Avenging the Analogy
Beneath the lore and storyline, the Avengers are a group of uniquely qualified individuals. They each have their own story, but when the world is in dire need, they come together to form the Avengers: an unstoppable force of personality and skill. An entrepreneur is an impressive force, just like Iron Man or Black Widow fighting evil solo. However, nobody can deny the benefits of assembling the Avengers team to combat the greatest challenges.
Admittedly, small business owners today will not likely face large-scale alien invasions. Yet,
the challenges they encounter may be just as tricky. That is why it is a good idea for every entrepreneur to build their “Avengers Team.” Iron Man is talented, especially when the fight is in the air, but he cannot be in two places at once. That is why he has a plethora of teammates covering him on the ground.
What an Attorney Brings to the Team
For a small business, the optimal Avengers team includes an attorney. Business attorneys can help entrepreneurs make practical decisions. In addition, prevention and foresight are essential to small business success. These two skills are in every competent business attorney’s arsenal. Below are a few of the other “superpowers” attorneys may bring to the small business Avengers team.
Choosing an Entity: Attorneys advise clients what form of business is best suited for each startup. For example, there are pros and cons to selecting a partnership, limited liability company (LLC), or corporation. A business attorney explores those options, makes reasoned recommendations, and files the necessary legal paperwork. Other startup protocol includes obtaining a business license and providing notice of your intent to start a business- this varies by state. Thus, an attorney guides clients through all the relevant business considerations unique to their situation.
Contracts: Business attorneys frequently review contracts. This process protects small businesses by spotting contractual risks and ensuring the entrepreneur receives sufficient value from the terms of the agreement. One could say attorneys have X-ray vision, at least when seeing through legal jargon.
Hiring Employees: Employment is a specialized area of state and federal law that creates compliance requirements for employers. Working with an attorney to build employment practices protects small businesses against lawsuits. It also ensures your business is compliant with relevant laws. Even preparing a handbook has more nuances than one might imagine, and an attorney can help with that too.
Intellectual Property: If the business involves trade secrets, patents, trademarks, or copyrights, a business attorney can offer advice on maintaining the intellectual property rights associated with each. Additionally, consulting an attorney is essential to properly manage situations where another business or individual infringes on those intellectual property rights.
For more information on selecting a small business attorney, check out the following articles: “How to Choose an Attorney for Your Small Business” and “Finding the Right Lawyer for Your Business” located on the Penn State Dickinson Law Inside Entrepreneurship Law Blog.
What an Accountant Brings to the Team
Certified accountants are wizzes with numbers. They make sure no one overlooks the financial details and fine print. Small businesses are often strapped for cash as-is. Therefore, protecting capital from expensive accounting mistakes can help an entrepreneur in the long run. Some of the “superpowers” an accountant will bring to an Avengers team are highlighted below.
Tax Expertise: Taxes are one area that can run an unnecessarily large bill if done improperly. Accountants ensure that financial filings are complete and accurate. This function is crucial for complying with relevant tax laws and federal regulations.
Financial Statements: Financial statements provide snapshots and overviews of the state of the business. These are crucial for internal planning, budgeting, growth forecasting, and understanding how the business performs. Financial statements are also important because banks and investors often require them before small businesses can access financing. Relatedly, accountants create financial forecasts for personal use and financing requests.
Making Decisions: An accountant who understands the business is an asset to the team when considering opportunities and growth avenues. Accountants can evaluate the business’s financial position and determine the viability of new product or service ideas. Managing cash is often a problem for new businesses, and accountants guide clients to savvy spending practices that help entrepreneurs sustain their businesses long-term.
For more information on the “powers” of an accountant, check out “Dynamic Delegation: When to Use your Accountant Versus You Attorney,” located on the Penn State Dickinson Law Inside Entrepreneurship Law Blog.
“A” is for Accountant and Attorney. Anyone Else?
Yes! “A” is also for anyone else who can serve the entrepreneur and small business. Fortunately, some excellent organizations and professionals want to be part of the small businesses’ Avengers team. Business owners should consider connecting with a banking professional who can provide them with the best advice regarding financing and loan options. Additionally, maintaining business bank accounts is very important. Thus, the relationship with a banking institution is an excellent addition to the team.
Entrepreneurs should also consider connecting with SCORE. SCORE is a nonprofit organization that provides free services to entrepreneurs, including one-on-one mentoring with a dedicated volunteer. SCORE also offers connections to valuable business planning resources, financing advice, licensing guidance, and more. In addition, entrepreneurs may familiarize themselves with the Small Business Administration website, which offers numerous resources and helpful information. Ultimately, there is no limit on finding valuable additions to a small business Avengers team. However, starting with these few key members is a great way to ensure a small business is ready to tackle any challenge.
