As discussed in Part I and II, entrepreneurs and small business owners are faced with many legal challenges and obstacles as they try to make their companies a success. This concluding part of our series will discuss the final three of the 7 Deadly Legal Mistakes entrepreneurs must avoid.
Legal Mistake Number 5: Not Getting Client Agreements in Writing
As we mentioned in Deadly Legal Mistake Number 3 in Part II, a handshake is fine, and having your word be your bond is terrific. However, when things get a bit sticky, you need to have something more concrete when you’re doing business with the public. Quite frankly, you need things in writing.
When you sell your goods or services, you need to have written contracts for the sale. These documents will detail what your obligations are and what your client’s obligations are. Of particular concern is the requirement that your client pay you on a timely basis. But beyond mere payment, you need to lay out time for performance, termination rights, rights upon default, ability to amend or change the agreement, financial obligations to each other in certain situations, governing law … to name a few. A written agreement provides the rights and obligations of each party, and decreases the chances of uncertainty. A clear agreement helps prevent disputes and is invaluable to a business.
Legal Mistake Number 6: Failing to Understand Your Obligations to Your Employees
New York employers must understand their duties and obligations to their employees under state and federal law. Employees in New York State have a number of basic worker rights, which include the following:
New York Minimum Wage. The wages and hours section of the New York Labor Laws demands that every worker in New York State has the right to earn at least the minimum wage. The minimum wage in New York City is $15.00/hour; in Suffolk, Nassau, and Westchester Counties $14.00/hour; and elsewhere in the state its $12.50/hour. Note that workers in fast-food establishments, those who earn tips have different minimum wages and other certain types of employees have their own minimum wage requirements.
Work Breaks and Days Off. New York requires employers provide employees with work breaks during shifts that are longer than 6 hours. In addition, some industries are required to provide a worker with a minimum of one 24-hour period off in every calendar week.
Overtime Pay. If a New York employee isn’t exempt from overtime pay under the Fair Labor Standards Act, he or she must be paid overtime for every hour worked over 40 in a workweek.
Sick Leave. Employees are eligible to accrue and use up to 40 hours (or 56 hours depending on certain factors) of sick leave each year – whether it is paid or not is based on several factors about the size and revenues of the business. In addition, eligible employees can use paid time off under the Paid Family Leave act. This lets workers take paid leave to care for newborn babies, newly adopted or fostered children, family members who are suffering from a serious health condition, or to provide assistance to loved ones if a family member has been deployed on active military service. NYC employees have additional rights to Sick and Safe days as well.
Discrimination. There are a host of federal and state laws that prohibit many types of discrimination in the workplace. This includes sexual harassment; a hostile work environment; and discrimination based on age, skin color, national origin, religion, gender identity or expression, sexual orientation, marital status, caregiver status, pregnancy, military status, and others. State law also prohibits discrimination during pre-employment screening and hiring when the terms and conditions of employment are discussed.
Workplace Safety and Health. The federal Occupational Safety and Health Administration (OSHA) protects workers from health and safety hazards at their workplace. New York employers are required to inform and educate their employees about all the hazards of a particular workplace and how to avoid them. If a worker suffers an injury at work or develops an illness directly connected to the job, they may be eligible for compensation. There are new requirements in NYS for employers to prevent airborne illnesses which are a response to the pandemic.
Harassment & Discrimination. In addition to protections under Federal law, New York law prohibits employment discrimination based on membership in any protected class by employers covered under New York's anti-discrimination laws. Further, New York City has additional protections prohibiting employment discrimination under its own local anti-discrimination laws.
Legal Mistake Number 7: Not Working with a Business Attorney Until It’s Too Late
Hiring an attorney is not inexpensive, but it can be priceless. An experienced business attorney will help issue spot risks in your business that can derail your success unexpectedly.
In case you’re wondering how to tell when it’s too late…
- If you’re served with a summons and complaint that alleges illegal employment discrimination at your company—it’s too late;
- If you can’t collect on a bill for services rendered because there’s an ambiguous term in the sales contract—it’s too late;
- If you fail to protect your intellectual property before a competitor uses it—it’s too late;
- If an employee quits and takes half your clients with her—it’s too late;
- If an employee quits and starts making a product exactly like yours—it’s too late;
- If the local government wants to close you down for a lack of a permit or license—it’s too late; and
- If your business partner claims he’s owed more of the company’s revenue—it’s too late.
These are just a few scenarios when you may realize it’s too late to hire an experienced business attorney, instead you’ll be hiring a litigator. Litigation is messy, expensive, lengthy and uncertain. This may leave you asking, “When’s the optimal time to start working with a business attorney?”
To learn more, see Part I and Part II. To learn how to choose the attorney your business needs, get our book on that topic.
Francine E. Love is the Founder & Managing Attorney at LOVE LAW FIRM, PLLC which dedicates its practice to serving entrepreneurs, start-ups and small businesses. The opinions expressed are those of the author. This article is for general information purposes and is not intended to be and should not be taken as legal advice.