Rush on Business : Iowa Corporate Lawyer & Attorney : Rush Nigut of Brick Gentry Law Firm : Serving Des Moines, Cedar Rapids, Davenport, & Sioux City

Today I am excited to get a chance to participate in 22 Tweets with Lance Godard.  22 Tweets is an opportunity for practicing lawyers that tweet to share their stories and tell a little bit about themselves in a 22 question format.

Lance has a terrific site (an ABA Journal Blawg 100 recipient) that features many interesting and insightful lawyers. I encourage you to check it out.

Be sure to follow us this afternoon @22twts and @rushnigut. 

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A couple of years ago I set out to write a Legal Guide to Starting a Business in Iowa. Unfortunately trying to work, write a blog, coach baseball and write the guidebook didn't quite work for me. I started the guidebook but never came close to finishing it.

So this year I have decided to blog the guidebook. At the end of the project, I'll have my book and hopefully Iowa entrepreneurs will have something that is helpful and informative.  The project may take several months so most of the information on the blog over this time will be very general in nature rather than dealing with current events. I'll still blog on current events as appropriate.

Thanks for your continued support and have a happy New Year!

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A couple of years ago I touched on how wage and hour lawsuits were on the rise. Since then Iowa's own Casey's General Stores got tagged for $11.7 million in a settlement.  But not even I could have predicted the potential $1,000,000,000 liability that AT&T allegedly faces for failure to pay overtime. Yep, that's a BILLION dollar claim!

Naturally that kind of pie in the sky number might leave one to think, "It's never going to happen to me, my business is much smaller and I won't be a target." But when you look at the fact that experts believe approximately 70 percent of businesses are out of compliance with wage and hour laws, you shouldn't be quick to shrug off the prospects of a process server knocking on your door. All it takes is one disgruntled employee to contact the Iowa Workforce Development or the Department of Labor and you could find yourself in the middle of a wage and hour dispute.

So what are some helpful tips to avoid wage and hour lawsuits? (The outline below is from an earlier post.  The comments from some prominent employment attorneys are especially good).

• Conduct a Wage and Hour Review.  Your first step should be to get with an employment law attorney or other wage and hour/human resources specialist who can review your pay practices to determine whether you are in compliance with the law.  The cost spent for a review and developing a compliance program could save you tens of thousands of dollars in the long run or perhaps even millions if you run a large company. 
• Train Managers.  Making sure managers understand the rules is paramount.  Managers can avoid costly mistakes and spot problems before they become too costly.
• Think Exempt-Non Exempt, Not Just Salary - Hourly.  Too many employers pay employees a salary and then believe that relieves them from any obligation to pay overtime.  Employees need to make sure those employees are properly classified as exempt (someone who is typically not paid overtime) or non-exempt (someone that is generally entitled to overtime).
• Take Complaints on Wage Issues Seriously.  You want to treat wage and hour complaints just as seriously as employment issues including harassment or discrimination.  In fact, these wage and hour lawsuits could be more costly to your business.
• Do Not Retaliate.  Never, never, never retaliate against someone that makes a complaint for wage and hour issues.
• Develop strong policies on pay practices and employee hours.  Make sure employees work those hours assigned and do not work off-the-clock.  Above all, properly document the number of hours worked because just like in baseball where a tie goes to the runner - if the employer has not documented the hours worked by the employee - the benefit of the doubt will go to the employee. 

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An older post from Guy Kawasaki on the top lies from lawyers but worth reading. Kawasaki says at the end of the post that it wasn't his idea so lawyers shouldn't get upset with him.  However, most lawyers could benefit from reading the post.  An important take away is that if you say something, you had better follow through. 

Of course every business person could probably heed that advice, not just lawyers.

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An article in Barron's supports, in a big way, the importance of keeping good business records. The article details how the IRS disputed a $75,000 repayment of a loan for a business owner named Henry resulting instead in a $68,000 dividend, on which Henry owed tax. 

Joseph Gelband, a tax attorney from Larchmont, New York, wrote the article. He provides some wise counsel for business owners:

[Henry's] story points to the importance-especially for a closely held corporation-of observing formal business practices, if for no other reason than to create a record.  Minutes should be kept, and updated at least annually. Executive salaries, bonuses, and loan transactions should be reflected in those minutes, which should be reviewed by the company's accountant when statements are prepared.  The existence of that kind of paper trail would have left Henry in a much stronger position.

Now is a great time to document those transactions before the end of the year. 

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I want to take the time to thank my clients that have made 2009 such a special year. I am very fortunate to work with some of the best people I know. A big thank you to the regular readers of this blog.  As I enter the 4th year for Rush on Business this coming March it's always nice to know that I have support from so many.  

Have a great Thanksgiving holiday!

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The Franchise King has a great list of 20 small business blogs that have the right stuff. These blogs possess some of the best content on the Web when it comes to small business. Be sure to check them out!

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Throughout this blog you will see posts that recommend business people enter into a shareholder agreement when they start a corporation with multiple shareholders. But did you know that unless your shareholder agreement states otherwise, your shareholder agreement may only be valid for 10 years pursuant to Iowa corporate law?

Chapter 490.732 of the Iowa Code seems to indicate exactly that (although I have never seen it applied in a case yet). I think this is something that maybe even some of the most experienced corporate attorneys may not realize. So don't be surprised. You should review your shareholder agreement. If it is more than 10 years old, it may no longer be valid and a new agreement may be necessary.  If the agreement is less than 10 years old it may be a good idea to revise it so there is language indicating the agreement applies for more than 10 years. 

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In a recent interview I was asked about what employers need to know about the H1N1 virus as a follow up to my recent post on how employers need to be prepared for H1N1.  I didn't have a lot of time to respond as the question came towards the end of the program and we ran out of time. As a follow up, I thought I would mention that Connecticut employment lawyer, Daniel Schwartz, has a great post on H1N1 and the workplace. Daniel lists some available resources and has several recommendations for employers to get ready for the flu season:

• Update (or create) a Business Continuity Policy with specific provisions for H1N1 flu.
• Encourage employees to get flu shots (both seasonal and H1N1) as soon as possible. To the extent that you offer health insurance to employees, determine if those shots are covered under the appropriate plans. And consider offering flu shot clinics if you have the resources.
• Clarify what your absence and illness policies will be. Consider having flexibility in this situation if you can to encourage employees who are sick (who have someone that is sick in their household) to stay home.
• Make sure your infrastructure can handle an increased telecommuting presence if need be.
• Stay updated on the EEOC guidance.

I couldn't agree more that employers need to have flexibility in your policies. This is one time where it is likely okay to vary from your existing leave policies. However, it is imperative that if you do so, you treat all employees in a fair and consistent manner. 

Education is a key to prevention. For more information please visit Flu.gov for helpful information on H1N1 including a business planning section.  

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