Iowa patent and intellectual property attorney Brett Trout posted yesterday on the recent ruling from a federal judge that struck down a key part of the Patriot Act.  Brett refers to an article from the Associated Press.

It is important to note the judge immediately stayed his ruling so the government could appeal.  I will follow this case as it moves forward and provide updates.  This is a critical issue for Internet Service Providers.

A nice overview of the ruling and its potential impact is found on Concurring Opinions.

Thanks to Nina Kaufman for quoting my post  "Employees v. Independent Contractors" on the Entrepreneur.com Blog Network.  Nina’s blog on the network is "Making It Legal:  The small business mentor’s guide to entrepreneurship and law."  Her advice on the employee v. independent contractor issue is excellent:

This is not an area to play fast and loose with the law. It’s like gambling in Vegas; the house is stacked against you. As confident as you think you may be about the situation, it’s wise to confirm your choice with an employment or other business attorney.

Another blog post worth mentioning on the subject is from David Willis on his Texas Small Business Law Blog.  David is right on track with his warning to small business owners:

The bottom line is that an SBO cannot simply say that a particular worker is an independent contractor and expect that decision to have legal effect. The consequences for failing to properly determine the relationship between the SBO and worker can be quite serious, resulting in legal liability to third parties, insurance issues, and penalties for unpaid employment taxes. For these reasons, it is critical that an SBO seek help from a professional when defining the nature of an employment relationship is important to the SBO’s business.

Is your business looking to blog?  Want to find out more about how you can have a Web site on steroids? 

If so, you definitely need to listen to DSMBuzz podcast with Mike Sansone of Converstations.  Mike Sansone is a premier blog coach, not just here in Central Iowa, but also nationally.  Particularly if you are a Central Iowa business you would be crazy not to to talk with Mike to learn how you can improve the communication with your customers. 

 

In the never ending search for objective franchise information  I discovered Blue MauMau.  The site is a franchisee community designed to share insight, comments and stories about buying and running a franchise.

A few of recent blog entries worth reading are:

If you are considering a franchise it is important to research and conduct due diligence about the franchise system.  The notion that franchised businesses cannot fail is false.  Not everyone is cut out for owning their own business and not everyone is cut out for franchising.  Here are two suggestions if you are considering a franchise:

  1. Talk with as many franchisees as possible in your due diligence.  Ask probing questions to get an accurate picture of the franchise and the prospects for success.  You will learn both from the positive and negative comments. 
  2. Consider working in the franchise system for six months to a year before purchasing the franchise.  There is no substitute for working in the system before purchasing the franchise.  Don’t think you can afford to do this?  Perhaps you should consider whether you can afford NOT to do this.

Des Moines, Iowa lawyer and broadcaster George Davison shares his interesting insight and resources on George Davison Iowa Law.  Many of you may know George from his work on WHO radio as a news anchor.  He sports one of the best all-time radio voices I have heard.  George is also an adjunct professor at DMACC teaching courses business and corporate law. 

George is one of the few lawyers that make listening to case law updates at CLE seminars fun and enjoyable.  His reviews of cases such as the recent decision in favor of DMACC on discrimination and retaliation claims are some of the best around. 

George’s blog is one for the blogrolls.

It’s been a long time since I have written about the Microsoft-Iowa case but the hearing for final approval of the $179.95 million settlement is this Friday, August 31.  The settlement received preliminary approval from Judge Rosenberg back in April and I anticipate the judge will grant final approval of the settlement.

Class members are entitled to receive $16 for each copy of Windows or MS-DOS they purchased; $25 for each copy of Microsoft Excel; $29 for each copy of Microsoft Office; and $10 for each copy of Microsoft Word, Works and Home Essential software. Consumers do not need proof of purchase to be reimbursed for up to $200.

Microsoft will provide one-half of the difference between $179.95 million and the unclaimed cash and vouchers to Iowa public schools in the form of vouchers that may be used by the schools to purchase a broad range of hardware products, Microsoft and non-Microsoft software, and professional development services.

One of the more interesting aspects of the settlement is that claims from consumers are trickling in very slowly.  As of August 1, 2007, the AP reported that only a little more than 55,000 Iowans have filed claims.  Class members are able to claim $200.00 without a receipt.  It is likely that most of the claims are far below $200 but even if the 55,000 Iowans claimed an average of $200 that  means the total payout for the class members is approximately $11 million at this point.  Probably not too surprising because I think most people have a hard time working up any outrage over Microsoft’s actions.  

The plaintiffs lawyers, on the other hand, have requested $75 million in legal fees and expenses for the case.  Initially Microsoft objected to the amount of the fees when Conlin requested more than $75 million but it is my understanding there will be no objections because Conlin has agreed to reduce her claim to no more than $75 million.  (What would Brett Rogers say about this?)  The judge will decide how much is awarded in fees. 

For details on how to file a claim please go to www.iowamicrosoftcase.com.  You must file your claim by December 14, 2007 or within thirty (30) days after the court grants final approval on the settlement, whichever is later.  

Drake University Law School is hosting a Risk and Responsbility in the 21 Century Symposium on September 7, 2007. 

