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Protect Your Small Business from Employee Lawsuits

Employee lawsuits are one of the biggest risks that small businesses face. These legal proceedings are not only expensive and time consuming but also pose significant threat to damage the reputation of your company. Worst still, they can demoralize your employees. It is therefore imperative to protect your small business from possible employee lawsuits.

Employee lawsuits are one of the biggest risks that small businesses face. These legal proceedings are not only expensive and time consuming but also pose significant threat to damage the reputation of your company. Worst still, they can demoralize your employees. It is therefore imperative to protect your small business from possible employee lawsuits.

Most employment lawsuits are related to wrongfully termination, i.e. if an employee feels he/she has been fired wrongfully, the disgruntled former employee can appoint employment law attorneys and file litigation against the company.

Common forms of employee lawsuits include:

  • Discrimination: According to the U.S. Equal Employment Opportunity Commission (EEOC), it is against the law to terminate an employee owing to his/her age, color, sex, religion, disability, sexual preference, national origin, and/or genetic information. Most employee lawsuits are based on discrimination. In 2014 alone, EEOC received 88,778 of these charges.
  • Discriminatory Discharge: It occurs when an employee is laid off just because he/she falls into any of the above mentioned legally protected category.
  • Retaliation:This employee lawsuit occurs when an employee is terminated due to his/her association with a legally protected activity, including
    • Reporting a federal violation committed by the company to the authorities
    • Filing a claim of discrimination
    • Participating in investigation of such a claim
    • Refusing to be involved in an illegal act like refusing to lie or distort the truth during a federal investigation
  • Harassment: This includes offensive conduct of the company related to any of the categories mentioned above. Harassment also includes physical assaults, offensive jokes, name-calling, threats, objects or pictures, or anything that interfere with the employee’s performance at work.

Typically, employers point out violation of one or more specific company policies as a reason when terminating an employee. However, citing the policies may not be enough always especially if the company has a history of such behavior. You also need to prove that the employee has actually violated a policy and provide necessary documents in support of your action. Besides, you have to prove the fact that you maintain a similar attitude for everyone else who violates the policy without any exception.

Employee laws vary from state to state. It is therefore essential to know and understand the laws related to your state in order to safeguard your business from employee lawsuits. Talking to an experienced business attorney is your best option here. For example, an Austin business lawyer can help you understand laws related to employment discrimination and complaints in Texas and how you can protect your company from possible threats.

Protecting Your Business from Employee Lawsuits

Small businesses are often targeted because people assume that they are most likely to negotiate a settlement rather than defending a lawsuit. At times, litigation proceedings are unavoidable. But as a small business entrepreneur you should do everything in your hand to protect your company from possible legal threats. Here are 3 tips to help you avoid and fight against possible employee lawsuits.

  1. Avoiding Lawsuits Related to Employee Firing and Discipline

The following are some best practices to avoid employee termination related lawsuits.

  • Have written job descriptions and clearly mention responsibilities as well as performance expectations
  • Clearly communicate across the company how you enforce the requirements
  • Encourage employees to communicate workplace or performance related issues clearly and have proper process for the same
  • Establish high standards of work ethics and a specific discipline process

As an employer you are responsible for terminating an employee. It is important to ensure that it is not wrongful termination. The following are some tips to help you in this context.

Provide feedback, constructive criticism and further instructions about improving performance and/or workplace behavior verbally as well as in written documents i.e. through emails. In other words, communicate that there are performance issues and/or conflict in the workplace that the particular employee needs to address.

If the subpar performance or behavior of the employee persists, document the same with respect to the job description and performance expectations mentioned during the time of recruitment/promotion. Provide a copy of the document to the employee and the reporting manger (if applicable) and also get it signed by the employee so that you can later protect your company from any EEOC charges.

Before firing the employee, do have an affirmative written agreement specifying the behavior or performance issue(s) that he/she needs to correct. The biggest and most common mistake made by small business owners is not having such management discipline in place.

Keeping proper records and having a management discipline actually leave little room for losing a lawsuit.

