Rush on Business

National Start a Business Month

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 05 Feb 2010 16:08:16 -0600

This February is National Start a Business Month. To celebrate I am offering to form any Iowa incorporation or LLC for half the price during the month of February 2010. It's my small way to encourage business start-ups and help out start up entrepreneurs.

Twitter Interview Today with Lance Godard

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 05 Feb 2010 06:00:00 -0600

Today I am excited to get a chance to participate in 22 Tweets with Lance Godard. 22 Tweets is an opportunity for practicing lawyers that tweet to share their stories and tell a little bit about themselves in a 22 question format.

Lance has a terrific site (an ABA Journal Blawg 100 recipient) that features many interesting and insightful lawyers. I encourage you to check it out.

Be sure to follow us this afternoon @22twts and @rushnigut.

Legal Guide to Starting a Business in Iowa

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 05 Jan 2010 06:00:00 -0600

A couple of years ago I set out to write a Legal Guide to Starting a Business in Iowa. Unfortunately trying to work, write a blog, coach baseball and write the guidebook didn't quite work for me. I started the guidebook but never came close to finishing it.

So this year I have decided to blog the guidebook. At the end of the project, I'll have my book and hopefully Iowa entrepreneurs will have something that is helpful and informative. The project may take several months so most of the information on the blog over this time will be very general in nature rather than dealing with current events. I'll still blog on current events as appropriate.

Thanks for your continued support and have a happy New Year!

Wage and Hour Lawsuits: Your Business Could Be Next

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 17 Dec 2009 06:00:00 -0600

A couple of years ago I touched on how wage and hour lawsuits were on the rise. Since then Iowa's own Casey's General Stores got tagged for $11.7 million in a settlement. But not even I could have predicted the potential $1,000,000,000 liability that AT&T allegedly faces for failure to pay overtime. Yep, that's a BILLION dollar claim!

Naturally that kind of pie in the sky number might leave one to think, "It's never going to happen to me, my business is much smaller and I won't be a target." But when you look at the fact that experts believe approximately 70 percent of businesses are out of compliance with wage and hour laws, you shouldn't be quick to shrug off the prospects of a process server knocking on your door. All it takes is one disgruntled employee to contact the Iowa Workforce Development or the Department of Labor and you could find yourself in the middle of a wage and hour dispute.

So what are some helpful tips to avoid wage and hour lawsuits? (The outline below is from an earlier post. The comments from some prominent employment attorneys are especially good).

Conduct a Wage and Hour Review. Your first step should be to get with an employment law attorney or other wage and hour/human resources specialist who can review your pay practices to determine whether you are in compliance with the law. The cost spent for a review and developing a compliance program could save you tens of thousands of dollars in the long run or perhaps even millions if you run a large company.
Train Managers. Making sure managers understand the rules is paramount. Managers can avoid costly mistakes and spot problems before they become too costly.
Think Exempt-Non Exempt, Not Just Salary - Hourly. Too many employers pay employees a salary and then believe that relieves them from any obligation to pay overtime. Employees need to make sure those employees are properly classified as exempt (someone who is typically not paid overtime) or non-exempt (someone that is generally entitled to overtime).
Take Complaints on Wage Issues Seriously. You want to treat wage and hour complaints just as seriously as employment issues including harassment or discrimination. In fact, these wage and hour lawsuits could be more costly to your business.
Do Not Retaliate. Never, never, never retaliate against someone that makes a complaint for wage and hour issues.
Develop strong policies on pay practices and employee hours. Make sure employees work those hours assigned and do not work off-the-clock. Above all, properly document the number of hours worked because just like in baseball where a tie goes to the runner - if the employer has not documented the hours worked by the employee - the benefit of the doubt will go to the employee.

Business Person's View on Lawyers

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 10 Dec 2009 10:40:02 -0600

An older post from Guy Kawasaki on the top lies from lawyers but worth reading. Kawasaki says at the end of the post that it wasn't his idea so lawyers shouldn't get upset with him. However, most lawyers could benefit from reading the post. An important take away is that if you say something, you had better follow through.

