Final Exam Review

FCPA

1977 -- Congress passed the Foreign Corrupt Practices Act (FCPA) → prohibits U.S. businesspersons from bribing foreign officials to secure advantageous contracts First part of FCPA applies to all U.S. companies and their directors, officers, shareholders, employees, and agents -- prohibits bribery of officials of foreign governments if purpose of payment is to induce officials to act in official capacity to provide business opportunities FCPA does not prohibit payment of substantial sums to minor officials whose duties are ministerial -- often referred to as "grease" or facilitating payments Meant to accelerate performance of administrative services that might otherwise be carried out at a slow pace Generally, act, as amended, permits payments to foreign officials if such payments are lawful within the foreign country Doesn't prohibit payments to private foreign companies or other third parties unless the U.S. firm knows the payments will be passed on to a foreign government in violation of the FCPA Business firms that violate the FCPA may be fined up to $2 million Individual officers or directors who violate the act may be fined up to $100,000 (fine can't be paid off by company) and may be imprisoned for up to 5 years In the past, bribes were concealed in corporate financial records → second part of FCPA is directed toward accountants All companies must keep detailed records that "accurately and fairly" reflect the company's financial activities and must have an accounting system that provides "reasonable assurance" that all transactions entered into by the company are accounted for and legal FCPA further prohibits any person from making false statements to accountants or false entries in any record or account

Copyrighting

1988: Congress passed Digital Millennium Copyright Act -- gave significant protection to owners of copyrights in digital information and est civil and criminal penalties for anyone who circumvents encryption software or other tech anti-piracy protection Prohibited manufacture, import, sale, and distribution of devices or services for circumvention Provides for exceptions to fit needs of libraries, scientists, universities, and others In general, law does not restrict "fair use" of circumvention methods for educational and other noncommercial purposes -- exceptions are to be reconsidered every 3 years Limits liability of ISPs -- ISP is not liable for copyright infringement by its customer unless it is aware of the subscriber's violation, may be held liable only if it fails to take action to shut down subscriber after learning of violation A copyright holder must act promptly by pursuing a claim in court or the subscriber has the right to be restored to online access

Management of an LLC

2 options for managing an LLC: "member-managed" or "manager-managed" Most LLC statutes provide that unless the articles of organization specify otherwise, an LLC is assumed to be member-managed Member-managed = all members participate in management and decisions are made by majority vote Manager-managed = members designate a group of persons to manage firm -- may have only members, members and nonmembers, or only nonmembers Members in a manager-managed LLC owe fiduciary duties to the LLC and its members, including duty of loyalty and duty of care Members of LLC can set forth in their operating agreement provisions governing decision-making procedures and may also specify how voting rights will be apportioned -- if not, LLC statutes in most states provide that voting rights are apportioned according to each member's capital contributions

Federal Law Prohibits FTC from Spamming (laws passed)

2003 -- Congress enacted Controlling the Assault of Non-Solicited Pornography and Marketing Act which applies to any commercial emails that are sent to promote a commercial product or service Statute preempts state antispam laws except for those provisions in state laws that prohibit false and deceptive emailing practices Generally, act permits sending of unsolicited commercial email but prohibits certain types of spamming activities including use of a false return address and the use of false, misleading, or deceptive information when sending email Statute also prohibits use of "dictionary attacks"--sending messages to randomly generated email addresses--and "harvesting" email addresses from websites through specialized software Spamming servers located in other nations increased after CAN-SPAM Act -- generally were able to escape detection and legal sanctions because Federal Trade Commission lacked authority to investigate foreign spamming Congress sought to rectify situation by enacting U.S. Safe Web Act -- allows FTC to cooperate and share information with foreign agencies in investigating and prosecuting those involved in spamming, spyware, and various Internet frauds and deceptions Provides a "safe harbor" for ISPs -- gives immunity from liability for supplying information to FTC concerning possible unfair or deceptive conduct in foreign jurisdictions

License (bonding) vs. Cookies

A company may permit another party to use a trademark (or other intellectual property) under a license Licensing is ubiquitous in the online world -- ex: when you download an app, you are typically entering into a license agreement as you are obtaining a license to use that app and not the ownership rights in it Licensing agreements frequently include restrictions that prohibit licensees from sharing the file and using it to create similar software apps -- may also limit use of app to a specific device or give permission to user for certain time period Whenever consumer purchases items from online retailer or a retailer that sells offline and online, retailer collects information about consumer Cookies = small file sent from a website and stored in a user's web browser to track user's web browsing activities -- provide detailed information to marketers about individual's behavior and preferences, used to personalize online services

