The Term Paper consists of a discussion, analysis, and application of the concepts of Employee Relations; Employee Welfare; and choosing the appropriate type of Business Entity with specific focus of

 Overtime threshold regulations (2016)  Employees who earn up to $47,476 (salaried or hourly) are eligible for overtime pay over 40 hours per week  Wage threshold is also indexed, so it will increase every three years  Affects professionals such as academics and lab technicians  They will be required to track hours and lose flex time FLSA, cont.

 Child Labor Protections  Age 18 and over: any jobs  Age 16 -17: any non -hazardous job, unlimited hours (mining, logging, roofing, excavation)  Age 14 -15: any non -hazardous, non -manufacturing, and non -mining job during school hours, limited hours  Record keeping – employers must keep records of hours and wages; fined for not doing so FLSA, cont.

 Enforcement of FLSA  Can begin by complaint filed with U.S. Labor Department  Employer can seek interpretation from Department of Labor  Labor Department can initiate its own investigation  Violations of FLSA  Officers of a corporation can be held individually liable for the corporation’s violations  $10,000 and up to six months in prison  Employees cannot be fired for reporting violations  Chao v. Hotel Oasis, Inc., 493 F.3d 26 (1 st Cir. 2007) – court held president of a hotel personally liable for willfully failing to keep proper payroll records. Equal Pay Act  Illegal to pay different wages to men and women doing the same jobs  Equal Pay Act is not a comparable worth statute  Comparable worth requires equal pay for jobs that require equal skill, effort, and responsibility  Comparable worth changes the free marketplace concept that we as a society have adopted  Merit and seniority systems are exceptions OSHA  Occupational Health and Safety Act (OSHA)  Passed to ensure workplace safety precautions  OSHA was agency created to enforce it  Covers all employers who have at least one employee  Created Occupational Safety and Health Review Commission (OSHRC) and the National Institute for Occupational Health and Safety (NOSH)  OSHA Coverage and Duties  Familiarize themselves with OSHA’s requirements  Post employee rights  Require protective gear  Keep records of injuries  Report fatalities and hazards causing them  Post OSHA citations Employee Concerns  Employment Retirement Income Security Act (ERISA) amended by Pension Protection Act of 2006  Applies to any employer in interstate commerce  Applies to medical, retirement, or deferred income plans  Requirements  Must give employees an annual report  Must disclose loans made from the fund  Pension Protection Act  Passed as a response to a number of large corporate bankruptcies that released employers from pension obligations  Imposed stricter funding requirements Employee Concerns, cont.

 Unemployment Compensation  State administered  Employers pay FUTA taxes to fund the program  Amount received is controlled by wages and time working  Requirements  Involuntarily terminated  Able and available to work  Seeking employment Worker’s Compensation  Worker’s Compensation – provides wage benefits and medical care to victims of work related injuries  State administered  Employees injured in scope of employment are covered  Fault is immaterial  Independent contractors are not covered  Benefits include expenses, lost wages, and injury compensation  Principles  Employees do not have the right of common law suit  3rd party can be sued to indemnify employers  Every employer must carry insurance or be self -insured Worker’s Compensation, cont.

 Types of Injuries  Most injuries occur suddenly – broken limbs, injuries from falls, burns, cuts, and the like  Expanded to include injuries that occur over time – back injuries from lifting heavy over time, high blood pressure, heart attacks and other injuries resulting from stress in the workplace  Forfeiture of right to suit in exchange for worker’s compensation  Disability Benefits  Partial disability – listed on schedule by rate  Example – 50% of wages  Total disability – generally 2/3 of salary  Unscheduled injuries are determined by board  Death benefits paid to family Title VII Civil Rights Act  Prohibits Discrimination on the Basis of  Race; Color; Religion; National Origin; Sex; Pregnancy; Age  Application  Employers with 15 or more employees (for at least 20 calendar weeks)  Labor unions with 15 members and/or a hiring hall  Employment agencies that work for covered employers  State and local agencies  Non -covered Employers  Employment of aliens outside the United States  Religious corporations, when hiring for religious positions  Congress  Federal government (they have a separate scheme)  Indian tribes Title VII Civil Rights Act, cont.

 Employment Procedures Covered  Hiring, compensation, training, promotion, demotions, transfers, fringe benefits, rules, working conditions, dismissals, employment agencies referrals  What is considered disparate treatment under Title VII?

 Treating employees or potential employees differently on the basis of race…  McDonnell Douglass v. Green , 411 U.S. 792 (1973)  Established the following required elements  Plaintiff belongs to a minority group  Plaintiff applied for and was qualified for job  Plaintiff was rejected (despite qualifications)  Job remained open  Employer’s burden of proof to show nondiscriminatory reason for the non -hire Sexual Harassment  Covered by EEOC guidelines  Employers must have policies on harassment  Possible liability for  Demands for sexual favors – “quid pro quo”  Environment of sexual suggestion  Hostile conduct for refusal to provide sexual favors  Verbal or physical suggestions  Cannot be fired for refusal to accept sexual advances  Managers and companies have liability for failure to take action on complaints of sexual harassment Affirmative Action  What is Affirmative Action?

