Examine Both State and Federal Law

The State of Michigan, as well as the federal government, have passed various regulations designed to prohibit discrimination and encourage diversity in the workplace. Following Title VII of the Civil Rights Act of 1964, the concept of what diversity means in the workplace has changed substantially. In the 1960s, diversity referred to differences like skin color, national origin, race, religion, and sex. Title VII of the Civil Rights Act prohibits discrimination based on these factors. In recent years, the concept of diversity expanded to include people with disabilities, the elderly (i.e. age), and veterans. The Civil Rights Act of 1964 applies to employers with 15 or more workers.

Some other regulations address diversity in the workplace, which include (but may not be limited to) the Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Pregnancy Discrimination Act. If you have a business located in Michigan, you must remain up to date with Michigan legislation. For example, Michigan’s Elliott-Larsen Civil Rights Act prohibits employment practices that discriminate against an individual based on a variety of factors.

Adequately Train Managers and Workers

The United States Equal Employment Opportunity Commission has the task of enforcing federal laws that prohibit discrimination against job applicants or employees due to their race, color, religion, sex, age, national orientation, or disability. This agency recommends that managers at a company, as well all employees, are sufficiently trained on equal employment opportunity laws. Successful implementation of training programs can provide all people at a company with the information necessary to perform legally and ethically, free from improper behavior. As part of a training program, it is critical to remind all employees of the various policies that are in place. All employees must be held responsible and accountable for their behavior, and face swift corrective action if they violate any laws, policies or rules designed to prevent discrimination. 

Contact a Knowledgeable Corporate Attorney Today

Businesses must navigate critical issues of diversity all the time, and those may have become even more critical during the past year of pandemic. Contact Resnick Law PC today to schedule a free case evaluation. 

If the Act becomes law, the bill requires the Securities and Exchange Commission (SEC) to implement “ESG Metrics” that address corporate disclosures under the Securities Exchange Act. The bill requires several elements, which include but are not limited to:

• In consent solicitation and proxy statements, issuers must include a clear description of the issuer’s review, and a description of any process the issuer utilizes to assess the impact of ESG metrics on its long-term business strategy. 
• Within audited financial statements, issuers must reveal ESG metrics so that a Sustainable Financial Advisory Committee may be formed. Issuers must also provide the SEC with recommendations about what metrics issuers should disclose. Additionally, the report must identify the challenges, as well as the opportunities for investors associated with sustainable finance.

Why ESG Reporting Matters

ESG reporting includes the disclosure of information connected to a company’s corporate, environmental, and social operations, and gives investors more detail which can assist their analysis on whether to avoid or engage with a company. When done correctly, ESG reporting provides a detailed image of the business’s impact in these three areas:

• Environment. This reporting analyzes how companies utilize energy and maintain the company’s environmental relations. For example, this would include disclosure of a company’s energy use, waste use, and how it treats animals. 
• Governance. This reporting reviews a company’s controls, practices and procedures. For example, this detail might include information about an illegal practice in which the company was once involved; or, the processes in place to avoid illegal practices that are common among publicly traded companies.
• Social. This reporting considers the connection between a company’s workers and the work culture. For example, this category might include details about whether a company donates a percentage of its profits to the surrounding community. 

The History Behind the Act

Long before this initiative went through the House of Representatives, the bill was introduced by a California legislator whose intent was that the proposed regulations would encourage both corporate and social responsibility in California, and throughout the country. The hope was that the regulation would result in companies being held to stricter standards involving ESG disclosure. The work on this bill comes during a time when many ESG lawmakers have begun working together to unify reporting standards, and provide more rigid and thorough environmental disclosures to the public due to various global environmental concerns. 

Obtain the Assistance of an Experienced Corporate Law Attorney

This Act represents just one of several pieces of notable corporate law legislation that have been filed in the last year. If you need help navigating the ESG Disclosure Simplification Act or any other corporate law issue, you should not hesitate to speak with a knowledgeable lawyer. Contact Resnick Law P.C. today to schedule a free case evaluation. 

You and your partner(s) may need to secure financing to obtain capital for the launch of your business. Or, if you have already started your business with partners, it may make sense to be sure you are legally protected (personally) from any business debt.  If you create a general partnership and end up leaving the business, you could still be liable for any business debt the partnership takes on and fails to pay. The following are some tips for protecting yourself from business debt in a partnership.

