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. 

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.

One of the most difficult decisions questions that any entrepreneur faces when starting a new business is what type of business structure to utilize. One of the many types of possible business structures is the C corp, which offers some distinct advantages over other structures, such as LLCs or S Corps. The following are some of the primary advantages offered by C corps. For more in-depth guidance on what business structure is right for your venture, reach out to a business attorney for help.

To determine if a C corporation is a good fit for you, it is critical to weigh both the advantages and the disadvantages offered by this type of corporate structure.

Advantages of a C Corp

There are a number of distinct advantages available through C corps. Some of the reasons why individuals decide to structure businesses as C corps include the following:

• Profits from C corporations do not pass directly to individual owners and as a result do not influence tax brackets. Instead, profits remain in the company and are taxed at the corporate rate.
• C corporations are capable of taking significant capital and operating losses. The Internal Revenue Service will not scrutinize a person for reporting losses a number of years in a row. Instead, a C corp is capable of carrying losses forward and applying them in later tax years.
• C corporation income is taxed at a 21% flat rate. Any individual with taxable income of $38,700 or more will be taxed at least 22% and sometimes even more.  
• Shareholders are able to serve as a C Corporation’s directors and employees.
• C corporations are able to deduct health insurance that is paid for workers. They are also able to deduct the cost of medical reimbursement plans.
• Because C corporation’s tax years are not based around the calendar year, the owners of C corporation are able to perform “income shifting” which can mean the company ends up paying a much lower amount in taxes.

Disadvantages of C Corps

Some of the reasons why business owners decide against a C corporation structure include the following:

• C Corps are double taxed. These corporations are taxed first when the business earns income, and the shareholders are then taxed on the amount they receive.
• The formation of a C corporation is particularly complicated and requires business owners to create a complex series of articles of incorporation and bylaws.
• C corporations face a number of substantial legal challenges. In addition to filing articles of incorporation, many states require corporations to have specific provisions regarding how the company’s management handles matters.

Speak with an Experienced Corporate Lawyer

When you are in the process of creating a business, it can be challenging to determine which business structure works best for you. Fortunately, at Resnick Law, our corporate attorneys have substantial experience with each type of business structure and can help determine which one matches your current needs. Contact our law office today to schedule an initial free consultation.

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Most workers in Michigan are classified as “at will” employees, which means that they or their employers can decide to terminate employment any time without providing any reason. There are however, some reasons for which an employer is

With the assistance of a skilled attorney, you can develop a strong defense against wrongful termination charges. Our lawyers have an in-depth understanding of Michigan’s complex system of business and employment laws.

When an Employer can Not Terminate a Worker

Although employers are not required to have a reason for terminating an “at will” worker, if the employee alleges that the termination is due to one of several prohibited reasons, a lawsuit will likely result.

Some of the situations in which employers in Michigan are prohibited from terminating workers include the following:

• Breach of contract. If there is a contract suggesting the nature of an employer-employee relationship, it is no longer an “at will” relationship. If an employer violates the terms of this contract and terminates a worker, the employer can end up facing claims of wrongful termination.

• Discrimination. Employers in Michigan are prohibited from terminating workers on the basis of color, race, religion, sex, national origin, marital status, age, and disability. If a worker was fired for one of these reasons, the worker likely has a strong basis for a wrongful termination lawsuit.

• Public policy. An employee can not be terminated from an employer if the termination relates to the worker’s unwillingness to commit an illegal activity. Employers also cannot terminate workers because they reported illegal acts or violations made by an employer.

Strategies to Avoid Wrongful Termination Claims

Some of the techniques that employers can follow to avoid claims of wrongful termination include the following:

• Maintain a detailed employee handbook, which expresses the employer’s expectations of its workers. The more that a handbook expresses the reasons why the employer might terminate a worker, the more support an employer will have to show that a worker was fired due to violation of a company policy. In many situations, it is a wise idea to obtain the assistance of an experienced attorney who can review your company’s policies.
• During the session in which the worker is informed of his or her termination, have another individual present who can provide testimony as to how the worker violated company policy.
• Provide a severance package that is adequate; this often helps companies avoid claims of wrongful termination.
• After the worker is terminated, make sure to keep all documentation of the process organized and easily accessible in case it is needed.

