secured creditors in a bankruptcy? Do you know if you are one? Here's what you need to know.

Although nearly all employers, by now, know that discriminating against pregnant employees is illegal, some just don't know how to recognize when it is happening. Pregnancy discrimination occurs more often than most employers expect. Frequently, it is not borne out of any ill will, but rather just the implicit biases that have been ingrained in most of us since birth.

There's something natural about wanting to protect a pregnant person. However, employers need to exercise caution and common sense when it comes to offering support to pregnant workers. Below, you'll find the three most common forms of discrimination pregnant employees face.

Ecommerce can be amazing. With a few simple clicks, a small business can be online in minutes, selling products and services across the globe. However, when it comes to the relatively new area of online affiliate marketing, businesses need to beware of money laundering schemes that take advantage of these programs.

Affiliate marketing programs incentivize third parties to market the affiliated business for a fee. Some affiliate programs will actually pay third parties percentages as high as 50 to 80 percent when a referred customer makes a purchase. These high percentage programs are particularly susceptible to money laundering schemes, particularly if the purchase results in a resalable item. If you are paying others for affiliate marketing, close monitoring for signs of money laundering should be built into your costs of doing business.

Many companies that do business in some dangerous parts of the world have kidnapping insurance to protect their executives and employees. But now that so much of our commerce and data is online, the whole world becomes dangerous and our companies become vulnerable to ransomware attacks.

So if hackers "kidnap" your network or your company or customer data and try to ransom it back to you, can kidnapping insurance help?

Over the past few weeks, businesses small and large have been forced to deal with the most recent ransomware attack, aptly named WannaCry. Like other ransomware, a business's computers, networks, data, and servers, all get locked down by a hacker that demands payment in untraceable bitcoins to unlock the systems.

However, unlike other ransomware attacks, the WannaCry attack is so simple to avoid that victims would likely want to cry after learning how easy it would've been to prevent, hence the name. The ransomware attack relies on an exploit (a vulnerability in the code) that existed in Microsoft XP. However, before the attacks even started, Microsoft issued a patch to close the exploit (fix the code). Basically, if a user updated their Microsoft XP machine after March of this year, they are safe from the attack. However, computers that were not updated are vulnerable.

Before he was a senior adviser to President Donald Trump, Jared Kushner, also Ivanka Trump's husband, ran Kushner Companies, his father's real estate development and lending company. Earlier this month, his sister, Nicole Kushner Meyer, invoked Jared's name when imploring Chinese investors to "invest $500,000 and immigrate to the United States."

But can investors really buy their way into a visa? And should your business be targeting such investors?

While going viral can be a boon for business, it can also lead to nightmarish PR disasters. Take for example the recent United Airlines scandal where a passenger was dragged off the plane. The incident made national news headlines for weeks and likely cost United quite a bit of business. Unfortunately, there was no scapegoat that United could point at to blame. But clearly, when an employee's on-duty conduct causes a public scandal, an employer will be justified in issuing an immediate termination.

When a single employee, or group of employees, end up going viral for all the wrong reasons, even if it involves off-duty conduct, not even remotely related to their job, an employer may need to sever ties to keep the company's reputation intact. In these scenarios, businesses need to keep their thumb on the PR pulse, but also have their finger on the trigger at the same time.

Most employers know about the various protected classes such as race, national origin, religion, gender, disability, medical condition, and sexual orientation. However, many employers are unaware of the fact that a person's genetic information is also protected.

Under the Genetic Information Nondiscrimination Act (GINA), employers are limited in what genetic information they can collect, and are prohibited from using that information in hiring, firing, or other employment decisions. Generally, genetic information includes things like DNA and other medical tests, and even medical histories for individuals and their family members.

Even though a virtual office employee can work from home in their underwear, broadcasting that fact to co-workers is rarely, if ever, appropriate. As virtual offices have become increasingly commonplace in the world of business, employers have been facing new and unique employment problems in the virtual workplace.

