Articles Posted in Uncategorized

Your startup needs an infusion of capital.  You’ve tapped your savings and retirement account, the bank’s loan officer begins to shake his head as soon as you walk in the door and your family and friends send your calls to voicemail.

So you hear about this new thing called crowdfunding.  You go to Kickstarter™ or RocketHub™, web sites that allow a person or business to turn to the public to raise money.  Your campaign is successful and you have $100,000 to keep the party rolling. 

Sounds like you’re a winner, right?   Wrong!  Leave it to the SEC – that’s the government agency that monitors securities and investments – to put a damper on things for you.  As authorized under the JOBS Act passed in 2012, the SEC has proposed new reporting requirements for companies that use crowdfunding.  The proposed rules, which will allow a company to raise up to $1 million a year, are not as stringent as those for a public offering, but they may make crowdfunding much less attractive for small businesses looking to raise capital.

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CNN reported recently that Jonathan Martin will not return to the NFL this season. Martin was a tackle for the Miami Dolphins who left the team because of what he alleges was, in a word, bullying.

Martin is an unlikely victim. He’s about six and half feet tall and weighs more than 300 pounds. He was a starter on the Stanford football team and was an honorable-mention All-Pac-10 selection and second-team freshman All-American. The Dolphins selected Martin in the second round of the 2012 NFL draft. Getting on Martin’s wrong side is not something most of us would consider to be a survival trait.

Enter Richie Incognito. In reports published in the sports press, Martin alleged that Incognito subjected him to severe verbal abuse, among other things. The particulars of the case have played out over the past couple of weeks, but among the more interesting tidbits is that Incognito’s conduct may have been the result of taking orders from Dolphin coaches to “toughen up” Martin were taken too far.

Bullying, of course, is not limited to the locker room. People who get a kick out of tormenting another human don’t magically disappear after leaving high school. They grow up and get jobs. And your office may not be immune.

There are a multitude of laws banning discrimination and sexual harassment in the workplace, but there are no laws that say workers have to be nice to each other. Left unchecked, though, workplace bullying can lead to a substantial hit to your bottom line.

According to the Workplace Bullying Institute—and yes, there is such a thing—up to a third of workers report being the target of bullies while on the job. The targets report higher levels of anxiety and stress and lower levels of productivity. A bully can lead to higher levels of absenteeism and turnover. A WBI team at Griffith University in Australia estimate that bullying costs companies between $6 billion and $13 billion annually. Continue reading

EMPLOYEES – CHECK YOUR WEAPONS AT THE DOOR!

Illinois became the last state to pass legislation authorizing the concealed  carrying of firearms by enacting the Firearm Concealed Carry Act.  What does this mean for employers and what is the rule for having guns in the workplace?  

 The Act allows a concealed carry license holder to carry a loaded or unloaded firearm fully concealed or partially concealed on or about his person or his vehicle.  In order to obtain a concealed carry license, the individual must be at least 21 years old; have a current Firearm Owner’s Identification card (“FOID”); not have been found guilty of a misdemeanor involving physical force or violence or two or more DUI violations in the preceding 5 years; not be subject to an arrest warrant; not having been in a residential or court ordered treatment program for drugs or alcohol in the last 5 years; and complete 16 hours of firearm training and education.

Regardless of the right to carry a concealed weapon, there are certain places where it is still illegal to have such a concealed weapon. Prohibited areas include:

·      Pre-school, daycare, elementary school, secondary school, college or university;

·      Any government building or court;

·      Any hospital, mental health or nursing home

·      Any establishment where more than 50% of the gross receipts are from the sale of alcohol (bars)

·      Public playgrounds or parks

·      Casinos

·      Sports stadiums

·      Airports

·      Amusement parks or zoos

Before employers start running for the doors believing their places of business will become a haven for gun toting employees, there are a few items that need to be addressed.

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Mandatory Arbitration: Friend of Big Business and Enemy of Consumers?

Virtually every consumer contract now contains a mandatory arbitration clause that reads something like this: “All claims and disputes arising under or relating to this agreement are to be settled by binding arbitration.”  That sounds innocuous enough, at least until you find out what binding arbitration really means.

According to a report from the American Association for Justice, mandatory binding arbitration is a “license to steal.”  An example they use bears this out:  Back in 1998, an 81-year-old woman named Mabel Strobel was a client of Morgan Stanley Dean Witter.  On the advice of her broker, Strobel sold a rental property in San Diego and invested the proceeds in the stock market.  In the next four years, through the magic of the market, Morgan Stanley turned her $1 million investment into about $700,000.  Strobel claimed the company inappropriately invested her money, considering her investment objectives, risk tolerance and sophistication.  Unfortunately, the contract Strobel signed with the brokerage contained an arbitration clause.   So she brought an arbitration case against Morgan Stanley.  In 2004, an arbitration panel sided with Strobel, holding the brokerage liable for her losses.  So we have a happy ending for the consumer, right?

