SCORE's Top Legal Tips
Keep on top of your legal duties by following these tips.
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5 Tips for Avoiding Legal Problems
- Arm yourself with basic knowledge of business law so you're alert to your company's obligations and rights.
- Practice prevention. Have your attorney review contracts and agreements before they're signed.
- Get your attorney's opinions on documents you have drafted--such as employee policies--before you put them in place. You want to make sure they meet the requirements of the law.
- Familiarize yourself with trademark and patent laws so you don't violate them. Learn how to apply for a trademark or copyright should you need to do so.
- Understand the law as it pertains to your organizational structure. Your legal obligations as a C corporation, for example, will differ from those as a sole proprietor.
- A policy which states the company is an equal opportunity employer and strongly enforces a nondiscrimination policy.
- A strong sexual harassment policy detailing what isn't accepted at your place of business.
- A policy about phone and/or e-mail communications.
- Expectations of employees.
- Include how your company plans to monitor or take action on all of the stated policies.
- Be prepared to negotiate. The landlord's printed lease will most likely favor the landlord.
- Match the lease to your business's needs. If location is important, you'll want a longer lease--or a shorter one with options to renew.
- Understand who pays what--such as utilities, repairs, insurance and even taxes. You may want to pay slightly higher rent for eliminating these items.
- Be aware that your negotiating power is stronger in a market where lots of commercial space is available.
- Remember that a lease is a legal document. Have your attorney review it before you sign.
- Don't engage in false, misleading or deceptive advertising. Make sure your claims are accurate.
- Obtain written permission to use photographs, endorsements, or quoted matter. Remember that some material is protected by copyright.
- Don't use words and phrases like "free" and "easy credit" unless they're true. Easy credit, for example, means you offer credit to poor risks without charging them more for it.
- Remember that consumers can sue you for deceptive advertising, and federal, state, and local governments can take action against you.
- For more information, visit www.nolo.com , a website from Nolo.com, Inc., a self-help legal publisher in Berkeley, CA.
- Know the laws. If you must grant credit directly to consumers, familiarize yourself with both federal and state consumer credit statutes.
- Tell the truth. The Truth in Lending Act requires you to disclose exact credit terms, such as the monthly finance charge and annual interest rate.
- Follow correct procedures for handling billing mistakes. If you don't, you may have to give the customer a $50 credit even if your billing was right.
- Don't discriminate on the basis of race, color, religion, national origin, age, sex or marital status when granting credit.
- For detailed information on consumer credit laws, www.nolo.com , a website specializing in legal matters.
- Some company policies have to be in writing--such as policies on sexual harassment and discipline--so employees know what's expected of them. These can form the basis of an employee manual.
- Draft your employee handbook yourself or assign someone else in the company to do it. Then have it reviewed and fine-tuned by your lawyer.
- Include a disclaimer stating clearly that the manual is in no way a legal contract.
- Visit the Online Women's Business Center at www.onlinewbc.gov , and click on "Management" and then "How to Write a Policies & Procedures Manual" for an excellent model for an employee handbook. You can adapt the policies to suit the needs of your business.
- Make sure every employee receives a copy of the handbook and signs a statement saying they've read it. Review it every six months or so and update it as needed.
- Obey the laws regarding employees. Don't discriminate in hiring, for example, or permit sexual harassment.
- Hire carefully. Look for people with a strong work ethic and avoid hiring those who feel life owes them something.
- Adopt strong employment policies. Communicate them clearly to employees and enforce them.
- Keep good records on employee mistakes, even when they're not firing offenses. Document your own actions and the reasons behind your employment decisions.
- Consider buying employment-practices liability insurance (EPLI).
- If your company has an invention you think is patentable, take steps at once. You may lose your right to patent it if you offer it for sale or disclose it publicly without patent protection.
- Make sure your product or invention isn't infringing on someone else's patent. Your library can help you conduct a patents search.
- Be prepared to establish the novelty of your idea. Keep good records of its development--including dates, drawings, etc.--and round up witnesses.
- Hire a patent attorney or agent. Look in the Yellow Pages under "Patent Attorneys." Get references.
- Consider patenting your method of doing business. According to Success magazine, Amazon.com owns the patent on the one-click shopping-cart strategy and successfully defended it in court against Barnes & Noble.
- An idea, without knowledge of how to make it work, isn't patentable. You must be able to present an illustrated description of a specific useful product, which achieves the desired objective, in sufficient detail to enable others to make and use it.
- Even then, not every invention is patentable. The U.S. Patent and Trademark Office website at www.uspto.gov sets forth applicable requirements and procedures.
- A patent takes 1� years or more to obtain, expires within 20 years and isn't renewable. Total costs are typically $8,000 or more, about 50-50 government and attorney fees.
- Beware of invention promotion scams. Read the Federal Trade Commission's warnings on such scams at www.ftc.gov .
- U.S. patents have no effect elsewhere, but a U.S. patent can be used to block importation of infringing products from abroad. Foreign patents are harder and more costly to obtain.
- Consider adopting an alternative dispute resolution (ADR) program as a way to resolve employer-employee conflicts. It can be less costly and time-consuming than litigation.
- Understand that ADR uses such tools as mediation and arbitration and is conducted in private.
- To find help in setting up an ADR program, look in the Yellow Pages under "Mediation Services." Ask other small business owners or your local chamber of commerce for referrals.
- Remember that ADR programs work best when you have a clearly written ADR policy that employees see as fair. Start by maintaining an open-door policy that encourages employees to bring grievances to their managers without fear of retribution.
- Visit www.Chorda.com , the website of Chorda Conflict Management. The site includes a Nation's Business article, "A Working Alternative for Settling Disputes," which provides a thorough discussion of ADR.
- Employees have the right to use their vacation time or personal days during their service; they may also opt for unpaid leave.
- You aren't obligated to pay employees who are absent on account of military duties, unless your company policy says you will.
- If your company does have a paying policy for military service time, you can't require employees to use their vacation or paid leave time.
- You must extend the same benefits to employees who are absent for military service as you do to employees who are on nonmilitary leaves of absence.
- You may temporarily fill vacancies left by military employees absent for service. However, upon their return, military employees are entitled to the same positions they left.
Brought to you by SCORE , "Counselors to America's Small Business."
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