Does your insurance cover a data breach?

Given the rapid increase in data breaches – affecting not only Fortune 500 companies but smaller businesses as well – it’s worth checking whether your current insurance policy covers cyber losses.

That’s especially true now that almost every state requires companies to notify customers if their data has been compromised.

A growing number of insurers are now offering cyber-liability policies. These typically cover the costs of investigating a data breach and notifying customers, loss of business and reputation, and future credit monitoring.

A recent study by the Ponemon Institute found that businesses with fewer than 10,000 customer records are more likely to be hacked than businesses with over 100,000 records, in part because they’re less likely to have robust defenses against hackers. [Read more…]

You may need a policy covering employees’ use of cloud storage

Employees are discovering that cloud storage services are a great way to access work-related data at home and on the road, and to collaborate with co-workers, especially those who work remotely.

Unfortunately, they’re also a great way to make your confidential data insecure – which is why you may need a thoughtful policy covering their use.

Cloud services allow a user to log into an account, upload documents or files, and then access or download them from any device, anywhere and at any time. Users can sync folders across devices, and can also share or sync files with others. [Read more…]

‘Crowdfunding’ businesses have obligations to investors

More and more start-up businesses are seeking funding on websites such as Kickstarter or Indiegogo, promising small rewards to individual investors in return for micro-contributions.

These include the Veronica Mars movie, which raised millions of dollars by promising small contributors posters, DVDs and movie scripts, and a space telescope project that offered “space selfies.”

But keep in mind that these promises are a legal obligation – so if you end up getting hundreds or even thousands of contributors by offering small rewards, you’ll have to follow through on each one of them. [Read more…]

Companies can’t force workers to accept ‘payroll cards’

Companies cannot require workers to receive payment of their wages via “payroll cards,” according to the federal Consumer Financial Protection Bureau.

Payroll cards have become popular recently, especially in the retail and food service industries. But under federal law, a company can’t make the cards the exclusive way it offers to pay wages.

State laws may impose further restrictions on the cards. [Read more…]

You can be sued for interfering with someone else’s contract

If you sign a licensing agreement to sell someone else’s products, but that person already has an exclusive license with a third party to sell the same products, you could be legally on the hook.

That’s a lesson that J.C. Penney learned the hard way, after it signed an agreement with Martha Stewart to sell a variety of her housewares in special dedicated sections of its stores.

The problem was that Martha Stewart had previously signed an exclusive licensing agreement with Macy’s covering sales of her kitchen, bed and bath products. So while J.C. Penney could legally sell other Martha products such as window treatments, rugs and lighting, sales of the kitchen and bath products violated the agreement. [Read more…]

Company not liable for employee who assaulted customer

A car dealership couldn’t be held liable in court for a salesman who sexually assaulted a customer, according to the Texas Court of Appeals.

The customer had brought her car in for service and was waiting for a shuttle bus to take her home. The salesman offered to drive her home in his personal car, and she claimed that along the way, he made improper advances. The dealership immediately fired the salesman.

The customer sued the dealership, but the court said the dealership had done nothing wrong.

The dealership hadn’t been negligent in hiring the salesman, it said, because it wasn’t aware of any indication that he might do something like this. Although there was some suggestion that he might have engaged in misconduct in the past, there was no evidence that he had ever engaged in sexual misconduct. [Read more…]

If someone falls outside your business, are you liable?

If you lease a store or other business and someone trips and falls outside the building, are you legally responsible?

That often depends on what’s in your lease – so this is something you may want to think carefully about when you negotiate.

This issue came up recently when a woman named Sabena Beriy fell on what she claimed was a poorly maintained curb outside a P.F. Chang’s China Bistro restaurant. P.F. Chang’s had leased the property from a landlord as part of a larger development. The lease said that P.F. Chang’s was responsible for any injuries on its “premises,” and that the landlord was responsible for any injuries that occurred outside of those premises.

