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

Employers Must Protect Employees' Social Security Numbers

In a recent newsletter update from the Krupin O'Brien employment law firm, attorney Natalie Cantor Gros wrote an informative article regarding the importance of employers protecting the Social Security numbers of employees.

The article points out that a Michigan employer paid $275,000 settlement to group of 911 operators whose Social Security numbers were stolen when a labor union employee brought home documents containing Social Security numbers and the employee's daughter use the information to make unauthorized purchases.

Michigan has passed a law designed to protect employees' Social Security numbers and other states are following. With about 9 million victims of identity theft in 2005 it is critical that employers take adequate steps to protect employees' Social Security numbers.

Employers should be particularly careful of allowing employees to have such confidential and private information on laptops. I have read over and over again about the loss of sensitive information on stolen laptops. Will employers ever learn?

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The Use of Comp Time in Place of Overtime

Some employers decide to provide employees comp time instead of paying overtime. Under the law, employers are usually not allowed to provide only one hour of comp time for each hour of overtime. Instead, an employer may be able to give compensatory time if the overtime premium is included. This means an employee is entitled to 1 1/2 hours of comp time for each hour of overtime worked, as long as the employee takes the time off during the same pay period as the overtime work. (This is often a misunderstood fact by employers).

If you have questions concerning the use of comp time in lieu of overtime please consult an employment lawyer or contact the Iowa Workforce Development.

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How to Name Your Iowa Business

The first step in naming your Iowa business is to make sure it is available for use. This requires a little homework. You need to make sure you are not infringing someone else's business name.

To stay out of trouble you should first see if the name is available through the Iowa Secretary of State's Web site. You can perform a search of a database containing the names of all the registered corporations and limited liability companies (LLCs) registered for business in Iowa. Another option is calling the Iowa Secretary of State's Office at 515-281-5204 to see if your name is available.

The next step is to make sure your business name is not registered as a trademark. It is possible for businesses to trademark their names in Iowa but a federally registered trademark offers more protection for the owner. In order to check the federally registered trademarks you can perform a free search on the U.S. Patent and Trademark Office Web site. Conducting a search this way is not always complete so you may want to consider contacting an Iowa trademark attorney or a company which specializes in trademark searches. Another great way to protect yourself is to conduct a Web search of Google, MSN, Yahoo or other search engine to find out if a business shows up with the same name. You better be careful and consult an Iowa trademark attorney if you intend to use the same name as someone else.

Why is a trademark so important? If you choose a business name that is too similar to a competitor's name, you might find yourself accused of "infringing" a trademark owner's rights. The trademark owner then may be able to force you to change your business name and also receive money damages from you.

Be sure to contact an Iowa business attorney or Iowa trademark attorney if you have questions about how to name your Iowa business.

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Exceptions to Limited Liability for Corporations and Limited Liability Companies

One of the main reasons for incorporating or forming a limited liability company (LLC) is protection from personal liability for business debts and claims. While corporate and LLC owners enjoy this limited liability in many situations it is important to realize that limited liability is not absolute. A corporate shareholder or an LLC member may be held personally liable if he or she:

1) Personally and directly injures someone;
2) personally guarantees a bank loan or other business debt and the company defaults;
3) fails to deposit taxes withheld from employees' wages;
4) intentionally engages in fraud or illegality which causes harm to the company or someone else;
5) mixes business and personal assets and does not maintain separate accounts for the business and personal finances.

Business insurance may be helpful in certain situations to protect you if limited liability does not apply but many insurance policies contain exclusions for intentional acts.

The best advice for running your corporation or LLC is to make sure you keep your personal guarantees to a minimum, pay applicable taxes and keep all business dealings separate from your personal accounts.

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Start-Up Businesses Should Develop Solid Relationship with Business Attorney

It is a good idea for start-up businesses to develop a solid relationship with a business attorney. Hiring an attorney is usually not as expensive as entrepreneurs imagine. In many instances entrepreneurs may try to set up their own incorporations through online resources but boilerplate article of incorporation, bylaws or shareholder agreements may not meet your needs. A business attorney can also help you consider other issues which may further protect your interests. This article from Entrepreneur discusses how to develop a solid relationship with your business attorney and the reasons why you should hire an attorney from the outset of your business.