Of course every business person could probably heed that advice, not just lawyers.

Lesson in the Importance of Good Business Records

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 30 Nov 2009 10:43:14 -0600

An article in Barron's supports, in a big way, the importance of keeping good business records. The article details how the IRS disputed a $75,000 repayment of a loan for a business owner named Henry resulting instead in a $68,000 dividend, on which Henry owed tax.

Joseph Gelband, a tax attorney from Larchmont, New York, wrote the article. He provides some wise counsel for business owners:

[Henry's] story points to the importance-especially for a closely held corporation-of observing formal business practices, if for no other reason than to create a record. Minutes should be kept, and updated at least annually. Executive salaries, bonuses, and loan transactions should be reflected in those minutes, which should be reviewed by the company's accountant when statements are prepared. The existence of that kind of paper trail would have left Henry in a much stronger position.

Now is a great time to document those transactions before the end of the year.

Happy Thanksgiving!

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 24 Nov 2009 06:05:07 -0600

I want to take the time to thank my clients that have made 2009 such a special year. I am very fortunate to work with some of the best people I know. A big thank you to the regular readers of this blog. As I enter the 4th year for Rush on Business this coming March it's always nice to know that I have support from so many.

Have a great Thanksgiving holiday!

Small Business Blogs for the Soul

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 12 Nov 2009 07:41:55 -0600

The Franchise King has a great list of 20 small business blogs that have the right stuff. These blogs possess some of the best content on the Web when it comes to small business. Be sure to check them out!

Shareholder Agreement Gotcha Under Iowa Business Law?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 02 Nov 2009 06:00:00 -0600

Throughout this blog you will see posts that recommend business people enter into a shareholder agreement when they start a corporation with multiple shareholders. But did you know that unless your shareholder agreement states otherwise, your shareholder agreement may only be valid for 10 years pursuant to Iowa corporate law?

Chapter 490.732 of the Iowa Code seems to indicate exactly that (although I have never seen it applied in a case yet). I think this is something that maybe even some of the most experienced corporate attorneys may not realize. So don't be surprised. You should review your shareholder agreement. If it is more than 10 years old, it may no longer be valid and a new agreement may be necessary. If the agreement is less than 10 years old it may be a good idea to revise it so there is language indicating the agreement applies for more than 10 years.

What Employers Need to Know About H1N1

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 23 Oct 2009 06:00:00 -0600

In a recent interview I was asked about what employers need to know about the H1N1 virus as a follow up to my recent post on how employers need to be prepared for H1N1. I didn't have a lot of time to respond as the question came towards the end of the program and we ran out of time. As a follow up, I thought I would mention that Connecticut employment lawyer, Daniel Schwartz, has a great post on H1N1 and the workplace. Daniel lists some available resources and has several recommendations for employers to get ready for the flu season:

Update (or create) a Business Continuity Policy with specific provisions for H1N1 flu.
Encourage employees to get flu shots (both seasonal and H1N1) as soon as possible. To the extent that you offer health insurance to employees, determine if those shots are covered under the appropriate plans. And consider offering flu shot clinics if you have the resources.
Clarify what your absence and illness policies will be. Consider having flexibility in this situation if you can to encourage employees who are sick (who have someone that is sick in their household) to stay home.
Make sure your infrastructure can handle an increased telecommuting presence if need be.
Stay updated on the EEOC guidance.

I couldn't agree more that employers need to have flexibility in your policies. This is one time where it is likely okay to vary from your existing leave policies. However, it is imperative that if you do so, you treat all employees in a fair and consistent manner.

Education is a key to prevention. For more information please visit Flu.gov for helpful information on H1N1 including a business planning section.

Insight on Business Interview

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 22 Oct 2009 06:00:00 -0600

I had the pleasure of sitting down for an interview with Michael Libbie yesterday. We talked blogging, discrimination cases, franchising and other issues.