• Protect Yourself in a General Partnership

Your business structure will influence whether or not you are on the hook for business debts that go unpaid. Most business partnerships fall into two categories — general partnerships and limited partnerships. General partnerships are when two or more people start a business together. You do not need to create a legal entity to form a general business partnership. Suppose you and one of your good friends shake hands and decide to start a t-shirt printing company together; you started a general partnership.

In many general partnerships, there is no formal, written agreement between the partners. Unless all partners have signed a written partnership agreement, each partner will be equally liable for business debt and any outstanding business payments that go unpaid. Many people opt for a general partnership because it is less formal, but this business structure does not protect an individual’s (or a partner’s) personal assets from business liabilities (i.e. debts, lawsuits, etc.). 

In other words, if a patron or customer brings a lawsuit against the business and is awarded a large verdict, or sum of money, the plaintiff could seek to collect from you personally (which also means s/he may collect against your personal property or other personal assets).  A better option is to have all the partners sign an agreement which limits each one’s personal liability for partnership obligations, debts and/or liabilities.  This agreement should also include a limit of liability should one partner leave the partnership for any reason, or under certain circumstances. 

In a general partnership, every partner is 100% liable for the partnership/business debts and liabilities, including debts from loans, capital or financing, and damages awards from lawsuits. At Resnick Law, we can review your partnership and advise on whether you should become a limited partnership or require all partners to sign a contract limiting liability. In the alternative, there may even be a better business structure for your endeavor. An experienced attorney can help you determine the best structure.

• Protect Yourself in a Limited Partnership

A limited partnership is an agreement between a general partnership and a limited partner.  Limited partnerships must be registered and have formal documentation of the agreements between any general and limited partners. The limited partner often acts as an investor or as a less active member of the business. In limited partnerships, the general partner is typically the person who is exposed to the greatest share of potential liability for business debts. The limited partner is often only accountable for their business interest in the company. 

• You May Need to Set Up an LLC or Corporation

If you are concerned about being liable for your business debts, you may want to create an LLC or corporation. When you do so, you will separate your personal assets (i.e. your home, retirement savings, or other property) from your business assets.  Personal liability in an LLC or corporation would generally only come about if you signed a personal guaranty for a business debt, or in some other special circumstances.  Generally speaking, however, an LLC or corporation protects the individual partners, members, shareholders, etc. from personal liability of the business debts.  

• Contact an Experienced Business Lawyer in Michigan

Speaking to an experienced business attorney is one of the most important things you can do to protect yourself from business debts and set up your business and personal life for success. At Resnick Law, our experienced business lawyers are ready to help.  Contact us today to schedule your initial consultation.

Greater Discrepancies with Purchase Price

The pandemic has brought into question the long-term viability of many businesses; in turn, this tends to create discrepancies in purchase price and business valuations between buyers and sellers. Many business models are being scrutinized beyond normal due diligence, and sellers during the pandemic are increasingly expected to demonstrate the impact (albeit largely unknown) that the pandemic will have on a company’s long-term economic health. Discrepancies in valuation may result in more substantial purchase price adjustments. 

A buyer’s motivation for acquiring a business may also influence the purchase price. While buyers interested in financial gain will likely be focused more on short-term profits, others may be more focused on strategic plays and growth potential.  It goes without saying that the type of business plays a large role in all of this.  Additionally, in today’s economy there is still much uncertainty regarding survival and what the world looks like post-pandemic.  All of these factors can greatly impact the purchase price of a transaction.

Working Capital Adjustments

The way in which many businesses operate has changed substantially during the pandemic. Additionally, many businesses have been forced to pivot and/or adapt their operations to account for less working capital and cash flow.  One common area of contention within mergers and acquisitions right now is whether working capital should be measured against standards that existed before the pandemic, or if projections should be based on the current economy. Buyers will favor projections based on the current economy, as this will likely justify a lower purchase price, while sellers will tend to favor projections based on numbers and valuations pre-pandemic. 

Anticipated Timelines Have Increased Greatly

The day-to-day operations of many businesses have been significantly disrupted and impacted as a result of the Coronavirus. Understandably, some companies have implemented remote-work policies in the hopes of keeping workers safe and healthy.  Despite these efforts, however, the time frame for merger and acquisition transactions may inevitably take longer, as the flow of information is not as fluid as it once was.  Also, performing physical and internal inspections has become more difficult, dictating longer periods to be needed for due diligence.  For several reasons, the parties to a merger or acquisition can expect the entire transaction to take a longer period of time from beginning to end than they once did.

Tax Considerations

Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion spending package that contains various types of pandemic-associated relief, including direct payments to individuals as well as small business loans. Many of these changes impact tax returns for previous years as well as for the 2020 tax year. The changes and issues that have arisen may also have a substantial impact on determining valuations of companies and their assets.

