Category Archives: Operating a Business

NLRB General Counsel Memo Discusses Lawful and Unlawful Employer Handbook Rules

This past week the General Counsel for the National Labor Relations Board published a memo titled “Report of the General Counsel Concerning Employer Rules.”  You can download the PDF by following that link.

The report provides an update on the General Counsel’s view of lawful and unlawful employer handbook policies in the areas of confidentiality, professionalism, anti-harassment, trademarks, photography/recording, and media contact rules.  The memo provides examples of policies the General Counsel found lawful and unlawful under each area.

The NLRB GC has been actively challenging certain types of employer policies over the past few years as violations of Section 8 of the National Labor Relations Act.  Under Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), an employer’s rule may violate Section 8 of the NLRA if employees would reasonably construe the employer rule to prohibit Section 7 activity.  Section 7 activities include, among other things, the right for employees to engage in concerted activity with regard to their working conditions by commenting or speaking about them with other employees and third parties.

The GC has been challenging policies with broad prohibitions on things such as social media comments about an employer, broad definitions of confidentiality, and broad prohibitions on contact with media regarding an employer as violations under Section 8.  The GC has also actively challenged employer policies that prohibit recording or photography in the work place.  This is a much greater concern for employers these days given the fact that seemingly every employee owns a cell phone capable of making an audio recording or taking a photograph.

As a result of the NLRB’s effort, there has been some level of uncertainty as to what language the NLRB would find acceptable in an employer’s policies on these topics under the NLRA and practitioners had been seeking guidance in order to properly advise clients.  This memo is the General Counsel’s response to that request.

Employers would do well to review this memo and consult with their attorney to determine whether their policies and procedures should be revised given this new guidance.

2015 Texas Legislative Update

The 84th Legislature Regular Session began last month.  A number of bills that are of interest to Texas businesses have already been introduced and referred to committee.  Below you can find a brief description of some of the pending bills and the impact they could have should they make it into law.  Be sure to check back as the legislative session progresses for updates on new bills and whether these bills make it into law.

HB 1001
This bill would make certain domestic private entities ineligible for credits, exemptions or discounts on taxes or fees imposed by the state if the entity created a job outside the United States that could have been created in the U.S. and, as a result, eliminated or failed to create a similar job in the U.S.

SB 433
This bill offers an amendment to the Texas Business Organizations Code to clarify that the charging order for membership interests applies to both single-member and multiple-member LLC’s.

HB 94
This bill would mandate the creation of a publicly accessible database of employers who committed certain wage payment violations. The database would include employers who are assessed a “bad faith” administrative penalty, failed to comply with the payment requirements following a wage determination, or who are convicted of a criminal offense related to the payment of wages under Labor Code section 61.019 or Penal Code section 31.04.

HB 162/SB 152
This bill would amend the “bad faith” administrative penalty authorized under Labor Code Section 61.053 to make it a mandatory penalty against the employer. The bill also offers a list of specific acts constituting “bad faith” including: (1) a history of previous violations; (2) failure to pay wages as an act of discrimination or retaliation against an employee; (3) failure to pay wages to multiple employees at the same time; (4) failure to pay wages knowing it was a violation of law; or (5) actions showing a reckless disregard for wage payment requirements.

HB 174
This bill would require state agencies, political subdivision, and vendors or other contractors of state agencies to adopt a “living wage policy” mandating employee wages that are the greater of $10.10 an hour or the federal minimum wage under the FLSA.

HB 187/SB 65
This bill would expand the statute of limitations for filing an allegation of discrimination in payment of compensation by defining when the unlawful employment practice occurs.  This bill would also allow recovery for similar unlawful employment practices that occurred prior to the filing period.

HB 670
This bill would invalidate certain foreign forum selection and foreign choice of law clauses in contracts if application of the chosen forum or law to the dispute would result in violation of a right guaranteed by the U.S. Constitution or the Texas Constitution. In this bill, foreign means forums and laws outside the U.S. and its territories.

HB 828
This bill would prohibit a court, arbitrator, or administrative adjudicator form basing a ruling or decision on a foreign or international law or doctrine, or a prior ruling or decision that was based on a foreign or international law or doctrine, with certain limited exceptions.

What is the Texas Business Opportunities Act?

Almost everyone is familiar with the concept of franchises and franchise law but many people are unaware of another statute governing business opportunities called the Texas Business Opportunities Act.  The importance of understanding this law cannot be understated due to the penalties involved – failure to comply is by law a deceptive trade practice in violation of the Texas Deceptive Trade Practices Act. So here is what you need to know.

What is a “business opportunity?”

A business opportunity can be quite literally, anything.  Whether the opportunity falls within the statutory definition is determined by the promises or representations made by the person or entity selling the opportunity.