If you didn't catch it live you can watch the podcast here. (The interview begins at about the 30 minute mark).

If you haven't heard about Des Moines Local Live, you should check it out. It's an Internet radio station with 50 local radio hosts talking everything from business to sports. A real testament to Des Moines' Internet-blogging presence.

How to Catch the Business Investor's Eye

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 19 Oct 2009 20:25:14 -0600

Need capital for your business? Looking for an investor? If so, you should take the opportunity to attend a seminar from the Business Innovation Zone of Central Iowa (BIZ) on how to get your business into shape and attract an investor's eye.

Adam Claypool of DeWaay Investment Banking is the speaker. I have worked with Adam on several occasions so I know this will be a worthwhile opportunity to listen to one of central Iowa's more prominent investment bankers. The presentation is this Wednesday, October 21st at the Des Moines Partnership offices, 700 Locust Street, Suite 100, Des Moines, Iowa. It begins at 11:30 a.m.

Afterwards you can listen to me on the radio this Wednesday at 1:00 p.m. with Mike Libbie offering insights on business on Des Moines Local Live.

Negotiating Franchise Agreements

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 09 Oct 2009 06:00:00 -0600

Franchise attorney Charles Internicola busts the myth that franchise agreements are non-negotiable in his post, Myth: Is it Illegal for a Franchisor to Negotiate and Modify the Terms of its Franchise Agreement. This is one of the best posts on the subject that I have seen.

In addition to the fact that you should take your right to negotiate the franchise agreement seriously, I would encourage you to stay on the alert for other common red flags from franchisors (I have written about these previously but it bears repeating):

You don't need a lawyer to review the agreement.
I would prefer you don't talk with other franchisees. You should only talk with me.
Trust us, we can't (and won't) change the agreement but we won't really hold you to that provision anyway.

Like many people you may considering an investment of your retirement savings in a franchise. You absolutely owe it to yourself to do the best job possible investigating that franchise and performing the most due diligence possible. That includes hiring experienced franchise counsel to review the franchise agreement and disclosure document. You need to talk with as many franchisees as possible but be sure to visit with those in your area. The success of a franchisee in New York, for example, may differ significantly than the success of a franchisee of Iowa especially when franchises are more of a regional flavor.

Some franchisors won't negotiate the terms of the agreement but that can be okay. Hopefully the franchisor can explain their reasoning for not negotiating a provision rather than hiding behind a blanket statement that they cannot negotiate because it is illegal. You definitely want to deal with a franchisor that is willing to listen and consider your needs.

And never, I mean NEVER, believe the franchisor that tells you they won't hold you to the terms of their written agreement. You can be assured that the franchisor's lawyer in any lawsuit will never acknowledge that statement was ever made and most franchise agreements are written so that any such statement could not be used as evidence in court.

Social Networking Law Blog Sure to Be Busy

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 06 Oct 2009 06:00:00 -0600

Megan Erickson of the Dickinson Law Firm has started Erickson's Blog on Social Networking and the Law. Now that's a blog that will have a never ending flow of posts. She already has an interesting array of posts including one where a business owner got slapped with a $2 million libel lawsuit for Facebook and Twitter posts.

This is one blog I'll be sure to follow.

Does Anyone Form an S Corporation Anymore?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 05 Oct 2009 06:00:00 -0600

The title of this post may be a little tongue-in-cheek, but I would say at this point I am forming perhaps 2-3 times as many LLCs as S corporations.

It still doesn't mean you should rule out the S corporation as your entity of choice. It could be the entity for your situation. Joe Kristan, an accountant with Roth and Company in Des Moines, explains in a recent post who can and should own a S corporation.

It's important to note that a decision to form an s corporation or LLC is often as much a tax driven question as it is a legal decision. That's why I encourage all new business owners to contact an accountant, in addition to a business lawyer, to determine which business entity to form.

Employers Need to Prepare for H1N1

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 02 Oct 2009 16:56:06 -0600

Liz Overton of Sullivan & Ward, P.C. has a timely post on how employers should deal with the H1N1 virus.