Speak With a Knowledgeable Corporate Law Attorney

If you are interested in discussing a potential merger or acquisition, one of the best things that you can do is retain the assistance of an experienced attorney. Contact Resnick Law PC today to schedule a free consultation. 

Employee Retention Credit

The employee retention credit was created to encourage businesses to retain workers on their payroll. The tax credit results in a refund of up to 40% of up to $10,000 in wages paid by a qualifying employer who has had its business impacted by the COVID-19 pandemic. The only businesses exempted from this credit are local and state governments as well as small businesses that receive small business loans. 

Qualifying employers must have their business fully or partially suspended by the government as a result of the pandemic and the employer’s gross receipts must be 50% below the comparable quarter in 2019. Employers who can retain staff during the pandemic should not hesitate to utilize this credit.

The Paid Sick Leave Credit

The paid sick leave credit was created to allow businesses to obtain a credit for a worker who cannot work as a result of either COVID-19 isolation or self-quarantine. These workers are qualified to receive paid sick leave of up to 10 days at a maximum of 80 hours at the worker’s regular rate of up to $511 a day and $5,110 in total. Employers can immediately be reimbursed for this credit by reducing the required amount of payroll taxes owed. 

The Family Leave Credit

Employers can also receive a credit for workers who cannot work because the worker is caring for a family member with COVID-19 or because a child’s school or place of care is closed. Workers who fall under this category are entitled to receive paid sick leave of up to two weeks at a maximum of 80 hours at two-thirds of their regular pay rate with a cap-off at $200 a day or $2,000 in total. Qualifying employers can immediately redeem this credit, as well. 

Credits are Optional

Remember, payroll tax credits are optional. As a result, eligible employers need not feel required to claim the credits. If employers do claim the credits, however, it is critical to include the amount of credits by the employer in its gross income when federal income taxes are reported. One of the best ways to decide whether these credits are worth claiming is to speak with your corporate lawyer.

Speak with a Knowledgeable Business Law Attorney

Planning for your business’s continued success is more important now than it ever was. One of the best ways to make sure that you take tax laws into full consideration is to obtain the help of an experienced business lawyer. Contact Resnick Law today to schedule a free case evaluation.  

How the WARN Act Applies to Closings and Layoffs

Employers in Detroit as well as the rest of Michigan and the United States are required to comply with the Workers’ Adjustment and Retraining Notification (WARN) Act when it comes to closings and layoffs. This law only applies to employers who have either 100 employees, with the exclusion of part-time workers, or 100 workers including part-time workers who comprise work more than 4,000 regular hours weekly. Under the WARN Act, employers must issue a 60-day notice of either closings or layoffs if they involve “employment loss” of a certain magnitude. For layoffs, at least 33% of employees excluding part-time workers and at least 50 workers must experience a job loss in a 30-day period at a single employment location. For plant closings, at least 50 workers, excluding part-time employees, must experience employment loss in a 30-day period. 

For the purposes of the WARN Act, an employment loss includes either an employment termination other than a discharge for cause/voluntary departure/retirement, a layoff greater than six months, or the reduction in hours of work by more than 50% during each month in a six-month period.

Limited Exceptions to the WARN Act

There are three limited exceptions to the WARN Act’s 60 days notice requirement. While one or several of these exceptions might apply to your situation, the assistance of an attorney is often necessary to prove it. These three exceptions include:

• Faltering company exemptions, which apply when a company sought new financing or funds to stay open and where providing 60-day notice would destroy that company’s opportunity to gain these new funds. This exemption only applies to plant closings, which means that it is the least likely to apply to companies disrupted by the pandemic.

• Natural disaster exemptions, which apply when a closing or layoff directly occur from a natural disaster. While floods, earthquakes, and other storms fall into this category, it remains uncertain if the pandemic would constitute a natural disaster. While the definition of a natural disaster does not include pandemics, the U.S. Department of Labor might extend this exemption at some point. 

• Unforeseeable business circumstances exemptions, which apply to both closings and layoffs that occur when a business’s circumstances are not reasonably foreseeable. This exemption requires a significant and sudden unanticipated occurrence that substantially disrupts business operations. This exemption is likely to be the exemption most commonly utilized by companies who have incurred financial difficulties as a result of the pandemic. 

Remember, in addition to claiming one of these exemptions, employers also must still provide as much as notice as is practicable, and when doing so provide a brief statement of why the notification period has been reduced. 

