A big mistake that new businesses make is that they sign anything that a vendor or supplier gives them – they don’t look at it, and they don’t take the time to ask for an attorney’s help. They either fear that they cannot delay, or they cannot afford an attorney. However, when that business starts to get in trouble, it’s the business owner who gets sued. That’s when it turns out that one of the papers signed was a personal guarantee.
A lot of vendors and suppliers are reluctant to give a new business any credit without a personal guarantee. That doesn’t mean that you should sign it, or that you shouldn’t try to renegotiate it. If you can afford to make purchases cash-on-delivery in the beginning, then you can build up some credit with the suppliers.
Once you’ve been in business for a while, and have built up a reputation for making payments on time, you can also attempt to renegotiate your vendor agreement. By renegotiating the personal guarantee away, then you can protect yourself in case there is a problem later. You may still find yourself in court – but being able to produce documentation showing that the personal guarantee has been voided will be able to help you.
Contracts are not static documents – they can be modified throughout the life of the agreement. If you have personal guarantees, then it may be time to look into modifying them.
With the increased minimum wage in New York, the Minimum Wage Poster will change, and a new poster should be hung as close to December 31st as possible (ideally on the first business day after). The New York Department of Labor makes all of its posters available free of charge and a link to the PDF of the new poster is here.
An interesting case out of Massachusetts raised some questions about what an employee subject to a non-solicitation agreement can do. The employee announced her new position on her LinkedIn profile, and her former employer sued because among her followers were some of her now-former clients. The employer argued that this posting solicited her clients to come do business with her.
The court in this case was able to make a ruling based on other issues, and did not have to get into the LinkedIn issue. However, it put both employers and employees on notice – announcements on social media (be it LinkedIn, Facebook, or Twitter) can violate agreements and should be carefully considered. For employees, whenever you leave a job to start a new one, you should review any restrictive covenants that you signed (non-compete agreements, non-disclosure agreements, and non-solicitation agreements) to see what you are able to do. If there are limits on your ability to make public announcements, or if you have followers who are in a restricted group (either now-former co-workers or clients of the previous company), you may want to restrict the announcement to ensure that only people who can see your new job are able to. It will take you more time to set up, but it will be time spent saving yourself from a lawsuit.
On December 31, 2013, New York’s Minimum Wage will increase to $8.00 per hour. As of the last day of the year, any employee must make at least that amount. Waiters and other food service tipped employees see no change in their base amount, as the tip credit will increase with each change in the minimum wage.
On January 1, 2014, Florida’s Minimum Wage will increase to $7.93 for non-tipped employees. This is part of Florida’s annual readjustment of the minimum wage based upon inflation. As the Florida tip credit remains the same, the direct wage that employers must pay tipped employees will increase to $4.91.
Chanukah is in full-swing, and some companies and organizations are hosting their holiday parties already. The rules that govern liability don’t take an afternoon off, and hosts of these parties expose themselves to any number of problems if they aren’t careful. Employers who plan to hold holiday parties for the company should be mindful of the following tips.
- If you are going to serve alcohol, you must be willing to cut employees off. Having a limited drink selection is also smart. Employees who get drunk may make bad decisions, and the company may find itself liable if no one in management stopped the employee from drinking.
- Have a car service ready. One of those bad decisions that an employee might make is to drive drunk. The potential liability for the company here can be incredibly high. The risk is simply not worth it.
- Make sure that there is an enforced code of conduct. Sexual harassment laws do not stop because there is a party and employee holiday parties are ripe ground for unwanted advances that can lead to complaints. Make sure that your employees understand what is and is not permitted.
- Skip the mistletoe decorations. Sierra Mist is running a radio ad where a male employee solicits kisses using a can of their new soda. It makes me cringe every time I hear it because that employee’s conduct is going to cost the company money. Keep the decorations neutral and you can avoid complaints which cost time, and lawsuits, which cost money.
- Management must be willing to be “party poopers.” Nobody wants to ruin a good time, and it can be hard to enforce the rules when there’s music playing, dancing, and a buffet. However, the company’s management is still management, and if they aren’t taking an active role in solving problems, then they are part of the cause. It is important that managers understand what they need to do, and how to proactively address potential issues.
It’s a party and I’m not suggesting that the top-level officers patrol the dance floor to make sure that everyone is standing at least eight inches from each other and that no one has had more than two drinks. But what I am suggesting is that parties take a little more planning now than they have in the past. It’s worth taking that little bit of extra time to protect your company later.
