Articles Posted in Small Business

An arbitration agreement is a contract, in which two or more parties agree to settle a dispute outside of court.  Usually, an arbitration agreement is a clause in a larger contract. The arbitration clauses are often subjects to hotly disputed litigation, stemming from the vague verbiage and possible inconsistencies with other parts of the contract.  One of such issues – the admissibility of the “Wholly Groundless Exception” – was decided by the Supreme Court in January in the case of Henry Schein, Inc. v. Archer & White Sales, Inc , 586 U.S. __ (Jan. 8, 2019).  This is a tricky issue for those in the trucking industry who include arbitration clauses in their contracts with drivers.

What Is A Wholly Groundless Exception?

A “wholly groundless exception” was born out of the “delegation clauses” ordinarily found in arbitration agreements.  A delegation clause represents an agreement between parties that an arbitrator, not the court, will determine the threshold issues of enforceability of the arbitration clause and the scope of the arbitration agreement.  In other words, it is up to an arbitrator to decide whether, according to the contract or the rule of law, an issue may be decided by arbitration or needs to be determined by a judge.  These clauses were held to be valid by the Supreme Court in 2010 in Rent-A-Center, West, Inc. v. Jackson, 561 US 63 (2010). Since then, several circuits decided that this provision must be limited; thus creating a so-called “wholly groundless exception” to the delegation clause. This exception lets parties avoid compelling arbitration in cases where the claims are so obviously not within the scope of the agreement, that it would be a waste of time to go through arbitration before filing a lawsuit.

Employee expense reimbursement is now required by law in Illinois, at least under certain circumstances, making the Land of Lincoln the ninth U.S. jurisdiction to statutorily impose such a requirement.   In doing so, Illinois joins the company of other states with similar rules.   Employers of all shapes and sizes should get up to speed on the new law, an amendment to the Illinois Wage Payment Collection Act that took effect on January 1, which requires employers to reimburse all “necessary expenditures” directly related to the employer’s services.

The new law (820 ILCS 115/9.5) defines “necessary” as “all reasonable expenditures … required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.” This means that the employer must have either “authorized or required” the employee to purchase the product or service and must receive appropriate documentation within 30 days—unless the employer allows for a longer time frame.

Employers should have written expense reimbursement policies that lay out what they pay for and how much, along with what’s requested in terms of documentation; although if an employee cannot produce this documentation, such as a receipt, the employer must accept a “signed statement” from the employee instead.   This written policy can set caps for different categories of expenses and the employer does not need to reimburse more than the capped amount, provided the caps amount to more than “de minimis” reimbursement—a term the amendment does not define. In other words, the best guideline one can follow is: be reasonable, based on costs in your area.

Chicago-Business-Lawyer-George-Bellas-300x177A Legal Guide to Holiday Parties

Alas, the holiday season is upon us!  It’s time to celebrate the successes of the prior year with a festive holiday party, where employees can let off steam, socialize and spread cheer.  So, who should you contact first? A caterer… or a DJ… or your friendly Chicago business lawyer?  Although it may not sound like the most fun way to kick off celebrations, calling your company’s lawyer to discuss legal guidelines and potential liability pitfalls may be a good idea.  We don’t mean to be scrooge and kill the fun, but times have changed.

To ensure that your holiday party is memorable for the right reasons, this guide may help understand some concerns are and how to avoid potentially troublesome situations.

In late September, the social media behemoth Facebook told the World Wide Web that about 50 million accounts had suffered a security breach. Hackers had stolen password tokens for signing into Spotify, Instagram, Yelp and thousands of other third-party applications.

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Facebook Security Breach

Facebook automatically logged out the 50 million users directly affected and another 40 million who might have been implicated, and the company said that passwords weren’t compromised. But the incident serves as a warning to all who have multiple passwords across the various sites and accounts they use—in other words, virtually everyone in the First World, and certainly business owners—to take this opportunity to better manage account security.

Workers Classification – Employees or Independent Contractors

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Independent Contractor or Employee?

As a business owner or an employer, when you hire a new worker, you will be reintroduced to the question – should you classify the worker as an employee or an independent contractor?  In order to make this huge business decision, you need to fully understand the difference between an employee and an independent contractor and the importance of classifying them correctly.

Generally speaking, illegal immigrants have the same protections under labor laws as American citizens, with some minor exceptions.

Minimum Wage Laws:  addition to federal laws, each state has its own minimum wage requirements; where federal and state laws differ, the higher wage applies.  Minimum wage laws apply to all workers the same, regardless of immigration status. Minimum wages in the U.S. are primarily set forth by the federal government, under the Fair Labor Standards Act (“FLSA”).  But virtually every state has its own minimum wage law as well.  Though the federal law trumps the state law, if state law mandates greater benefits, the employer must pay the higher rate.

Importantly, the FLSA makes no exception for illegal immigrants.  They’re therefore entitled the same benefits as American citizens.   Currently, the FLSA minimum wage is $7.25 per hour for non-exempt employees, and the New York minimum is the same. The minimum under Illinois law is $8.25.

In case you missed it, on June 21 the Supreme Court of the United States passed a judgment that states were now allowed to impose taxes on online sales.  This overrules its previous decision to rule out tax collection on stores that did not have a physical presence in that state.

So what does this law means and how is this going to look for your online business?

Before we go further into the South Dakota vs. Wayfair Inc. ruling, it is important to be familiar with how sales tax on online purchases used to work until now. The previous verdict from 1992, also known as Quill Corp. vs. North Dakota ruling, set forth that online retail merchants only had to impose taxes on their online sales in states where they had a physical presence or a “nexus.”   This means that the customers were required to pay the tax on the purchase to their home state directly.

By Misty J. Cygan, Attorney at Law

George Bellas Small Business Attorney

Aileron is a trained emotional support dog.

Business owners and their customers are perfectly used to service dogs who assist people with disabilities in getting around and performing daily tasks.

buscemiA proposed federal rule change that would allow owners of restaurants, bars and other businesses whose employees receive tips to distribute those gratuities as they see fit would add flexibility for employers—but might raise questions in the minds of customers.

Those who agree with the Mr. Pink character from “Reservoir Dogs,” who famously refused on principle to tip a diner waitress in the movie’s opening scene, would have a whole new set of arguments to make about which jobs society deems to be tip-worthy.

Currently, a 2011 Obama-era Department of Labor rule mandates that tipped workers get to keep the 15 percent or 20 percent that’s added to the credit card receipt or stacked under the salt shaker. The rule change would allow management to pool these tips and spread the wealth more evenly, including traditionally non-tipped staffers like dishwashers and cooks.

data-protection-represents-forbidden-secured-and-wordcloud-266x300Have you thought about or bolstered your cybersecurity lately?

Because while government agencies, corporations and banks might be the top targets of would-be cyber attackers, small businesses need to make sure they’re protected, too, lest hackers succeed in their attempts to intrude and, in some form or fashion, monetize their information and data.

Such efforts start with educating yourself and your employees about malware and phishing attempts, ensuring that everyone knows not to open an attachment or click on a link—whether on their computer, phone or another device—if they don’t recognize the source.  You must regularly remind your employees and family never to open questionable emails or emails from an unknown source.   In particular, never open any attachments from people you don’t know or recognize.