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otherwise comply with the federal government’s requirements concerning obligations to minorities, women, persons with disabilities, and veterans.
Although some of these federal laws do not apply to the smallest employers (e.g., Title VII generally applies only to employers with 15 or more employees), state laws that mirror or are broader than these federal laws might still apply. These state laws can be equally as important as their federal counterparts. For example, many states (and some local authorities, such as city or county governments) prohibit discrimination in employment on the basis of a person’s sexual orientation, and practically all states prohibit retal-iating against employees for filing a workers’ compensation claim. States also have a wide variety of court-made rules that prohibit discharging employees for violating what courts declare to be the state’s fundamental public policy.
Although many of these “public policy” cases involve situations in which an employee claims that he or she was fired for refusing to break a law, the law in some states is broader.
The list of laws that provide protection to employees goes on. Retaining a lawyer to review your business’s employment practices can help you avoid the legal pitfalls that can trap the unwary.
POLICIES, PAPERWORK, EMPLOYEE HANDBOOKS, AND OTHER EM-
PLOYMENT ADVICE.
Another reason to consult with a lawyer is to create
and improve your business’s written policies and record keeping practices.
Having detailed company rules and policies on, among other things, work hours, absenteeism, telephone and Internet usage, confidentiality, smoking, drug use, dress, equal employment opportunity, and harassment is essential.
For example, one way to defend against many sexual harassment claims is to show that your business has an enforced, written policy that forbids harassing conduct and provides avenues through which employees can complain about actions they may feel to be harassing. Employees who claim to be victims of harassment but who fail to avail themselves of such a policy have a more difficult time succeeding in court. A lawyer who has an opportunity to learn the needs of your business can help you draft a full set of policies specifically tailored to your needs and can help you create or review an entire employee handbook, if appropriate. A sample of the topics which an employee handbook may address is included on the CD which accompanies this book.
Similarly, although lists of job qualifications and job duties are not specifically required by any law, they are useful and should be reviewed by a lawyer prior to implementation. Having a list of the “essential functions” for each position in your business can clarify your duty to reasonably accommodate an employee’s disability. Additionally, creating a list of job qualifications can help you analyze what skill sets you need for your business’s employees. However, some job qualification requirements can lead to claims that a requirement is discriminatory. In one case, courts found that a company’s requirement that applicants for certain low-level, unskilled positions
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have a high school diploma and pass a test was liable for unlawfully discriminating against minorities. The requirements disproportionately affected racial minorities, and there was no legitimate business reason to have those requirements for those unskilled positions. A lawyer can help ensure that the job qualifications that you identify for the positions you create for your business are not similarly discriminatory. Sample role and responsibility documents are on the CD which accompanies this book.
Lawyers can also help guide you through the hiring and, if necessary, the termination process. It is important to know what types of inquiries to job applicants are lawful and about whether the decision to discharge an employee is likely to expose you to a lawsuit. A lawyer can also give you guidance about the types of records that you should keep on your business’s employees and about the best way to maintain those records. Lawyers can help ensure that you follow the rules regarding posting the required legal notices and reporting new employees to appropriate government agencies. Lawyers can also guide you through the workers’ compensation and unemployment insurance laws that apply to your business.
EMPLOYMENT CONTRACTS.
Most employees do not have written con-
tracts with their employers, but professional services firms should consider several issues that may lead to the conclusion that an agreement with some or all employees regarding aspects of their employment is appropriate.
One consideration for employment agreements is the employee’s length of service. Although most employment relationships are “at will”—that is, they can be terminated at the will of either the employee or the employer at any time and for any reason—written contacts can specify a time period of employment. However, a new business should carefully consider whether the need to commit to employ a person for a period of time outweighs the need to retain the f lexibility to end his or her employment if conditions change.
Written contracts are also often used to specify compensation packages that are more complicated than a set hourly wage rate or annual salary. Written employment contracts can be used to specifically delineate the employee’s job duties and responsibilities as well.
Whether you have written contracts covering other aspects of employ-
ment or not, it is important to consider having explicit agreements with employees (or independent contractors) that cover any inventions or other intellectual property rights that may be created in the course of a person’s work for your business. Such agreements should clearly assign those rights to the business. Entering into such agreements at the beginning of a person’s work for your company can prevent later disagreements about inventions.
If you wish to enter into employment contracts with your employees, it is essential that you have a lawyer review the contracts to ensure that your business does not enter into agreements it cannot live with, especially if the employment relationship later sours.
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NONDISCLOSURE AND NONCOMPETITION AGREEMENTS.
Apart from
formal employment agreements, it may be worthwhile to draft and require your employees to sign confidentiality or nondisclosure agreements. If an employee, or any service provider such as a Web site designer, is going to have access to information that you do not disclose to the public and you would not want shared with your competitors—such as customer lists, pricing information, business plans, or proprietary business methods—a nondisclosure agreement can give you an added level of security. Such agreements should make it explicit that the employee is prohibited from using or disclosing any confidential information that he or she learns from your business except as authorized by the business.
You may also want to consider having certain employees sign noncompetition agreements. In those agreements, employees agree not to compete against your firm for a given time period and sometimes in a specific area or with specific clients. If a person subject to a noncompetition agreement leaves your company and starts competing against you, it may be possible to go to court and get an injunction prohibiting the person from violating the agreement. However, it is essential to consult with a lawyer about entering into such contracts. The laws of different states differ widely. In some states, such agreements are not enforceable at all, and even in the states in which noncompetition agreements are enforceable, there are often specific requirements that must be met before such an agreement will stand up in court.
Intellectual Property Issues
Intellectual property issues also present a number of difficulties to the professional services firm. Often, intellectual property developed by the firm is one of the firm’s most important assets, particularly for consulting firms. This part of this chapter outlines some major considerations with trademarks, copyrights, patents, and trade secrets.
TRADEMARKS.
A trademark is a word, name, or symbol (or even a color,
sound, or smell) that is used to identify products or services of a company and to distinguish them from another company’s products or services. To have rights in a trademark, you must initially pick a mark that is protectable.
Courts have found terms such as “Discount Muff ler” or “Lite” beer to be too generic to be protectable trademarks. On the other hand, arbitrary or fanci-ful associations between a mark and a product—such as “Apple” computers—are protectable.
If you are the first one to use a protectable mark, you automatically obtain some rights in it by displaying it in connection with the sale or advertising of your service. However, to ensure that you will have rights in a trademark that you may spend money promoting, you should be sure that you are not using a trademark in which someone else already has rights. Although commercial
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trademark search firms exist, a lawyer often better can help you decide how thorough a search you need to undertake given your needs.
Trademarks do not automatically offer protection to your mark across the country. They typically apply only in the area in which you use the mark.
Thus, it is possible for two businesses in the same line of work to have the same name, as long as they operate in different areas. You can receive “priority” in your mark nationwide if you register it with the United States Patent and Trademark Office. If you do not intend to operate nationwide, registration with your state’s government may be sufficient. (Note that you do not obtain trademark rights in the name of your company simply by incorporating or by registering an assumed name under which to do business.) Seeking legal advice to guide you through the various questions you may have about how best to protect your trademarks can help ensure that the investment you make in the identity of your business does not go to waste.