Sources:
https://www.score.org/blog/does-your-small-business-need-lawyer
https://www.kamlawfirm.com/10-reasons-hire-small-business-attorney-for-startup/
https://mileiq.com/blog-en-us/do-i-need-lawyer-start-small-business
https://www.forbes.com/sites/theyec/2020/02/07/when-and-why-your-small-business-needs-an-accountant/?sh=7a46e7d249cb
https://www.freshbooks.com/hub/accounting/why-is-accounting-important
https://www.score.org/about-score
Photo Credit:
https://www.amazon.com/Birthday-Place-Avengers-Edible-Cupcake/dp/B008VUPQKK
https://ashacpa.com/
https://covid19relief.sba.gov/
An important aspect of employment agreements are the confidentiality clauses that define what employees are forbidden from sharing with the outside world. Confidentiality policies are a crucial part of any business that has knowledge and trade secrets to protect from competitors. There is often a significant amount of proprietary information that employers may want to keep locked down. However, some federal government agencies care about what goes into confidentiality agreements and have policies in place to protect employee’s rights. It is important to keep these rights in mind to ensure that employment contracts are not infringing on protected rights.
Speaking of Federal Agencies
The National Labor Relations Board (NLRB) is an independent federal agency that enforces the National Labor Relations Act (the Act).Congress enacted the Act in 1935 “to protect the rights of employees and employers, to encourage collective bargaining and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” The NLRB strives to prevent and remedy unfair labor practices with 26 regional offices equipped to investigate and prosecute violation of the Act. Complainants may file charges with the NLRB Regional Director and the process proceeds in a familiar manner beginning with an investigation, continuing with a complaint and answer, and ending with a potential hearing before an Administrative Law Judge. The Court of Appeals can enforce, set aside, or remand all or part of the case and the U.S. Supreme Court reviews appeals.
Section 7 Covers Confidentiality but Its Content is Not a Secret
For this discussion, the pertinent part of the Act is Section 7. Section 7 guarantees that employees may discuss “wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees such as union representatives.” Employers violate the Act if they include terms and conditions of employment that specifically prohibit, or would be reasonably understood by employees to prohibit, discussions of the terms of employment. This includes workplace complaints. Under Section 7, employees have the right to criticize and protest labor policies and employer treatment. These are protected communications that employers are unable to limit in confidentiality agreements or employment contracts.
In 2004, the NLRB decided that rules that have a chilling effect on employee’s Section 7 rights are also prohibited. Therefore, even if a rule or policy does not explicitly address a Section 7 activity, it is still unlawful if “1) employees would reasonably construe the rule’s language to prohibit Section 7 activity; 2) the rule was promulgated in response to union or other Section 7 activity; or 3) the rule was actually applied to restrict the exercise of Section 7 rights.” This makes it tough to get around Section 7. It is important to note that broad language may encroach on Section 7 rights and violate the Act. A rule in the confidentiality agreement that uses broad language such as “employee information” or “personnel information” and fails to limit the scope of these terms likely violates Section 7.
Section 7 also governs employee criticism of the employer. The NLRB found that overly broad rules that may be construed to ban criticism or protests about supervisors and the employer in general are unlawful. This includes statements prohibiting negative comments about the company, “insubordination”, and social media posts that could affect the employer’s business or reputation, to name a few.
What Does the Act Allow?
Broad language such as a prohibition on “confidential” information is allowed under the Act if it does not also reference employee information or terms of employment. The Act does not prohibit businesses from protecting their legitimate interest in ensuring privacy of business information if employees would not reasonably construe the rule to prohibit Section 7 activities. The Act generally allows rules that prohibit disclosure of “business secrets”, “confidential information”, “confidential financial data”, “proprietary company information”, “information regarding business partners”, and “information regarding customers”. The crux of many Section 7 cases is whether an employee would reasonably construe the rule to prohibit Section 7 rights. Therefore, context matters, and each provision should be read in conjunction with the surrounding rules to ensure that employees will not misunderstand what the rule prohibits.
Let us Recap
Although confidentiality is an important part of protecting one’s business operations, employers cannot restrict employee’s ability to speak about the internal operations as it pertains to employee treatment and work conditions. Even broad language violates the Act if employees would perceive the rule as infringing on their Section 7 rights. Employers should avoid limiting employee’s rights to discuss wages, terms of employment, workplace investigations, and criticism of the employer. For more information on what is and is not lawful, you can view real-world examples provided in the NLRB Office of the General Counsel Memorandum: GC 15-04 available on the NLRB website. Please consult an attorney for more information and assistance writing a Section 7 compliant confidentiality agreement or employment contract. Thank you for your interest in my blog!