While it's true that employers are currently under no obligation to allow additional time off to employees who do not have available time off or have exhausted their available leave, I could easily see employers facing a tough dilemma about whether to adjust their leave and/or PTO policies if a significant outbreak of H1N1 occurs at work, or perhaps even in our schools.

Have you considered what you will do as an employer if a significant outbreak occurs? Will you make changes in your policies? Whatever you decide, consistency and fairness are keys to avoiding legal problems.

Watch Out! Your Kid Could Get You Fired

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 29 Sep 2009 06:00:00 -0600

A few weeks ago I posted on how your spouse could get you fired. Well, its not just your spouse you need to worry about. What about your kids?

A recent Family Circle article discussed how a teen's post got her father fired. The father apparently could not get time off to attend his daughter's school musical. The daughter was upset and vented about it on her MySpace page. The article says she stated she didn't want to work for someone like dad's boss: "He yells all the time, treats my dad like dirt, won't let my dad spend time with his family even though he gets to take time off constantly, and doesn't even know how to do his job."

Unfortunately, the rant went out to several hundred of the girl's MySpace friends, including kids at school, one of whom was the boss' son. The boy showed the post to his father and the girl's father was fired.

All of this underscores the importance of discussing with your kids how "public" information can become. Even if an account is private, that doesn't mean that one of your kid's friends won't share the information with the rest of the world.

P.S. Sorry I couldn't find a link to the article online but check out the October 17, 2009 edition of Family Circle magazine for the article, Share Tactics. There are several examples of how today's teens have no problem revealing every detail of their lives online.

Contract Law: Read Your Agreements

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 24 Sep 2009 06:00:00 -0600

Okay, you have decided you can do it on your own. You don't need a lawyer to review your agreement (at least until the proverbial you know what hits the fan). But let me give you some MasterCard commercial-like "priceless" advice:

READ YOUR AGREEMENTS.

I am honestly not trying to be a smart aleck when I say this. I cannot tell you how many times I have seen really smart business people fail to follow this simple plea. Just reading and actually understanding your agreements will help you avoid a great deal of trouble - with or without a lawyer.

Contract Law: Miscellaneous Provisions Shouldn't Be an Afterthought

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 22 Sep 2009 06:00:00 -0600

You've probably seen them in your contracts. Miscellaneous provisions such as choice of law, litigation venue, successors and assigns provisions, no waiver, entire understanding, or supersede clauses. They tend to always appear at the end of the contract and are almost always an afterthought by the parties. After all, those provisions don't mean anything, right?

Wrong.

Often when a contract claim proceeds to litigation these miscellaneous provisions are outcome determinative. Take for example the litigation venue provision. Let's say you are a small Iowa company and the contract specifies that your case must be heard in the courts of Los Angeles, California. This means you must be prepared to fight the case in Los Angeles or you may automatically lose your case. The California venue will almost assuredly drive up the costs of litigation over an Iowa venue. First, your Iowa lawyer, unless he or she is licensed in California, will need to get local counsel in California. Chances are the California local counsel will charge a substantially higher hourly rate than here in the Midwest and you will likely need to travel for court hearings and other proceedings. WIthout the money to fight, you are doomed from the outset regardless of how good your case may be. Plus, without a history with the judges in that state it is often difficult to predict the outcome of issues which could put you at a real disadvantage.

That's just one example. The other miscellaneous provisions in your contracts can come back to bite you in other ways. My recommendation is to carefully consider these provisions and don't treat them as an afterthought. If litigation occurs, you may be very happy you did.

Brick Gentry Lawyers Win Highly Publicized Case in Union County, Iowa

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 11 Sep 2009 06:00:00 -0600

A jury recently found a Union County Board of Supervisor, Mike King, not guilty of disorderly conduct after half hour of deliberation. Brick Gentry's Matt Brick and Doug Fulton defended King in the case.

For details on the case please read Matt's blog post regarding the intersection of employment law and criminal law.