P.F. Chang’s claimed that Sabena’s fall occurred in the common area of the development, not in its restaurant. It also claimed that the landlord was responsible under the lease for designing and maintaining the parking areas, driveways and curbs. [Read more…]

Supreme Court: No patent for doing ordinary things online

You can’t obtain a patent for taking some ordinary process in the real world and coming up with a computer program that makes it easier, according to the U.S. Supreme Court.

The decision is important because many companies have been trying to patent their apps and other programs to keep competitors from taking their business away.

In the Supreme Court case, a company called the Alice Corporation tried to patent an online system to reduce risk in financial transactions. Alice’s program was little different from a third-party clearinghouse or escrow service, except that it all happened automatically online. [Read more…]

Social media marketing can create legal traps for businesses

If you’re using social media to market your business, that’s terrific – but you should be aware that the same legal rules that apply in the “real world” also apply to Twitter, Facebook, Pinterest and other venues.

Many companies have rushed into social media marketing plans without considering the legal issues. Here’s a quick look at some of the problems that can result:

Improper endorsements. Many social media campaigns solicit endorsements, testimonials and favorable reviews from consumers, and then promote them. That’s fine – but keep in mind that if you offer anything in return for such endorsements, you may have to disclose this fact. [Read more…]

New rules for telemarketing calls and text messages

The Federal Communications Commission has adopted new rules that strictly limit telemarketing calls and text messages.

Businesses can no longer make pre-recorded calls to landline phones, and can no longer send pre-recorded calls, auto-dialed calls, or text messages to cell phones. The only exception is if the business has the “prior express written consent” of the customer.

This prior written consent must be very clear, and the customer must be told that providing a phone number is not a condition of making a purchase. The customer must actually provide the number; it can’t be “pre-populated” on a form.

Pre-recorded calls are now illegal without written consent even if the company already has an established business relationship with the customer. [Read more…]

Be careful if contracting work is ordered by a tenant

Businesses that perform contracting work at a property are generally entitled to a “lien” against the property to make sure they get paid. This means that if the property owner fails to pay, the contractor can in some circumstances foreclose on the property, have it sold, and collect payment from the sale proceeds.

These types of liens can benefit building contractors, laborers, carpenters, plumbers, electricians, architects, engineers, and suppliers of materials (such as lumber yards). Sometimes liens also apply to cars and trucks, and can be claimed by mechanics and towing companies.

There are special rules for making sure there’s a right to such a lien, so it’s good to talk to an attorney if you have any questions.

For instance, if contracting work is authorized by a tenant, extra care is required. [Read more…]

‘Paid sick leave’ laws appear to be spreading

There are no federal laws in the U.S. that require businesses to pay workers for sick days. The closest thing is the federal Family and Medical Leave Act, which requires larger companies to offer up to 12 weeks of unpaid leave to workers with a serious medical condition.

But some cities and states are beginning to require paid sick time. Connecticut adopted such a requirement in 2012, and bills have now been introduced in the legislatures in Arizona, Hawaii, Maryland, Michigan, New Jersey, New York and North Carolina.

In addition, paid sick time laws have been adopted recently by a number of cities, including New York; Washington, D.C.; San Francisco; Portland, Oregon; and Jersey City, N.J. [Read more…]

Sale of business interests can trigger surprise tax result

Did you know that if more than 50% of the interests in a partnership or a multi-member LLC are transferred within a 12-month period, the entity technically ceases to exist under federal tax law?

That’s true even if the business continues to operate as normal for all other intents and purposes.

This “technical termination rule” isn’t the end of the world, but it’s something you need to be aware of. For one thing, a special tax return is due within a few months after the “termination” occurs. Recently, one family business was hit with more than $12,000 in IRS penalties and interest because the family didn’t realize they needed to file such a return. [Read more…]

Don’t skimp on protecting your trademarks

You may have heard that you don’t actually have to register a trademark; you only have to use it in business to have a right to it. That’s true to some extent – but beware!

