Harassment – It’s a New Era

Hypothetical: Jordan owns Jordan’s Construction, Inc. She hired her first employee the first day she opened up her business. She did not consult with a business attorney or a human resources consultant. There was no time. The business needed to start immediately, and she couldn’t take the time to “dot the i’s” or “cross the t’s.”  This was her third business and she had never had any problems.  She had 10 employees. Two of them were supervisors. One of them, Chris, was a flirt. It was well-known that Chris was a flirt, but in the construction industry “it was acceptable.” A new employee, Sam started working. Chris sent Sam...

The Mistake of a Business Owner in Using a Progressive Disciplinary Policy

Hypothetical 1:  Sue started Beautiful Endeavors, Inc. fifteen years ago. The company now has five employees. Sue heard that she needs to have a progressive disciplinary policy so she implements one at her business. Then, Sam, an employee, physically assaults Chris, an employee. However, since Sam did not have any disciplinary issues, the policy requires that Sam is provided with a verbal warning. Hypothetical 2:  Jill has a florist business. She uses an employee handbook from the internet and implements it prior to hiring her first employee. The employee handbook has a progressive disciplinary policy, but the employee handbook...

When the Weather Impacts Your Employees’ Safety

In Minnesota, employees’ safety can be impacted by the weather. Severe cold in the winter and extreme heat in the summer are two common examples. Although OSHA (Occupational Safety and Health Administration) does not have specific standards for weather related conditions, employers have a responsibility to provide workers with conditions that are free from recognized hazards, including winter and summer weather related hazards, which are causing or likely to cause death or serious physical harm. Best practice is to have a policy regarding safety for conditions impacted by the weather, train your workers and monitor your workers. Even if your...

THE OFTEN-OVERLOOKED IMPORTANCE OF INSURANCE: IS YOUR BUSINESS ADEQUATELY PROTECTED?

Insurance coverage – what the policy covers and what it does not cover – is often misunderstood by business owners.  A business owner assumes that they have adequate insurance, but generally, upon a review of the business’ unique circumstances, the business if oftentimes not adequately covered.  Hypothetical:  A taxi cab company has insurance on all of its vehicles, but the insurance limits are the lowest allowed in the State.  One of the drivers is involved in an accident where the other driver is seriously injured.  The medical expenses are $300,000 and rising.  In this scenario, the taxi cab company will likely be sued and a claim to pierce the corporate...

Corporate Checklist

A corporation formed under Minnesota Chapter 302A has to follow strict corporate formalities, including maintaining its corporate books (note: nonprofit corporations are formed generally under 317A). Generally, a corporation is considered either an S-Corp or a C-Corp. However, those designations are tax designations. In order to be taxed as an S-Corp, you must file Form 2553 with the IRS. It is important as you start the New Year that you ensure that the following items are completed for your corporation:    o Articles of Incorporation filed with the Minnesota Secretary of State. o Completed the written action of incorporator, subscription agreement letter of investment intent, first meeting of the board of directors,...

The Mistake of a Business Owner in Purchasing a Business Hypothetical: Heidi and Gail want to purchase Couture Cupcakes, Inc. (CC). CC’s business attorney drafts the documents for the sale, and Heidi and Gail believe that the documents look reasonable. They do not consult with a business attorney prior to purchasing CC. After they purchase CC, numerous problems arise. Heidi and Gail seek the advice of a business attorney.  Issue: Three months after the purchase, Heidi and Gail find out that there were leases and contracts in the name of CC. Heidi and Gail claim that they are not responsible for those leases and contracts, which total...

Steps For Hiring an Employee

Oftentimes business owners make the mistake of rushing through the process of hiring an employee. The owner focuses solely on hiring someone without first making certain that the owner is protecting the business (and the owner’s personal assets). This article focuses on employees and not independent contractors (note: the law looks generally disfavorably upon independent contractors, and there are legal tests that must be met to lawfully classify a worker as an independent contractor). Best practice is first to form a legal entity such as a corporation or an LLC (limited liability company). The type of entity structure you would choose...

The Potential Pitfalls of Being Your Own Client

Billy Swanson dreams of owning his own business. He decides that he is going to open a business catered to the needs of homeowners. Specifically, he is going to provide cleaning services, lawn care services, and snowplowing services to homeowners. So, he decides that he is going to name his business, “The Perfection of a Home, Corp.” He decides to use “Corp” after his name because he believes his business looks more official. So, his buddy tells him that opening up a corporation is easy—you just go to the Secretary of State’s office and register your business as a corporation—because...

Commercial Lease Pitfalls

Hypothetical:  Mary’s floral shop, Mary’s Wedding Flowers, Inc. is excited because the shop has outgrown the space, and therefore, she needs to rent a larger space.  Mary has negotiated the contract with the potential new landlord. She brings the contract into her meeting with her business attorney as she realizes after being in the school of hard legal knocks that before she signs anything she needs her attorney to review it.  Mary explains to the attorney what she believes the agreement is and waits to hear the attorney’s response.  The attorney points out the following: Although Mary understands that she...

Failure to Properly Incorporate and Piercing the Corporate Veil

Hypothetical:  Mary works in human resources during the week. On weekends she makes fantastic floral arrangements for her friends’ weddings.  Mary unexpectedly gets laid off. She decides to turn her hobby into a business. Mary talks to her friends who own their own businesses on how to proceed.  Mary goes to the Secretary of State’s office and files the Articles of Incorporation for Mary’s Wedding Flowers, Inc.  On the day Mary opens up her flower shop, she immediately is swamped with business.  She doesn’t meet with any professionals, including an accountant or an attorney because she can do all of...