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We are living in the digital age and consumers use the internet to make a variety of decisions, including what products to buy and what professionals to hire. During their research,  many savvy consumers go online to look at the reviews the business has received on local business directories like Yelp or Google+.  These online reviews can have a profound effect on the success of your business so it is important to understand your rights should your business receive a negative one. 

In the case that your business has received a negative online review, you may have recourse under state or Federal defamation laws.  However, before pursuing that route, you should consider using any dispute or review process provided by the review site.  Defamation is generally defined as the act of intentionally publishing a false statement that has the ability to negatively effect another’s reputation.  Defamation laws protect individuals and businesses alike.  Publication is the communication of the defamatory statement to another person and the act of posting a review to a website usually qualifies.  Whether a statement has a negative effect on another’s reputation is judged using a reasonable person standard and will be looked at on a case by case basis.  In order for the statement to actionable, it does not have to be intentionally defamatory; it just has to be intentionally published.  Defamatory statements must be false and cannot be opinions.  Whether your situation meets the necessary threshold for defamation may be difficult to ascertain, so it is important to consult with a qualified attorney before pursuing a claim for business defamation.

If you believe that your business has received an online review that contains false information and is damaging to your business reputation, you might have a claim for defamation.  Recent civil cases for this type of wrong have resulted in large verdicts for the businesses that were injured.  While you most likely cannot pursue an action against the hosting website, as they are usually exempt under the Digital Millennium Copyright Act (DMCA), you might be able to recover from the individual that made the statement.  All litigation should be considered using a cost-benefit analysis and business defamation cases resulting from online reviews are not any different.  

The U.S. Citizenship and Immigration Services, in partnership with the Social Security Administration (SSA), offers E-Verify to help employers instantly determine an employee’s eligibility to work.  Initial confirmations and “Tentative Non Confirmations” are available in as little as three to five seconds.

The voluntary Internet-based program works by comparing the information from an employee’s Form I-9, Employment Eligibility Verification, with Department of Homeland Security and Social Security Administration records.  Instead of simply retaining I-9s on file in their own offices, employers who enroll in E-Verify must enter the I-9s of all new hires into the program’s database.

There are both advantages and disadvantages to using E-Verify.  Employers must weigh each and its relevance to their circumstances.

Five Benefits of Signing Up for E-Verify

 • While E-Verify is generally voluntary, some states require employers to use E-Verify, and it is mandatory for some federal government contracts.

 • E-Verify could become mandatory nationwide.  Adopting it earlier affords employers more time to become familiar with it and adapt.

 • E-Verify helps companies avoid hiring and training a person who turns out to be ineligible to work.  It can eliminate “No Match” letters from the SSA notifying an employer that an employee’s reported social security number does not match government records.

• If an employer hires foreign nationals who recently received a degree in science, technology, engineering, or mathematics, enrolling in E-Verify may make those workers eligible to work an additional 17 months without the employer having to file H-1B petitions on their behalf

•Although using E-Verify does not provide a “safe harbor” from prosecution, it creates a “rebuttable presumption” that the employer has not violated section 274A(a)(1)(A) of the Immigration and Nationality Act (“Unlawful Employment of Aliens”).

Five Drawbacks of Signing Up for E-Verify

 • E-Verify is not entirely free.  Employers must allot time and resources to training and supervising staff to use the system and deal with the results of queries.  

 • E-Verify makes mistakes, issuing Tentative or Final Non-Confirmations for workers who are authorized to work, or stating “Employment Authorized” for workers who are not.

 • Tentative Non-Confirmations open employers up to new legal risks.  For example, employees have sued employers for discrimination for not providing proper notice and instructions for contesting a Tentative Non-Confirmation.

 • E-Verify can lead to liability for privacy and discrimination violations.  Federal and state laws require the safeguarding of I-9 information.  Employers must make sure that their staff does not intentionally or accidentally misuse E-Verify data.

 • Because the government can use E-Verify to mine data, it may find employers’ hiring mistakes that otherwise would not have been discovered.  For example, employers enrolled in E-Verify must complete and submit I-9 forms by the third business day after a new hire’s first day of work.  Consistently missing this deadline could trigger an I-9 inspection and fine.  Employers who are not submitting I-9s to E-Verify might never be caught in a slight delay in completing them.