Before investing in a business name, symbol, type of packaging, or any other distinctive representation of your business, it’s worth paying to conduct a trademark search. Sure, you could look around on Google, but that’s not the same thing as a proper trademark inquiry. The consequences of discovering too late that someone else is already using your idea are very serious. You may have to defend against a lawsuit, or destroy all your marketing materials or merchandise and start over from scratch – or both. [Read more…]

Your non-compete agreements are protecting you, right? Maybe not

A lot of companies have a stack of signed non-compete agreements on file, and they assume that they will protect them in the event that a key employee leaves and wants to work for a competitor. But just because you have a signed agreement doesn’t mean it will work the way it’s supposed to.

The law concerning non-compete agreements changes frequently, and it’s a good idea to review these agreements regularly with an attorney to make sure they’re up-to-date. This is especially true if you have employees who work in more than one state.

Here’s a look at some of the issues that can come up:

Have the employee’s responsibilities changed? Last year a court in Massachusetts threw out a non-compete agreement signed by a staffing company COO who left to form a rival company. The agreement had been signed 15 years earlier when the employee was first hired as a branch manager. The court said the non-compete couldn’t be enforced because the employee had been promoted several times over a 15-year period, and his job simply was no longer the same. [Read more…]

Download your old tax returns directly from the IRS

Now you can download your individual tax returns from the last few years directly from the IRS. This might be very helpful for all sorts of reasons, including applying for certain small business loans.

To begin, go to http://www.irs.gov/Individuals/Get-Transcript

Your injury and illness records might have to be made public

OSHA has proposed a new rule that could require many businesses to submit their injury and illness records to the agency as often as quarterly. The new rule would also allow OSHA to post these records on its website for all the world to see.

Businesses are concerned about this rule for several reasons. One is that the added collection of injury and illness records could trigger an OSHA inspection. That’s true even if a reportable event wasn’t the company’s fault – if a serious injury were caused entirely by employee misconduct, for instance, it would still have to be reported to OSHA as an injury and could trigger extra scrutiny. [Read more…]

U.S. clarifies its position on using job applicants’ criminal history

The federal Equal Employment Opportunity Commission recently clarified its position on when employers can reject job applicants based on their criminal records.

The EEOC is highly skeptical of companies that have a blanket ban on workers with criminal records, because it believes such a policy disproportionately discriminates against minorities.

However, it recognizes that a criminal background can legitimately disqualify workers for certain jobs.

According to the agency, it’s okay to take criminal history into account as long as it’s actually relevant to the position. This means that a company should “target” its background screening by considering (1) the nature of the job, (2) the seriousness of the crime, (3) the relevance of the type of crime, and (4) how long ago the crime occurred. [Read more…]

Workers’ wearable technology will create new headaches for business

Over the next few years, we’ll see the very rapid adoption of wearable technology – smartwatches, Google Glass, and other miniaturized connectivity devices.

It’s not hard to imagine how employees with these devices could create problems for businesses. Think of a service employee whose smartwatch displays inappropriate text messages or images, an accounting worker whose Google glasses capture salary data and automatically upload it to social media, or a home health aide whose smart bracelet updates the world on her location – even though the home addresses of her clients are supposed to be confidential.

It’s not too soon to think about updating your cellphone, social media, and other policies to take these new devices into account. [Read more…]

You must protect employees from sex harassment … by customers

Everyone knows that businesses can be sued for sex harassment if an employee or manager harasses another employee. But did you know that you can also be sued if the harasser doesn’t work for you – if the harasser is a customer, contractor, or other person connected to the business?

That might not seem fair, since you have no control over a customer’s actions. But you still have a duty to provide a way for employees to complain, to investigate accusations, and to take reasonable steps to stop any harassment to the extent possible.

In one recent case, a graduate student who worked as a manager for the Hofstra University football team sued the university, claiming she had been harassed by some of the football players. [Read more…]

Be careful about copyrighted images on websites, sales materials

Graphic designers often like to “borrow” photographs and other artwork in order to create websites, brochures, direct-mail solicitations and other materials. But it’s important to make sure that you have a legal right to the images and designs you’re using.

