Complete performance reviews for all employees and independent contractors.
Review your staffing needs and plan to add, subtract, or reorganize accordingly.
Review job descriptions for independent contractors to ensure they are truly contractors and not mischaracterized employees.
Review personnel files and update I-9s and W-4s as necessary.
Review employee benefits.
Review your employment policies and procedures to ensure they are up to date and comply with recent changes in the law.
Review your administrative and business policies and procedures to see whether they accurately reflect your current practices.
Compare your actual sales to your yearly goal.
Identify successes and areas for improvement in the areas of lead generation and conversion of leads to customers.
Adjust marketing plan to match your goals.
Check customer satisfaction.
Review customer service policies and procedures.
Identify ways to improve the customer experience.
Collect W-9s from contractors and vendors that need 1099s.
Review yearly journal or transaction entries for accuracy. Especially make sure that income and expenses are properly categorized.
Verify year-end accounts payable and accounts receivable.
Reconcile payroll including comparing taxes paid to payroll returns.
Prepare documents and files for your CPA or tax professional.
Run year-end reports such as a profit and loss statement, budget report, and balance sheet. Compare to last year’s reports.
Prepare next year’s budget.
Review IT policies and procedures.
If you collect personal information from customers, review your PCI compliance.
Train employees as necessary.
Install security patches, software, and operating system updates.
Consider getting a cybersecurity audit.
Review last year’s goals.
Review your long-term goals.
Set next year’s goals.
Adjust your business plan accordingly.
On November 22, Judge Amos Mazzant, of the Eastern District of Texas sitting in Sherman, issued a nationwide injunction blocking implementation of the highly-anticipated changes to the Overtime Rule. A group of 21 state attorneys general, including Ken Paxton of Texas, sued to block implementation of the rule which was slated to take effect on December 1.
The rule change would have raised the overtime exemption for salaried executive, administrative, and professional employees from $455 a week to $921 per week.
In other words, administrative employees making less than $47,892 per year would have been entitled to overtime if they worked more than 40 hours in a week.
The court found that the Department of Labor (DOL) exceeded its statutory authority in issuing the rule change. The court’s decision is available on the Texas Attorney General’s website: http://tinyurl.com/zzdo4mw.
The DOL stated it is considering its legal options. It has not yet announced whether it will appeal the injunction to the 5th Circuit Court of Appeals. The DOL press release can be viewed here: https://www.dol.gov/WHD/overtime/final2016/.
As a practical matter, the ruling comes too late for most businesses.
The DOL announced the proposed rule change on July 6, 2015. The Department received over 290,000 comments to the proposed rule change. On May 18, 2016 the DOL released the final rule and warned the new rule would take effect on December 1.
Larger businesses adopted strategies for complying with the new rule months ago. Businesses that planned to comply and announced those plans to employees will hesitate to change course because of the cost of making changes at this late date, uncertainty whether the ruling will stand, and harm to employee morale.
Starting in December, administrative employees making less than the magic number, $47,476 per year, will no longer be exempt from the overtime provisions of the Fair Labor Standards Act. These administrative employees will earn overtime pay if they work more than 40 hours in a week.
Salary alone is not the only factor for determining whether a salaried employee is entitled to overtime or is exempt. There is actually a three part test:
Otherwise, the employee is entitled to overtime pay at time and a half the employee’s hourly equivalent rate for each hour worked beyond a 40 hour work week.
The Department of Labor has identified four options for employers to comply with the new rule:
Raising salaries and paying overtime is simply not financially feasible for many businesses. Employees may negatively view adjustments in workloads and schedules or converting them from salary to hourly pay.
There is another way to comply with the new rule without undertaking additional financial burdens: adopt a workplace policy mandating that non-exempt employees cannot work overtime without prior written approval from a supervisor.
Enforce the policy consistently. This will help the business be able to predict and control labor costs while encouraging healthy work-life balance for employees.
Adopting a policy regarding overtime, educating employees about the policy, and enforcing the policy will provide some predictability and enable the business to manage workloads in a way that minimizes financial strain and possible cash flow problems. We can help craft company policies that comply with the new rule while providing the ability to manage overtime.
It’s also a good time to think about your tax strategy.
Conventional wisdom is to maximize deductions and business losses and to minimize income. While this strategy results in lower tax bills, it may not be the best strategy for your business. Choosing the best tax strategy involves some advance planning and goal setting.
If your personal goals include buying a home or if your business goals include courting investors or seeking funding to meet your goals, then think carefully before minimizing your business income to avoid tax liability.
Mortgage companies tend to view the self-employed as high risk. Self-employed mortgage seekers must jump through more hoops than their counterparts who are employed by large companies. Mortgage lenders want to see a history of income stability. If your small business has taken a loss in each of the preceding several years, it will be hard to get a mortgage.
The same goes for financing to grow your business. Lenders are looking for credit worthiness and stable income – not a brilliant tax strategy. Don’t let your brilliant tax strategy compromise your ability to meet your goals.