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The Immigration and Nationality Act (INA) requires employers to verify the identity of their employees and their eligibility to work in the U.S.  To comply, employers must retain original I-9 Forms for current employees and, for former employees, keep them for at least three years.  These need not be submitted to the government but must be available for inspection.  From time to time, U.S. Immigration and Customs Enforcement (ICE) ask to inspect the forms. 

What Does an Inspection Entail?

An employer who receives a Notice of Inspection must produce its I-9s, usually within 3 business days, and may be asked for payroll records, employee lists, articles of incorporation, and business licenses.  ICE may ask the employer to bring the documents to an ICE field office, or officials may visit the employer.  At the inspection, in addition to printed documents, the employer must retrieve any electronically stored documents requested and provide the ICE officer with the hardware and software needed to view them.  The employer must also provide an electronic summary of information in the I-9s, if one exists.

What Happens Afterwards?

After reviewing the I-9s, ICE may send the employer one or more of the following:

• Notice of Inspection Results, also known as a compliance letter, informing a business that it is in compliance. 
• Notice of Discrepancies, informing the employer of problems with the employer’s I-9s and documents submitted by the employee.  The employer must provide a copy of the notice to the employee, who then must prove to ICE that he or she is eligible to work.
• Notice of Technical or Procedural Failures, listing technical violations and giving the employer ten business days to correct them.  If not corrected in time, these failures may become “substantive “violations.”
• Notice of Suspect Documents, stating that ICE has found an employee unauthorized to work.  The employer must terminate the employee or face penalties.  ICE gives the employer and employee an opportunity to show that this finding is in error.
• Warning Notice, notifying the employer that there are substantive verification violations, but that the circumstances do not warrant a fine.
• Notice of Intent to Fine (NIF), informing an employer that it has been found to have knowingly hired and employed ineligible workers.  The employer must cease and may face fines and criminal sanctions.  An NIF may also be sent for technical errors that an employer failed to correct.

What If ICE Decides to Fine an Employer for Violations?

In response to an NIF, employers may seek a hearing before an Administrative Hearing Officer or try to reach a settlement with ICE.  If an employer does nothing, ICE will issue a Final Order.

Civil fines can be as low as $110 and as high as $1,100 for each employee, depending on mitigating and aggravating factors.  Serious violations may also lead to prosecution for knowingly hiring unauthorized workers, document fraud, harboring, and other crimes.  With the high stakes involved in being accused of I-9 violations, it is best to contact to qualified attorney to discuss the matter as early as possible.

Almost every business collects uses and records customer information in some way, shape or form.  Your business may obtain names, addresses, telephone numbers, credit and debit card information, social security numbers or health care and insurance information in the ordinary course of business.  This data is often required in order for you to be able to serve your customers. However, you are responsible for keeping this data secure and your business must comply with Federal and state laws governing it.  The loss, theft and/or unauthorized use of this information could have devastating effects on your customer’s lives and on your business. 

New technology has enabled businesses to be more efficient and serve a broader customer base.  But, these technologies also come with the overwhelming risk of a customer data breach.  Therefore, you must be proactive in safeguarding this information.  In order to do this you should create a privacy and security policy.  The first step is to sit down and think about the type of information your business deals with and how it currently does so.  You should then consider who has access to this data.  It is also a good idea to make a list of these individuals so that you know who needs to be specially trained once you formulate a plan.  It is then imperative that you contact a business law attorney and a technology consultant, if the information is stored electronically, so that they can advise you as to the most secure, efficient and cost-effective options available to you.  A business law attorney will be able to explain the legal implications of a breach and ensure that you are in compliance with Federal and state laws.  Once you create a policy you should make it known by creating a written document to be distributed to employees and customers.

Privacy and security issues are not to be taken lightly.  If you are a business owner, you should worry about losing data, the theft and unauthorized use of information by employees and third parties, compliance actions and private litigation relating to these issues.  Your business and your customers would be best served by your attention to detail in this area.  Contact a seasoned business law attorney to discuss these issues today.

A franchise agreement is a contract that governs a franchise relationship.  These agreements are entered into by the franchisor, the entity that owns the business model, and the franchisee, the individual or entity that will run a location of the business.  While the terms of each contract are unique to the particular deal, most include similar provisions. 

Most franchise agreements will include provisions describing where the franchise will operate and whether that territory is exclusive.  The agreement will also detail how long the franchise relationship will last.

These contracts will most likely include terms regarding franchise fees and royalties the franchisee will have to pay the franchisor.  The agreements will also usually contain provisions relating to how the franchise is to be run on a day to day basis, including details as to what training is to be provided by the franchisor.