Speak with a Knowledgeable Business Law Attorney Today

The attorneys at Resnick Law have helped employers navigate a variety of employment laws. If you believe that a worker will accuse you of wrongful termination or are currently facing wrongful termination charges, you should not hesitate to contact a skilled business law attorney. Contact our law office today for assistance.

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Today’s do-it-yourself mindset has led to many new business owners to handle many legal matters on their own without the assistance of an attorney. While there are many websites that offer seemingly affordable legal document preparation and filing assistance, these alternatives are rarely suited to helping you if your business runs into a serious legal problem. Knowing

Help Deciding the Right Business Type

Preparing documents is not the only thing a qualified business attorney will do for you; your attorney will also help you decide what business type is best for you. During the incorporation stage of your venture, knowing what type of legal set-up you actually need will help you avoid wasting valuable time and money. A lawyer can tell you whether or not you need to register as a corporation, LLC, or other business entity, ensuring you are not making multiple changes to your structure because of startup errors.

Damage Mitigation

Every business has 36 to 53% chance of being sued and few business owners are truly prepared to deal with the consequences associated with litigation. Lawsuits can be filed against you at any point by a business partner, client, employee, your competition, or even a vendor. Even if the reason for the lawsuit seems frivolous to you, having a lawsuit filed against you could easily cost you a lot of money regardless of the outcome. Having an attorney who has represented your business before the suit was even filed means that you already have legal protections in place to reduce potential damages along with representation during the lawsuit.

Ensure Compliance

Laws applicable to business owners on a federal and local level are constantly changing.  Without an attorney to advise you, it is surprisingly easy to violate operating laws that were created after you started your business or changed after your business was already operating.  It is almost impossible for a business owner who is already focused on keeping a company running on a daily basis to constantly check state and federal business laws for changes that could affect legal compliance. Having a dedicated attorney reduces your chances of being blindsided by new rules or failing to comply with complicated rules that you are not implementing properly.

Benefit from Being Proactive

Finding yourself the target of a business related lawsuit or being accused of violating a law is overwhelming and extremely upsetting. The legal team at Resnick Law P.C. is here to alleviate your burden and make sure your business has the legal protection it needs. Our full-service law firm is able to represent you in a variety of business related situations including contract negotiating, buying or selling a business, collecting on unpaid accounts, and more. We take pride in offering our clients cost-effective counsel that focuses on your unique needs. Contact us to schedule a consultation at one of our two offices so that we can begin answering your questions and helping with your business’s legal needs.

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Harassment in the workplace can create a hostile work environment that affects the morale of employees and the work they do on a daily basis, which can eventually affect the bottom line of the business. Because way in which the management handles harassment complaints can have legal repercussions for the business, it is always best to have guidelines in place to ensure that harassment complaints are properly handled.

The ongoing #MeToo movement has highlighted various weaknesses in how allegations of harassment, sexual or otherwise, are handled across industries. In many cases, allegations of harassment in the workplace are ignored or minimized as opposed to being investigated and resolved. This approach can dissuade employees from making valid complaints and encourage harassers to continue their unprofessional behavior in the workplace.

For the business, allowing some employees to continue harassing other employees in order to avoid an investigation can only lead to further legal problems. If the employee being harassed can prove that the employer was aware of the harassment and chose to do nothing, the employer can be held legally responsible for that failure to act. In addition, if a member of management is the one harassing other employees, the employer can be held liable for that person’s actions if the employee can prove that he or she was retaliated against for filing the report, or that the harassment created a hostile work environment.

Guidelines and procedures regarding workplace harassment and how employees can report it should ideally be included in the employee handbook and posted in places where employees have easy access to the information. The procedures for reporting an incident of harassment should be geared toward making it easy for employee reporting, but also present a fair way to conduct an investigation into the allegations. The investigation should be kept confidential until the allegations are substantiated. Keeping the investigation confidential may also encourage other employees to report misconduct.

