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

I love this post from New York business lawyer Imke Ratschko regarding the best practices in executing a contract.

Her tips (and my comments):

1. Don't let technology or anyone else fool you.  This is a great lesson.  Once I negotiated a employment contract with another lawyer for several hours.  The last version of the day contained language that had been inserted for the first time and not discussed previously.  If I had not read the entire agreement (for what seemed like the tenth time) we would not have caught it.
2. Date the contract.  It goes without saying but it often does not happen.  It is important to date contracts for a variety of reasons including statute of limitations and it puts the dealings between the parties in chronological context.
3. Both parties should sign the agreement.  Again, it is surprising how often this does not get done.  While the contract still may be enforceable without both signatures it is obviously best to have the signatures and avoid a potential dispute about whether a party agreed to the terms.
4. Initial last minute changes to the contract.  Sometimes changes occur at the last minute.  If this occurs each party should initial by each change.  If time is available rewriting the language is always the best alternative.
5. Sign in your correct capacity.  If you are a corporate officer, you should sign in your corporate capacity such as President or Vice-President.  If you have an LLC sign using "Member" after your name or use your title.  This helps limit personal liability and indicates to the other side that you are signing the agreement on behalf of your company and not personally.  Similarly, make sure the entity is the party to the agreement and not you individually.
6. Check the other party's authority to sign.  You should make sure the person signing the agreement on behalf of the other party has authority to do so.  It is often a good idea to include language in the signature block that indicates the agreement is signed by an authorized representative of each party.
7. Get an original executed contract of the contract for your files.  It is generally not required under the law but it is often helpful to make sure that each party to the contract has an originally executed agreement.  So if there are two parties you will sign two sets of the agreement.  (Update:  See below for a comment from David Wall on electronic signatures - he makes a great point and offers some wise information).

Photo on flickr by diylibrarian

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If you get the chance you should catch the Iowa Energy NBA D-League basketball team in action.  The franchise played their first home game at Wells Fargo Arena last night after two road victories over Dakota the pre-season favorite.  The home season started out on a high note with the Energy notching an exciting 101-98 victory over the Albuquerque Thunderbirds.

It is a great family attraction.  The basketball is surprisingly good and the Energy are fun to watch with its up-tempo brand of play.  JamesOn Curry and Dwayne Mitchell are the real deal.  You might want to get out and watch these guys because they might not be here long.  The Chicago Bulls and Miami Heat just might be calling sooner rather than later.

Even if you aren't a big basketball fan you are sure to enjoy the action.  Trust me, the "Sparkplugs" are worth the price of admission alone.  And if you don't know what I am talking about you just might be a little surprised but you will have to see it to believe it.

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Kyle Kruidenier provides a good reminder for landlords over on the Iowa Law Blog.

Landlords:  Don't forget your rental certificate.

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Rick Georges of Futurelawyer shares a little Thanksgiving humor with his Top Ten Reasons There Weren't Any Lawyers on the Mayflower. 

Thanks for reading this blog.  I appreciate it.  I wish you a happy Thanksgiving and a wonderful holiday season.

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Recently I have been discussing the rise in wage and hour litigation.  See here and here. 

According to the Department of Labor approximately 70 percent of businesses are out of compliance with wage and hour laws.  That's right - 70 percent!  According to Shanti Atkins of the Compliance Training Blog, some experts believe this number is even higher.

But you might be asking yourself, "How could my business be out of compliance?  Everyone is salary.  I don't need to pay overtime.  Besides employees can volunteer their time."  As Mark Twain said,

It ain't what you don't know that gets you into trouble.  It's what you know for sure that just ain't so.

So what are some helpful tips to avoid wage and hour lawsuits?

• 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. 

The Department of Labor Web site is an excellent place for more information or please feel free to let me know if you desire more information on wage and hour reviews.

Update:  SMBTime blog had a great point in a follow up to this blog post regarding the fact that businesses should consider hiring an attorney to conduct the wage and hour audit so as the maintain the attorney-client privilege. 

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I read an interesting report regarding the Yankees' negotiations with Alex Rodriguez.  Apparently the Oracle of Omaha provided some advice that Rodriguez should contact the Yankees without his super agent Scott Boras.  With the assistance of two Goldman Sachs executives Rodriguez negotiated his $275 million, 10 year deal with the Yankees.

It was a tough week for Boras as Detroit pitcher Kenny Rogers also gave him the boot.

Is Boras a victim of his own success?  The contracts he has negotiated have been out of this world.  But the owners can't stand him and apparently the big money earned by his clients can't buy love either.  Rodriguez likely would have earned more on the free agent market but he wanted to remain a Yankee.  Boras must not have been listening.  Buffett did.