A company called Dream Communications found this out the hard way recently, when a designer used a photograph without permission in creating an online magazine about luxury homes in Hawaii. The owner of the image sued, claiming that it was entitled to almost $8,000 in licensing fees.

But Dream’s problems became a nightmare when a court added penalties under the federal copyright law. In the end, Dream was ordered to pay the owner $45,000 in damages, plus almost $7,000 in attorney fees and costs. [Read more…]

Businesses struggle to decide on e-cigarette rules

Most businesses ban smoking in the workplace, but what about the new electronic cigarettes? Should those be banned as well?

E-cigarettes convert a liquid, which may contain nicotine, into a vapor. Some companies want to encourage e-cigarettes as a way to help workers quit smoking – which can reduce absenteeism and health costs.

On the other hand, some businesses see e-cigarettes as simply a milder, but still harmful, version of regular cigarettes. And they say little research has been done on the effects on co-workers of inhaling secondhand vapors.

The law is still developing. Some 24 states currently ban regular cigarette smoking in the workplace, but only three also ban e-cigarettes (New Jersey, North Dakota and Utah). [Read more…]

Can you sue for a bad online review?

Online customer reviews have become a very important part of retail business. In one recent survey, two-thirds of shoppers said they consulted online customer reviews before buying. Of those, 90 percent said their buying decisions were influenced by positive reviews, and 86 percent were influenced by negative reviews.

A one-star increase in a restaurant’s Yelp rating led on average to a 5-9 percent increase in revenue, according to a recent Harvard Business School study. And a one-point increase in a hotel’s score on Travelocity and TripAdvisor allowed hotels to increase their rates by up to 11.2 percent, according to an analysis by Cornell University.

With online reviews becoming so important, it’s no wonder businesses get upset when customers post negative reviews, especially if the business thinks the black marks were undeserved.

But is there anything you can do about it legally? [Read more…]

Direct deposit can be required…if there’s an ‘opt-out’

Most employers find that paying workers through direct deposit is far simpler and easier than paying via check. But can employers force employees to accept direct deposit?

Well, not exactly. According to the Department of Labor, you can’t refuse to pay people by check if they really, truly insist on a check. However, you can make direct deposit standard practice, and you can force people who don’t like it to “opt out”…as opposed to inviting people who want it to “opt in.”

Some states have additional rules and restrictions on direct deposit, though, so it’s important to speak with an attorney before you make a change in policy.

No more ‘automatic tips’ for large groups at restaurants?

Many restaurants and other businesses automatically add a tip to the bill for groups over a certain size. But that’s likely to change in 2014, thanks to a new decision from the IRS.

As of January 1, 2014, these automatic tips must be treated as “wages,” subject to payroll tax withholding. This will mean much more paperwork for the businesses (not to mention making the waiters and other servers unhappy).

Darden Restaurants, which owns the Olive Garden, Red Lobster and Longhorn Steakhouse chains, has announced that it is experimenting with getting rid of automatic tips. Many other service businesses are expected to follow suit.

New rule on when same-sex spouses are entitled to FMLA leave

Here’s a complicated wrinkle for businesses that have employees who are in a same-sex marriage.

The question is whether these employees are “married” for purposes of the federal Family and Medical Leave Act, such that they’re eligible to take time off to care for a spouse.

Previously, the IRS has ruled that employees are “married” for purposes of employee benefit plans if same-sex marriage is legal in the state where the marriage occurred.

But now, the U.S. Department of Labor says that employees are “married” for purposes of FMLA if same-sex marriage is legal in the state where the employee resides. [Read more…]

Companies may have to force employees to use safety equipment

If an employee is going to be working in hazardous conditions, does the employer merely have to provide appropriate safety equipment … or does it have to actually force the employee to use it?