Speak With a Corporate Law Attorney

If you have questions about the law including the WARN Act, it can help to speak with a knowledgeable corporate law attorney. Contact Resnick Law PC today to schedule a free case evaluation.

While there are several common ways that partnership disputes arise, there are several strategies that can be used to resolve them. 

Disagreements Among Partners

Some of the most common types of disputes that partners encounter include:

• Intellectual property disputes. If a company is based on one partners’ intellectual property, it is possible to take steps against this asset being classified as company property. This is why there should always be clear documentation about who retains the asset and how it is handled during and after the life of the business.

• Monetary disputes. Business partners often disagree about how money should be spent. In many partnerships, one individual manages operations while the other decides how money is handled. To avoid disagreements over finances, it is a good idea to make clear ownership rules up front. In terms of compensation, both partners should be honest about how much time they put into the company and take the corresponding amount in salary.

• Operational disputes. Many partnerships begin with co-equal management and the partners intending to make decisions mutually. Disagreements, however, can still arise because one partner might feel that the other partner is not performing his or her job. One of the best ways to avoid escalating conflict is to clearly outline the process for dispute resolution in your partnership contract. 

Tips in Resolving Partnership Disputes

Some strategies that can be utilized to reduce partnership disagreements include:

• Actively listen. Practice “active listening” in which each partner agrees to compassionately listen to the other’s position without interjecting. 
• Avoid rush judgments. For small companies, even small decisions can be critical. If partners disagree about an issue, it can be easy to end up in an argument. Rather than rush into a decision, relax and consider your partner’s position.
• Plan in advance. If you anticipate that certain topics will result in disputes, attempt to plan how to handle these disputes ahead of time. 
• Seek outside help. Realize that outside help can be useful. Mediation can be a great choice in these situations. Mediation is focused on reaching a fast and effective resolution that benefits both parties in a dispute. If mediation is undesirable for some reason, it might be time to consider retaining the assistance of a knowledgeable corporate lawyer. 

Speak With an Experienced Business Law Attorney

At Resnick Law PC, our attorneys have helped business owners resolve disputes. Contact us today by calling (248) 642-5400 today to schedule a free case evaluatio

Burgeoning Coronavirus Lawsuits

In May 2020, lawsuits were filed against Princess Cruise lines alleging that the company was grossly negligent in exposing passengers to COVID-19. The lawsuit claims that the cruise ship was allowed to go to sea despite the knowledge that previous ship passengers had the disease. The Princess Cruise lawsuit is only one COVID-19 lawsuit of many, and the numbers keep going up. 

To minimize the risk of ending up in a lawsuit, some companies have resorted to what once seemed like drastic measures. For example, there have been several news stories of companies throwing away tens of thousands of dollars in food to avoid potential infection risks.

What Duty Business Owners Have to Customers

In Michigan, business owners have a duty to use reasonable care to protect customers from an unreasonable risk of harm created by dangerous conditions. Business owners must take reasonable care to provide customers with a safe environment. This means that business owners must discover and eliminate dangerous conditions on their premises and avoid creating conditions that could make things unsafe.

In Michigan, a customer’s contributory negligence is not a complete bar to recovery. Given the extensive recommendations about staying indoors and maintaining a six feet distance from others, there is at least some degree of culpability if a person claims to have contracted COVID-19 while patronizing a business in person.

The Role of CDC and MIOSHA Guidelines

While there is no specific requirement that business owners must follow guidelines established by the Centers for Disease Control and Prevention, to avoid third-party liability, it might be a good idea to follow these guidelines to keep customers as safe as possible.

Unlike the CDC, the Michigan Occupational Safety and Health Administration (MIOSHA) has issued workplace guidelines for business owners that include requirements that must be followed. For example, employers must create a written exposure control plan that includes exposure determination and addresses what measures will be taken to prevent worker exposure to COVID-19.

Steps Businesses can Take

Some of the helpful strategies business owners can take to mitigate the risk of coronavirus exposure include:

• Discouraging handshaking
• Informing workers about what they can do to reduce the risk of COVID-19 spread
• Practicing proper respiratory hygiene
• Routine cleaning and disinfecting
• Separating sick employees
• Using sufficient building ventilation

Speak With a Michigan Corporate Law Attorney Today

If you have questions or concerns about how your business can better mitigate liability during the COVID-19 pandemic, it can help to speak with a knowledgeable corporate law attorney. Contact Resnick Law, PC today to schedule a free case evaluation.