I wonder if Buffett will help LeBron James on his next big deal.  Or better yet, I wonder if he provides investment advice to law bloggers? 

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Last month I wrote on the rise of wage and hour litigation.  In that post I talked about how I believe wage and hour issues are often misunderstood by employers which often results in misclassification of workers or possibly "off-the-clock" allegations where workers are not properly credited for time worked. 

Yesterday, I heard the same sentiments from lawyers at the Iowa State Bar Association's Labor and Employment Law Seminar.  The plaintiffs' lawyers in the audience had a glint in their eye during the presentation on the Fair Labor Standards Act (FSLA). 

Why?

1. The FSLA is a plaintiffs friendly act.  It is truly the one law that favors the employee and consequently plaintiffs' lawyers.  Plaintiffs' lawyers are usually able to tell whether a lawsuit has merit very early in the process.   Further, class actions are often conditionally certified without having to meet the typical standards for class action certification.
2. Companies often make mistakes.  Wal-Mart, Merrill-Lynch,  Starbucks, Citigroup and the list goes on and on.  These companies have access to herds of the brightest and best lawyers.  Yet, many successful lawsuits have been filed against these and other companies for wage and hour claims.  What about all those smaller businesses out there?  Let's just say I have my doubts these smaller businesses are doing it any better.
3. The dollars at risk are HUGE!  $172 million, 78 million, 98 million, 87 million.  Even smaller businesses potentially face risks in the hundreds of thousands.   Willful violations are not uncommon which double the damages and attorney's fees are generally awarded to the winning plaintiffs.

How can businesses avoid wage and hour claims?  Stay tuned for the next post . . .

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Thought I would share this article from Seeds of Growth following up on Mark Cuban's talk at Blogworld. 

Remember:  In business, you only need to be right once to be a success.

Did you know that a certain Central Iowa patent attorney also appeared at Blogworld?  Quite a feather in Brett's cap.

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Accurate and properly written job descriptions can be an invaluable aid in hiring well and legally.  But bad job descriptions . . . well that can be worse than none.  Inaccurate descriptions, and those that an employer allows to become outdated only confuse the hiring process, complicate employee reviews and make accommodation under the ADA a daunting task.

For those reasons, any employer that adopts written job descriptions must commit itself to the ongoing task of ensuring that all descriptions prepared and circulated are accurate initially, reviewed periodically and updated as necessary.

In preparing a good job description, an employer should keep the following in mind:

• List specific qualifications.  Ensure that all educational "requirements" are mandatory, or consider using the phrase "or equivalent experience."
• List essential job functions and duties.  Carefully determine if the position has any lifting and other physical requirements.  If the description contains physical requirement, they must be "essential" or the requirement may be found to discriminate against disabled job applicants.  Be as specific as possible about responsibilities and duties, particularly supervisory and discretionary duties, because job descriptions (and duties) are important in determining whether an employee is entitled to overtime pay.
• Seek appropriate input.  Seek input from employees who hold the position and their managers to ensure accuracy.
• Identify and list the pay range.
• Use appropriate language.  Keep language neutral, non-age restrictive and relevant to job requirements.  For example, say "college degree required" as opposed to "recent college graduate".
• Monitor accuracy.  Implement and monitor a system to ensure that all job descriptions are current and complete.

For further discussion on job descriptions visit an excellent post from attorney Liz Overton on Sullivan & Ward's Iowa Law Blog.  Another insightful post is from Pennsylvania attorney Michael Moore (no not that one) who explains that proper business records (including well written job descriptions) are your only true defense in surviving a wage and hour audit.

Photo on flickr by macartisan.

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On IowaBIz.com, West Des Moines accountant Joe Kristan shares a story about what happens when you try to take personal deductions for corporate expenses.

The moral of Joe's story:

If you incorporate your business, run it like a business. The corporation pays the corporation's bills, or your deduction vanishes.

Great advice indeed!

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Doug Mitchell interviews Steve Reese who is the owner of Fitness Together franchise in Clive, Iowa in his first podcast of the Iowa Small Business Zone.  Listen and you will find that Steve is an enthusiastic proponent of franchising.   I was also impressed with Steve's impression of the potential benefits of blogging from someone who is new to the medium.  He views it as a way to improve communication with existing clients first and foremost. 

Steve's key in choosing a franchise?  Make sure the franchise has a proven track record.

Doug is a natural in the interview process.  I look forward to more podcasts in the Iowa Small Business Zone.

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For some reason I am not having any success at getting people to comment on a couple of issues:  here and here.

