Don’t Treat Your Employees Like Strippers

By | Business Contracts, Employment Agreements, Independent Contractor Agreements, Taxes | No Comments

employees independent contractorsAs reported by Jessica Anderson in the Baltimore Sun (Strip club dancers are suing clubs over pay – and winning), strip clubs are getting in trouble by improperly treating strippers as independent contractors instead of as employees.

Although there’s no hard and fast rule as to whether an individual working for your company is an employee or an independent contractor, the U.S. Internal Revenue Service (IRS) does provide some guidance on the issue.

Important Employment Factors

Two key factors that favor employment status are setting the work schedule and controlling how the work must be done by the person. For strip clubs, this meant club management telling the dancers when they had to perform and dictating what they could and couldn’t do when stripping/dancing.

What’s the potential damage by mislabeling employees?

If you treat your employees as independent contractors, you may be liable for back wages, statutory damages, penalties, employment taxes, plus contributions to workers compensation and unemployment compensation funds. These misclassified employees may also be eligible for benefits you’ve provided to your other workers, such as 401k contributions, paid vacation, and health insurance.

How to this problem?

If your workers are really employees, treat them as such from the time you extend an offer to work for you. Pretending they’re independent contractors when they’re not creates a ticking time bomb of legal and tax liabilities you don’t want.

On the other hand, if a worker truly is an independent contractor, it’s often a good idea to make that relationship clear in a professionally prepared written independent contractor agreement signed by the parties. If the contractor decides to assert employment status, you’ve got a contract to point to when trying to convince a judge or government agency that the worker is not an employee.

IRS Form SS-8

If it’s truly unclear whether your workers are employees or independent contractors after consulting with an experienced business lawyer, you may wish to file a Form SS-8 “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding” (PDF file) with the IRS for a determination as to the workers’ status.

Google Privacy Policy, the FTC, and Your Rights

By | Business Legal Alerts, Federal Trade Commission, Privacy, Social Media, Social Networking | No Comments

According to the WaPo’s Craig Timberg (“Google facing FTC scrutiny over privacy — yet again”), Google has been accused in a consumer advocate complaint to the U.S. Federal Trade Commission (FTC) of engaging in deceptive trade practices by changing its privacy policy earlier this year to permit merging user profile data collected across the company’s various platforms.

Whether or not there is anything wrong with the Google privacy policy change remains to be seen. The FTC may even dismiss the claim on the merits.

What is clear is that the general rule of Internet free services applies. If you’re not paying for the service, you’re the product. It’s a Faustian bargain you enter into willingly with every online service that you use (from Facebook to Gmail).

Rule of Internet Free Services: You trade information about yourself and others in exchange for the service provider delivering what you want.

And if you don’t want to trade that information to be used for targeted advertising and other purposes, don’t use the “free” service. It’s really that simple.

Evernote Privacy Policy Change: Much Ado About Nothing

By | Business Legal Alerts, Internet Lawyer, Privacy | No Comments

evernote privacy policy updateUpdateEvernote has rescinded its planned change to its privacy policy because of the backlash. Users must affirmatively opt in before the company’s employees will be reading the content of user notes as part of the machine learning process. This is somewhat silly because the same issue has been ignored for many years by Evernote users who also use “free” email services like Gmail and Yahoo mail.

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Original Article

Evernote is updating its privacy policy to reflect that some company employees may view your content as part of overseeing the machine learning process.

There’s an uproar because some users (e.g. technologically-impaired journalists) naively think their information is stored online secure from prying eyes.

Here’s What You Should Know About the Evernote Privacy Policy Change

First, the general rule of thumb is that anything stored online is not secure. Just ask the celebrities whose naked selfies were exposed in “The Fappening.”

Second, many of those complaining about Evernote’s policy change think nothing about using Google Gmail, Yahoo Mail, and other email services where machine learning is also supplemented by company employees viewing user content.

Third, Evernote is doing the right thing by disclosing how the machine learning process actually works with the assistance of real people. If the company hid this information, you’d undoubtedly see shakedown lawsuits because of the lack of transparency (Tip – if you’ve got a website or an app, you should have your Internet lawyer make sure your privacy policy is consistent with your actual practices).

If you don’t want your stuff seen by third parties, don’t put it online. If you want to access everyday tools that make your life easier (like Evernote and Gmail), then understand there’s a trade-off that includes a loss of privacy.

Limited Liability Companies: How Many Should You Own?

By | Business Entities, Limited Liability Companies, Texas Business Lawyer | No Comments

limited liability companiesMany entrepreneurs have big plans for their startups. Unfortunately, as part of those big plans, they often want to treat a small business as if it is a large complex organization that needs multiple limited liability companies (LLCs) for asset protection and tax avoidance.

Trump’s Limited Liability Companies

According to a recent Wall Street Journal article, Donald Trump has at least 96 LLCs that he uses to protect what he owns and to legally minimize taxes paid. This is typical for a large business empire, particularly one that involves intellectual property licensing (the Trump brand) and real estate ownership.

As A Small Business, Should You Have More Than One Limited Liability Company?

According to Texas Business Lawyer Mike Young, author of How to Form a Texas LLC, as a general rule of thumb it makes sense to set up separate LLCs for each asset or annual revenue stream that exceeds $100,000 in value. In addition to the potential tax advantages, each LLC serves as a separate protective basket for one of your nest eggs in case something goes wrong with one venture (e.g. bankruptcy) or asset (e.g. slip-and-fall personal injury lawsuit).

Of course, each entrepreneur has a unique story with specific legal needs. This means you’ll want to discuss your assets and income streams with an experienced business lawyer. Working together with your accountant, you can set up the number of limited liability companies you need to achieve your goals.

Sale of Business Leads to Expensive Breach of Contract Lawsuit

By | Business Contracts, Business Lawyer, Business Legal Alerts, Buy Internet Business, Buy/Sell Internet Business, Sell Internet Business | No Comments

As reported in The Connecticut Law Tribune, “Oral Surgeon Wins $3.1M in Breach of Contract Suit.” Although you can read the details of the particular lawsuit in Karen Ali’s article, note the important lesson from this case. The terms and conditions of an agreement to buy or sell a business must be followed, including post-closing obligations each party owes the other.

When picking a business partner, be at least as careful in performing due diligence as you would when selecting a potential spouse for marriage. The monetary stakes are often higher in the business arrangement.

Also make sure that you have a signed professionally prepared buy-sell agreement so that if one party decides to leave, you’ve already put in place a road map to be followed that preserves business continuity and ideally does not adversely affect the relationship between the parties upon separation.