Have a frank discussion with your tax preparer in advance if your business or personal plans include getting financing in the next 2-5 years.
Each year the Texas Workforce Commission and the Wage and Hour Division of the U.S. Department of Labor investigate scores of Texas businesses for violating minimum wage and overtime laws. With the new federal overtime exemptions imminently taking effect, employers should review their payroll policies to ensure compliance. Beginning December 1, salaried employees who make less than $47,476 per year or $913 per week will be entitled to overtime pay for working more than 40 hours in a work week. Texas recognizes the federal minimum wage which is currently $7.25 an hour.
Plan now to be in compliance with the overtime rule on December 1. Salary alone is not the only factor for determining whether a salaried employee is entitled to overtime or is exempt:
Nonexempt employees are entitled to overtime pay at time and a half for each hour worked beyond a 40 hour work week. The Department of Labor enumerated four options for employers to comply with the new rule:
Raising salaries and paying overtime is not financially feasible for many small businesses. Converting salaried workers to hourly pay could tank employee morale. Another way to comply with the new rule without undertaking additional financial burdens is to adopt a workplace policy forbidding non-exempt employees from working overtime without prior written approval from a supervisor. Enforce the policy consistently. This allows the business to predict and control labor costs while encouraging healthy work-life balance for employees.
The last minute has arrived. If you haven’t already adopted procedures to comply, consult a lawyer to help your business transition to the new rule. The Department of Labor has published this fact sheet for employers: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf
Anyone with a social media account can post online reviews of businesses, and there’s virtually no way to vet a review, that is, whether the reviewer is being truthful or whether the reviewer has an ulterior motive.
Schemes have been found where reviewers were compensated for good reviews, where reviewers blackmailed businesses into giving benefits in return for not writing bad reviews, where businesses threatened to sue reviewers for bad reviews, and where reviews were blatantly faked.
While a sudden plethora of five star reviews might be a red flag to Yelp, Google, or Tripadvisor, business owners are more concerned about the impact of fake negative reviews on their business.
When faced with a negative review that appears malicious or fake, people often respond by contacting the review site. Unfortunately, the review site has no legal responsibility for user posts.
Sites are protected by Section 230 of the Communications Decency Act (CDA), a little known federal law that was originally enacted to keep internet pornography out of the hands of children.
Congress passed the CDA in 1996. Most of the law focused on limiting indecent or obscene material on the internet; however, those provisions were struck down in a series of lawsuits filed by free speech advocates. Section 230 remains. In a nutshell, Section 230 says that internet providers are not the publisher or speaker of information they post when the information was created by someone else. 47 U.S.C. § 230. This means that a website generally is not responsible for content posted on it that was created by a website user. There are a couple of exceptions, e.g., criminal content and intellectual property infringement are not protected. So, online review sites are not responsible for the content of reviews posted by site users.
Even though they may not be legally liable, social media sites are concerned about the reliability of reviews posted on their sites. Most sites have adopted procedures for taking down fraudulent reviews. These procedures are site specific. So victims of fraudulent reviews must contact each site owner for instructions.
While the site may not be liable for fraudulent content, the individual doing the posting does not have legal protection for fraud, criminal acts, or defamation. If a reviewer did not use the business it reviewed, the review is likely fraudulent. If the review contains facts that are not true, the review may be defamatory. The basic test for defamation is that the statement is false and caused harm, is published, and is made negligently or maliciously. However, an opinion is not defamation.
So, what’s a victim to do? Look at the site’s acceptable use policy and see if the site has a procedure for taking down fraudulent content. Contact a lawyer to see whether the review contains content that is not legally protected and what recourse you may have against the individual that posted the review.
Arbitration is private; whereas, generally documents in court cases are public records.
So, if keeping a dispute out of the public eye is important, arbitration is preferable. In most cases, arbitration is faster. Arbitration can be accomplished in a matter of months. In smaller cases, parties can ask for fast track arbitration which is even faster. Fast track arbitration can be accomplished in a month or two.
Litigation of smaller cases will generally take six months or more. Litigation of complex cases can take years. Arbitration is informal. Because arbitration is done by agreement, it is flexible.
The rules of evidence don’t apply, so parties can either loosen or dispense with the need for testimony necessary in court that makes documents and such admissible. The investigation phase of a lawsuit is called discovery.
Discovery in arbitration is more of an informal exchange of information rather than a structured process involving asking, objecting, and getting court rulings on information requests. Arbitrators can, but do not have to, strictly follow some statutes. For example, an arbitrator can relax some of the “gotcha” procedural laws that litigants find to be unfair such as the time limits for filing suit. Arbitration is final. It is very difficult to appeal an arbitration award.
What are the drawbacks to arbitration?
Because the arbitrator does not have to follow laws strictly, statutory claims and defenses that may be a slam dunk in litigation may not be followed by the arbitrator. It is very, very difficult to overturn or appeal an arbitration award. Litigants have a right to have a higher court review lower court rulings.
