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Retain an Attorney to Secure Your Business Contracts, or Theirs!

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PABy Angela M. Ward, Attorney

Lancaster County business is most efficient with sound contracts. Whether you are buying, selling, renting, merging, leasing, hiring, starting a new job, or starting a new partnership, a sound contract is at the heart of every important business transaction.

While many Lancaster County business agreements are sealed with an oral agreement and a handshake, it is much safer for all parties if they start with a more easily-enforceable written contract. A formal, written contract is an effective way to state the expectations of both parties, to clarify costs and deliverables, and to map out resolution strategies.

Sound contracts protect you and your business. While it’s tempting to trust in the good nature of your colleagues, employees, partners, or vendors, understanding the deal actually reviewing every part of a contract and obtaining advice on unclear terms is the only way to ensure mutually-understood performance terms and the consequences when those terms are not met. With sound business contracts and advice, both parties are protected from confusion, frustration, disagreement, and liability for breach of duties.

A Business Attorney can Help You Avoid Confusion and Problematic Clauses

While some businesses write their own contracts or get forms from online sources, it’s always a good idea to have a qualified business attorney, with experience in contract law, review contracts before signing them or before asking others to sign them. A qualified attorney can identify problematic causes that may be unclear, unusual, or that will not hold up to legal scrutiny.

The recent lawsuit from Penn State against former Coach Shoop highlights the issues of contracts with unusual or exceptional clauses. Penn State sued for breach of contract because Coach Shoop left before the term of his contract was completed. Shoop’s lawyers charged the terms were so unusual as to be unenforceable and won a countersuit. If the contract had been written more clearly, and with a greater consideration for conventional contract terms, the contract may have been more defensible when contested.

A Contract Lawyer Helps Identify Missing or Conflicting Elements

While the heart of an agreement is often straightforward – I do this, and you do that – the power of a contract often lies in the language around contingencies and legal protections. For example, if you create or sign a contract without a clearly worded dispute clause, you may find yourself in an expensive lawsuit. Well-written dispute clauses will clarify the dispute resolution process, and avoid unfavorable legal situations down the road.

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Non-explicit, default and dispute resolution clauses could cost a business thousands in avoidable legal fees.  In 2017 a Finnish company and a Pennsylvania biotech company found that their contracts had conflicting arbitration clauses. When a patent dispute arose, courts ruled that the PA business had to comply with the Finnish company’s preferred arbitration process, and dispute the patent before the International Chamber of Commerce. This unfamiliar, and expensive, legal venue resulted in enormous legal fees for the Pennsylvania company.

Have a Lawyer Look at Your Contracts

As a business owner or senior executive, you will be asked to sign contracts on a regular basis. You will sign contracts for everyday items like phone services and internet, but also be asked to sign vendor agreements, employment agreements, non-compete agreements, loan documents, leases etc..  While many business owners sign contracts quickly and automatically, reviewing contracts in detail is important. By using a lawyer for contract review, you’ll ensure you fully understand any unusual clauses, hidden terms that are buried in legal language, and consequences for an action you may take, such as terminating an employee, a service provider, or vendor.

In the world of contracts, understanding details is essential. Going and Plank can review contracts before you sign them, and help you identify unusual or potentially problematic language. It’s prudent to use the services of an experienced business attorney to review employment contracts, leasing or real estate contracts, home improvement contracts, service contracts, vendor agreements, leasing and purchasing agreements.

If you’d like to find out more about how Going and Plank can help you create, review, revise, or remediate contracts and contract issues, contact us for a customized approach to your business needs.

 

 

 

 

 

 

Choose the Business Form That’s Right for You.

Choose to Incorporate for Liability Purposes. Chose the Form of Your Corporation for tax Purposes.

There are very few businesses that do not face exposure to claims from unhappy customers, vendors, or suppliers. As a business owner, it is important to protect your personal assets from claims that may be made against your business. Incorporating the business is the most effective way of getting protection from liability for claims against the business.

Incorporating your business creates a separate legal entity for liability purposes. Whether it creates a separate entity for tax purposes depends upon the form of corporation that is created. The type of corporation that a business should form is more of an accounting question than a legal question. An accountant should be consulted to be sure that you create the most tax-advantageous form for your business.

Angela Ward is an Associate and business attorney at Going and Plank. With more than 20 years of experience practicing business law, Ms. Ward is a regional expert in business formation and representation. Below, she provides some basic differences in the forms of corporations that can be created.

Which Corporation Form is Right for Your Business?

by Angela Ward

C Corp

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PAA C Corporation is formed by filing articles of incorporation with the Corporation Bureau of the Pennsylvania Department of State. It is owned by one or more individual or entity shareholders. Management of a C Corp involves three stages: shareholders, a board of directors, and officers. Shareholders vote for a board of directors who make the major business decisions. Members of the board of directors elect officers to take care of day-to-day operations.

For tax purposes, a C Corp is taxed as a separate entity which pays tax on its income. Profits are distributed as dividends to its shareholders who then pay income tax on the distribution. This is why they say that C Corps suffer double taxation. Despite this, C Corps are often chosen because the company pays a low tax rate on the first $75k in profit. C Corps also provides various tax and cost advantages for owners such as paying non-reimbursable medical expenses and disability insurance. A C Corp can be changed to an S Corp whenever the shareholders choose.