In addition to ensuring that employees maintain productivity while telecommuting, employers need to ensure that the virtual work environment does not expose them to liability from employee lawsuits. A common problem in virtual office environments is sexual harassment. Surprisingly, even non-human virtual assistants face an alarming amount of sexual harassment.

As more and more states continue to legalize marijuana, both recreationally and medically, more and more businesses are getting in on the money grab surrounding the world's largest cash crop. For marijuana business owners looking for financial and legal peace of mind, purchasing insurance becomes an important consideration.

Along with the typical kinds of insurance that all businesses need to maintain, such as workers' comp. for employees and premises liability coverage for customers, cannabiz owners need to evaluate whether other insurance coverages are in their best interest. Additionally, if owners decide to purchase specialty insurance, they need to carefully read the terms of each policy to know what may be excluded.

Hope for the best; plan for the worst. It's a good life strategy that can be essential for small business owners. While most of us don't want to plan for -- or even consider -- our businesses going bankrupt, it's a sad reality that many startups don't end well. And meeting that end with the right plan can protect you as the small business owner and may even give your business a second chance.

So here are the most important things you need to know about small business bankruptcy, from our archives:

As the field of robotics continues to advance, society keeps inching closer to that science fiction fantasy world with Robocop and ED-209 keeping law abiding citizens safe. However, one Silicon Valley company, Knightscope, has already started deploying security robots on behalf of clients seeking cost effective security enhancements.

Unfortunately, the robots can't stop criminals by themselves, and that is by design (protocol number 1: do not harm humans). The K5 robot functions as a roaming set of super-powered eyes and ears, that can identify some forms of danger, suspicious activity, and crime, then contemporaneously report what it sees to the humans in charge. They come equipped with thermal and infrared vision. Currently, the K5s have been deployed in parking lots, malls, arenas, and corporate campuses.

Trademarks exist in order to allow consumers to differentiate products and services that exist in a marketplace. When a business, other entity, or individual, puts time, money, and effort, into developing a valid trademark, the law provides certain protections for the trademark holder.

For instance, when trademarks look similar, or have the potential to confuse the public or consumers, a trademark infringement action can be brought against the infringing party. If the infringing party has profited off the use of the infringed-upon trademark, or has harmed the goodwill associated with the trademark, the amount of damages claimed can increase drastically. However, not all trademarks that appear to be similar or infringing will be found so under the law. There are several defenses to trademark infringement actions.

There are ways to contribute to a startup or small business that go beyond the standard 9-to-5. And there are ways to compensate for those contributions beyond the bi-weekly paycheck. For instance, while some partners will make financial investments in a company in hope of future success and return on that investment, others will put in the work to grow the company with the same goal in mind. And while cash might be tight in a startup's early days, you may want to compensate those efforts through shares or ownership stakes in the business.

Sweat equity, as opposed to financial equity, represents a party's work and effort contribution to a project, and can present some unique challenges when it comes to compensation. Here's a look at sweat equity agreements, and how you might want to structure them.

Last week, the US House of Representatives passed the Working Families Flexibility Act, sending the new proposed law to the Senate. This new law could have a significant impact on private businesses, small and large, as it restructures labor standards to allow more flexible overtime agreements.

The proposed law would allow private employers to offer employees the opportunity to "bank" overtime hours for later use, rather than be paid for the overtime when it is earned. The banked overtime hours would accrue at a 1.5 X rate, and employees could use the hours as "comp time" (akin to vacation) or cash the hours out. The big catch is that if an employee receives a raise before cashing out, they will be entitled to receive their new rate of pay for their banked hours.

As National Geographic recently chronicled, fermented drinks and alcohol have been a part of human culture since there was a human culture. Booze, in all its myriad incarnations has become so entwined in our daily and nightly lives that we rewrote the Constitution (twice!) over it.