Election Day is this coming Tuesday (November 5). Employers are supposed to ensure that their employees have enough time to vote. Employees who gave notice by Sunday (Friday was the last working day) are entitled to up to two hours off with pay to vote. The two hours come either at the beginning or the end of their shift.
This only applies to employees who must be at work within 4 hours of polls either opening or closing. Polls open at 6AM and close at 9PM.
As a new feature, each week, we will share legal articles and updates from around the country that may have an impact on our clients.
Conde Nast Ends Its Internship Program - As more of the larger companies are being sued for not paying their interns, more of these companies will decide that the risks are no longer worth the benefit. If you have unpaid interns in your office, this may be something to think about.
EBay Settles Class Action - If you were selling on eBay, you may be able to take part in the settlement.
This past week, new rules from the Department of Labor went into effect. These rules make some changes to the way employee deductions can be made – now there are five broad categories of permitted deductions. The first three are unchanged.
- Required deductions – these are deductions for state and federal taxes, as well as any other deductions required by law, such as garnishments.
- Union dues
- Deductions for the employee’s benefit – this includes health insurance, day care, and other company-provided services where the employee receives a benefit. Services that are for the employee’s convenience (such as check-cashing) are not considered a benefit and fees cannot be charged/deducted. While this regulation is unchanged, the DOL has provided additional clarification and categories of employee benefit.
The two new ones are:
- Repayment of salary advances
- Repayment of overpayment of salary
Both categories require the employee to be told how the deduction will be made. In the case of the salary advance, the employee must be given the terms of the advance (how much will be advanced, how much each deduction from future wages will be, when the deductions will cease) ahead of time. In either case, employers must have a written grievance procedure and, if the deduction is grieved, the employer must halt deductions. For salary advances, it is also important to be aware that the employer cannot charge interest under this program.
The new regulations do not change many existing rules – for example, employers still cannot fine employees for tardiness or other workplace rule infractions and take those fines out of employee salaries directly. While you can discipline employees for these infractions with suspensions or firing, you cannot make them work while deducting salary.
With only two and a half months left in the year, it is a good time for Corporate officers to start looking around and make sure that they have covered all of their yearly formalities. For Corporations, that means having both a Shareholders’ and a Board of Directors Meeting. For LLCs, that means holding a Members’ Meeting.
It’s not enough to hold the meeting; minutes of the meeting should be kept, and then put with the company’s other documents. If your governing documents state how much notice each attendee must be given, you should send out that notice, or get a waiver from each attendee.
At these meetings, you should ratify every major act that the business has taken – this does not mean the day-to-day actions, but any big contracts, such as leases or loans, that have been signed should be voted on and ratified here (unless they were approved previously).
For small companies, these meetings are important; they establish the company as its own entity and not merely as an extension of the owners. So while they may seem silly, these formalities will help if there is ever a lawsuit – these help to limit or eliminate the liability of the owners of the company.
We have forms available for Meeting Minutes, Notice of Meeting and Waiver of Notice. Please feel free to contact us if you need them, or if you have any questions.
New York’s Attorney General has started to get aggressive and go after businesses that put up fake reviews on sites such as Yelp. Calling it a consumer affairs matter, he has reached a settlement with a group of New York businesses that he was able to prove either put their own fake reviews online, or paid third party vendors for the false positive reviews. While he is the only government official taking a stand on this issue right now, he is not the only one fighting fake reviews. Yelp is suing a small law firm for allegedly posting fake reviews itself.
Fake reviews, known as “astroturfing,” are becoming more and more of a problem. The fake reviews hurt consumers who might choose a business based upon Yelp or another review site. However, beyond those victims, the reviews also hurt other businesses who might lose out on customers to the fake reviews. The reviews can also have the effect of hurting potential buyers of the business – looking at reviews of a potential purchase can tell you how popular the store/restaurant is with consumers and whether you can continue to market the brand, or if you would need to completely remarket the enterprise.
Even with these developments, “reputation management” companies will continue to solicit business, and for a small fee, will still flood review sites with positive reviews of your business. However, the New York AG’s office seems intent on continuing his policing efforts. It is also possible that this effort could spread to other states – the national response that this move gets will be telling. Beyond it being a potentially bad business practice, astroturfing may now have real legal consequences. As such, we recommend staying away from the practice.
The Guardian has an article up on how to spot, and avoid, false reviews.