Rights of Directors

A corporate director must have certain rights to function properly in that position and make informed policy decisions for the company Right to participation = directors are entitled to participate in all board of directors' meetings and have a right to be notified of these meetings Right of inspection = each director can access corporation's books and records, facilities, and premises -- essential for directors to make informed decisions and to exercise necessary supervision over corporate officers and employees Almost absolute and can't be restricted When a director becomes involved in litigation by virtue of their position or actions, they have a right to indemnification (reimbursement) for legal costs, fees, and damages incurred

Reasonable Accommodation (ADA)

ADA does not require employers accommodate needs of job applicants or employees with disabilities who are not otherwise qualified for the work but if applicant or employee can perform essential job functions with a reasonable accommodation, the employer must make it Required modifications may include installing ramps, establishing more flexible working hours, creating or modifying job assignments, and creating or improving training materials and procedures -- employers should give primary consideration to employees' preferences in deciding what accommodations should be made Employers who do not accommodate needs of people with disabilities must demonstrate accommodations will cause "undue hardship" in terms of being significantly difficult or expensive for the employer -- usually, courts decide on a case-by-case basis by looking at the employer's resources in relation to the specific accommodation Employers must modify their job-application process so those with disabilities can compete for jobs with those who do not have disabilities Employers are restricted in kinds of questions they may ask on job-application forms and during pre-employment interviews and can't require people with disabilities to submit pre employment physicals unless they require for all applicants Employers can condition an offer of employment on applicant's successful passing of a medical exam but can disqualify applicant only if medical problems discovered would render applicant unable to perform job Drug addiction is a disability because it's a substantially limiting impairment Those who are actually using illegal drugs are not protected by the act -- only protects people with former drug addictions (those who have completed or are currently in a supervised drug-rehabilitation program) Individuals who have used drugs casually in the past are not protected under the act as they are not considered addicts People suffering from alcoholism are protected by ADA -- employers have right to prohibit use of alcohol in workplace and can require employees not be under influence while working Workers with disabilities must be given equal access to any health insurance provided to other employees Employers can't exclude preexisting health conditions from coverage An employer can put a cap on healthcare payments under its group health policy but any caps must be applied equally to all insured employees and not discriminate on basis of disability

What is a Disability?

ADA is broadly drafted to cover persons with a wide range of disabilities -- specifically defines disability to include any: physical or mental impairment that substantially limits one or more of an individual's major life activities; record of such impairment; being regarded as having such impairment Health conditions considered disabilities under the federal law = alcoholism, heart disease, cancer, diabetes, testing positive for HIV, and morbid obesity (weight = 2x normal weight for height) ADA prevents employers from taking adverse employment actions based on stereotypes or assumptions about individuals who associate with people who have disabilities (EX: parent with disabled child) Amendments to ADA prohibit employers from considering mitigating measures or medications when determining if an individual has a disability Disability is not determined on a case-by-case basis

Shareholders

Acquisition of a share of stock makes a person an owner and shareholder in a corporation → shareholders own the corporation Have no legal title to corporate property, such as buildings and equipment, but do have an equitable (ownership) interest in the firm Have no responsibility for the daily management of the corporation Ordinarily, corporate officers and directors owe no duty to individual shareholders unless some contract or special relationship exists between them in addition to the corporate relationship -- duty is to act in best interests of corporation and its shareholder-owners as a whole Shareholders must approve fundamental changes affecting corporation before they can be implemented -- empowered to amend articles of incorporation and bylaws, approve a merger of dissolution of corporation, and approve sale of all or substantially all of the corporation's assets Some of these powers are subjected to prior board approval Members of board are elected and removed by vote of shareholders Directors usually serve full terms -- shareholders deem unsatisfactory, not reelected but shareholders have inherent power to remove a director from office for cause (breach of duty, misconduct, etc.) by majority vote

Piercing the Corporate Veil

Action of a court to disregard corporate entity and hold shareholders personally liable for corporate debts and obligations Generally, courts pierce the veil when the corporate privilege is abused for personal benefit or when the corporate business is treated so carelessly that it's indistinguishable from the controlling shareholder When facts show great injustice would result from use of a corporation to avoid individual responsibility, a court will look behind the corporate structure to the individual shareholders Some factors that frequently cause courts to pierce corporate veil: -A party is tricked or misled into dealing with corporation rather than individual -Corporation is set up to never make a profit or always be insolvent, or is too "thinly" capitalized--has insufficient capital at time of formation to meet prospective debts or other potential liabilities -Corporation is formed to evade existing legal obligation -Statutory corporate formalities, such as holding required corporation meetings, are not followed -Personal and corporate interests are commingled to such an extent that the corporation has no separate identity Commingle = to put funds or goods together into one mass so they are mixed to such a degree they no longer have separate identities