The latter, according to the OSHA Review Commission.

The case involved a marine contractor in Florida that was renovating a boat ramp. An employee of the contractor was observed using a jackhammer on concrete without wearing goggles or earplugs. [Read more…]

What to consider before signing a contract with a software vendor

Many contracts that a business will sign with a software vendor (or any other professional service provider relating to software) involve sharing detailed business or customer data. This is especially true with any type of cloud computing service. Before you sign a contract, ask yourself these questions:

What can the provider use my data for? Obviously, a vendor needs to be able to use your data to provide you with the contracted services. But many standard contracts also allow the provider to use the data (typically in aggregate form or without specific customer identifiers) for a number of other purposes, such as improving its own products, or even selling it to third parties. Do you really want your customer data treated in this way?

Will the data be safe? What systems does the provider have in place to maintain security? These can include passwords, antivirus software, alarm systems, limits on which of the vendor’s employees have access to the data, and backup and disaster recovery systems. [Read more…]

Commercial landlord is responsible for disability access

A commercial landlord who leased space for a restaurant and a liquor store can be held liable in court if the premises aren’t accessible to the disabled – even though the lease said that disability access was completely the responsibility of the tenant.

That’s the word from a federal court in California.

The case is a warning to commercial landlords that they need to be proactive and make sure that tenants are fulfilling their responsibilities under the Americans With Disabilities Act.

A landlord and a tenant can agree that it’s up to the tenant to make sure that the premises are accessible. However, if the tenant fails to do so, the landlord is still legally on the hook, the court said. [Read more…]

Time to update your company’s cell-phone policy

About 85% of American companies have a written policy that limits workers’ use of cell phones while driving. The goal is to improve employee safety, while also preventing lawsuits from people who are injured by distracted employees.

That’s great – but many of these policies were adopted several years ago, and need to be reviewed now because the legal landscape has changed.

Here are some of the problems with many older policies:

► They’re not inclusive enough. Many older policies prohibit employees from talking on the phone while in a company car, or while using an employer-provided device. That’s good, but an effective policy should also prohibit any business-related phone call while driving, regardless of who owns the car or the phone. [Read more…]

Here’s what to think about in a distributorship agreement

If you’re a manufacturer who’s thinking about using a distributor to expand your reach into new areas – or if you’re a distributor who wants to sell products for a new company – a good contract is the key to making the relationship work and avoiding misunderstandings and conflicts.

Here’s a brief list of the issues that you’ll want to think about and make clear in the agreement before you sign on the dotted line:

  • Does the distributor have exclusive rights within a certain territory? If so, how is that territory defined? Must the distributor meet certain quotas in order to maintain its exclusivity?
  • Is the distributor also allowed to sell products made by the manufacturer’s competitors?
  • What reports must the distributor provide? Should they include forecasts of future orders, so the manufacturer can better manage its inventory? [Read more…]

How does your company’s 401(k) plan measure up?

The IRS has conducted a survey of 1,200 different 401(k) plans from businesses of all shapes and sizes, and has created an interesting snapshot that allows you to compare your company’s plan to other plans across the country. Here’s what the survey shows:

  • 68% of plans provide employer matching contributions.
  • 41% allow employees to make election changes at any time, 22% allow them quarterly, and 13% allow them once each payroll period.
  • 5% of plans have automatic contributions unless the employee opts out. Within those plans, 43% of employees contribute at the default rate. 29% contribute more, 7% contribute less, and 21% contribute nothing.
  • 54% of plans require one year of service to contribute. Only 13% allow immediate contributions.
  • 72% use involuntary cash-outs of post-termination balances.
  • 76% allow hardship withdrawals, and 65% allow loans.
  • 22% allow Roth contributions. Only 4% allow after-tax non-Roth contributions.
  • 96% allow catch-up contributions by employees who are 50 or older.
  • Only 1% allow investments in the employer’s stock.