Because the rules of discovery and rules of evidence do not apply to arbitration, parties run the risk of not getting all of the information and evidence relevant to the case. The arbitrator may base an arbitration award on evidence that is not admissible in court. Courts and juries cannot consider inadmissible evidence.
There is no jury right in arbitration. The arbitrator is both judge and jury. If the losing party doesn’t pay the award, it will take longer to make the award collectible. If a court judgment is not appealed, it becomes final and collectible in 30 days. After arbitration, the winner must file the arbitration award in court, and the court will confirm the award making it collectible. However, the loser has 90 days to dispute the award in court.
Which is more expensive?
That depends. The filing fees for arbitration are higher, but overall costs of arbitration can be lower because arbitration takes less time and because preparing the case for arbitration is less expensive.
Mediation is an alternative.
Mediation is a means of dispute resolution that is less expensive than arbitration or litigation. Mediation is attractive because the parties agree on a resolution. If mediation is not successful, then the parties may resort to arbitration or litigation.
Many businesses prefer arbitration because it provides a private forum for resolution of disputes, and arbitration can be faster and less expensive than litigation.
In business disputes among licensed professionals such as doctors or lawyers, the privacy afforded by arbitration is preferable to public court proceedings that may expose the dispute to media coverage.
In reality, inserting arbitration clauses into business contracts has become a knee jerk almost rising to the level of boilerplate. Before inserting an arbitration clause into a contract, consider the pros and cons in light of the contract and the parties’ relationship. Rather than inserting an arbitration clause into every contract, consider requiring mediation prior to arbitration or litigation as an even less expensive means of resolving disputes.
It’s become ubiquitous on customer service web pages: the chat box.
Searching through a site’s FAQs, a box pops up with an avatar of a person who looks eager to help encouraging you to type your question in the box.
Years ago, legal aid lawyers began wondering if we could use a chat box to help people who lived far away from the nearest legal aid office or who didn’t have transportation to their local legal aid office.
Nationally, several groups started working on the idea.
What if we could leverage internet chat to allow lawyers to help low income people from their desk?
Enter Texas Legal Services Center (TLSC) and the Texas Access to Justice Foundation. TLSC proposed and received a grant from the Foundation to start a chat service. We call it Live Help, and it’s still up and running on the Texas Law Help website, www.texaslawhelp.org.
The site and Live Help are geared to legal issues faced by low income Texans; however, the site contains a plethora of useful information about Texas law. It’s well worth a visit.
The first chat lawyer, Elliott Fontenette, is now the project manager leading a team of paid and volunteer attorneys. I consider him to be a visionary. When we started Live Help in 2010, Elliott and I were swimming in uncharted water. Now, legal aid groups around the world are using chat to help people access legal information, and the service has proved popular here in Texas with nearly 28,000 Texans having used the service.
I was reminded of my time at TLSC and working on Texas Law Help when Elliott and I were interviewed for a recent ABA Journal article about legal aid agencies that use web chat: http://www.abajournal.com/magazine/article/legal_aid_agencies_are_using_webchat_to_answer_queries/?utm_source=maestro&utm_medium=email&utm_campaign=tech_monthly
Thanks, Elliott, TLSC and Texas Access to Justice Foundation for continuing to bring quality legal services to those who cannot afford it. Well done!
The Department of Labor has finally issued a long anticipated rule raising the “white collar exemptions”, that is, the salary exemption level for executive, administrative, and professional workers. Traditionally, salaried administrative workers were not eligible for overtime pay unless their salary was very, very low. Beginning December 1, 2016, the overtime eligibility threshold for salaried employees will raise to $47,476 per year or $913 per week. What this means is that salaried employees making less than $47,476 yearly will be entitled to overtime pay for working more than 40 hours in a work week.
The exemption threshold had not been updated since 2004. The new rule provides for automatic updates every three years to maintain the exemption threshold at the 40th percentile of full time salaried workers’ earnings in the lowest wage region according to the U.S. Census.
Plan now to be in compliance on December 1. Salary alone is not the only factor for determining whether a salaried employee is entitled to overtime or is exempt. There is actually a three part test:
Otherwise, the employee is entitled to overtime pay at time and a half the employee’s hourly equivalent rate for each hour worked beyond a 40 hour work week.
The Department of Labor enumerated four options for employers to comply with the new rule:
Raising salaries and paying overtime is simply not financially feasible for many businesses. Employees may negatively view adjustments in workloads and schedules or conversion from salaries to hourly pay. There is another way to comply with the new rule without undertaking additional financial burdens: adopt a workplace policy mandating that non-exempt employees cannot work overtime without prior written approval from a supervisor. Enforce the policy consistently. This will help the business be able to predict and control labor costs while encouraging healthy work-life balance for employees.
Businesses have only a few months to plan for the new rule. Start analyzing your options now. A business lawyer can help your business make the transition to the new rule.
The Department of Labor has published this fact sheet for employers: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf