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.

Des Moines Business Blog Expert Offers Free Seminar

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.

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.

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.

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.

Brett Trout and I will be presenting a blawg (law blog) continuing legal education seminar this Fall in Des Moines, Iowa covering the nuts and bolts of getting your law firm’s blog up and running. The seminar will include not only getting your blawg up and running quickly, but also tips on how to generate quality content to generate a base of avid readers and how to rank #1 in the Google Search rankings. For more information, email me at rnigut@sullivan-ward.com or watch this site for more information on the date, place, curriculum and special blog reader pricing.

According to an annual survey released by the U.S. Chamber of Commerce, Iowa’s legal system ranks No. 4 in the nation. Iowa has ranked in the top five each of the last three years.

The five top states for overall legal fairness according to the survey are Delaware, Nebraska, Virginia, Iowa and Connecticut.

The survey shows that Iowa is a great place to do business. New business owners from Iowa often ask me whether they should incorporate in another state. Unless there are compelling reasons to do so I generally encourage them to incorporate right here in Iowa. Another major reason to incorporate in Iowa are the low fees necessary to maintain a corporation in Iowa. If you file using the convenient online process, it only costs $30.00 every two years to register with the Secretary of State. When you compare those fees with many other states, including highly regarded Delaware, Iowa is quite the bargain.

The study, released by the Chamber of Commerce’s Institute for Legal Reform, is a benchmark by which companies, policymakers and the media assess the fairness of legal systems in the 50 states. The more than 1,400 attorneys who participated in the poll were asked to judge a number of factors, including overall treatment of tort and contract litigation, treatment of class action suits and mass consolidation suits, judges’ impartiality and competence and juries’ predictability and fairness.

A full report and state-by-state results are available at the Institute for Legal Reform or by calling the U.S. Chamber of Commerce at (202) 463-5682.

Are you looking to incorporate your Iowa small business? My first word of advice is to speak with an accountant to determine which form of business best suits your tax situation. Your choices likely include the "S" corporation, "C" corporation or you could choose to form a limited liability company.

Some people are inclined to choose an online service to incorporate your business. Many of these companies hook you in with a low cost advertisement for the incorporation but the other necessary documentation is offered for a significantly higher cost. Further, these organizations are often unaware of specific legal situations and local laws. It is wise to choose a business lawyer to incorporate your business. You want to make sure your lawyer practices primarily in business law. Choosing a lawyer that is not familar with business law may have serious consequences and may increase the costs because the lawyer may learn on your dime. By analogy, you would not want a plastic surgeon operating on your heart.

Find out how to affordably incorporate or form a limited liability company for your business. Click here for more on small business incorporation.