The employer should not take actions to retaliate against a person who files a harassment complaint in an effort to encourage the person to drop the complaint. Obvious actions of retaliation may include: firing the complainant, disciplining the complainant, demotion, reducing the complainant’s pay, or threatening to take any of these actions if the complaint is not dropped. There are other actions that may be considered retaliatory, for example moving the complainant to another department, to a less favorable shift, or even to another office. Even if these actions are taken for another reason, if they are taken close to the filing of the complaint, it can lead to an inference of retaliation.

Contact us for More Information

When drafting the guidelines and procedures to handle reports of harassment, and employee manuals in general, it is important to seek the guidance of an experienced business attorney. In some cases, when an investigation has been initiated, it may be important to seek the guidance of an attorney. For more information on how to proceed when an employee has filed a harassment complaint, contact an experienced business attorney at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.

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Most business owners do not enjoy being mired in public disputes or messy litigation, either with business partners or clients. For this reason, if it is possible, these businesses may choose alternative dispute resolution methods that keep them away from litigation in court and offer more in terms of keeping the details of the dispute private. One such dispute resolution method used by many businesses is arbitration.

Arbitration is a process that takes place out of court and in which the parties in dispute present evidence of the dispute to a neutral third party, known as an arbitrator, who then makes a decision. The parties can choose the arbitrator in agreement, and can choose an arbitrator who has specific technical knowledge that would assist in resolving the issues in controversy.

The decision the arbitrator makes can be binding on the parties or non-binding, depending on the arbitration agreement the parties signed. If the arbitrator’s decision is non-binding, the parties can go through litigation to settle the dispute.

Arbitration can often present a more cost effective approach to dispute resolution than litigation, but it comes with different costs. In addition, it can often take a shorter period of time to resolve a business dispute through resolution than through litigation. Arbitration further offers more protection of proprietary business information than a trial would because in a trial, the information may be publically available.

Arbitration agreements between businesses and individual clients are not always favored. This is because the business presumably is in a better bargaining position than a client. However, if the arbitration agreement is clear and well drafted, the contract will be enforced. Restrictions that are included as part of the arbitration agreement may not be enforced if they are not allowed under the law.

In order to go through arbitration, the parties in dispute generally have a preexisting contract requiring disputes to be resolved through arbitration. Although it is possible for parties to agree to arbitration after the dispute arises, it is less likely to happen. Arbitration clauses in contracts should be drafted very carefully to ensure that they are later upheld. Failure to properly draft the agreement could mean prolonged and expensive litigation on the validity of the arbitration clause which was supposed to help avoid litigation in the first place.

Arbitration does not eliminate the need for an experienced business attorney, and each side in arbitration is often represented by an attorney. The cost of the attorney’s fees and cost of litigation can sometimes be built into the arbitration agreement, with the agreement holding that the prevailing party will be reimbursed for its attorney’s fees.

Arbitration is not always better than litigation, and vice versa. Which option a business chooses depends on the needs of the business. Therefore, before making a decision on including an arbitration clause in a contract, it is important to seek legal advice from an attorney who is familiar with the needs of your business.

Contact Us for Legal Advice

For more information on alternate dispute resolution, and arbitration in particular, contact an experienced business attorney at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.

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Buy-sell agreements are enforceable contracts that govern what happens when a business co-owner leaves a business. In these agreements, the business owners agree to an exit strategy for a leaving owner, including buying out his or her interest in the business at a pre-agreed price. Instead of a guaranteed purchase, some buy-sell agreements give the remaining owners a right of first refusal to buy the business interest of a departing owner.

Buy-sell agreements can be drafted as part of a business’s organizational documents or as separate documents. Some businesses are required to have buy-sell agreements in place as a matter of law.

The value of negotiating this kind of agreement before the actual event causing a partner to leave takes place is that all parties will come to the negotiation on more or less the same footing. If it is left until the last minute, the departing business owner or his or her estate may feel that the terms negotiated for the sale of his or her interest in the business is not fair. Alternatively, the remaining business partners may feel the departing business owner is making too many demands. With each side feeling dissatisfied, lawsuits to resolve the issues are more likely to be filed.

Buy-sell agreements also provide predictability on business continuation, which is valuable to shareholders and customers. Customers are likely to face fewer interruptions in service when the business is transitioning out an owner. The buy-sell agreement also provides a market for the sale of the business interest where it may not otherwise exist.