  1. Mind Your Words and Actions

Simply stay away from anything (including conducting any business and/or making public announcements and potentially slanderous statements) that are likely to be considered questionable and damage your business image. Even if you maintain proper business ethics, working for other organizations that commit shoddy business practices can ruin your company’s name and drag you to the court.

Also, limit any possible conflicts of interest. Try to avoid situations that may result in a conflict of interest.

  1. Hire a Competent Business Attorney

Appointing a business lawyer is one of the very first things you need to do when opening your start-up. The attorney will be responsible to create all legal contacts, including employment agreements. He or she will also take care of all the legal proceedings if you have been sued by a disgruntled former employee.

It is therefore essential to appoint an attorney who is familiar with your local employment and business laws and has prior experience in your particular field. Finding a good attorney, however, can be a challenge for new entrepreneurs. Ask for professional references from other small business owners or from your local chamber of commerce. Additionally, you can search online and make cold calling to find a good attorney who has experience in dealing with employee lawsuits.

Conclusion

Remember that defending your company against employee lawsuits is a time taking and expensive affair. It is therefore crucial to establish and enforce strong company policies and organizational procedures to avoid such legal proceedings in the first place. Consult with an experienced business lawyer who can handle employment law issues on behalf of your company on an ongoing basis, including preparing legal documents and employment contracts.

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Legal

What Do Trade Secrets Protect?

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According to the United States Patent and Trademark Office, a trade secret is “information (that) can include a formula, pattern, compilation, program, device, method, technique or process.”

At first glance, you may think that a trade secret looks very similar to a utility patent, but as you will see, they are very different. For starters, a utility patent is something that is filed and approved through a rigorous process, whereas a trade secret is only granted limited protection in certain cases.

A trade secret aka ‘confidential information’ is non-patented information that provides a company with a competitive advantage in their industry. This could be anything from a marketing strategy to a recipe for award-winning cookies, and at their core, they enable a company to keep an edge on their competition.

As everything comes down to ‘interpretation’, and even lawyers interpret the law in a way that works for their client.  Disclaimer: Don’t get caught out in a way your competitors can steal your information. A patent attorney in Orlando recommends always seeking legal advice.  Startups are particularly vulnerable to the prying eyes of competitors.  The options for protecting your intellectual capital or business trade secret include non-disclosure agreements (NDA), and of course if deemed the appropriate strategy, applying for a patent.

Read more below about what types of protections you are granted in the United States for a trade secret.

What is a Trade Secret?

A trade secret is anything that gives you a competitive edge in your industry, whether it is a process, recipe, or simply a method of doing something. In some cases, trade secrets are eligible for patents; in other cases, a trade secret must simply be protected by ensuring this information is not leaked.

Trade secrets are not protected like a patent – instead, they only protect against unauthorized disclosure. This means that if a contractor were to leak your trade secret to a competitor, you may be able to seek damages from the contractor, royalties from the competitor, and possibly have a court force the competitor to keep the trade secret from leaking further.

However, there is nothing that bars a competitor from independently discovering the same secret. In a patent, your invention is clearly laid out by the USPTO. Since a trade secret is not disclosed in the same nature, you can not take up legal actions against a third party who has come across the same information under their own labors.

How Does a Trade Secret Work?

Since trade secrets include such a wide variety of things, they vary slightly depending on the information in question. One good example of a trade secret is a simple customer pricing list for a sales organization.

If this list were to be leaked to the competition, there is little stopping competitors from simply offering better rates to steal these clients. One way that this list can be handled is through the use of a non-disclosure agreement, otherwise known as an NDA. In the NDA, the company can indicate all information that is not to be released or shared outside of the company, and in many cases, can not be shared within the company either.

If a trade secret is shared or discovered by misappropriation, a court may force the entity to take measures to keep the information from going any further, as well as forcing royalty payments, legal fee reimbursement, and more.

Remember though: if your competition independently discovers the same information as your trade secret, you are not granted any legal protection. If you are concerned about this and believe that your trade secret is truly unique and useful, explore your options for getting it patented in order to enjoy complete protection.

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Legal

What’s in a Name: How to Choose & Legally Protect Your Business Name

name

When starting out on a new business, one of the most exciting parts of getting set up is choosing the perfect business name. We want something witty that sticks in people’s minds, and perfectly sums up exactly what it is that we do. Brainstorming the perfect business name can be hard, and it is made harder by the fact that just because we think we have come up with the perfect business name does not mean that we can use it.

Before we start doing anything with our amazing new business name, we need to make sure that we are actually allowed to use it. We don’t want to find ourselves with a great new website and fancy business cards only to have another business come in and stop us from using our new name, and even potentially request damages. We can save ourselves a lot of time and stress by taking the time to properly confirm whether our chosen business name is available for us to use.

Trademark Law

Business names are regulated under Trademark Law. Regulations are in place to prevent businesses from using a business name that is likely to lead them to be confused with a competing business. If a business is found to be infringing on the trademark of another business, it can be forced to change its name, which can be a costly setback, and sometimes forced to pay damages.

It is not always prohibited to use a business name that is already in use. If the business that is already using the name is relatively small, and provides drastically different services to you, you may still be able to use the name. The same applies if the business is located a significant distance from where you are and only serves a limited community, which your business is unlikely to serve.

Research your Business Name

Once you have come up with an appropriate business name, there are a number of searches to conduct in order to ensure that it is available to use. While a federal database of registered trademarks exists, it is not sufficient to just search here. Some companies with a local focus will only register their trademark on the state level, and under United States law, a business can lay claim to a trademark by using it, without registration.

As well as searching the federal database of registered trademarks, which includes every trademark registered by the United States Patent and Trademark Office, also do a state level search for your state, and neighbouring states if you think that your business will be active there.

The next place to search is the world wide web. In fact, it is probably worth doing a basic internet search before investing time and effort in trademark searches as most companies have a web presence, so this is a fast way to eliminate names.

As well as searching for companies using your exact name, look out for companies using a similar name that are active in a similar field. If there is too much crossover in your brand and service, these companies may also be able to prevent you from using your selected name under trademark law.

This type of internet search also helps you make sure that your selected business name is available as a domain name for when it comes to establishing your own web presence. Check with different abbreviations and hyphens as well as alternative top-level domains (such as .com or .net). While you may legally be able to use a business name, you may still want to avoid it if another company is already using your preferred web domain, or a very similar domain.

Conduct Business Entity Search

Finally, you need to check if the business name is available in your state.This search has to done on a state level. Each state maintains a database of all corporations, limited liability companies (LLCs) and limited partnerships registered in the state. Each state will also have a fictitious name database, which is a list of all registered business names in the state regardless of whether they have registered a trademark or registered as a corporation with the state. This is the final search that will show up unregistered companies without a web presence.

Register your Trademark

Once you have found a business name that you can use, it is a good idea to think about registering. While it is not legally required to register a trademark to start using it, registering your trademark can be useful if you do ever find that you need to defend your trademark in court. Plus, it may help reduce the risk of others using your name, as it will be easier for them to locate your business when they do their own new business trademark search.

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Legal

Brexit Unknown Makes UK Businesses Nervous

Brexit and the markets

Brexit is certainly making businesses nervous right now, and there are many reasons for that. Despite almost three years having passed since the original vote, things are no clearer as to what the impact will be on business or what kind of trading relationships the UK will have with the EU going forward. Therefore, some nervousness is to be expected.

UK Businesses Rely on EU Workers

UK businesses of all kinds and in all industries employ EU workers. The question that remains unanswered is how those working relationships will function after Brexit has properly occurred.

There are guarantees in place that workers currently residing in the UK will be able to carry on living here, but it’s not at all clear whether more EU workers will be able to move here with ease after Brexit, and most indications suggest that won’t be the case. This will certainly have a big impact on businesses in many sectors.  See this article on: Solicitors talk Brexit.

All Types of Workers Are Required for the UK Economy to Function

One idea that has been floated by the UK government is the idea of an income threshold, meaning only those earning more than a certain amount of money will be allowed to live and work in the UK. This would mean that highly skilled workers would find it much easier to work in the UK than low skilled workers would.

However, the UK economy relies on both skilled and low skill labour in order to function properly. If that supply of low income workers was cut off after Brexit, more businesses would struggle.

Contingency Planning Might Not be Enough for Small Businesses

For big businesses, contingency plans are already being put in place. This is expensive and time-consuming for large companies, but it will mean that they’re able to protect themselves against the upheaval brought about by Brexit. On the other hand, small businesses don’t always have that option because they don’t have the resources to put adequate contingency plans in place. It’s those small businesses, therefore, that are likely to be hit hardest.

It’s clear that small businesses are not opening at the rate they previously were because of Brexit uncertainty too. This denies the UK economy future growth prospects as well as depriving society of potentially successful ideas and businesses.

What Can Business Do to Prepare?

In terms of what businesses should be doing now, it’s best to seek professional legal advice about the situation, what you can expect and where your business and its staff stand. You should also analyse your supply chain and think about how that could change in the future under various Brexit scenarios. It might also be a good idea to look at existing contracts with EU companies and seek clarifications regarding those.

The Brexit situation is constantly in a state of flux, so things can change very quickly in one direction or the other. Therefore, it’s important for businesses to be watching and listening so that they can work out what their next move should be in order to prepare properly and minimise risk.

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Legal

If You Own A Business, You Need An Estate Plan

planning

It’s an unfortunate fact that arguments over material possessions break out between family members when somebody dies. It’s rough when one beneficiary thinks they’re entitled to that person’s possessions and financial resources more than the others. The complexity of the situation is amplified when the deceased person owned a business.

If you’ve got a family, you have every reason to care about what will happen to your business when you die. Your business has the potential to be an investment for your children or a nest egg for your spouse. If you haven’t created an estate plan that includes your business, it’s time to create one.

Start with a will

Your will is the most basic estate planning document. It allows you to declare who will be named the executor of your business. Your business executor will be responsible for continuing the business.

Dying without a will places a huge burden on your employees, business partners, and the success of your company.

Although a will is important, it’s not everything.

Your will isn’t the principle governing document of your estate

Our USA based readers may be interested in what’s in this article titled: What Might Surprise You About Your Will, CG Trust explains that many assets don’t fall under a will or probate like real estate, life insurance, and mutual funds. When you purchase these assets, you’re asked to assign a beneficiary and sometimes a contingent beneficiary.

When you specify a beneficiary for an asset, that overrides anything stated in general terms in your will. For example, say you leave everythin’ to your aunt Suzie in your will and your children are listed as beneficiaries on your life insurance policy. Your aunt Suzie can’t touch your life insurance policy – only your listed beneficiaries can.

Identify your designated beneficiaries for all business assets. If it’s not somebody you want to inherit that asset, change your beneficiary immediately. Remember, a beneficiary on a specific asset overrides what’s in your will.

Focus on minimizing your taxes

Most people don’t realize that when a business owner passes away, the estate taxes can tank the business. Estate taxes can be more than 50% of the value of your business and must be paid within nine months of your death. Most businesses need to liquidate to pay these taxes.

Thankfully, the IRS has tax breaks in Section 303 and Section 6166 that can protect your business. Section 303 deals with using stock to pay death and funeral taxes; Section 6166 deals with Federal estate taxes.

Both sections make it easier to pay necessary taxes without breaking up your business.

Avoid probate as much as possible

Although the process is mostly clerical, probate ties up assets for months (sometimes years) and can be expensive. It’s best to plan ahead to avoid probate as much as you can.

When you create a properly structured ILIT living trust, the benefits paid from the insurance policy won’t pass through probate. The funds will be available immediately to cover estate taxes and other financial obligations.

You can also establish a grantor retained annuity trust (GRAT). With this trust in place, if your assets grow over the terms of that trust, the appreciation won’t be subject to estate taxes. This allows you to pass your business assets to your kids or your spouse.