Domino’s Pizza pays $9.75 million for ‘robocalls’

The Domino’s Pizza chain has agreed to pay $9.75 million to settle claims that it sent unsolicited phone calls and text messages to people’s cell phones.

The messages promoted the pizza chain and offered coupons. Consumers in three states filed a lawsuit claiming that the calls were made without their consent, and therefore violated a federal law concerning telephone privacy.

The federal law generally prohibits private companies from making calls to cell phones from a computer system that can automatically make the call without human intervention. Although the law doesn’t specifically mention text messages, some courts have ruled that it applies to texts as well. [Read more…]

Sweepstakes promotions can be a legal gamble

A lot of consumer companies market their products with sweepstakes or other games. But as the A&P grocery chain found out recently, there are a lot of legal issues that shouldn’t be left to chance.

The grocery company offered what it called the “A&P Frozen Food Month 2013 Sweepstakes,” and advertised that customers who bought $50 worth of frozen-food products would automatically be entered in a contest to win $350 gift cards.

The New York Attorney General’s office complained. In the end, A&P settled the case by paying more than $100,000 in fines and hiring a new compliance officer.

What did A&P do wrong? [Read more…]

‘Black Swan’ case highlights danger of unpaid internships

A recent court decision involving two unpaid interns who worked on the movie “Black Swan” shows the danger that companies can get themselves into with internships. If you offer an unpaid internship program – or even if you just bring on an unpaid intern from time to time, perhaps even as a favor to someone – it’s a good idea to carefully review the rules.

Unpaid internships have burgeoned in the last few years, as the practice has grown far beyond college students on summer break. With a tight job market, many out-of-work professionals are looking for internships as a way to get a foot in the door or to explore a career change.

As a result, the U.S. Department of Labor is stepping up enforcement of violations.

The truth is that there are relatively few situations in which an unpaid intern can legally work in a for-profit business. That’s because a valid internship program must be primarily for the intern’s benefit, rather than for the employer’s benefit. Otherwise, the intern is basically an employee and must be paid minimum wage. [Read more…]

The law is strict about providing FMLA notice to workers

When an employee takes leave under the federal Family and Medical Leave Act, the employer is supposed to quickly provide him or her with certain notices. These may include an “eligibility” notice, a “rights and responsibilities” notice, and a “designation” notice.

Although these notices can be somewhat technical, they’re strictly required to protect your rights.

The Wackenhut Corporation found this out the hard way when Jacqueline Young took 12 weeks of FMLA leave. Once her leave was over, she continued to be absent for another two weeks, after which Wackenhut fired her.

Wackenhut had provided an explanation of the scope of workers’ FMLA rights in its employee handbook, and it had also posted the Department of Labor’s FMLA poster in the workplace. However, it apparently didn’t specifically provide Jacqueline with the “eligibility,” “rights and responsibilities,” or “designation” notices when she went on leave. [Read more…]

Company buys rival’s assets, also buys itself a lawsuit

By the time Wisconsin-based JT Packard & Associates ran into financial trouble, it was also the target of a lawsuit by employees who claimed they hadn’t been paid overtime.

Eventually, Packard went out of business, and its assets were sold to a company called the Thomas & Betts Corp. As part of the sale agreement, Thomas & Betts specifically said that it wasn’t assuming liability for the overtime claim.

When a company purchases the assets of a failed business, rather than buying its stock, it’s generally allowed to decide what types of liabilities it’s taking on (or not taking on). That’s the rule in most states, including Wisconsin.

There was just one problem, however. The overtime lawsuit was brought under federal law, not state law. Therefore, Wisconsin law didn’t matter … and even though Thomas & Betts specifically said that it wouldn’t assume liability for the overtime issue, it had to do so anyway.

That was the ruling of a federal appeals court, which said Thomas & Betts was on the hook for $500,000 in overtime pay. [Read more…]

It’s easier to deduct a home office

The IRS has made it easier to deduct a home office, starting in 2013.