There are several methods used to determine the value of a business for purposes of determining the future price to be paid when a business owner leaves. The owners can agree on a fixed price, set forth a detailed formula to determine the sale price of business shares later on, or use an appraiser. The method used for each business depends on the kind of business and on the method the owners agree to use. In some cases, the shareholders may be required to hold regular meetings to set or review the sale price. This can help ensure that the sale price always reflects a fair market value.

Contact an Experienced Business Attorney

There are many legal considerations that go into drafting a good buy-sell agreement. This is a document that should be drafted by an experienced business attorney who can offer legal advice on any issues that may arise as the document is prepared. For more information on how an experienced business attorney can help you prepare a buy-sell agreement, contact us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.

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Generally, a “time is of the essence” clause in a contract states that one party is to complete performance under the contract within a certain amount of time. For example, in a construction contract, a homeowner may require the contractor to complete building the home within a year, and include that the failure to complete the home within that time would constitute a material breach of the contract.

In some cases, instead of terminating or rescinding a contract when a deadline is not met under the “time is of the essence” clause, the parties may agree to liquidated damages. Liquidated damages are a certain amount of money that the parties agree will be paid by the party failing to meet a deadline to the other party to the contract. Liquidated damages are a less severe remedy than rescinding or terminating a contract, and therefore, may be more acceptable by the parties when they initially agree to the terms of the contract. The amount set for the liquidated damages has to be reasonable.

However, clauses in contracts indicating that time is of the essence do not guarantee that a failure to act within the time indicated will result in a court finding there was a material breach of the contract. The intention of the parties is generally more important than the language they include in the contract when it comes to contracts containing “time is of the essence” clauses. Michigan courts have found that in some contracts, despite the clause, time was not of the essence, and therefore, no breach resulted from the failure to meet a deadline.

It is important to ensure that if a clause indicating that time is of the essence is added to a contract, the language used is clear, and that the parties understand the consequences if the deadline is not met. If the contractual language is unclear, or if it contains no information on what happens when the deadline is not met, it is more likely that the clause will not be upheld.

Contact an Experienced Attorney

Making sure that your contracts are well drafted and convey your understanding of a transaction is very important. Before you sign any contract, it should be reviewed by an experienced attorney who can explain what the contract’s key terms are and how they can affect the deal. For more information on how our experienced contract attorneys can assist you, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan.

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However, the limited liability offered by corporate formation is not absolute, and in some cases a court may allow a director or shareholder to be held personally liable. This generally happens when the corporation has declared bankruptcy after being sued and being unable to pay the judgment and other business debts. When a court allows the shareholders or directors to be held personally liable for a corporation or a limited liability company, the court is said to pierce the corporate veil.

Piercing the corporate veil occurs in situations in which the shareholders or directors have engaged in some conduct that blurs the lines between the corporation and themselves as separate legal entities. This includes situations in which there is mismanagement by a director with the corporation’s’ funds being intermingled with a director’s personal funds, or in situations in which the corporate formalities required under the law are not followed. In these situations, a court could find that the corporation is nothing more than an instrumentality or an “alter ego” of the director or shareholders, and allow the piercing of the corporate veil.

The corporate veil may also be pierced in situations in which the corporation is found to be underfunded, especially if the underfunding is done intentionally. This can include purposefully taking money or assets from the corporation in order to hide them from future claimants, which may happen in anticipation of the corporation being sued. A court can also pierce the corporate veil if the corporation is used to commit fraud or otherwise commit a wrong.

There are certain steps that directors and shareholders who want to be able to shield themselves from personal liability for the business debts should take. First, they should ensure that the business is properly formed, and all formation requirements are met. Secondly, care should be taken to ensure that the business is following all required business formalities, including keeping proper financial accounting. The business should also have safeguards in place to monitor if a director or anyone else with access is misusing corporate funds for personal use.

Contact Us for Legal Advice

If you are starting a new business, it is important to choose the most advantageous business form for your particular needs. In addition, if you choose to form your business as a corporation or as a limited liability corporation, you must ensure that your business is well formed in order to offer you limited liability protection. For more information on how an experienced business attorney can help you navigate business formation, contact us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.

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