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.
The holiday season, really from Halloween through the twelfth day of Christmas, is this Austin Business Attorney’s favorite time of year. I love just about everything about the holidays. But, with the good comes the thieves.
Here’s a short checklist to help you stay safe.
If you think someone is standing too close, they probably are. Just move away. Go look at something else and get back in line later.
If it’s dark, don’t hesitate to ask a security guard to walk you to your car.
And, if you see an email from someone you don’t know, or if an email seems suspicious, just delete it.
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.
Ah, the employee break room – the smell of stale coffee, long-forgotten leftovers lingering in the fridge,
and… a panoply of informational posters decorating the walls?
Yesterday, the EEOC raised the penalties for failing to post required notices of employee rights under several federal laws.
At issue are the notices covered in the “Equal Opportunity is the Law” poster.
The maximum fine increased from $210 to a whopping $525 per violation.
This begs the question, “What notices are required?”
All employers must post information regarding:
Additionally, federal law requires federal contractors and employers with 15 or more employees to post the “Equal Opportunity is the Law” poster.
There are plenty of vendors who sell the required posters; however, all required posters can be downloaded free of charge through the Texas Workforce Commission and EEOC websites.
On May 11, President Obama signed the Defend Trade Secrets Act of 2016 into law. The Act protects businesses from misappropriation of trade secrets and gives businesses the ability to litigate trade secret cases in the federal courts. The text of the new law can be found here:
Texas adopted the Uniform Trade Secrets Act in 2013. The Texas law is codified in Chapter 134A of the Texas Civil Practice and Remedies Code. The text of the Texas statute may be found here:
There are a few differences between the Texas law and the new federal law. The definition of a trade secret is essentially the same under both the federal and state statutes. A trade secret is information that is valuable because it is specific to the business and that the business reasonably tries to protect. Trade secrets typically include a company’s financial data, policies and procedures, customer lists, supplier lists, intellectual property, and other proprietary information such as formulas, techniques, processes, drawings, and the like
The new law allows a business to file a federal lawsuit to protect trade secrets “related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). Courts traditionally interpret interstate commerce broadly, so many businesses will be able to litigate in federal court. One of the most interesting provisions of the new law is a pre-emptive strike: the law allows a party to obtain a court order for seizure of property to prevent the dissemination of trade secrets in “extraordinary circumstances.” The seizure order can be obtained without notice to the opposing party. A prevailing party may get an injunction to prevent dissemination of trade secrets, an order requiring the opposing party to pay a royalty, damages for actual business losses, damages for unjust enrichment, and attorneys fees. The law also allows an award of up to two times the amount of damages if the misappropriation was willful and malicious.
Protecting trade secrets is of paramount concern when a competitor hires a former employee. The Defend Trade Secrets Act allows a court to place conditions on the former employee’s employment when there is a threat of misappropriation.
There are some circumstances when employees or former employees have immunity from disclosing trade secrets. For example, an individual is immune from liability for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a violation of law. If trade secrets are disclosed in documents filed in a court, the statute requires the filing to be sealed to prevent public disclosure.
Important: The Defend Trade Secrets Act requires employers to notify employees of the immunity provisions in the law. If your business has incorporated non-disclosure language in your employee handbook, or if you require employees to sign non-disclosure agreements, you will need to revise your handbook or agreements to properly notify employees that they are protected from liability when disclosures of trade secrets are made to government agencies or attorneys solely for the purpose of reporting or investigation violations of the law. An employer that fails to provide the required notice loses the right to recover attorneys fees and exemplary damages.
The availability of both state and federal court actions to protect businesses from misappropriation of trade secrets is a welcome development; however, most businesses need to revise their non-disclosure agreements, handbooks, or policies and procedure manuals as soon as possible to avoid losing valuable rights under the new law.
Jane, Mary, and Alice have a thriving business. They decided to operate as an LLC and handled the formation themselves by filing a certificate of formation with the Texas Secretary of State.
Everything was fine until Alice got divorced, and her ex was assigned half her membership shares.
Who’d have known their company shares were community property!
Now, the ex is making life miserable by demanding to see the books, demanding distributions, and threatening to sue. What a mess: a mess that was avoidable. Had they adopted a company agreement, the owners could have managed what happened to the company shares in divorce.
A company agreement, also called an operating agreement, describes the way a limited liability company will do business. The company agreement governs the relations among members, managers, officers, and the company. Even a sole member LLC can, and should, adopt a company agreement. Here are a few reasons why.
A company agreement is a valuable tool that allows LLC owners to control the destiny of their company and to manage relationships between themselves, their managers, and their officers.
They can expand or limit responsibilities and liability as they see fit.
Adopting a company agreement early can be a cost saving strategy that staves off expensive problems later, and the agreement can be modified as the company grows. It is critical to use an attorney to draft a company agreement, but it is money well spent.