As always, last year flew by. That means that you should have already thought about what the new year will mean for your business.
If you are doing business in New Hampshire and you are not a corporation or a limited liability company, you may need to register your business name with the Secretary of State. Every individual and all associations and partnerships doing business under a name other than that granted by a certificate of authority, certificate of formation or articles of incorporation must register.
If you are thinking about investing in commercial real estate or residential property for rental income, you may want to consider forming a limited liability company (also known as an "LLC") first. Owning this kind of property in your personal name can expose your personal assets to legal liability in the event of a lawsuit. Forming an LLC to hold title to your investment property before you purchase will provide you a certain level of limited liability protection if properly created and maintained.
Whether hiring because the economy is good or firing because the economy is bad, employers can find themselves at the center of a discrimination claim based on their hiring and firing procedures. While there is no perfect way to protect your business from problems that can arise during the hiring and firing processes, the following guidelines can reduce the possibility of being the subject of a discrimination charge at the Equal Employment Opportunity Commission or the New Hampshire Commission on Human Rights.Hiring It is important that you establish, document and maintain a consistent hiring procedure. Having such a procedure, and following it, will provide the basis for a defense against a hiring related claim. Usually, the process begins with an employment application. In general, the application should not ask questions about age (except to verify that the applicant is above the minimum age required by law for a specific job), sex or sexual orientation, race, color, marital status, maiden name, number names and ages of children and other dependants, religious creed, national origin, disability, pregnancy status, history of worker's compensation claims, absences at prior jobs, arrest records that did not result in convictions or military history unless the job requires such background.
The application should not inquire about the applicant's height and weight, except in specific job categories where guidelines have been established such as law enforcement. Similarly, the employer should not ask any medical questions. The employer should not seek information about organizations that the applicant may belong to such as political parties, although though it is permissible to ask about professional memberships that directly relate to the specific job in question. It is permissible to ask for a complete employment and educational history, and it is acceptable to inquire about gaps in employment periods. During the employment interview, the interviewer should take care to only ask questions that have to do with the job. If the questions do not deal specifically with an applicant's ability to perform the responsibilities associated with the job, they should not be asked. The application should have an acknowledgment, that the applicant signs, stating that the information contained in the application is true and accurate and that including incorrect information will result in termination. The application should include a statement indicating that if hired, an employee's status is "at-will", a consent and release for contacting references, prior employers, schools, any drug or alcohol testing, or criminal background checks if required by the position. Interviews provide great opportunities to learn more about the applicant's capabilities but can also lead interviewers into treacherous territory if they are not experienced. If you own a business and are unsure about how the interview should proceed, do not hesitate to speak with an attorney who can help you prepare appropriately.
Firing There will be times when, even though you followed best practices during the hiring phase, you will need to terminate an employee. Termination presents a number of causes of action terminated employees may use to claim a wrongful discharge. Employers are advised to create policies and procedures that are applied consistently for all employees. Prior to firing an employee, the employer should document any problems, but in a manner that is consistently applied to all employees so that it does not appear that one specific employee was targeted. Regular performance reviews and the documentation of problems with all employees should be maintained in the personnel records. Additionally, a disciplinary policy should be followed with all employees and any discipline applied should be documented. When terminating an employee, if the employer does not want to offer a long explanation to the employee, the reason it does give, should be real. Avoid making personal remarks that might humiliate the employee, or remarks that might lead the employee to think the termination is temporary. If you think the employee may become emotional, consider having a witness present. The employer should explain any severance pay, benefits continuation forms, profit-sharing procedures and other benefits available to the employee carefully and precisely.
The employee should be allowed to remove personal items at a time that permits the individual to maintain his or her dignity. The company should prepare a checklist of property that belongs to the company and these items should be accounted for, such as keys. The company should deny access to its computer system immediately upon discharge. The termination should be documented for the personnel file immediately after it takes place. Attention should be paid to the details of the conversation and the reaction to the termination. Staff should be informed of the termination, and a simple statement is best. If the termination is for cause, it is best to keep that reason confidential and limited to an agreement with the employee that the company and employee simply part ways. Employees who have questions can meet with the company privately and customers should be contacted so they know how their needs will be met and by whom. An employer who believes that the termination of a particular employee presents a problem for the company, should speak with an attorney prior to taking any action. For more information, please contact Emily Collinson at (603)524-4121.
According to NH RSA 281-A:5, every employer who employs individuals on a full or part-time basis is required to obtain Workers' Compensation Insurance for those employees. It does not matter if the employees are related either to yourself or each other.