 Affirmative action is remedial step taken to ensure that those who have been victims of discrimination in the past are given the opportunity to get work  It is neither required nor prohibited under Title VII  Any employer can have an affirmative action program; cannot use quotas, but can set goals  Who is Required to Have Affirmative Action Programs?

 Those who have been subject to court orders  State and local agencies, colleges and universities receiving federal funds  Government contractors  Businesses that work on federal projects Affirmative Action, cont.

 Preparing an Affirmative Action Program  Equal employment opportunity statement  Appoint an affirmative action officer  Conduct internal audit  Establish overall goals and area goals  Example: “A certain number of minorities employed by certain date.”  Good faith effort Defenses  BOFOQ – Bona Fide Occupational Qualification  Necessary for the operation of business  Example – A Presbyterian Church is hiring a pastor. The Church can require the applicants to be Presbyterian.  Seniority/Merit System  System must apply to all employees  Divisions must follow the industry custom – bona fide  Origins of the system cannot be discriminatory  Cannot be used to perpetuate discrimination Defenses, cont.

 Aptitude  Test must be related to successful job performance  Cannot eliminate certain races  Example – Firefighter must pass a driving test; Police Officer must pass a physical fitness test or a marksmanship test  Misconduct  U.S. Supreme court limited this defense in McKennon v. Nashville Banner Publishing Co ., 524 U.S. 742 (1995) – holding that a business could not use employee wrongdoing after -the -fact as a basis for a misconduct defense Title VII Enforcement  Steps in filing a case  Complaint  Filed by employee  Must be done within 180 days from the violation  Filed with EEOC or state agency  Employer is notified of the charge  EEOC has 180 days from filing of action to take action  If case is not settled within 180 days, employee gets right -to -sue letter  Types of Relief  Injunctions  Back pay  Punitive damages  Affirmative action  Attorney’s fees Other Antidiscrimination Laws, cont  ADA: Americans with Disabilities Act  Applies to employers with 15 or more employees  Required to make reasonable accommodations  Cannot use tests to screen out the handicapped  Family and Medical Leave Act  12 weeks unpaid leave each year for birth or adoption of a child, illness of spouse, parent, or child  Must return to same job or equivalent Types of Business Ownership: Sole Proprietorships  Formation  Done by an individual  May have a fictitious name  Example – Tod Jones d/b/a Taco Tuesdays  No formal requirements for formation  Sources of Funding  Loans (including family loans)  Governmental help  Example – Small Business Administration  Liability - Full personal liability of owner Sole Proprietorships, cont.

 Tax Consequences  Owner claims all income and losses  No separate filing requirement  Management and Control  Complete centralized management  Sole proprietor is both manager and employee  Transferability of Interest  Business can be sold – property, inventory, and goodwill  Owner may sign a non -compete agreement Partnership  Governed by the Uniform Partnership Act (UPA)  Adopted in most states  In the absence of a partnership agreement, the UPA controls  What is a partnership?

 An association of two or more persons to carry on as co -owners, a business for profit  Can include corporations and natural persons Partnership, cont.

 Formation  Voluntary formation – by agreement  Articles of partnership  Involuntary formation – by implication  Sharing of profits; constitutes prima facie evidence that a partnership exists  Exceptions – rent, wages, annuity to widow/estate, payment for goodwill  Blumberg v. Ambrose, 2015 WL 5604474 (E.D. Mich. 2015) – the court held that absent a partnership agreement, the court considers outwardly acted. In this case, the court held that a partnership existed when the parties referred to each other as “co -founders” and worked without typical compensation with the understanding that profits would be shared Partnership, cont.

 Tax issues  The partnership does not pay taxes  Partnership files only a informational return  Partners report income and losses on their individual returns  Liability  Partnership assets reachable by partnership creditors  Partners personal assets are reachable after partnership assets are exhausted Limited Partnerships  Governed by Uniform Limited Partnership Act (ULPA) and the revised act (RULPA)  Adopted in nearly all states  ULPA and RULPA apply when there is no agreement  Structure  Must have at least one general partner  Must have at least one limited partner  Liability of limited partner is limited to capital contribution  Liability of general partner is unlimited  If statutory requirements are not met to form a L.P., then a general partnership is formed Limited Partnerships, cont.

 Limited partners have limited liability, but cannot participate in management  Limited partners can do the following and still maintain LP status:

 Can be an employee  Can consult with and advise the general partner  Can act as a surety guarantor for the limited partnership  Can vote amendments, dissolution, sale of property, and debt assumptions  Management is the responsibility of the General Partner Limited Partnerships, cont.

 Limited partners have limited liability, but cannot participate in management  Limited partners can do the following and still maintain LP status:

 Can be an employee  Can consult with and advise the general partner  Can act as a surety guarantor for the limited partnership  Can vote amendments, dissolution, sale of property, and debt assumptions Limited Partnerships, cont.

 Management is the responsibility of the General Partner  Partner Authority  Can be restricted by the agreement  Consent of limited partners required for:

 Admitting a new general partner  Admitting a new limited partner  Extraordinary transactions (like selling assets)  Limited partners may inspect books/records Limited Partnerships, cont.

 Taxes  Taxed the same as general partnerships  Partners report profits and losses on individual returns  Limited partners get direct tax (and have limited liability)  IRS scrutinize a limited partnership to make sure that it is not a corporation by analyzing the following:  The transferability of the interests  The assets of the general partners  The net worth of the general partners Limited Partnerships, cont.

 Profits and distributions  General partner has the authority to make these decisions  Profits and losses are allocated on the basis of capital contributions  Agreement for sharing profits and losses must be in writing  Transferability  Transfer of interests are permitted  May have a significant restriction on transfer to prevent liability under federal securities laws  The more easily an interest can be transferred, the more likely the IRS is to label it a corporation  Transfer of a limited partner’s interest does not dissolve the partnership Limited Partnerships, cont.

 Dissolved by the following:

 Expiration of the time period/event designated  Unanimous written consent of all partners  Withdrawal of the general partner  Court order after application by one of the partners  Order of priority  Creditors  Partners  Return capital contribution  Remainder split according to agreement Corporations  Characteristics  Unlimited duration  Free transferability of interest  Limited liability  Centralized management  Legal existence  Can hold legal title to property  Can sue and be sued Corporations, cont.

 Types  For profit  Not for profit  Domestic – in the state of incorporation  Foreign – everywhere else  Government corporations  Professional corporations (limits liability on everything other than professional malpractice) Corporations, cont.

 Close or closely held corporations  Limited number of shareholders  Less formality  S or C corporation  IRS election to be treated as partnership for tax purposes  Limited liability  Size limits  Must comply with statutory requirements Corporations, cont.

 Where should the business incorporate?

 Status of state’s corporation laws  State tax laws  Ability to attract employees  Incentives (corporate shield)  Formation  File articles of incorporation  Name  Names and addresses of all incorporations  Capital structure of the corporation  Types of stocks  Classes of stock  Rights of shareholders  Voting rights  Statutory agent Corporations, cont.

 Must hold initial meeting after incorporation  Elect new directors  Adopt bylaws (day -to -day procedures)  Issue stock  Ratify contracts  Equity financing – shareholder  Common stock: has voting rights, receives dividends when paid  Preferred stock: receiver preference over common stock can be cumulative or noncumulative Corporations, cont.

 Liability issues  Must make full payment for shares (paying par value)  Shareholders’ liability generally limited to amount of investment  If corporation veil is pierced, there is shareholder liability; means corporate immunity from liability is set aside  Why would the corporate veil be pierced?

 Inadequate capitalization  Alter ego theory/No formalities/Ignoring corporate formalities  Formed to perpetrate a fraud on creditors  Officer and Director liability  Protected by the Business Judgment Rule  Must act in good faith and with prudence  Must study issues; can consult experts  Increasing criminal liability Corporations: Shareholder Rights  Voting Shareholders  Elect the board  The proxy  Vote on critical corporate issues  Pooling agreements  Voting trusts  Shareholders have the right to vote on mergers, consolidations, and the sale of all assets  Shareholders have access to books/records  Shares are generally freely transferable, some restrictions apply  Must be noted on stock certificate  Must serve a necessary purpose  Must be reasonable  Dissolution may be voluntary (board resolution) or involuntary (court ordered) Limited Liability Company  Formation  Filing articles of organization  Name must contain “LLC”  Funding  Members make capital contributions  But personal assets are safe  Tax  Pass through taxation  LLC does not pay taxes Limited Liability Company, cont.

 Management and control  Operating agreement – specifies voting rights  A member or consultant may be given authority to operate  Transferability of interest  Interest can be transferred  Transferee may become a member if majority agrees  Dissolution  Withdrawal, death, expulsion of members  May be voluntary  Some states allow involuntary dissolution Limited Liability Partnerships  Formation - Must file to create  Funding - Capital contributions from partners  Liability  Limited liability for all  Malpractice not shielded from liability  Tax – Pass through taxation  Management and control – members may participate in management without personal liability for partnership debts  Transferability – transfer must be restricted  Dissolution – similar to LLC  Complete reading assignments  Complete writing assignments  Answer discussion questions  Complete unit quiz 44 What’s Next? Jennings, M. (2017). Business; It’s Legal, Ethical, and Global Environment. (11 th ed.). South -Western Cengage Learning. The Holy Bible 45 References