Photo Credit:
https://brownfoxlaw.com/nlrb-provides-employers-greater-leeway-to-discipline-abusive-employees/
https://hrdailyadvisor.blr.com/2016/10/10/listening-employee-complaints/
https://www.cbia.com/resources/hr-safety/issues-laws/labor-relations-law-union-issues/
Sources:
https://www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act
https://www.nlrb.gov/about-nlrb/what-we-do/introduction-to-the-nlrb
https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/interfering-with-employee-rights-section-7-8a1
https://www.nlrb.gov/guidance/memos-research/general-counsel-memos
Better to Be Safe Than Sorry
Sealing the deal with an oral agreement may sound like enough, especially with people you trust. However, regardless of whether your business is large or small, your employee is a friend or an acquaintance, or it is your first or tenth employee, it is much safer to have a formal, written employment contract. One of the most significant benefits is the legal protection that can save you from a costly lawsuit in the event something happens.
If you are a small business owner, you would likely prefer to spend your money investing your business. An employment contract will protect your businesses cash and develop a clear plan for resolution in the event a dispute arises. For instance, you could encounter a dispute over letting an employee go and what happens when an employee learns a trade secret necessary to perform their job and then leaves.
Articles Cannot Replace an Attorney
Although it is great to do your research ahead of time and learn the basics online, it is no match for consulting with a qualified attorney. It is important to consult an attorney to ensure that your contract offers you and your employee the best possible protection and will hold up under legal scrutiny. Each provision and decision will have consequences for you and your employees that a professional can explain in detail. In the meantime, here are some elements of an employment contract that you may want to consider and bring up with an advisor.
Performance Expectations
The employment agreement will explain what is expected of you and your employee. Basically what the relationship entails. It will likely out the job functions you want them to perform and how much you will pay them for their services
Ask yourself what performance looks like on either side and describe in detail what is expected even if to you it would seem rather obvious. If you want your employees to interact professionally and respectfully with customers, state it in the agreement. This ensures your employees will find it hard to later claim you never told them it was expected. These statements will protect you in the event that the employee later disputes what is required of them and why you may have to let them go for not performing their job.
At-Will Employment
Pennsylvania is an “at-will” employment state which means that as an employer, you can terminate an employee at will except for an lawful reasons such as discrimination. This is true even if you do not have a written agreement which states so. This is another concept that can be included in the employment contract which puts your employees on notice of your ability to let them go with or without cause at any time. The exception to this “at-will” rule is if an employment contract specifies a duration such as two years. If a time for the employment is stated, then the employer can only fire they employee for “just cause”. This includes things 
such as drug use of failing to adequately perform their job. In this case, the description of the employee’s job will be important for establishing “just cause”. Additionally, this standard may be a reason why you as an employer prefer not to specify a time frame and keep employees on an “at-will” level.
Additional Provisions
Some other provisions to consider including are whether you offer your employee benefits such as health, life or disability insurance or retirement accounts. Reasons for termination and grounds for termination. Vacation days and sick day policies. An attorney can help you comply with federal laws such as the Americans with Disabilities Act that may require certain times of leave. An important point to consider when offering paid or unpaid vacation or sick time is that once you have established your policy, you must comply with it. Generally, Pennsylvania does not require paid vacation time, however, if you choose to offer those days, you then must stick to your word. Pennsylvania labor laws currently do not require employers to offer severance pay. However, if as an employer you choose to include it in the employment contract, you then must stand by your offer and abide by your stated policy.
Recap
Business has never been a “one size fits all” situation. What works for some businesses may not work for yours. The most important thing is to gather information and learn as much as possible, that way every decision you make is well-informed. So whether you decide to use employment contracts, agreements, or handshakes is up to you and should be based on your specific circumstances and goals. This post is starting point for considering your options and learning more about employment agreements. Please consult an attorney for more information and thank you for your interest in my blog!
Sources:
https://www.goingandplank.com/5-key-points-to-include-in-business-contracts/#:~:text=An%20employment%20contract%20should%20outline,without%20fear%20of%20legal%20liability.
https://dced.pa.gov/business-assistance/international/trade/labor-workforce/
https://www.findlaw.com/smallbusiness/employment-law-and-human-resources/pros-and-cons-of-written-employee-contracts.html
https://sites.psu.edu/harris/2018/02/16/navigating-pa-employee-leave-laws-what-you-can-and-cant-do/
https://www.phillysmallbusinesslawyer.com/employmentcontracts.html
https://www.employmentlawhandbook.com/wage-and-hour-laws/state-wage-and-hour-laws/pennsylvania/
Photo Credit:
https://www.nc.gov/state-employees
How to Draft an Employee Restaurant Contract
https://www.abc.net.au/science/articles/2015/05/14/4235587.htm
