BEWARE SMALL EMPLOYERS - TOP 10 WAYS TO AVOID BEING SUED

Lawsuits can be death for small businesses. In more than 20 years of legal advice to employers and employees, I have seen repeated mistakes by employers, most of which could have been avoided. Don’t despair if you recognize yourself in this list; most employers stumble on more than one. The solution is to change your procedures NOW, before a disgruntled employee takes action.

DO NOT:

1. Hold an employee’s final check “hostage” until return of uniform, cell phone, keys, and/or other company property.

2. Automatically characterize all employees as “exempt” from the overtime laws and pay them a salary.

3. Pay employees in cash. You still have to take withholdings, itemize, and document.

4. Allow employees to work through breaks and leave early.

5. Hire “independent contractors.” Most workers do not qualify as independent contractors and various taxing authorities are watching this closely.

6. Loan money to employees and then deduct whatever is still owing from final paychecks.

7. Have a “use it or lose it” vacation policy.

8. Fail to document your employees’ hours worked.

9. Ignore complaints that an employee is being “bothered.” Red flag. This is code for sexual harassment.

10. Fail to have an employee handbook. All employers should have one, even small employers.

While these may be my “top 10,” unfortunately there are many more ways that employers—especially small employers—can run afoul of the labor laws, sometimes with catastrophic results. Your best strategy is to be pro-active and get solid policies and procedures in place with the help of a knowledgeable professional. As the only employment law specialist in East Contra Costa County, I can help: Rhonda@alvisfrantzlaw.com or (925) 516-1617.

By: Rhonda Shelton Kraeber, Esq.

Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.

I started a new business.... now what?

Yay! The economy is moving, you’re starting up a new business, now what?  I have probably helped over 700 businesses start up since I started practicing law over 30 years ago. It has been my specialty. People back in the 70’s said, “nine out of ten businesses fail in their first few years. How are you ever going to survive?” I always had a standard reply. “Wow, if it’s that scary, imagine how they feel.”

I have dedicated my legal career to helping business owners, because I am passionate about business. Good thing, because running a law practice is a business as well, and it has a couple of complications like a Trust account to go along with it. I was overwhelmed by the paperwork, the questions about what to do first, and bringing in that first money, all while actually practicing law. It’s one thing to have information, it’s another to actually “do the business.”

One of my invaluable resources which is free, is the Small Business Administration’s “Business Information Center”. There are three in northern California: San Jose, Oakland and San Francisco. These Centers have books on all of the aspects of starting, running and growing a business. They have classes for a nominal amount of money, and they have retired executives who can guide you.

The one thing they don’t provide is legal advice, and depending on your type of business, you may need a fair amount of that… what structure do you take, what should your contract with your customers look like, how do you hire your first employee.

I’ve noticed that in your first 9 months there are so many legal questions. Lawyers charge out at between $300 and $450 per hour. I wanted my clients to call me as much as possible, but I hated charging them for every phone call or letter. So our firm established the “Corporate Start Up Plan” to help new business owners in their first 9 months of “incubation.” Check out our website http://www.alvisfrantzlaw.com/ for more details or give us a call.

Be sure to follow us on facebook as well: http://www.facebook.com/alvisfrantz

To find out more about business law or corporations, call Alvis Frantz and Associates, A PC at (925) 516-1617. HAVE A LEGAL QUESTION YOU WANT TO SEE ANSWERED HERE? Go to our website and “Contact Us”.

Incorporate in Nevada? Not so Fast

Many clients who come to our firm hear from someone that incorporating in Nevada is the way to go. It’s private, there are no state taxes, and it’s kind of sexy.


However, before you file those papers, think again. California tax laws may change your mind.

The reason to file in a particular state most often is motivated by tax issues. Most people believe that they won’t have to pay state income tax if they have a Nevada Corporation. The California Franchise Tax Board will determine if you do business primarily in California or not. If your federal tax return shows any “nexus” or connection with California, you will be taxed by California in accordance with the proportion of revenue that you receive in California.

Say, for example, your sales reps are in Nevada, but your main office and your home are in California. The Franchise Tax Board, in an audit, has the ability to look to see where your credit card and gas card charges are from. If it looks like you live in California, and it looks like your business is operating out of California, they can charge you California taxes. The amount of taxes you pay to California is also affected by the percentage of revenue you receive from California sales in relation to other states. So somebody with an internet business where the goods are shipped from a manufacturer in Florida to somewhere outside the state of California would not be subject to California tax. But if you are shipping from California, you are subject to California tax.

There are many exceptions to the rules, and specific circumstances that can change the result. That’s why it’s good to see an attorney who can help you sort out which state is best for incorporation. Our firm will walk you through the decision making process to make sure you accomplish the result that you want.

Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.