But I am receiving a number of requests recently for information on specific subjects.  It's actually fun and gratifying to receive email from readers who say they have been following the blog and want to know what I think about . . .

Today, it's this question.  Does Iowa allow single member LLCs?

Answer:  Yes. 

How's that for direct and to the point.  See my post on LLC formation in Iowa for more information.

I also intend to get to a couple of other requests in the near future.

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It's tough to hire good employees these days.  I am not familar with the company but I loved this video from Success With People.  They have an intriguing low-cost mentoring program for hiring better people and engaging them in your business. 

The Pennsylvania Employment Law Blog also has a helpful post The Interviewing and Hiring Process.  The five keys every business owner should think about when it comes to interviewing and hiring according to Michael Moore:

1. Uniformity of Process;
2. Documentation;
3. Prohibited Questions;
4. Applicant Communication;
5. Training.

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So who's more likely to land you in court: 

Customers or Employees?

I would love to hear your thoughts.  Please comment below. 

Photo of Polk County Courthouse on flickr by turtlemoon.

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The Ohio Practicial Business Law Counsel blog started up this past month and has some informative posts.  Of particular interest is a post on Dealing with a Customer's Bankruptcy. 

It's great to see business law blogs focused on clients.  Good luck to Teri Rasmussen in her new endeavor and thanks for the link to Rush on Business.

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Recently I posted about how the identity of anonymous bloggers may be revealed in situations where the anonymous blogger has engaged in defamation. 

My friend, Michael Libbie, thinks its wrong to duck responsibility in publishing.  I could not agree more.  As I stated in my previous post: 

If you are a modern day Lone Ranger or Zorro, you should not have the expectation that your anonymity gives you the right to say anything you wish about other people and organizations. 

However, last night I came across a new political blog here in Metro Des Moines called intothevortex.net.  I thought the blog posts were well-written and insightful.  Not knowing the author I checked the About Section of the blog and found the following explanation:

We are a multitude speaking as one through a single pseudonym. We must because too often personalities interfere with the real issues and serious debate. We refer to The Federalist Papers in support of the value of anonymity. We care about our community, our schools, who leads us and how they spend our tax dollars. We believe in the future, good government and the Boston Red Sox.

While I hate the Red Sox (but ironically love the Celtics), it is true that the tradition of anonymous speech is older than the United States. Founders Alexander Hamilton, James Madison, and John Jay wrote the Federalist Papers under the pseudonym "Publius," and "the Federal Farmer". The U.S. Supreme Court has repeatedly recognized rights to speak anonymously derived from the First Amendment.  The Electronic Frontier Foundation quotes the decision in McIntyre v. Ohio Elections Commission which reads:

Protections for anonymous speech are vital to democratic discourse. Allowing dissenters to shield their identities frees them to express critical, minority views . . . Anonymity is a shield from the tyranny of the majority. . . . It thus exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular: to protect unpopular individuals from retaliation . . . at the hand of an intolerant society.

That is a very strong argument in favor of anonymity, particularly on the Internet.  But while I agree with the principles of our Founders, unfortunately anonymity is taken too far in many instances.  For example, The Des Moines Register blogs are rife with people who will say anything when they are not required to accept responsibility for their words. 

Does this mean I disagree with the right to maintain an anonymous blog?  Well, one of the reasons I started blogging was because of the Anonymous Lawyer Blog later revealed to have been written by Jeremy Blachman.  His blog helped me understand the power of blogs and the Internet for lawyers.  An anonymous blog - done responsibly.

In the end, whether anonymous or not, let's all remember to blog responsibly.  Please. 

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The Rush on Business show is going on the road this next week.  On Monday, November 5, I'll be speaking in an Entrepreneur Workshop at Iowa State University.  The Human Computer Interaction (HCI) Graduate Program at ISU received funding to teach the Entrepreneurship Workshop, which is a one-credit, hands-on workshop for students interested in entrepreneurial activities with particular emphasis on commercializing a technology and/or starting a company. 

My talk will focus on Avoiding the Top Ten Legal Surprises that Wreak Havoc in New Tech Companies. 

FYI:  A National Science Foundation Report has just named Iowa State University as a technology licensing powerhouse.

The report noted that the Iowa State University Research Foundation executed 218 licenses in the year ending June 30, 2005. That was second in the country behind the University of California system.

"This is a tremendous accomplishment considering the University of California system has about $3 billion in research expenditures compared to ISU's $210 million," the case study said.

The study also noted Iowa State's total of 745 active licenses ranks sixth in the country. And the five start-up companies Iowa State launched in fiscal year 2005 ranked 22nd nationally.

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