Why “Hire” Is A Four-Letter Word

By | Business Contracts, Business Lawyer | No Comments

hire independent contractorWhen you search for individual freelancers to do work for your business, wash out your mouth with soap every time you say the dirty word “hire.” Because you should never hire an independent contractor.

What’s the problem?

The term means “employment.” When you “hire” an individual, you’re getting an employee, not an independent contractor.

Why is that important?

  • Are you registered to do business in the state where the freelancer lives?
  • Are you paying into the government worker’s and unemployment compensation funds?
  • Are you doing payroll tax withholdings? And making employer FICA contributions for Social Security and Medicare?
  • Does the freelancer live overseas? If so, are you setting yourself up to pay an extra month of salary each year. Because many countries require 13-month pay.

Avoid using “hire,” “employ,” or other dirty words unless you want an employee.

Instead, use “contract with,” “select,” “retain the services of,” etc. to procure the services of an individual freelancer.

Experienced business lawyers prepare independent contractor agreements to prevent employment. Yet business owners should stop referring to those workers using employment terms like “hire.”

How To Extend A Contract Deadline

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contract deadline extensionSometimes it makes sense to extend a contract deadline, i.e. a delay in one or both parties’ performance.

If an extension makes sense, how do you do it?

After negotiating the terms of the extension, get the details in writing signed by the parties. Ideally, it’s a simple written amendment to the contract that leaves other provisions untouched and enforceable.

Unfortunately, many business owners try to modify a contract informally by a verbal “handshake agreement” or exchanging some emails that don’t adequately describe what’s being agreed to.

This leads to confusion and often anger. And if one party feels screwed by the informal changes made, it’s a recipe for breach of contract and a lawsuit.

Instead, you’ll have an experienced business lawyer prepare the amendment for you to sign. That reduces the legal dangers while giving you what you want when you extend a contract deadline.

What if there are many issues that need to be changed in addition to the deadline extension?

In those types of situations, it often makes sense to have an amended and restated agreement. This will be the original agreement with the changes made in the document itself. The parties will sign the amended and restated agreement showing the terms and conditions you want now.

In rare instances, it makes sense to terminate the original agreement and sign a new contract that’s prepared from scratch. Your business attorney can advise you on the best way to paper the modified deal, including deadline extensions.

Note that extending a contract deadline is not the same as contract renewal. A renewal keeps the agreement in place for an additional term beyond the current term. For example, at the end of a one-year contract, there may be a provision in the agreement where it can renew for an additional year.

Are underpants-stealing gnomes running your website?

By | Business Contracts, Business Lawyer, Internet Lawyer, Website Legal Documents | No Comments

online business gnomes conceptIn a classic South Park episode, gnomes would steal people’s underwear.

Why?

One of the little thieves explained their business model.

  • Phase 1 – Steal underpants
  • Phase 2 – ?
  • Phase 3 – Profit

Does this seem absurd? Yet most website owners are no different than these imaginary gnomes.

Here’s the top 3 signs you’ve got a hobby disguised as an online business.

1. There’s no realistic plan to earn income now or in the future. Profits are non-monetary. For example, social media “buzz” expressed by the number of “likes” received, retweets, comments, etc.

2. There is a plan to profit but that plan changes every three months based on the hottest new fad pitched by some Internet guru.

3. The website isn’t run like a business. There’s no liability shield in place, no contracts, and no website legal protections. No Internet business attorney or accountant to make sure whatever is earned is protected.

So, do you have an online hobby or a business? Don’t mistake one for the other.

How to Avoid King Charles’ Fishy Mistake in Your Business Deals

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old business contract in scroll formOnce upon a time, a Prince Charles lived in exile while the Cromwells ruled England. Having enjoyed his time in Belgium, Charles repaid the country for their help when he took the throne.

Perhaps the king had a moron for a lawyer. Or his legal counsel was too afraid to question the king’s decisions.

Because King Charles II signed an agreement in 1666 that gave Belgium the right to have 50 fishermen use English waters “for eternity.”

Let’s just say that “eternity” is not something you typically want to include in your business contracts.

Because 300 years later, the Belgian government demanded England honor the contract. And the British gave in because it was a binding agreement.

In fact, there’s a Belgian politician going on TV these days to show the agreement. He’s taunting the British with it.

Of course, you might wonder how this applies to your business.

Here’s what’s important to know…

Part of running a company (or a country for that matter) is having systems in place that serve your interests.

And one of the first places to start is to get an experienced business lawyer to prepare contracts that help you succeed.

Because even if the term isn’t for eternity, it can seem like forever if you’re stuck in a bad agreement that’s costing you time and money.

And with the holidays about to kick in, now is the perfect time to get your business set up to start 2021 on the right foot. If you need a new contract prepared or an existing agreement improved, let’s talk.

Should Your Business Avoid Having Workers Based In California?

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california ab5 workers regulationsUnless your company already does business in California, you should avoid having workers based in that state.

Here’s why…

California AB 5  – Many Contractors are Reclassified as Employees

California Assembly Bill 5 (AB 5) essentially shifted the burden to business owners to prove a worker isn’t an employee. And made it hard to meet that burden.

The law provides in part, “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

Why is that important?

Because if you’ve got an employee working for you in California, you get all of the regulatory and tax baggage that comes with that.

If your company is located elsewhere, you get to register as a foreign entity doing business in California (and pay taxes accordingly).

You also are likely to get hit with penalties for the years you’ve been doing business in the state but didn’t register your entity.

Plus you’ll get to deal with employer withholdings for Social Security, worker’s compensation, unemployment compensation, and any “entitlements” the State of California decides to impose on your company.

At some point, you can expect California’s government to mandate you fill your management positions based on “social justice “ criteria unrelated to skill or performance.

Of course, the government also has no problem stopping workers at the drop of the hat for COVID-19. Who knows what the next reason will be to shutter business? And you can’t count on being exempt from whatever comes down either.

In short, it’s just not worth the downside of using California-based workers unless you’re already stuck in that trap by doing business in the state.

Exemptions From California AB5 For Some Workers

In September 2020, California’s Governor signed a new law that carved out exemptions for freelance writers and certain other workers (e.g. youth sports coaches) from AB5. It’s California Assembly Bill 2257 (AB2257)

But you can’t rely upon piecemeal exemptions like this to protect your company when it’s the policy of the state to loot your business (no matter where you’re based) in order to prop up a social welfare state that’s insolvent.

An experienced business contracts lawyer can help you avoid traps like the ones California sets by preparing the right type of worker agreements that protect your company. And advising you on business-friendly jurisdictions where it’s okay to get the workers you need.