The goals of the symposium are (1) to explore the notion of risk, (2) consider how we should respond to it in this century, both in the private and in the public arena, and in doing so, (3) examine the responsibilities of individuals, private institutions, and government.

The featured speaker is Tom Vilsack.  Vilsack is the former two-term governor of the State of Iowa and former presidential candidate.  He is now a visting distinguished professor of law at Drake Law School and an attorney with Dorsey & Whitney.

Also scheduled are a number of other terrific speakers including best-selling author Phillip Howard, trial lawyer Marc Stanley, Connecticut Law School professor Tom Baker, Harvard Business School professor David Moss, Drake University business professor Tom Root, Cedar Rapids Mayor Kathleen Halloran, and Iowa Insurance Commissoner Susan Voss.

The event has applied for six hours Iowa and federal CLE credit.

 

Congratulations to Vince Basile of Aerospace Geartech who is featured in an article about the Business Innovation Zone (BIZ) in today’s Des Moines Register Business section.

Executive Director Mike Colwell worked with Vince to obtain grants through the Iowa Department of Economic Development and DMACC in order to purchase two manufacturing businesses (one from Ilinois and one from Florida) and move them to Iowa.  Colwell also helped Vince with his business plan and other strategic issues. 

Vince is an example of how persistance pays off.  He would tell you that his search for a business was not easy.  He looked at many different businesses until he found the right one (I guess two) for him.   He is now in a business that fits his skill set and passions.  He is extremely resourceful which will serve him well as he moves forward with his new business venture.

I also cannot say enough about the guidance and expertise of Mike Colwell.  Every time I talk with him I learn something new about business and entrepreneurship.  Central Iowa businesses are extremely lucky to have such a great new resource.  If you are a start-up entrepreneur or a business looking for growth or capital, I highly recommend talking with Mike.  BIZ does not actually make investments in companies but it does help entrepreneurs locate grants and find investors.  BIZ is also able to provide assistance with improving business plans and open up valuable networking opportunities for new entrepreneurs.  The thing I like best is that Mike won’t always tell you what you want to hear.  His objectivity and honesty is refreshing. 

 

Iowa intellectual property lawyer Brett Trout has a terrific post on IowaBiz illustrating why it is dangerous to steal online contracts.  Brett says,

I have seen companies steal terms of use agreements and privacy policies from websites that have nothing to do with their line of business. Not even taking the time to read the contracts, they unwittingly leave in the original company’s name, address and preferred jurisdiction. An Iowa company looks pretty awkward explaining to a court why their contract dispute should be tried in Albuquerque.

Terms in contracts are construed against the drafter. If you leave in an ambiguity, the court will read it in favor of the people suing you. That is why lawyers take such care in customizing contracts to your business and its goals.

Sometimes it is almost laughable how many companies copy the terms of use and other online policies of major Web sites.  In doing some research for an online auction company I noticed several of the companies I researched had the same online policies.  Was it just coincidence the policies were strikingly similar to eBay?  Well, I guess if it ain’t broke . . .

Even if you use standard terms of use policies and other online policies you will need some customization for your particular business needs.  Discuss with your lawyer whether he or she has standards forms that can be customized for your business.  Most eCommerce lawyers have such forms.  But it is a good practice to avoid directly copying the terms of use and other online policies of other companies.

Small Business Owners – Beware!  If you own or manage a small business you live in a world of substantial legal risks and increasing complexity.  It is easy to find examples of practices that once have been common but now could give rise to employment lawsuits.  One such example I often hear is "I’ll just call my workers independent contractors and avoid the hassles of employees."

 

Construction_worker

Many businesses make the mistake of treating employees as an independent contractors so they can save money on taxes, red tape and benefit coverage.  The risks associated with this approach is often not worth it.

Businesses that misclassify workers often find themselves embroiled in wage and hour lawsuits or workforce development audits.  These businesses could also face tax penalities and lack of insurance coverage in key liability situations.

Often, businesses treat employees as independent contractors because they fail to fully understand the distinction between the two categories.  The most important difference is whether or not you have the right to control the work.  Other factors, such as where the work is performed, who provides the equipment, how payment is made and if there are set hours, also play an important role.

Generally, an employee is someone whose manner of work the employer has a right to control, even if the employer does not actually exercise that control.  True employees are sometimes known as W-2 employees because of the W-2 form issued to them for federal income tax purposes. 

On the other hand, an independent contractor is someone you engage to perform a certain task, but whose manner of work you do not have the right to control.  You have the right to tell your independent contractor what it is you want done, and you remain free to dismiss them if you do not like the work (depending on your contractual arrangement).  Ultimately though it is the results you are interested in.  The manner in which the results are accomplished is up to the independent contractor and is not subject to your control.  An independent contractor is given a 1099 form to report income for federal tax purposes.

If you have questions about whether to treat workers as employees or independent contractors be sure to consult with an employment or tax lawyer.  This area of the law is more complicated than just the control issue.  Tax lawyer Tripp Atkins is currently analyzing the 20-factor IRS test for determining an employee or independent contractor on his blog.

The safest course is to treat workers as employees if the workers’ status as an independent contractor could reasonably be questioned.   

Photo on Flickr by Partsnpieces.