What Constitutes Force Majeure

When a “force majeure” event occurs, it prevents a party from performing its obligation under a contract in that either the event could not have been foreseen or could not have been prevented even with care and diligence. While many people think of natural disasters when considering force majeure clauses, this category can also pertain to wars, government actions, and pandemics.

Just because a specifically enumerated event occurs, does not mean that a force majeure clause becomes effective. Instead, for the force majeure clause to come into play, an event must result in “extreme and unreasonable” difficulty or hardship. 

A force majeure event will also not excuse a performance if the failure to perform is the result of a party’s negligence instead of the event itself. If a party to a contract could have prevented the force majeure event, the force majeure will likely not be effective. 

The Role of Force Majeure in Business Contracts

There are several ways that parties can be protected if there is a force majeure in their contract. If a contract’s purpose is frustrated or incapable of being performed, the clause can protect a person through the doctrines of impracticability or impossibility. 

Force Majeure and the Coronavirus

Because force majeure can encompass government actions that make contract performance impossible, these clauses are likely to come into play in various contracts during the COVID-19 pandemic. In this setting, a force majeure might take the form of a lockdown order or other government action that makes it impossible to perform a contract. 

Advice When Considering the Use of a Force Majeure Clause

Some helpful strategies that parties navigating force majeure clauses should remember to follow include:

• If you plan to use the COVID-19 pandemic as a reason to not perform under a force majeure clause, make sure to give the other contracted party ample notice.
• Remember to discuss potential business solutions with the other party. While the coronavirus has resulted in delays in shipment, reduced supplies, and other hardships, it might still be possible to arrive at an acceptable arrangement.
• The strongest arguments that a force majeure event has occurred and made the terms of a contract impossible often involve government actions taken to control COVID-19 as well as unanticipated disruptions of the supply chain. 
• Force majeure is a temporary defense and only applies for the time that the event restrains a party’s performance under a contract. 
• To learn even more about the relationship between force majeure clauses and the coronavirus pandemic, considering reading the American Bar Association’s recent article “Is the Coronavirus a Force Majeure that Excuses Performance of a Contract?”

Speak with a Knowledgeable Corporate Law Attorney

How “force majeure” applies to the COVID-19 pandemic remains largely unsettled. Fortunately, an experienced corporate law attorney can help you navigate this important issue and many others. Contact Resnick Law PC today to schedule a free case evaluation. 

The following are some of the most common mistakes made by companies on social media as well as what can be done to avoid them.

Using Fake Testimonials

Testimonials, when used appropriately, can be a powerful way to build your reputation as a trusted business. The use of fake testimonials, however, can create trouble among regulators. State attorney generals strictly enforce how testimonials are used. Fake testimonials can quickly lead to substantial legal fines and other serious penalties.

Not Having an Internal Social Media Policy

As social media plays a larger role in society, it is increasingly more important for companies to have a social media policy. This policy should address things like whether workers can pursue social media opportunities while on the clock and who owns social media followings. 

When improperly handled, these issues have the potential to result in wrongful termination lawsuits. Employers can also encounter legal trouble if they delete social media posts and activity related to salary and other work conditions. 

Running Contests Without Proper Legal Authorization 

While companies realize that everyone loves the opportunity to win a prize and running a contest can create a great deal of publicity, it does not come without its risks. Regulatory agencies frequently watch how companies implement contests and whether those contests conflict with gambling or lottery laws. 

If your company decides to offer a contest, it must consider all applicable regulations. 

Requiring Employees to Promote Campaigns on Their Personal Profiles

For most business owners, employees play a vital role in the company’s future success. This extends to the company’s social media presence. While it might be tempting to ask a younger worker in the office who has a huge social media following to help promote a campaign, this can create various challenges. 

There is a substantial difference between making content available for workers to post and requiring employees to share content. While making information available to share is often permissible, companies are generally prohibited from forcing workers to share campaign details.

Not Being Prepared for the Associated Fines

Posting on social media might be free, but paying for the associated fines is not. Social media lawsuits often result in companies paying up to $100,000 in fines. Many companies fail to budget for these costs. In many cases in which a company is likely to win, the associated costs are still substantial and must be anticipated or can end up eating into other budgets. 

Given these costs, many companies decide to respond to potential infringement cases by first sending cease and desist or DMCA takedown letters. 

Speak with a Knowledgeable Corporate Law Attorney

Any business owner can accidentally make mistakes on social media, and when those mistakes threaten future business success, an experienced business litigation attorney can help. Contact Resnick Law PC today to schedule a free case evaluation.