In the past, the home office deduction was very difficult to document, and the IRS was very suspicious of it. Even people who could legitimately claim the deduction were often hesitant to do so for fear that it could trigger an audit.

This year, though, the IRS has created a “safe harbor” for taxpayers. You might not be able to deduct every expense if you use this method, but it will be a lot easier and safer.

The new method involves measuring the square footage of your office and multiplying by $5. There’s a maximum of 300 square feet, which works out to a $1,500 deduction. [Read more…]

Visa rules for foreign employees leave many companies stymied

Companies that want to hire foreign workers with specialized skills and expertise are facing a growing bottleneck with the H-1B visa program, which allows skilled foreign employees a visa if they are sponsored by an American employer.

The number of visas is capped at 65,000 a year, with an additional 20,000 possible under a special program for applicants with master’s degrees and doctorates.

This year, the government was flooded with 124,000 applications, and the cap was reached in less than 24 hours. That means that many thousands of companies that want to offer a foreign worker a job will be unable to do so. [Read more…]

Why you should have a written telecommuting policy

More and more companies are allowing employees to work from home. That can be great … but working from home raises a lot of legal issues that many managers simply aren’t aware of.

If you allow telecommuting – even if you allow it for only a few employees, or only part of the time – it’s a good idea to have a written policy that will protect you if questions arise or if something goes wrong.

Here are some of the legal issues and the things a policy should cover:

► Will the employee use company equipment at home?

If the employee will be using company equipment (computers, smartphones, etc.), what happens if the equipment is lost, stolen or damaged? Is the employee responsible for the loss? If so, the employee should be asked to sign an acknowledgement to this effect, perhaps authorizing payroll deductions for the replacement cost. [Read more…]

New form needed for employee background checks

If you use an outside agency to perform background checks on employees or job applicants, then a federal law called the Fair Credit Reporting Act requires you to provide a form to any person if you take adverse action against them based on the results of the report. This form summarizes the rights of the employee or applicant under the law.

You should note that a new form is required to be used starting in 2013. If you’re still using the old form, you should discard it and begin using the new form.

The main reason for the change is that the old form was issued by the Federal Trade Commission. As of January 1, 2013, regulation of this aspect of the law has been moved to the federal government’s new Consumer Financial Protection Bureau. The Bureau issued its own form; among other things, the new form provides contact information for the Bureau as well as the FTC.

Important news if you’re thinking of applying for a patent

As of March 2013, the way that patents are granted in the U.S. has undergone a radical change.

For more than 200 years, when two or more people claimed to have invented something, the key question was who actually invented it first. Starting now, however, the key question will be who was the first to file a patent application. This means that the second person to invent something might nevertheless “win” the patent simply by winning the race to the U.S. Patent Office.

This change is part of a new law called the America Invents Act. This law also makes very big changes in the process by which someone can legally challenge the validity of someone else’s patent.

If you’re interested in obtaining a patent, there is now much more of a premium than before in acting quickly, before someone else gets the same idea.

Should your company adopt a Roth 401(k) plan?

The new tax law that resolved the “fiscal cliff” back in January will prompt many more companies to offer their employees a Roth 401(k) plan in addition to a traditional 401(k) plan.

In a traditional 401(k) plan, employees contribute pre-tax earnings, the assets grow tax-free, and an employee can withdraw them at retirement age and pay ordinary income tax on the withdrawals.

With a Roth 401(k), employees contribute post-tax earnings, but when they withdraw the assets years later, the withdrawals are tax-free.

Roth 401(k)s have been around for a few years, but they haven’t been very popular, in part due to numerous restrictions on the ability of employees to transfer existing 401(k) assets into a Roth account. But the new fiscal cliff law allows employees to freely convert any or all of a traditional 401(k) into a Roth 401(k), simply by paying income tax now on the amount transferred. [Read more…]

What arbitration clauses should say (and usually don’t)

A large number of business contracts contain some “boilerplate” language to the effect that any disputes will be resolved by arbitration. That’s fine – but a good arbitration clause should be a little more specific, and should resolve the most common sorts of questions that tend to arise when problems actually do go to arbitration.