The estates of every U.S. citizen are subject to federal estate tax, but not every estate is required to pay the tax if the amount of the estate is less than the federal estate and gift tax exemption. In 2012, if the estate of a decedent has a net value of $5 million or less, then the estate will pass to the decedent's heirs free from federal estate taxes. The tax exemption also allows individuals to make gifts during their lifetime of up to $5 million. In addition, if the decedent was married on the date of death, and did not use all of the available exemption, the surviving spouse could add any unused exemption to his or her own up to an additional $5 million enabling the survivor to transfer up to $10 million tax free. Use of this "portability" feature can save the surviving spouse a million dollars or more in taxes. There is a great deal of uncertainty, however, when it comes to estate tax planning since the current law is due to expire on December 31 of this year. If Congress does not act at all, the estate tax exemption will drop to $1 million and the top tax rate would increase from 35% to 55%. In its 2013 budget proposal, the White House has proposed reducing the estate tax exemption level as well as the top tax rate that would be applied. The exemption would go from $5 million to $3.5 million and the tax rate would increase from 35% to 55%. While changes to federal estate and gift taxes can create a great deal of anxiety, the current situation provides a huge opportunity for individuals with business or other highly appraised assets, to make significant transfers of wealth, tax free. If you have been thinking about business succession planning, or making gifts of real estate or other assets to the next generation, now is the time to talk with an estate planning attorney who can assist you in implementing a strategy that takes advantage of the tax laws before they change. To create or amend your estate plan with these pending changes in mind, please call our office to schedule an appointment with one of our attorneys who are knowledgeable in the areas of trusts and estates, tax, and business law.
While Title VII of the Civil Rights Act of 1964, as amended does not prohibit an employer from requiring that an employee or applicant seeking employment provide information about arrests and convictions, use of such information in employment decisions may violate the prohibition against discrimination. The EEOC has recently issued updated guidance to employers on the use of these records when making employment decisions. (This information will be available on the EEOC's website at www.eeoc.gov.) Whether the employer searches an individual's criminal background itself or relies on a third party agency to provide information, in general, employers are interested in this information because of increased concern about workplace violence, liability for negligent hiring, theft and fraud. While having a criminal record is not a protected category under Title VII like race, color, religion sex and national origin are, the manner in which the employer uses the record may become part of a claim of employment discrimination based on those protected categories. For instance, if the employer makes derogatory statements about an employee or applicant's protected group, this might be used as evidence of bias and that the bias played a role in an employment decision. Additionally, if the employer is inconsistent in its request or use of the criminal background information by asking for it more often from individuals with certain racial backgrounds or allowing some employees or applicants to explain the information and not others, the inconsistency can be evidence of employment discrimination either in the hiring or evaluation process. Employers are advised to review their policies and practices to determine whether they have a greater impact on a group protected by Title VII than other employee's or applicants. Employers should train managers and those who make employment-related decisions on best practices when making such decisions. A narrowly tailored written policy and procedure for reviewing applications for employment should be developed, and managers need to be trained on the implementation of such policies and procedures so that they are consistent with Title VII. Employers are reminded that, if they collect applicants' and employees' criminal records, to keep this information confidential.
Among the most difficult things for an entrepreneur to deal with is determining the right time to step out of the business and the right plan for doing so. It may be that it is time to pass the business on to the next generation of family members who are interested in keeping it going, or that it is time to sell the business or its assets. Business succession involves more than writing a will and dividing assets between one's heirs after death. A successful succession plan takes into consideration the goals and needs of the family members as well as the orderly transfer of responsibility and control of the business. Selling the business outright requires a different plan, although many of the retirement issues are the same. When does the planning process begin? The business owner can begin considering selling the business or succession planning at any time but certainly when family members become active in the business or the owner feels that the time for retirement is approaching. The early stages of succession planning focus on the family members themselves, identifying each individual's capabilities, experience, expectations, and interest in the business. It may become apparent that not every family member is well-suited for the business, or that there are old issues that need to be resolved among them. During the initial planning, communication is very important and the business attorney can facilitate the identification of issues that might threaten the business in later years. As the family-business owner begins to create the succession plan, he or she will consider the advantages and disadvantages of the various methods used to transfer a business to one's heirs. Working with the business attorney and accountant, the family-business owner will explore options such as selling the business to family members or other successors, use of a buy-sell agreement, trusts, annuities, installment notes, family limited partnerships, outright gifts and life insurance policies. If the business owner elects to sell the business outright, then process is more likely to focus on the timing of the sale. When is the business in the best position ro realize the great sale price? Is it better to take on a business partner who will eventually buy the owners shares? Should the owner sell the business entity or the just the assets? Each plan requires the business owner to contemplate his or her eventual full retirement, possible disability or premature death. Our attorneys are experienced in helping individuals and families prepare for the future with comprehensive business succession and estate planning. Let us assist you in taking care of the business of your life.