Articles Posted in Business Start Ups

If your company has employees driving either company owned or employee owned vehicles in the course of their duties depending on the circumstances your firm may be held liable for their negligence. Given the potential damages of a catastrophic accident it’s important that your company has sufficient insurance to cover this situation. Without proper insurance your company could be responsible for paying for your legal defense, settlement amount or damages awarded at a trial.

If you have employees driving their own vehicles for company purposes you need to review your coverage. If such a company related errand or delivery is done in a vehicle not owned by your company and an accident occurs your insurance may not cover it. Most business owners have a general liability policy. It’s a common myth this policy will cover anything and everything that could result from business related negligence but most of these policies do not cover car accidents.

There are several potential causes of action that could be filed against you.

  • The legal doctrine of ‘respondeat superior’ means that an employer can be held responsible for the negligent acts of an employee if he or she is acting within the scope of his or her employment. The reasoning is the employer is exercising some control over the employee while the employee is doing his or her job. This can include actions taken by an employee driving his or her own vehicle or one owned by the company.
  • Another legal doctrine impacting such a situation is that an employer has an obligation to defend legal claims against an employee who is acting within the scope of his or her job. If the employer fails to do so the employer can be sued by the employee to get a court order mandating the defense or to pay the employee’s legal bills.

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photo - warrantiesHow many times have your purchased some consumer good and in the box is a copy of the warranty in print so small it made you squint? Now thanks to a recent change in the law if a consumer good has a warranty a copy need not be provided in the packaging. It can now be posted online and the print can be enlarged as much as you want on the screen. If you make or market consumer goods this should cut your costs and eliminate another piece of paper to put in the box.

The E-Warranty Act of 2015 amends the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act. The changes allow manufacturers and sellers the option posting written warranties online instead of on or with the consumer product as was required under the law. The Congressional intent of the law is to provide,

  • An environmentally-friendly means to give consumers access to product information, and
  • Flexibility in terms of complying with labeling and warranty requirements.

Supporters of the law see it as a way to bring warranty publishing laws into the digital age, increasing access to warranty information while reducing waste. Consumers need not keep track of papers they can see warranty terms on computers, tablets or smartphones.

Under the law written warranties aren’t required but if they are offered the Magnuson-Moss Warranty Act and its Federal Trade Commission (FTC) regulations require sellers and makers of products costing more than $15 at retail to,

  • Show the text of the warranty to consumers, and
  • Make the warranty available to potential buyers prior to the sale.

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photo - new franchise lawA new state franchise law goes into effect on January 1 which is much more favorable to franchisees. It makes it more costly for franchisors to pull out of agreements and gives franchisees more time to correct any alleged breach of a franchise agreement.

The new California Franchise Relations Act will cover any franchise agreement signed or renewed after January 1 as well as any franchise agreements that have an indefinite duration which may be terminated by the franchisee or franchisor without cause.

The part of the new law that should have the biggest effect on franchisor/franchisee relations are the new repurchase requirements.

photo - jammin java pump and dumpBob Marley is the world’s most recognized reggae superstar even 34 years after his death. His socially conscious music touched people across the globe and we can only imagine what he might think of his family name being associated with possible shareholder fraud.

The former chief executive of Jammin’ Java Corporation, which sells Marley Coffee, Shane Whittle been charged by the Securities and Exchange Commission (SEC) with fraud in November, according to the Los Angeles Times. Whittle is accused of running a “pump-and-dump” stock scheme that resulted in $78 million in illegal trading profits.

A “pump-and-dump” scheme, according to the SEC, normally involves positive and false publicity about the stock and the company which can drive up the number of people buying the stock, increasing its price.

  • False claims are often made on social media, internet bulletin boards and chat rooms. People are urged to buy the stock early then sell it before the price drops. The party making the statements often claims to have inside information about some future development or skills in picking stocks.
  • Those “pumping” the stock price often are actually company insiders or people paid to promote the stock and/or they will profit by selling their shares due to increased interest in the stock created by bogus claims.
  • Once those involved in the scheme “dump” their shares and the hype stops, the price drops and investors find they’ve invested in a company worth much less than they believed.

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photo - ex-employeesThis can happen in many ways but a recent Inc. magazine article brings up the fact that statements and opinions of former employees can damage your company’s reputation and make it more difficult to attract good job candidates. Just as online reviews of products and services (even lawyers) have multiplied across the internet, so have reviews of employers.

In the article J.T. O’Donnell describes a business owner having a hard time finding candidates for job openings, with three people backing out of interviews. With openings unfilled he was having a hard time meeting his clients’ needs. O’Donnell learned his company had restructured two years earlier resulting lay offs. Some of those let go used social media to blast the company and its management.

Just as you may do online research on people you’re considering hiring, those looking for work also may do online research of possible employers. These job seekers, especially ones whose skills are in high demand, may be very picky if they read things they don’t like. The job candidate may discount one or two truly negative reviews as being written by malcontents, but if multiple, consistent negative statements about your company or management are found they may be given some weight.

Creative accounting is photo -Toshibaone thing, creativity to the point of fraud is something else. Fraud is never a good idea, no matter how dire your company’s financial situation may be. Whatever short term benefit a company may obtain because of it, it’s just a matter of time before the truth is known. Depending on the circumstances civil lawsuits and criminal charges may result.