After all, the point of an arbitration clause is to provide a quick, inexpensive resolution of disputes. So why allow an actual arbitration to be bogged down by unnecessary and preventable delays and issues?

A good arbitration clause should say:

  • How will the arbitrator be selected? Will each side choose from a list provided by a specified organization? What happens if they can’t agree? [Read more…]

‘Bring your own device to work’ policies carry legal risks

More and more businesses are allowing employees to use their own laptops, tablets and smartphones for work, instead of providing the equipment themselves.

About a third of all large companies in the U.S. now have a “bring your own device” policy, and about half of smaller companies do.

These policies have a lot of advantages, but they can also create security and legal risks. If you have such a policy, or you’re thinking of adopting one, it’s wise to have a written agreement with your employees that will protect you if something goes wrong.

In fact, it’s always wise for a business to have written agreements and policies about the use of personal technology, since employees today are increasingly likely to use their own devices for work purposes, whether it’s officially allowed or not. [Read more…]

If you say that your product is ‘reliable,’ does it have to be?

Companies advertise all the time saying that their products are terrific and better than the competition. But at what point can a company be sued if a product doesn’t live up to the hype?

That question came up recently when a customer sued Apple, claiming that his iBook G4 laptop failed shortly after the one-year limited warranty ran out. (He claimed that certain solder joints degraded each time to laptop was turned on and off, resulting in the computer eventually breaking.)

According to the customer, Apple was guilty of “misrepresentation.” That’s because Apple had advertised the product as “durable,” “rugged,” “reliable,” “high-performance,” and “ideal” for students. The customer argued that such a product ought to last at least a couple of years. [Read more…]

Businesses should have a policy on cell phones and driving

Any business whose employees drive or use the telephone should probably consider having a written policy on cell phone use while driving.

Why? Because if an employee causes an accident while driving on business…or causes an accident while driving on their own time, but while texting or making a phone call related to the business…then it’s possible that someone who was injured in the accident will sue the company, and try to hold it liable as well as the employee.

This is especially true now that more and more states are passing laws limiting texting and talking while driving. If an injured person can show that the employee violated a law, it makes it that much easier to sue. [Read more…]

Companies, former employees battle over LinkedIn accounts

Linda Eagle co-founded a company to provide training for financial services employees. Two years later, the company was purchased and Linda was named CEO. But six months afterward, she was fired.

Linda and the company then became embroiled in a lawsuit over – surprise! – Linda’s LinkedIn account.

Linda claims that the company accessed her account, changed her password, and replaced her profile with that of the company’s new CEO. She says that by doing so, the company prevented her LinkedIn connections from contacting her, and hijacked those connections for its own benefit. (Eventually she managed to get control of the account back.) [Read more…]

A good records management policy can protect you legally

Every company should have a policy for what records to keep and what to discard…and should review it annually.

On the business side, a good policy can make sure that records are kept consistently and are accessible when required. It should balance the need for careful records against the cost of keeping outdated or useless materials.

But there are important legal considerations as well. For instance, a number of federal and state laws require certain records to be kept (including those pertaining to taxes, workplace safety, and family and medical leave). Failure to keep these records can result in government penalties. [Read more…]

Wage-and-hour complaints are at an all-time high

Federal wage-and-hour lawsuits against employers are at an all-time high. In fact, the number of employee lawsuits has quadrupled in the last 10 years, according to government figures.

Most of the recent suits accuse companies of wrongly calling an employee an independent contractor. (The remainder are for failure to pay overtime, wage miscalculation, and similar issues.)

Of course, more and more businesses want to treat their workers as contractors, because they can often avoid overtime rules, payroll taxes, employee benefits and medical leave requirements. The problem is that companies are often careless about observing the rules, and they get in trouble as a result. [Read more…]