Click here for information on Iowa small business incorporation and LLC formation services.

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John Wellman Remembered: The Consummate Lawyer

Upon my return from vacation I was saddened to learn John Wellman passed away last Friday. Wellman, a long-time public defender, was blinded in a hunting accident at the age of 17. He overcame his adversity to earn a law degree from Drake University and a Masters in Law from Yale. He was 64.

His son Gregg was my position coach at Simpson College. Wellman attended our games and later told me at the courthouse that he always enjoyed "watching" our team. He was one of the lawyers in the first trial I watched at the courthouse. He represented an obviously guilty man who had been caught on video tape robbing the cash register at a convenience store. Wellman joked with the prosecutor out of the presence of the jury that he would simply argue the man was trying to put the money back and that the camera had it wrong.

Guilty or not John Wellman represented his client to the best of his ability. He used his laser-like ability to pinpoint deposition testimony to impeach a witness whose trial testimony conflicted with previous statements under oath. Wellman did not refer to the deposition itself. Instead he recited the page and line immediately off the top of his head without missing a beat. An amazing gift indeed.

He delivered his closing as he leaned on his walking stick. Methodically explaining in plain language why the jury should acquit his client. Nothing fancy but a brillant closing nonetheless.

I worked in a case against a Plaintiff's class action lawyer that told me with regret that he did not have any "real" clients. I know Wellman had no such regrets. As explained in the book, Season of Life, Wellman was truly "a man built for others."

He lived with integrity and not only when it was convenient to do so. Always.
He sought justice. Because it is often hidden.
He encouraged the oppressed because they are always discouraged.
He made a great impact on the world because he asked the simple question: "What can I do for you?"

John Wellman did not worry about getting the biggest bank account or the fanciest car. (I guess he could not have driven the car anyway). He concentrated on what truly mattered. I am better for knowing him and I thank him for his fine example of what a lawyer should be and more.

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Look Before You Leap With Blogs

I read this interesting article entitled, "Blogs Raise Copyright, Other Legal Issues" from The Business Journal of Milwaukee. The article discusses the legal issues raised by blogging including copyright infringement, defamation and privacy issues.

For lawyer bloggers there are a whole host of ethical issues to consider including confidentiality, lawyer advertising, unauthorized practice and ex parte contacts.

Companies considering a corporate blog should consider seeking advice from in-house counsel and/or outside counsel with a good understanding of technology and blog law.

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eDiscovery Law Resource

The law firm of Preston & Gates has developed a searchable database currently containing over 500 cases relating to eDiscovery. This helpful resource for litigators contains over 100 eDiscovery cases that were decided in 2006. Click here for the eDiscovery Database.

Thanks to Francis G.X. Pilegge of the Delaware Corporate and Commercial Litigation Blog for pointing out the resource.

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Employers Face Overtime Lawsuits

According to Business Law Today and the Washington Post lawyers for big businesses around the country are working overtime to protect corporate giants facing lawsuits for failing to pay overtime to rank-and-file employees.

As discussed in an article by Stephen Franklin of the Chicago Tribune, cases against State Farm Mutual Insurance and Allstate Insurance led to payouts of over $100 million for each.

This is also a significant problem for smaller businesses. In my experience it is not uncommon for small employers to misclassify employees. The U.S. Department of Labor has upped its enforcement of federal overtime standards. According to the Business Law Today article, the department saw a 26 percent increase in back wages won for workers and an 11 percent increase in the number of workers it was able to help last year.

A human resource audit can help you determine whether you are classifying workers properly.

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Have you thought about starting your own business blog? Des Moines business blog expert Mike Sansone is offering a FREE two hour business blogging workshop on August 17, 2006. The workshop will cover topics like:

1)How to follow the conversations using social media search tools.
2)Why your company should engage in these conversations.
3)What are the differences between blog sites and (cob)web sites.
4)Questions to answer before you begin blogging.