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Seattle rolled over Denver in Super Bowl 48, but according to that most reliable source—somebody on the Internet, Challenger, Gray & Christmas in this case—the day after the Super Bowl costs American businesses $850 million in lost productivity.  People call in sick because of overindulgence, or come into work hung over, or spend an inordinate amount of time talking about the game, to the detriment of getting something done.

Of course, the Super Bowl isn’t the only thing sapping productivity.  Fantasy football allegedly costs employers $1.1 billion a week, so with a 17 week season, that adds up to $18.7 billion annually, a figure ignores the draft and the preseason, but whatever.  ($19.55 billion total.)

Other sporting events also take a toll: March Madness? $192 million.  ($19.74 billion) Fantasy baseball? Couldn’t actually find any figures, so I’ll assume that it is not as popular as fantasy football, making the weekly figures smaller.  But the season lasts about six months, so we’re going to assign it the same cost as football, at $18.7 billion.  (Total, $38.44 billion) The fantasy baseball number is the last that is not backed up by that most reliable source.

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The Lawyer Grinch has stolen what made the office holiday party fun.

No more mistletoe.  No more open bars.  No more all-night bashes.  No more “fun” gifts.  No more firings for conduct unbecoming.  No more lawsuits from molested interns and employees injured on the way home.  No more sexual harassment claims.  No more cleaning bills for disgusting fluids forcibly expelled onto a fine suit.  No more making bail for drunken drivers.  No more creeping into the office the day after hoping nobody noticed.  No more resentments that last for six months after Christmas.

While there is no way to mitigate all of the possible risks for your holiday party, we have some guidelines for employers to help get you through the holidays and keep the Grinch away from the office party.  Go to our web site for our suggested Best Practices for the Holidays.

In my 40+ years of helping people start new businesses, I have identified several potential problems that entrepreneurs often overlook in their eagerness to get their business up and running. Businesses succeed because of a number of variables, not all of which can be foreseen. But many of the problems could have been easily avoided by consultation with a lawyer who understands the issues confronting a new venture.

The Entity That’s Best for You:

There are many  ways to organize your business and each alternative has good and bad points. The most common choice is between a corporation or a limited liability company. A corporation limits your liability and increases your potential for raising capital. But a corporation also comes with strict reporting requirements and unfavorable taxation issues. A limited liability company, as its names suggests, also limits your personal liability and it comes with tax advantages, but there are restrictions on selling an interest in the LLC and the laws governing LLCs are not uniform across the country.

There are other choices and there are many factors that go into deciding which type of organization is best for your venture. Our website has some information to help in comparing corporations and limited liability companies. Continue reading

   In this electronic world, signatures are still required to create a binding and enforceable contract.  Many negotiations take place thru email or the web.  Many contracts are negotiated without the parties ever having met face to face.   Laws have adapted to the changing world, and these changes make it possible to create binding contracts without a pen touching a piece of paper.

   The UNCITRAL Model Law on Electronic Commerce was adopted by the United Nations in 1996.  This model law helped form electronic signature laws around the world, including in the U.S.   The U.S. Code was changed in 1999 and e-signatures are broadly defined in the Uniform Electronic Transactions Act (UETA) and includes “an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”   This definition and many other core concepts of UETA are echoed in the U.S. E-Sign Act of 2000.   Every state but three have enacted the UETA.   Illinois has not enacted UETA but has adopted its own e-signature laws. 

   For more information on e-signatures and the related laws, go to my firm’s web page that goes in to more details: “Is an E-Signauture Legally Enforceable?”

The Illinois Supreme Court overrules the Amazon Tax Law

Illinois lawmakers’ attempts to level the playing field for Illinois small businesses took a major hit by our own Illinois Supreme Court last week.

We all know that we don’t pay Illinois sales taxes on purchases made thru the web.  Those books we buy thru Amazon.com don’t have the Illinois sales/use tax added.  But, the same book purchased at a “bricks and mortar” business in Illinois is subject to the Illinois sales tax.    What consumers don’t know is that if the retailers don’t collect the pay the sales tax, the buyer must report the sale and pay the “use tax” on the transaction.   (Which is why it is called the Sales/Use tax!)

So, the Illinois legislature adopted a law requested by Illinois business owners to level the playing field by requiring the sellers on the web to collect and pay the Illinois sales tax on sales made to Illinois citizens, and the Illinois legislature responded with the a taxing statute – Public Act 96-1544 effective in 2011 – called the “Main Street Fairness Act” which has been referred to as the “Amazon.com Tax Law.” Continue reading