Monthly Archives: August 2016

Misclassifying Your Workforce Can Bite

A business owner and her lawyer are having lunch.  They were talking about Uber’s troubles.  Uber, the ride-share business, faced lawsuits over Uber classifying its drivers as independent contractors.  We now join the conversation in progress.

Business Owner:  Why does it matter whether someone is an employee versus an independent contractor?

       Lawyer:  Costs and liability are big reasons.  Whether a worker is an employee or independent contractor affects overtime entitlement, benefits, liability exposure, taxes, unemployment, worker’s comp, and which employment laws apply.  Making a mistake in classification can be costly.

Business Owner:  How so?

            Lawyer:  Take overtime for starters.  An employer is responsible for paying overtime if the worker is a non-exempt employee, even if the employer calls the worker an independent contractor.  A worker who successfully sues that he was an employee entitled to overtime that was not paid can get the unpaid wages, interest, liquidated damages, any penalties under state law, and his attorney’s fees and costs.  Then there are the attorney’s fees spent by the employer.

Business Owner:  That is not cheap.

            Lawyer:  That is not all.  There can be the audits, tax issues, etc.  The employee does not need to sue for that to happen.

Business Owner:  Oh, bother.  How do I properly classify someone?

           Lawyer:  There are several tests by the various governmental agencies and the courts.  You will have to pick the ones that apply to your business.  There are common themes between the tests, thankfully.

Business Owner:  Such as?

            Lawyer:  A written independent contract usually is important.  What has to be in the contract will depend on which test you need to satisfy.  Then there is control.  How much control the employer has over the who, what, when, where, and how of the job is considered.  Who provides the tools and materials also affects the outcome.  Then there is the risk of loss among other factors.

Business Owner: Any worker has a risk of loss.  The worker can be fired for doing a bad job.

            Lawyer:  There is more to the risk than that.  Who stands to lose money on a particular job is considered.  Here is an example that helps explain this.  Assume you and a painting company agree on a flat price of $3,000 for the company to paint your house.  You pick the paint, the finish, and agree on a schedule.  The painting company supplies the painters, the tools, and manages the painters and the pace of work.  The painting company, however, underestimated its costs and lost $200 because its total costs were $3,200.  The painting company’s employees are entitled to their wages regardless.

Business Owner:  What now?

            Lawyer:  Let me know if you want to go over how you classify your workers.  Any other questions?

Business Owner:  How come it seems like we are reading a script?

            Lawyer:  Because we are.

This post provides general information only.  This post is not intended to create an attorney-client relationship or to be legal advice about your situation.  Laws change and your situation may be different.  You should consult with a licensed attorney for legal advice specific to your circumstances.

© 2016 Matthew D. Macy

Watch Your Step With Your New Mark

You have a name, slogan, logo, or other mark for your new business or product.  Look first before spending time and money to identify your brand with that mark.  A search beforehand may warn you of another mark that could hinder your use of the new mark.  It is not fun to get a cease-and-desist letter or a lawsuit you could have avoided.

There are services available to conduct searches for you; the costs and efficacy varies.  There are do-it-yourself searches for little to no cost that you can do first.  Here is a sampling of DIY searches:

  • Google and other search engines:  Self-explanatory.
  • Federal Trademark Registrations:  The US Patent & Trademark Office (“USPTO”) handles the federal registration of trademarks under the Lanham Act.  The USPTO database has registered marks, marks that were registered but lost that status, and applications for registration, is available for free via the Web.  You can search the database here.  Try different variations on the name – spacing, punctuation, and non-letter characters can affect the search results.  There also is a way to search for logos and non-verbal marks using keywords and design codes.
  • State Trademarks and Trade Names:  States often have their own trademark registration and trade name databases.  You can search Georgia trademark registrations here and Colorado trademark registrations here.  The registration of a trademark or a trade name could be at the same place, or, like in Georgia, be in separate databases.  Georgia has trade name registrations take place at the county superior court, for example.
  • Records of incorporations, etc.:  A person forming an entity usually has to submit formation paperwork with the appropriate state agency, such as the state secretary of state.  The databases often are searchable online.  You should search the databases for the states where you want to do business.  Here are links to the sites for the Georgia’s Secretary of State’s website and the Colorado Secretary of State’s Web site.
  • Domain names:  A domain name register should give you the ability to conduct an online WHOIS search on a domain name.  A WHOIS search should tell you whether anyone has registered the domain name or whether it is available.
  • Social Media:  Examples of where to search are Facebook, Houzz, and LinkedIn.  There are many more social media sites; how far you should go will vary on the nature of your business.
  • Online phone book: Put in your intended name and something similar to see what pops up.

Remember GIGO (garbage-in-garbage-out) when searching.  The more varied are your searches, the more reliable are your results.  Examples of variation include spelling the mark correctly and incorrectly, spelling out non-word elements and visa versa (e.g., “plus” and “+”), using different phonics (e.g., “phone” and “fone”), altering the spacing between words, and so on.

Each database has its limitations.  Georgia’s trademark registration database, for example, will not show any pending applications.  It can take a week or so for new federal trademark applications to show on the USPTO database.  Even with that in mind, the search results can guide on whether a more in-depth search makes sense, where you can proceed with peace of mind, whether you should proceed with caution, or whether you should change your mark.

Stay tuned for a discussion of options if you get a “hit” on any of your searches.

This post provides general information only.  This post is not intended to create an attorney-client relationship or to be legal advice about your situation.  Laws change and your situation may be different.  You should consult with a licensed attorney for legal advice specific to your circumstances.

This article has links to websites owned and operated by third parties.  Use those links at your own risk.  The author including those links is not an endorsement by the author or the author’s firm of those third parties, of the content of those sites, or of the security of those sites.

© 2016 Matthew D. Macy