Japanese corporate giant Toshiba Corp. is suing five former corporate executives involved in a massive accounting scandal rocking the multi-national high tech company, Bloomberg reports. Toshiba is working to recover from overly creative accounting that resulted in profit write downs of more than $1.2 billion over nearly seven years.

Defendants are three former presidents and two former chief financial officers. The company is seeking the equivalent of $2.4 million in damages. Three defendants resigned in July to take responsibility for the scandal.

Fortune reports the company had overstated profits by about $2 billion. It states the cause was Toshiba management set profit targets so aggressively the only way subordinates could meet them was through inflating actual results. An independent investigation concluded that the five men failed stop the accounting irregularities Continue reading

photo - with friends like thisWhen you’re hiring someone for your business, especially for a position where the person can access funds, you need to find not only someone who’s competent but trustworthy as well. If you know someone for a while, maybe you’ve become good friends, you may feel a connection that makes hiring the person feel like the right choice to make. As a recent Orange County Register article shows, the hiring of a friend was a $6.8 million dollar mistake for a local business.

Russell Eugene Dunbar, formerly employed by a Santa Ana piano store, Fields Piano, was sentenced in July to 18 years in state prison for embezzling up to $6.8 million over three-year period with the company. Dunbar was found guilty last year of felony counts of forgery, falsifying records and grand theft. According to the Orange County District Attorney’s Office the charges included enhancements for aggravated white-collar crime over $500,000 and property damage over $2.5 million.

Fields Pianos hired Dunbar, a close friend of the owners, to be responsible for the company’s accounting in 2001. According to the district attorney, two years later Dunbar took steps to help himself to company funds.

  • He opened a personal bank account with a name similar to his employer’s business, Fields Piano Company, and deposited large checks from the store into this account.
  • To help hide his actions, Dunbar wrote smaller, personal checks and deposited them into his employer’s account and used deposit receipts to create false receipts.
  • Dunbar told his employer the large deposits were deposited in the company account, though there were no such deposits.
  • The store owners were unaware of the losses and paid taxes on income they never received.

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photo - DOJThe Department of Justice (DOJ) will be putting more emphasis on individuals when enforcing civil and criminal laws on businesses. This could result in individuals being charged with federal crimes if evidence supporting such a charge is developed during the investigation or litigation of a civil matter involving the federal government. This approach was unveiled when a memo by Deputy Attorney General Sally Quillian Yates was published in September.

Yates writes, “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing.” The memo makes clear that individual employees should not feel sheltered from individual legal liability (civil or criminal) if they work for a corporation that’s being investigated, sued or prosecuted for federal law violations.

While in the past employees may have felt the best defense may have been to “stick together” that may no longer work so well. If there is more pressure on individuals, lower ranking employees may be more willing to provide incriminating evidence on higher ups while those in upper management more be less willing to open up incriminate themselves.

Yates makes it clear that DOJ attorneys working on civil cases need to look for possible individual civil as well as criminal liability when investigating a business. “In addition to recovering assets, civil enforcement actions serve to redress misconduct and deter future wrongdoing,” Yates writes, “Thus civil attorneys investigating corporate wrongdoing should maintain a focus on the responsible individuals, recognizing that holding them to account is an important part of protecting the public in the long term.”

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photo - video vigilantesYour workplace could be a recording studio without you even knowing it. Thanks to smartphones, it’s never been easier to make audio and video recordings of your surroundings, including the workplace. Increasingly employees filing discrimination and whistleblower complaints are making recordings to back up their allegations. One Houston employment lawyer estimates that more than half of her clients come to her with secret workplace recordings, according to ABC News.

California has a wiretapping law that covers audio and video recordings of in person and telephone conversations. It is a “two-party consent” law so, ideally, the person making the recording should get permission from the person being recording in order not to violate this criminal law. The statute covers “confidential communications” (where one of the parties has an objectively reasonable expectation that no one is listening in or overhearing the conversation).

If the recordings are made in a busy, public space, it would be hard to argue a person being recorded expects privacy. When it comes to the workplace, courts have generally found that employees have no objectively reasonable expectation of privacy given management’s traditional ability to control the workplace and perform investigations into wrongdoing.

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UCSD BuildingChina may be the top trading partner for the area’s huge ports, but Taiwanese companies play a big role in that trade, according to the Los Angeles Times. The Los Angeles County Economic Development Corporation estimates that as much as a third of the imports coming into the ports of Los Angeles and Long Beach from China are made by Taiwanese companies doing business in mainland China. That data comes from a report the corporation released in June.

The Los Angeles region handled more than a quarter of the trade between Taiwan and the U.S. last year, valued at $17 billion, up 7.8% from 2013. Taiwan is the region’s fourth largest trading partner, behind China, Japan and Korea. In 2014 imports from Taiwan, much of them computers and electronics, increased 9% in the Los Angeles area to $9.5 billion, the highest level since 2007.

From January through April, the U.S. Census Bureau estimates the U.S. and Taiwan did about $21.6 billion dollars in trade in goods (with the U.S. running a $6 billion trade deficit). For all of 2014 the estimated total trade in goods was about $67 billion (the U.S. running a $13.9 billion deficit).

The Los Angeles area’s exports to Taiwan rose 6.4% last year to $7.6 billion, a record high, including aerospace, transportation and agriculture products. Taiwan and American (especially Californian) economic ties are “very close,” Taiwan President Ma Ying Jeou told The Times last month.

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