Terms relating to intellectual property owned by the franchisor are very important in franchise situations.  Franchise agreements include provisions instructing how patents, trademarks and copyrights can be used by the franchisee.  Advertising terms are also usually included in these contracts as it is likely that the franchisee will have to contribute toward advertising costs.

Termination and renewal terms are also essential parts of a franchise agreement.  These detail how the franchise relationship can be ended before the natural expiration and how the relationship can be revived if the parties so choose.  It is also common to find terms relating to disputes that may arise between the franchisor and franchisee and how these disputes are to be resolved.  This is where alternative dispute resolution and choice of law clauses may be utilized.  Terms relating to the resale of the franchise might also be present, as many franchisee’s have this option, although there may be a right of first refusal clause accompanying it.  This would provide the franchisor with the option of buying back the franchise before anyone else.

Franchise agreements determine all of the details of the franchise relationship and therefore must be clear and understood by all parties.  They can often be complex and it is therefore of the utmost importance to consult with a business law attorney who has experience with franchise law to advise you and negotiate with the franchisor.

There are different types of commercial leases, such as gross leases, modified gross leases and net leases.  One variation of the net lease is a “triple net” lease, in which the tenant is liable for a net amount of property taxes, insurance and common area maintenance relating to the property they are possessing.  Most of the time, additional fees in the form of common area maintenance expenses come up in the context of a triple net lease.  Landlords ask tenants to pay these fees so that they contribute to the cost of maintaining common areas such as entranceways, walkways, parking lots and hallways, as well as services enjoyed by the tenant such as janitors, security and landscapers.  These fees are in addition to a rental payment and can be substantial depending upon the situation. 

It is essential that a business owner be informed about the terms of the lease they are entering into, especially if these terms have the potential to cost them money.  As common area expenses can be a significant cost they are often controversial and hotly negotiated.  Most of the disagreements over these terms relate to the distinction between costs for the maintenance of common areas and expenses that are primarily the landlord’s responsibility.  Generally, the test is who will benefit most from the expense, the tenant or the landlord.  For example, it can be argued that tenants should not be paying for improvements that are being done to increase the value of the property as the landlord will be the primary beneficiary of these improvements. 

When negotiating common area expenses, the business owner should inquire as to the purpose of the payments.  They should also ask whether they will be able to review what the money is being spent on at any given time.  Business owners should seek the advice of an attorney as they will be able to explain many of the options available to them.  For example, there might be an opportunity to ask for a capped or fixed rate.  Most importantly, they should be informed about their legal options in the event of a dispute.

If you are signing a commercial lease and will be responsible for common area expenses, it is in your best interest to consult with a business law or real estate attorney before signing on the dotted line. 

A limited liability company is a very popular business form that combines some of the best features of a corporation and a partnership.  Like a partnership, an LLC is taxed through its individual members.  Like a corporation, it provides limited liability to its members.  In most situations, the personal assets of LLC members cannot be reached for the debts or liabilities of the business.  But, also similar to a corporation, there are certain scenarios where personal assets can be reached.  Most LLCs have more than one member.  In recent years, a variation called the single member LLC has become widely used.  As the name suggests, these LLCs have only one member.  While the structure and organizational requirements of single member LLCs are essentially the same as ordinary LLCs, there has been some uncertainty as to whether these businesses afford their members the same type of limited liability.

Initially, not all states recognized single member LLCs.  Now, all fifty states and Washington, D.C. recognize these business forms and have statutes governing them.  Generally, single member LLCs provide personal asset protection to their members for the liabilities of the business.  But, they do not always provide the reverse protection that a corporation or ordinary LLC includes.  In the case of an ordinary LLC, the personal creditors of the member cannot go after that member’s share without what is referred to as a “charging order”.  A charging order is a legal device that allows the creditor to place a lien on the member’s LLC interest.  The member’s interest is essentially any distributions made to them by the LLC.  Therefore, creditors can collect the members interest but not outright and not without jumping through a number of hoops.  In the case of a single member LLC, the charging order protection may not be provided.  While some states like Wyoming have specific laws making the charging order protection applicable to these types of businesses, other states, like California and New York, have made no decisions distinguishing ordinary LLCs from single member LLCs.  Therefore, in these states it is important to remember that legislation and judicial decisions have the potential to cause serious problems for business owners in the future.

When wrestling with matters of business formation there are many factors that need to be considered and the advice of a seasoned business law attorney can help.  Contact our office for a consultation today.