Alcohol has even infiltrated the workplace, from Don Draper's office bar cart in Mad Men to kegerators at startups. Clearly the hard stuff is here to stay, so how do you keep your small business safe from legal liability for inebriated employees? Here are a few tips from our archives:

A new app, which is currently designed as a chatbot for the popular intra-office communications app Slack, is designed to help office romances flourish. This app, Feeld, allows employees on a Slack network to anonymously confide in a chatbot who their secret work-crush is. Then, if two people have mutual crushes, the app will match and notify both employees.

When it comes to the game of matchmaker, employers are generally encouraged to stay away for several reasons. This means potentially prohibiting, or restricting, access to the Feeld chatbot, or other similar services on your own communications networks.

Filing for bankruptcy for your small business can be doubly painful. Any time an entrepreneurial dream dies is a sad day, plus, depending on how your company was structured, those business debts may affect your personal credit.

Chapter 7, or liquidation, can wipe out a lot of your small business's debt, but how long will that bankruptcy filing hamper your ability to buy a car for yourself? Here's a look.

The only way to truly protect your business from a product liability claim: Don’t make, sell, promote, or have anything to do with any products. Unfortunately, that advice just doesn’t work for many businesses, particularly those that have the primary purpose of manufacturing products.

However, startups big and small can take certain actions to limit exposure and risks related to product liability claims.

Asking about salary has been one of the most common questions on just about every employment application. And in some jurisdictions, it must now be a thing of the past. In efforts to eliminate the wage gap between male and female employees, some cities and states have made past salary inquiries illegal and some courts have banned them as well.

But the Ninth Circuit Court of Appeals recently ruled that employers can pay women less than men if that difference is based on salary histories as long as the reasons behind using the prior salary effectuates a business policy and the employer uses prior salary reasonably. What does that mean for your small business?

When it comes to protecting a company from economic espionage or data theft, business owners don't need to hire James Bond for protection, nor Ian Flemming for ideas. Generally, just having the right policies and security measures in place is all a company can do without making significant sacrifices to the movement of information and exchange of ideas.

However, when a company's process or data is so confidential that disclosure to a competitor could cause disruption, significant sacrifices may actually be worthwhile to safeguard the information. Here are three tips on how to protect against corporate espionage.

While small businesses always need to be alert for hackers and other security threats, tax season always seems to be especially popular for phishing scams. Perhaps it's our eagerness to put the work behind us or get it done quickly, but small business owners can be especially vulnerable to scammers trying to get access to personal employee information regarding tax filings.

Take, for instance, a recent W-2 phishing scam uncovered by cybersecurity analysts Barracuda -- attackers are using multiple techniques to trick small business owners and employees into sending the employee W-2 forms, which can include an employee's name, social security number, and other identifying information. Here's how to keep your small business safe.

Despite the best intentions of business partners when a new venture gets going, unfortunately, sometimes partners do more than just drift apart. Sometimes a partner may intentionally or inadvertently sabotage a business for their own gain.

Even though business partners have the right to control the business, absent specific contractual terms, they will also have fiduciary and other legal obligations to each other. As such, if one partner is found to have sabotaged a jointly owned business, they can be liable to the other joint owners for the harms caused and can be sued.

If you're a small business owner pondering bankruptcy, you have a few filing options. While some would mean an end to your entrepreneurial dream, others may let you continue to operate your business while paying off your debts. And if you're not willing to say goodbye to your small business yet, you may consider filing for Chapter 11 bankruptcy.

Generally, Chapter 11 is intended for the reorganization of businesses with significant debt, and may allow your small business to propose a plan for profitability post-bankruptcy and continue to operate while temporarily keeping your creditors at bay. And while most Chapter 11 filings don't include liquidation of the business's assets, it may be permitted in some cases. Here's a look.

Not all of us have the personal capital or investors needed to finance our small business completely. That means borrowing some money, normally in the form of a small business loan or a small business credit card that can fund the day-to-day operations of the business.

A business credit card can help your business establish creditworthiness, which in turn can help secure future financing, and it can be a good way to prevent personal and business debts from commingling. But using a small business credit card can be risky as well. Here's a look: