Category: Business Law Blog

The Importance of the Employee Handbook

 

Employee handbooks
Employee Handbooks Protect Employers

An employee handbook serves as a guide for employees and employers. The handbook is a tool to provide clear expectations and rules.  It defines ground rules and explains what is and is not considered acceptable behavior. Done properly, an employee handbook is a great first line of defense for a variety of legal issues.

However, if an employee handbook is done improperly, it can lead to confusion, anger and lawsuits. The sections contained in the handbook need to be carefully worded in order to avoid those pitfalls.  Generally, laws regarding employees and employees are drafted in favor of the employee so without the protections offered in an employee handbook, the employer is open to more risk.

Although some federal regulations such as Title VII and the Americans with Disabilities Act do not go into effect until you have 15 or more employees, a business of any size can be sued for other employment related issues.

To minimize your risks, it is important to have a relationship with an employment law attorney who will update you of any federal or state required changes.

Other ways to minimize risks include an annual handbook review. As the world changes, you may need to create new policies that reflect the changes in the law and your employee handbook should reflect those changes.  For example, think of the changes to the workplace over the past few years like health care reform, more employees are able to work from home, working parents and the balance between home and work life, the use of personal mobile devices and so many others.

In addition, the handbook should be reviewed to make sure the documented polices that are included in the book are consistently followed and are a reflection of the culture of your work enviroment.  If the policies in the handbook are not followed and not a reflection of your work enviroment, you will have a weak defense if a dispute arises.

Remember, it’s not enough just to update the handbook.  Clearly communicating any change or policy update to all employees is also required.

Small Business Owners: The Future Might Not Be All That Uncertain

If you are like most small business owners, you find it difficult to plan because your future has more unknowns than your non-business-owning counterparts. You might not know how much your business is worth, when you should sell, where to find the right buyer, how to fetch the best price, or even how much insurance to carry. If you have a family business or operate with a partner, you also have additional layers of both complexity and ambiguity.

When planning for the future, it is easy to become overwhelmed by all that isn’t known. When you step back and evaluate the questions marks that dot the path to your future, however, you might realize that not everything is unknown.

The value of your business is a prime example of a discoverable fact, yet if you are like 98% of the other small businesses in this country, you don’t know the answer.

With less than a half an hour of your time and innovative technology that harnesses the power of big data, you can get an accurate business valuation to illuminate your path. The valuation will give you an understanding of how much your business is worth, how it compares to others in your industry, and the levers that could drive future growth.

According to a Financial Planning Association/CNBC study, over 70% of small business owners have the majority of their wealth tied up in business assets. Knowledge of how much yours is worth brings clarity and insight into retirement and estate planning discussions, succession planning and exit strategies, and insurance protection decisions.

As Lieutenant General and former Deputy Director of the CIA, Vernon Walters, once said, “Uncertainty is the most chilling thing of all.” To reduce the amount of ambiguity you face by determining the value of your largest asset, consider obtaining a business valuation today.

Protect Your Business with a Business “Prenup”

If your business has two or more owners, you need a Buy-Sell Agreement.

A buy-sell agreement is simply a contract between two or more business owners that formally documents contingency plans if a life changing event occurs.  Some people refer to these agreements as “prenups” for business owners. In the agreement, the business owners agree upon what happens to the ownership structure of the company in the event of one owner’s death, divorce, disability, retirement or other life changing events.

Many business owners don’t realize until it is too late the importance of a buy-sell agreement.  For example, if an owner gets divorced, the business may become hostage to the marital dispute. Or if an owner dies, the surviving business owner(s) may inherit heirs for business partners, who care little about whether the business survives.

Without a buy-sell in place, you are opening yourself and your business up for unknown risks.  Protect yourself and your business from the unknown future with a buy-sell agreement. Ensuring that critical events are properly covered is essential to the long-term survival of your business.

Business Owners: There’s No Time Like the Present

The biggest asset for many small business owners is the value of their business and they count on it for retirement funds. However, most of those owners do not actually know the value of the business. How will they know when they can stop working or what to expect in retirement?

Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:

  • Increase value. In life, what is measured improves – this applies equally to business valuation.
  • Capital infusion. To raise money on the right terms you need to know your value.
  • Mergers & Acquisitions. You need certainty on your value to properly negotiate a deal.
  • Exit of an Owner. The more you understand the value, the more likely you will be to reach an amicable split.
  • Too often people guess or estimate and one side or the other losses.
  • Tax strategies. Good tax and financial planning requires beginning with good data. The best plan in the world won’t do you much good if the initial assumptions about value of your assets was wrong.
  • Employee incentive programs. Companies with employee incentive plans may want or need to share value information each year with employees.
  • Insurance planning. Many small businesses do not have adequate insurance coverage. In order to get adequate coverage, you need to know how much value you are covering.

Many business owners avoid valuation because traditionally it has involved an extensive, expensive, and invasive process. Epiphany Law is different and our technology has changed the process. Now we can provide a valuation report that costs a fraction of the traditional model and takes a fraction of the time.

To get started on your business valuation, simply go to https://epiphanylaw.bizequity.com/.

 

Ambiguity is the Fertile Soil of Litigation

Don’t ever think that a comma is not powerful.  Recently a court in Maine found wording of Maine’s overtime rules ambiguous due to the lack of that humble oxford comma. That ambiguity cost a company millions in overtime pay.

Ambiguity is the fertile soil of litigation.  A former law school professor used to say, “Words are the tools of our trade.”  She would make us chant it with her.  When we use language that leaves itself open to interpretation, we are inviting people to challenge us as to what our words actually mean.  In the context of a contract, that challenge can put us and our businesses in a very bad place.  That is what we saw in this highly publicized case with the Oxford, or Serial, Comma.  For the record, I love the Oxford Comma, and I have no idea how it became something that people felt was optional.  Some examples of problems that arise from misunderstandings that spring from lack of an Oxford Comma:

The Book Dedication:  To my parents, Ayn Rand and God.

You get the idea.  While there are other ways to edit that list to make it clear, the Oxford Comma should/could have been used to clarify.  A mastery of language is not just a legal vocabulary, but also a grasp of grammar and basic words and grammar and stuff…  Did I say that right?

In the end, how you use the comma isn’t the issue.  If your contract doesn’t use the Oxford Comma, but is otherwise clear and concise, then you don’t have the same problem this company did.  The big problem here is that a missing comma could have such an impact on a company’s liability.  When you hire a lawyer to protect your business, make sure they know how to use their tools properly.

Avoid Piercing the Corporate Veil

Piercing the Corporate Veil

A corporate veil is like a “bubble” that will surround an LLC or Corporation and protect its owners from being personally liable for the company’s actions. The veil is normally very secure; however, there are times when that “bubble” can be popped and owners of a company become personal avenues for law suits normally reserved for the LLC or corporation.

Tips to avoid personal liability: Continue reading “Avoid Piercing the Corporate Veil”

Exit Planning: It Takes a Team

Exit Planning is very comprehensive.  Accordingly, several key players must be involved including your financial advisor, CPA, banker, insurance professional, business broker, or investment banker and attorney.  When selecting your team of advisors it is important to identify players that will work well together and will be able to help with any of the issues in a comprehensive plan.  No one person or advisor has the expertise to design a comprehensive plan.

Continue reading “Exit Planning: It Takes a Team”

Exit Planning vs. Succession Planning?

Often times the terms Succession Planning and Exit Planning are used interchangeably but they should not be.  Both Succession Planning and Exit Planning should be addressed as separate plans.

Succession Planning is planning for leadership continuity.  It identifies and fosters the next generation of leaders within a business. It’s a process because it requires a company to develop internal people with the potential to fill key positions within an organization. With a proper Succession Plan, a business will seamlessly transition leadership.

Continue reading “Exit Planning vs. Succession Planning?”

Employee Policies and Procedures: Costly if Not Monitored

There’s been a lot in the news lately about huge settlements that big companies have made for employment law issues. Whether it be for misclassification of workers or violation of wage and overtime laws, businesses continue to pay large fines for not following employment laws. For example, Uber drivers recently filed a class action lawsuit claiming they have been misclassified as independent contractors and are entitled to be reimbursed by Uber for expenses such as gas and vehicle maintenance. This lawsuit was costly. Uber agreed to pay $100 million to settle independent contractor misclassification claims.

Continue reading “Employee Policies and Procedures: Costly if Not Monitored”

Buying and selling real estate. Do I need an attorney?

The process of buying and selling real estate can be complex and it often represents one of the most substantial investments made by an individual or a business. Although using an attorney to assist with the process will not be free, the fees are a minor expense in relation to the significance of the transaction, and is certainly money well spent.

Handling a real estate transaction without an attorney may complicate the process in the short-term and increase risks and expenses long-term.

So, how can an attorney assist you in the buying or selling process?

  • Attorneys are able to negotiate the terms of the real estate purchase agreement to ensure your interests are protected, whether you are buying or selling.
  • Attorneys are able to structure the transaction in a way to minimize present and future tax liability and limit personal liability for matters relating to the real estate.
  • Attorneys are able to prepare agreements between partners in a real estate investment, as well as lease agreements with potential tenants.
  • Attorneys are able to conduct due diligence with respect to the real estate, to help you fully understand what you are buying and identify issues ahead of time. This includes reviewing the title work relevant to the property.
  • Attorneys are able to coordinate with other parties to the transaction, including real estate brokers and title companies, to ensure that the closing happens in a timely and efficient manner.

In summary, if you are buying or selling real estate, a real estate attorney will work for you to ensure you get the most out of your investment.