To fall within the statutory definition of a “business opportunity,” the seller must:

  1. sale or lease more than $500 of products equipment, supplies, or services that the purchaser will use to begin a business;
  2. the seller must represent that the purchaser will or is likely to earn a profit in excess of the amount paid to the seller; and
  3. the seller must:
    1. provide a location or assistance in finding a location for the business;
    2. provide a sales, production or marketing program; or
    3. make a promise to buy back or buy back the products, equipment, supplies, or products resulting from them.

Are there exceptions to the definition of a “business opportunity?”

Yes, there are a number of exceptions to the definition of a business opportunity.  For example, franchises that comply with the federal Franchise Rule can claim an exemption from the Texas Business Opportunities Act.  Other examples of exceptions include the sale or lease of an established and ongoing business, a retailer’s sale of goods or services, a sale or lease to a business enterprise that also sells or leases other products, equipment ,or supplies, and exceptions for certain high net worth individuals.  There are detailed rules and requirements for each exemption that must be carefully scrutinized to ensure the transaction fits within the exemption.

In addition, exemptions are not always automatic.  To claim an exemption as a franchise, the franchisor must file an exemption notice with the secretary of state’s office.

What does the Texas Business Opportunities Act require if you intend to offer a “business opportunity” for sale or lease?

The Texas Business Opportunities Act lists a number of requirements for sellers to comply with in order to avoid sanctions under the statute.  For example, there are record keeping requirements as well as bonding, trust account, and letter of credit requirements.  Most importantly, sellers are required to register the business opportunity with the secretary of state and provide specific disclosures in a disclosure statement provided to prospective purchasers.  The statute also lays out minimum time periods for providing the disclosure statement to a purchaser before they can purchase the business opportunity.

The act also provides specific requirements for the terms that must be included in the business opportunity contract.

What disclosures does the Texas Business Opportunities Act require in a disclosure statement?

Before offering a “business opportunity” for sale, the seller must file a copy of the disclosures with the secretary of state’s office.  The seller must provide a copy of the disclosure statement to each prospective purchaser.  The act requires the disclosure statement to contain, among other things, information relating to the following topics:

  1. A statutorily specified cover sheet.
  2. Names and address for the seller as well as information on the seller’s business.
  3. Information regarding the sales period for the business opportunity.
  4. A detailed description of the services the seller will perform.
  5. Recent financial statements of the seller.
  6. A detailed description of any training services offered by the seller in connection with the business opportunity.
  7. A description of the security maintained by the seller as required by statute.
  8. Information on delivery dates and cancellation rights.
  9. Information supporting any sales or earnings representations made by the seller.
  10. A history of legal actions involving the seller and certain individuals involved in the seller’s business.
  11. Information regarding any bankruptcies or reorganizations involving the seller or certain individuals involved in the seller’s business.
  12. A copy of the business opportunity contract.

What acts does the Texas Business Opportunities Act prohibit?

The act specifically prohibits sellers from the following:

  1. Employing a representation, device, scheme, or artifice to deceive a purchaser;
  2. Making an untrue statement of a material fact or omitting to state a material fact in connection with the documents and information required to be provided to the secretary of state or a purchaser;
  3. Representing that the business opportunity provides or will provide income or earning potential unless the seller:
    1. has documented data to substantiate the representation of income or earning potential; and
    2. discloses the data to the purchaser when the representation is made; or
  4. Making a claim or representation that is inconsistent with the information required to be disclosed by the act in:
    1. any advertising or other promotional material; or
    2. any oral sales presentation, solicitation, or discussion between the seller and the purchaser.

 

You can read more frequently asked questions regarding business opportunities on the Secretary of State’s website.

You can also read more about Texas business opportunities on the Attorney General’s website.

5 Things Your Company Should Consider When Deciding Whether to Enforce a Covenant Not To Compete

Should your company enforce a non-compete provision when an employee leaves to work for a competitor?  I can’t really answer that question beyond saying in typical attorney fashion that, “It depends.”  What I can do is discuss some of the factors your company should consider when making that decision and some of the questions it… Continue Reading

When should you hire an attorney to negotiate your agreement?

Business owners, partners, managers in closely held companies all share a very common trait – they like to do things themselves.  Why pay someone else if you can do it yourself?  The first question every business owner usually asks before spending money is whether the expenditure will provide convenience, cost savings, expertise, or will it… Continue Reading

A Summary of the 2013 Texas Legislature’s Impact On Business Laws In Texas

The Texas legislature’s 2013 regular session produced a number of bills that amend or alter laws affecting businesses in Texas.  Below is a summary of key bills passed by this legislature that affect Texas businesses, some of which will be addressed in more detail in later posts.  There is also a list of other bills… Continue Reading

How Business Planning Can Benefit You and Your Company

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Does Your Company Have a General Policy Against Hiring Murderers and Rapists? If So, You Better Watch Out…

Consider this a warning: If your company conducts criminal background checks on potential hires, you could be subject to a suit by the Equal Employment Opportunity Commission.  The EEOC filed two law suits this month against BMW and Dollar General.   The law suits assert that both companies violated Title VII of the Civil Rights Act… Continue Reading