Declare power of attorney

You need to declare power of attorney to someone trustworthy to handle legal matters on behalf of the business when you pass away. This individual will be in charge of things like payroll, managing vendor payments, and financial assets.

If you don’t declare power of attorney to someone before you die, the court will appoint a guardian who may not have your company’s best interests in mind.

You also need a succession plan

A succession plan is designed to ensure your business runs as smoothly as possible; it’s a plan that chooses decision makers and creates a strategy for transferring company information to the right people. Although the details for every business will be different, Fidelity.com describes what might be included in this plan.

For example, a management succession plan might include training your successors, delegating responsibilities, and bringing in an outside advisor for their objectivity. An ownership succession plan might include defining who will own vs. manage the business, creating terms that consider your family’s best interests and timing the transfer of your business to avoid a discounted sale of your business.

Get professional guidance

Making sure your business survives and stays in good hands when you die is important. If you’re not sure where to start, contact an estate planning professional for help.

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Legal

4 Things to Consider When Creating a Business Continuity Plan

finger boxes

One of the biggest mistakes a business owner can make is abiding by the “it will never happen to me” rule in regards to disasters. Each year, thousands of natural disasters occur all over the country.

Acts of nature like wildfires or floods can lead to a business closing for long periods of time. The only way to prevent problems when dealing with disastrous situations is by creating a business continuity plan.

Studies show that nearly 82 percent of the businesses in the United States do not have the IT infrastructure in place to deal with a disastrous act of nature or network outage. Instead of leaving the functionality of your business to chance, now is the time to take continuity planning seriously.

The following are some of the things you should consider when creating a business continuity plan.

1. Work on Identifying the Potential Threats You Face

Before you can create a comprehensive business continuity plan, you need to adequately identify the potential threats your business faces. Having a plan for a variety of possible disasters can help you rebound in a hurry following one of these events. Some business owners only make continuity plans to deal with things like natural disasters, but there are many more disastrous situations to consider.

For instance, figuring out what you would do to keep your business functional in the event of an employee strike or cyber-attack is essential. Once you have a list of possible disaster situations, you need to map out all of their outcomes.

If you are unsure about how to map out these outcomes, working with professionals who are experienced in continuity planning is a must. Often times, these professionals will be able to look at these situations objectively and help you figure out how to create adequate plans for each one.

2. Constructing a Recovery Team is a Must

One of the most vital parts of a successful business continuity plan is creating a recovery team. If you want to keep your own staff freed up during a disaster, hiring a third-party to perform this job is easy. Before hiring a company to fill this role, you need to assess the amount of experience they have.

Not only can a third-party act as your recovery team, they can also help you hone and refine your existing continuity plan. Allowing professionals to get a look at this plan can help you out greatly. They will be able to look at your continuity plan objectively and provide you with guidance on how to improve and strengthen it.

3. Know What is At Stake Without a Continuity Plan

Driving home the importance of a continuity plan is easy if you actually assess what you stand to lose without one. Often times, businesses without a comprehensive continuity plan will lose a lot of money in the event of a disaster.

While some of this money can be recouped via a class action lawsuit, a business may still lose lots of customers in the process. You can learn more about disaster-related lawsuits with a bit of online research.

4. Prioritizing is Vital When Creating One of These Plans

When disaster strikes, you will have to limit the number of resources your team uses. When creating a business continuity plan, it is important to figure out what technology or systems you need up and going first. Having this list of priorities in hand in the event of a disaster can help you limit the amount of downtime your team experiences.

Instead of trying to take on this complicated process alone, you need to reach out to disaster recovery professionals. With their help, you can get a plan in place in a hurry.

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Legal

How a Lawyer Can Help SEC Whistleblowers

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The job of the SEC whistleblower law firm is to ensure that you can report all instances of abuse without fear of reprisals. A whistleblower’s job is critically important, and his or her courageous actions protect investors and ensure that the markets are fair for everyone.

As brave individuals stand up to the corruption that surrounds them, these SEC tips will ensure that their rights are protected when they hire an SEC whistleblower law firm.

The SEC whistleblower program came into being because there was a series of corporate scandals that injured several individuals and companies as well. Legislators decided that the answer to this problem had to include individuals who had intelligence that would help law enforcement officials police the marketplace. This truth led the government to pass the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Maintaining Anonymity

The new law allowed the SEC to create a bounty that would enable a whistleblower to report wrongdoing anonymously without fear of losing his or her job.

It would also entitle the individual to an SEC whistleblower award.

Individuals must qualify for this award by presenting the SEC with information that leads to enforcement action that causes it to receive more than $1 million in sanctions. The individual or group of individuals must offer this information freely. If so, the individual or individuals would receive between 10 percent and 30 percent of the money that is to be collected in sanctions.

The fact that individuals can report wrongdoing anonymously has made the whistleblower program as effective as it has been. The fear of retaliation has stopped people from bringing wrongdoing to light in the past. Because there weren’t any witnesses who were willing to come forward, law enforcement officials found it impossible to gather evidence and then prosecute these securities violations. Perpetrators of these crimes couldn’t be stopped in the earliest stages for that reason.

Because of the Dodd-Frank Wall Street Reform and Consumer Protection Act, individuals are willing to come forward and report what they know.

A majority of the people who have evidence of wrongdoing opt to report it anonymously, but they must have a lawyer to do so. After you hire your attorney, you are required to sign a whistleblower submission under the penalty of perjury. It will be your lawyer’s job to represent you in the offices of the SEC while an investigation is going on. He or she will also work to ensure that you receive the highest award in the event that there is a successful enforcement action.

Fear of Retaliation

Under the law, your employer is not allowed to retaliate against you because you are a whistleblower. This means that your employer may not fire you, demote you, harass you, suspend you or threaten you if you take part in any of the following three actions:

  •       Present evidence of wrongdoing against your employer to the SEC
  •       Participate in investigations undertaken by judicial or administrative actions
  •       Make required or protected disclosures under any law or regulation that is subject to the jurisdiction of the SEC

In the event that your employer does retaliate against you, you will be entitled to file a lawsuit against him or her. You can be compensated in several ways. If you win your case, your employer may be required to pay your legal fees. Also, you may receive double back pay and reinstatement to your former job.

In order to file this type of lawsuit, you are required to possess a “reasonable belief” that the information that you provided the SEC demonstrates that a securities violation took place. Your SEC whistleblower office can help you determine whether this is the case or not.

The Award

To qualify for the award, you must offer your information freely and voluntarily.

The information that you or a group of individuals provide to the SEC must be original. This means that you must have come across this information through independent knowledge or independent analysis.

Independent Knowledge

The definition of independent knowledge according to the SEC is information that is known to be factual that the individual did not learn from a publicly available source. This type of knowledge may have come from the individual’s own observations, communications, experiences or interactions. This means that information the individual learned from a third party is considered to be independent knowledge.

Independent Analysis

Independent analysis comes from the individual’s examination or evaluation of documents that have been made publicly available. This examination or evaluation leads the individual to learn something from the documents that the average person wouldn’t know.

The information cannot be known to the SEC already. It also cannot be an allegation that was made in the media, an investigation, a report, audit or hearing from the government or a judicial or administrative hearing unless you are an original source of the information. Lastly, it must be information that was given to the SEC after July 21, 2010.

Your information must be the reason that the SEC opens up an investigation. The SEC may also reopen an investigation that is already closed in order to add the information that you provided. Your information may lead to the investigation of additional conduct in an investigation that is currently being conducted. The information must also be related to an investigation that is currently going on and that is responsible for the successful enforcement action that takes place.

You will be entitled to an award after successful enforcement action occurs and the SEC receives more than $1 million in sanctions from the guilty party. When the SEC has this money, it will let everyone know by posting a Notice of Covered Action on its website. You will not be able to obtain this money without your attorney, so your legal counsel will need to submit an application for the award for you. The SEC Form WB-APP must arrive at the SEC office within three months of the notice date.

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