Being an entrepreneur is probably the hardest job in the world. We have a passion about something that we want to share, something that we think will make a difference. But so often, we're either going it alone or with a very small team. As a result, we have to wear all of the hats: Chief Marketing Officer, Sales Rep, Widget Maker, Service Provider, Guest Relations, Financial Officer, HR Department, CEO, and janitor. And if that's not enough, there's still life outside of the business! Many of us are still spouses, parents, caretakers, community members, hobbyists...
So what happens when life happens AND you have a business to run?
Is your business or non-profit structured properly? Is it built on a solid foundation?
These seem like simple enough questions. You set up your business or non-profit, and as far as you know, things are going smoothly (or at least as smoothly as they can be in the world of entrepreneurship). But what problems might be lurking just beneath the surface?
There are certain things we look for when talking to a new client to make sure the business or non-profit at least has a basic foundation in place. Without this foundation, none of the other legal work we do will matter.
What do you do when your business has valuable competitive information that you don’t want a current or former disgruntled employee to share with others? Perhaps you’ve built a valuable customer list over the years, or you have a unique way of pricing your goods or services. Maybe you’ve developed a unique software solution, or you have special deals in place with your vendors. Whatever the information is, if it has economic value precisely because it isn’t known to your competitors or the general public, then it probably qualifies as a trade secret. What should your business be doing to protect such trade secrets?
As your business grows, you realize there are only so many hours in the day, and those 24 hours simply aren’t enough for everything that needs to get done: producing your product or service, marketing the business, making sure there is enough money to keep going, growing yourself as a leader and entrepreneur, etc., etc. At some point you simply need more help.
But taking on a regular payroll expense seems daunting and payroll taxes sound confusing and expensive. (After all, if you hire someone at $10/hr, it actually costs the business more than $10/hr…thanks Uncle Sam!) Many small (and some not so small) businesses in this situation decide to hire independent contractors instead. But is that truly the way to grow your business, or is it a trap waiting to spring?
The Fair Labor Standards Act (“FLSA”) requires that virtually all employees be paid at least the federal minimum wage for hours worked, plus overtime (at time and a half the employee’s base pay) for any hours over 40 in any given work week. It is critical for small businesses to know which employees are considered “exempt” from the overtime rules and which are “non-exempt,” meaning they must be paid overtime.
Many small businesses and non-profits assume that if they pay an employee a salary, then they don’t have to worry about the overtime rules. After all, paying overtime is expensive. However, the penalties for misclassifying employees and refusing to pay overtime can be steep. And while happy employees generally don’t complain, disgruntled employees (and former employees) will suddenly demand their unpaid overtime no matter what “understanding” you thought you all had.
Before adopting a policy of simply not paying overtime (or making everyone a salaried employee), small businesses and non-profits should ask three questions:
Maritza S. Nelson has been selected to the 2017 Ohio Rising Stars list. The Rising Stars list recognizes no more than 2.5 percent of attorneys in each state. To be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger, or in practice for 10 years or less.
Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant list.
The annual selections are made using a patented multiphase process that includes:
As a business attorney, I talk to all kinds of entrepreneurs about both their passions and their struggles. Going out on your own to pursue your passion is scary stuff. (Spoiler alert: The fear never goes away; you just get better at working through it.) So here are five legal tips that that will help every entrepreneur spend more time pursuing their passion and less time worrying.
1. Surround yourself with the right people. I tell every prospective client that a business owner must have a relationship with certain key advisors: your business banker, your accountant, and your business attorney. But you should also surround yourself with like-minded people who have achieved what you’re trying to achieve—other business owners that you respect and trust. These are the people you will most likely turn to for advice and referrals.
The Fair Labor Standards Act (“FLSA”) requires that virtually all employees be paid at least the federal minimum wage for hours worked, plus overtime (at time and a half the employee’s base pay) for any hours over 40 in any given work week. On December 1, 2016, new rules for overtime pay will go into effect, making more executive, administrative and professional (“EAP”) employees and highly compensated employees (“HCEs”) eligible for overtime.
The Ban the Box Campaign is picking up steam.
For those of you who may not be aware, Ban the Box refers to the check box on an employment application, “Have you ever been convicted of a crime?” Simply put, the argument against using this pre-emptive rejection tool is that it could result in disparate impact downstream, as a disproportionate percentage of those convicted of crimes are minorities. Beginning with Hawaii in 1998, thirteen states and 70 cities and counties have enacted legislation that prohibits such questioning for public and/or private sector jobs. Likewise, mega-employers Target and Wal-Mart have eliminated the practice nationwide. If your business has not yet been compelled to change, you may be soon, so you might as well get on board.
“Additionally, small to mid-size businesses in particular risk the more direct-type employment discrimination claims as they are more likely to hire family, friends, and friends of friends (people who look like you do). By continuing to use The Box, they also run the risk of making exceptions for family and friends that you wouldn't make for a stranger applying for the same job.” - M. Nelson of Law Office of Maritza S. Nelson, LLC
Based on the reaction I have seen from my clients, the initial thought of many business owners is that this is a cataclysmic turn of events. “You mean I have to hire criminals?”
As an entrepreneur, you’ll probably need legal advice at some point. But any given legal project should make your business better—whether that means minimizing the risk of future conflicts, saving you time and effort, developing the business strategy, or even improving the image and reputation of the business—not just increase your business expenses. How do you get the advice and representation you need without breaking the bank?