If you are interested, you can register here. But you should hurry because the workshop is limited to the first twenty five registrants.

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Top Ten Steps for Business Start-Ups

In her column this week Rhonda Abrams, a nationally syndicated small business consultant, sets out the top ten steps for business start-ups.

Abrams says this is what most entrepreneurs ACTUALLY do:

1. Choose a business name.
2. Get business cards.
3. Search the Internet for information and advice.
4. Envision how much money you'll make. (This is almost always wrong).
5. Set up a place to work.
6. Set up some basic financial accounts.
7. Look for customers.

Instead, Abrams advocates that entrepreneurs MUST DO the following:

1. Talk to an attorney and/or accountant. (I advise you definitely should do both).
2. Objectively check out the competition.
3. Get a domain name and/or email address.
4. Get all necessary business licenses, permits and certifications.
5. Contact an industry trade association.
6. Get a business bank account and set aside one credit card for business use.
7. Develop at least a simple budget.
8. Get bookkeeping software.
9. Develop a business plan.
10. Develop a marketing plan and go for it!

It is important for entrepreneurs to talk with an attorney and accountant first. You should consider the type of business entity (corporation, limited liability company, sole proprietorship, partnership, etc.) and whether there are any contracts you will need in your business. Further, it is important to understand the tax implications of your business upfront.

Abrams' advice is right on the money.

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Employees are often issued laptops, cell phones and other technologies. Unfortunately employees will often fail to return equipment when they leave the company. When that happens many employers want to deduct the value of the equipment from the employee's last check. Iowa employers must familarize themselves with Iowa Code Chapter 91A.5 concerning deductions from wages. This chapter prohibits an Iowa employer from withholding or diverting all or a portion of an employee's wages unless permitted by state or federal law or a court order. An employer may be allowed to deduct wages if the employer has written authorization from the employee to deduct for a lawful purpose that benefits the employee.

Consequently an employer may want to consider a written agreement with the employee upon issuance of the equipment. The agreement should authorize the employer to deduct the value of the equipment from wages if the equipment is not returned. With the appropriate language an employer may be allowed to deduct from the last paycheck.

Please be sure to consult a lawyer for specific advice concerning your circumstances.

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Did you know that several cities including Des Moines,Iowa now have laws or ordinances prohibiting workplace discrimination based on sexual orientation? Even though no federal prohibition exists, there is a trend toward enacting legislation in this area.

Under these laws, it is generally unlawful to use sexual orientation to:

Refuse to hire a job applicant.
Terminate an employee from a job.
Discriminate in compensation or in other terms or conditions of employment.
Print, circulate, or use any discriminatory statement, advertisement, publication, or job application form.
Make any inquiry that is discriminatory in connection with prospective employment.

If an employee or a job applicant feels that his or her rights have been violated and files a lawsuit, the possible damages a company may face include payment of back pay, reinstatement of the employee, a training requirement to eliminate the discriminatory practice, and payment of damages for emotional distress.

Be aware of your local regulations. Although discrimination based on sexual orientation is not yet prohibited by federal legislation, this is a hot issue. You may need to carefully consider your policies if you have one location in Des Moines and the other outside Des Moines. Do you want or need two policies that are separate and distinct regarding sexual orientation? However, even if this local regulation does not apply to your company, it is prudent to recognize this trend to avoid claims of wrongful termination in violation of public policy.

If your company is in Des Moines or another city that has a similar regulation you should review your Employee Handbook and any other written policies regarding harassment and discrimination. These policies may need to be re-written to include sexual orientation as a protected class. This may include several sections and policies within your Employee Handbook such as Equal Employment Opportunity, unlawful discrimination and harassment, and personal appearance policies. You should also review any documents that include your Equal Employment Opportunity policy such as employment applications, Affirmative Action plans and employment advertisements for open positions.

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Jennifer Jaskolka-Brown has started the Iowa Family Law Blog. Jennifer is a shareholder with Sullivan & Ward, P.C., a law firm located in West Des Moines, Iowa. She maintains a general practice which includes an emphasis on family law and litigation.

For more information please visit the Iowa Family Law Blog.

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