S Corp

An S Corporation is also formed by filing articles of incorporation with the Department of State. It is owned by no more than 100 shareholders but cannot be owned by other corporate entities. An S Corp is managed by shareholders, directors and officers.

For tax purposes, an S Corp is a pass-through entity, meaning that it is not a separate tax entity and does not pay corporate income tax. Instead, the shareholders of a C Corp pay tax on business income on their individual tax returns at their individual tax rate. Shareholders also have the advantage of being able to offset non-business income with business losses.

LLC – Limited Liability Company

A limited liability company is formed by filing a certificate of organization with the Corporate Bureau of the Department of State. An LLC has members instead of shareholders, and members are issued certificates showing their percentage ownership instead of stock certificates. An LLC can be owned by one or more member and has a flexible management structure. An LLC can be member-managed, meaning each member has a say in all management, or the members can elect to be manager-managed, where only the persons selected as managers can have a say in the operations of the business.

For tax purposes, an LLC can be either taxed separately or taxed to the member-owners as pass-through taxation. Many LLCs are single member-owned and taxed as the individual taxation rate. however, LLC’s can and often choose to be taxed separately (by filing an S Corp tax election) in order to avoid the imposition of self-employment tax.

Each business and situation differs. If you have questions about how to form and structure your business, contact me to talk more. 

Lancaster County Employee Handbooks: Communication, Remediation, and Protection

There are many reasons to create an employee handbook that are predicated on sharing company missions, aligning the workforce, creating a shared sense of purpose, and simply providing a set of answers to common human resource and employment questions.

In this blog entry, we’ll focus on the lawful roles of employee handbooks, and hone in on the legal benefits and challenges of creating a comprehensive employee handbook. Angela Ward is an Associate at Going and Plank and has over 20 years of experience in business law in Lancaster County and throughout the Commonwealth of Pennsylvania. Ms. Ward has agreed to help us explain why creating sound employee handbooks can protect your company from lawsuits.

Legal Considerations for Employee Handbooks

By Angela M. Ward

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PAMost businesses in Lancaster County and throughout our area are aware that Pennsylvania is an at-will employment state. At-will generally means that an employer can terminate employees at any time, or that employees can quit at any time, without fear of legal liability. However, Pennsylvania’s at-will status does not protect companies from wrongful termination suits or discrimination charges. That means that employers must ensure that employment decisions are fair, thoroughly documented, and supported by well-communicated policies and procedures.

Whether you’re a large or small business, you’ll need to share company policies with your employees. Mapping out basic information such as introductory or probation periods, employee benefits, hours of work, overtime policy, dress code, paid time off such as personal days or vacation days, and the use of personal phones and social media are at the foundation of even the simplest handbooks.

Employee Handbooks are an Incredibly Practical Tool

Many companies also find that an employee handbook is a great place to share a mission statement, a vision for their industry, expectations for attitude and customer services, and company values.

Your handbook is also a good place to share that you are an Equal Employment Opportunity (EEO) employer, include legally-mandated language on pay deductions, publish payday schedules, outline benefits, state policies on jury duty and military leave, communicate your policy on unpaid leaves of absence, and, if you have more than 15 employees, discuss your compliance with the American with Disabilities Act (ADA).

Employee Handbooks Explain Redress of Grievances

By thoroughly explaining procedures for submitting complaints, protests, accusations, or whistleblowing, you give your employees a clear path for sharing unethical or illegal behavior. Employee handbooks should offer a  practical way to address workplace issues before they grow into legal problems. When our team at Going and Plank helps companies with employee handbooks, we review your procedures to make sure processes comply with state and national employment law. We may also recommend additional systems and methods that you can put in place to ensure your management team is able to deal with conflicts effectively and legally.

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Employee Handbooks can Provide Legal Protection

Businesses can protect themselves in some measure from wrongful termination suits if they create and share well-crafted employee handbooks. These companies can protect themselves legally by requiring that all employees review and sign handbooks when hired. Companies should also require similar reviews and signatures whenever handbooks are edited or updated.

When creating or editing your company’s employee handbook, it’s critical that you clearly state that your handbook is NOT an employment contract. If your handbook is not clear on this point, plaintiffs may charge that the handbook substituted as an employment contract and may use it as a tool to override the at-will relationship. Employees can also use the lack of an employee handbook as the basis for a wrongful termination action.

There is a long list of Pennsylvania court cases challenging the role of the employee handbook. The well-documented legal liabilities created by the lack of an adequate handbook should convince companies to take handbooks seriously. An employee handbook is the foundation of a legally-sound approach for dealing with at-will employment, company expectations, discrimination and harassment policies, and termination procedures.

Is Your Employee Handbook Doing its job?

Some companies consider an employee handbook as an optional tool that’s “nice to have” but not essential. As numerous Pennsylvania lawsuits can illustrate, an inadequate handbook can fail to protect you in court. Operating without a handbook leaves you even more vulnerable to legal action. That’s why creating a solid, comprehensive employee handbook is an excellent investment of time and money.

Employee Handbooks are Legal Documents

Because employee handbooks are often cited in legal actions, companies should consider a handbook to be a legal document. Whether you ask your business lawyer to create a handbook or to examine existing documents, legal review is essential. If you’d like to talk to Going and Plank about creating or reviewing an employee handbook, contact us today.

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