Friday, March 25, 2011

Three Updates, Three Ways to Protect Your Business

Some issues never go away, especially in business law. Recent developments made me think it is worth revisiting three posts to remind you of what you should be thinking about, if not doing, to protect your business

Is That Worker an Employee or Independent Contractor?

Government, both Federal and state, continues to scramble to replace lost revenues. The misclassification of workers is thought to cost the feds alone almost $3 billion in lost taxes each year, so it is no surprise that this issue, which I first addressed in One in Three Businesses at Risk in Independent Contractor Crackdown, continues to be a hot button.

Since that post, the U.S. Department of Labor announced its investment of another $55 million into federal enforcement efforts. Locally, we upped the ante with the Colorado Employee Misclassification Law passed last year. Since Colorado doesn’t have enforcement money to throw at the problem, we created a framework for collecting and acting on complaints of worker misclassification.

Workers and business competitors will likely be the source of most complaints. If the complaint is found valid, the state can impose a fine of up to $5,000 per misclassified person; the fine can escalate to $25,000 per employee for future willful misclassifications. The fines, of course, are on top of the taxes owed in connection with the misclassified individual.

What should you do? My original post covers the tests used in worker classification. Review them and address any red flag situations immediately. When in doubt, check with your lawyer, or, if you are a member, the Mountain States Employers Council.

Firing an Employee for Something Posted on Facebook.

Litigation can be an expensive crapshoot, which is why I prefer to leave bleeding-edge legal developments to big companies. That approach doesn’t work, however, when the big company cuts and runs, which is what happened in the National Labor Relations Act (NLRA) case I first covered in Facebook Firing: The Chill Beyond the Water Cooler.

For most folks, the biggest surprise of this case is not that they can be sued for firing an employee for profanely berating a supervisor in a Facebook post, which is a pretty big surprise. No, the biggest surprise is that the NLRA applies to many nonunion employers. Surprised? Don’t worry, it’s a big club.

But back to the firing issue. The big company--ambulance giant AMR--instead of fighting to clarify how their disputed social media policy was “overly-broad,” as was the allegation by the National Labor Relations Board (NLRB), agreed to a settlement in February 2011. In that settlement, AMR committed to revise its rules so ”they do not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work,” which picks up Facebook, Twitter and the like.

Now, what should you do? While the AMR settlement didn’t create law that is binding on your company, it’s hard to ignore the apparent mindset of the NLRB. If social media policies aren’t already part of your employment policies, don’t let this case stop you; you still need them and some employee conduct can and should be prohibited. If you have policies, review them with your lawyer to see if they might be too broad. You might discuss adding an “NLRA savings clause” to your policies. Finally, before taking any policy-based disciplinary action, talk again to your lawyer about the specific facts and circumstances.

Sign up for the Secretary of State’s Email Notification Service.

Business identification threat became a noticeable issue last year. Colorado attempted to fight back with education efforts and a new notification service that I described in Business Identification Thieves Strike in Colorado.

Unfortunately, few business owners I meet even know (they must not read this blog!) that they can register to be notified by email whenever their company’s business records at the Colorado Secretary of State’s office are changed. That means, I suspect, that many businesses also don’t know that the Secretary of State will no longer be reminding business by mail of the need to file “periodic reports” or renew trademark or trade name filings. Timely periodic reports keep a business entity from losing its “good standing” and becoming noncompliant and, ultimately, delinquent. At best, the situation creates a bit of hassle and expense to cure; at worst, it could get your business thrown out of court.

This one is easy. What should you do? You go to the subscription page for these services and register.

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