After reviewing a case, an appellate court has the following options:

Affirm trial court's decision Reverse trial court's judgment if it concludes trial court erred or jury didn't receive proper instructions Remand (send back) case to trial court for further proceedings consistent with its opinion on the matter Affirm or reverse a decision in part Modify a lower court's decision -- ex: if it decides jury awarded excessive damages, court might reduce it to a more appropriate amount

Toxic Tort

An injured party may sue a business polluter in tort under the negligence and strict liability theories Basis for a negligence action is business' failure to use reasonable care toward party whose injury was foreseeable and caused by lack of reasonable care Lawsuits for personal injuries caused by exposure to a toxic substance have given rise to a growing body of tort law known as toxic torts Toxic tort = a civil wrong arising from exposure to a toxic substance, such as asbestos, radiation, or hazardous waste Businesses that engage in ultrahazardous activities are strictly liable for any injuries the activities cause -- in a strict liability action, injured party need not prove the business failed to exercise reasonable care

American legal system is based on ____?

Because of our colonial heritage, much of American law is based on the English legal system

Quorum

Board of directors conducts business by holding formal meetings with recorded minutes Dates of regular meetings are usually established in articles, bylaws, or board resolution, ordinarily no further notice is required -- special meetings need notice sent to all directors Most states allow directors to participate in meetings via phone or Web conferencing but all directors must simultaneously hear each other during meeting Quorum = number of members of a decision-making body that must be present before business may be transacted Normally, majority of board must be present to constitute a quorum -- once a quorum is present, directors transact business and vote on issues affecting corporation Ordinary matters generally require majority vote, but certain extraordinary issues may require a >majority

Directors

Board of directors is ultimate authority in every corporation -- responsible for all policymaking decisions necessary to management of all corporate affairs Board selects and removes corporate officers, determines capital structure of corporation, and declares dividends Each director has one vote, and customarily majority rules Subject to statutory limitations, number of directors is set forth in corporation's articles or bylaws Historically, minimum number has been 3 but today many states permit fewer Normally, incorporators appoint first board of directors at time of creation of corporation Initial board serves until first annual shareholders' meeting and subsequent directors are elected by a majority vote of the shareholders Director usually serves for a term of one year -- from one annual meeting to next Most state statutes permit longer and staggered terms Common practice is to elect ⅓ of board members each year for 3 year term -- greater management continuity Director can be removed for cause (failing to perform a required duty) either as specified in the articles or bylaws or by shareholder action If a director dies or resigns or if a new position is created through amendment of articles or bylaws, either shareholders or board itself can fill vacant position, depending on state law or bylaws In past, corporate directors rarely were compensated but today they are often paid at least nominal sums and may receive more substantial compensation in large corporations because of time, work, effort, and risk involved Most states permit corporate articles or bylaws to authorize compensation for directors In many corporations, directors are also chief corporate officers (president or CEO) and receive compensation in their managerial positions Director who is also an officer of corporation = inside director Director who does not hold a management position = outside director Typically a corporation's board of directors includes inside and outside directors

Administrative Law

Body of law created by administrative agencies in order to carry out their duties and responsibilities -- federal or state agencies Administrative agencies can be independent regulatory agencies, such as FDA Rulemaking -- rules, orders and decisions of administrative agencies Rules issued by various administrative agencies now affect almost every aspect of a business's operations -- may regulate a firm's capital structure and financing, hiring and firing procedures, relations with employees and unions, and the way it manufactures and markets products

Loyalty

Can be defined as faithfulness to one's obligations and duties In corporate context, duty of loyalty requires directors and officers to subordinate their personal interests to welfare of corporation Directors can't use corporate funds or confidential corporate information for personal advantage and must refrain from self-dealing

Union Contracts

Can't be forced into but could be required to pay dues Can't require employers to hire only union members but can specify they must have a certain number of union workers for certain duties

Civil Law vs. Criminal Law

Civil Law = branch of law dealing with definition and enforcement of all private or public rights, as opposed to criminal matters (individuals, preponderance of evidence) Typically, a private party sues another private party (government can also sue a party for a civil law violation) to make sure other party complies with a duty or pays for damage caused by failure to comply with a duty Criminal Law = branch of law that defines and punishes wrongful actions committed against society (force of government, beyond a reasonable doubt) Criminal acts are proscribed by local, state, or federal government statutes → criminal defendants are prosecuted by public officials, such as a D.A., on behalf of state, not by their victims or other private parties Civil case -- object is to obtain a remedy (such as monetary damages) to compensate the injured party Criminal case -- object is to punish the wrongdoer in an attempt to deter others from similar actions Penalties for violations of criminal statutes consist of fines and/or imprisonment and, in some cases, death

Stationary Sources

Clean Air Act authorizes EPA to establish air-quality standards for stationary sources but recognizes primary responsibility for preventing and controlling air pollution rests with state and local governments EPA sets primary and secondary levels of ambient standards (max permissible levels of certain pollutants) and states formulate plans to achieve those standards Different standards apply depending on whether sources are located in clean vs polluted areas and whether they are existing vs major new sources EPA standards are aimed at controlling hazardous air pollutants--those likely to cause death, serious irreversible or incapacitating illness, or neurological and reproductive damage Clean Air Act requires EPA to list all regulated hazardous air pollutants on a prioritized schedule -- nearly 200 substances have been classified as hazardous Emitted by: smelting, dry cleaning, house painting, and commercial baking Clean Air Act requires major sources of pollutants to use pollution-control equipment that represents the max achievable control tech (MACT) to reduce emissions -- EPA issues guidelines as to what equipment meets this standard

Nuisance

Common law doctrine under which persons may be held liable for using their property in a manner that unreasonably interferes with others' rights to use or enjoy their own property In these situations, courts commonly balance the harm caused by the pollution against costs of stopping it Courts have often denied injunctive relief on ground that hardships would be imposed on polluter and community are relatively greater than hardships suffered by plaintiff To obtain relief from pollution under nuisance doctrine, property owner may have to identify a distinct harm separate from that affecting general public -- "private" nuisance Under common law, individuals were denied standing unless they suffered a harm distinct from harm suffered by public at large -- some states still require this A public authority can use to stop or reduce "public" nuisance

Federalism

Compromise in which the national government shares sovereign power with the states

Superfund

Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act or Superfund, to regulate clean-up of leaking hazardous waste-disposal sites -- special federal fund was created for it As amended, has 4 primary elements 1. Established an information-gathering and analysis system that enables government to identify chemical dump sites and determine appropriate action 2. Authorized EPA to respond to hazardous substance emergencies and to arrange for clean-up of a leaking site directly if persons responsible for problem fail to clean it 3. Created a Hazardous Substance Response Trust Fund (Superfund) to pay for clean-up of hazardous sites using funds obtained through taxes on certain businesses 4. Allowed government to recover cost of clean-up from persons who were even remotely responsible for hazardous substance releases

When choosing a business organization...

Consider several factors including ease of creation, liability of owners, tax considerations, and ability to raise capital

Corporate Officers and Executives

Corporate officers and other executive employees are hired by board of directors At minimum, most corporations have a president, one or more VPs, a secretary, and a treasurer In most states, an individual can hold more than one office, such as president and secretary, and can be both an officer and a director of the corporation Corporate officers and other high-level managers are employees of the company -- their rights are defined by employment contracts Board of directors normally can remove corporate officers at any time with or without cause and regardless of terms of employment contracts but can be liable for breach of contract

Disadvantages of Corporation

Corporate profits can be subject to double taxation -- company pays tax on profits and if they are passed on to shareholders as dividends, shareholders must pay income tax on them Corporation normally does not receive a tax deduction for dividends it distributes to shareholders

Defamation

Defamation = anything published or publicly spoken that causes injury to another's good name, reputation, or character -- law has imposed a general duty on all persons to refrain from making false, defamatory statements of fact about others Libel = written or another form of permanence (such as a digital recording) Slander = oral form Tort of defamation can also arise when a false statement of fact is made about a person's product, business, or legal ownership rights to property To establish defamation, plaintiff normally must prove: defendant made a false statement of fact, it was understood as being about plaintiff and tended to harm their reputation, and was published to at least one person other than plaintiff If plaintiff = public figure -- must prove actual malice

Sexual Harassment

Demanding of sexual favors in return for job promotions or other benefits, or language or conduct so sexually offensive that it creates a hostile working environment Can take two forms: quid pro quo and hostile-environment Quid pro quo harassment occurs when sexual favors are demanded in return for job opportunities, promotions, salary increases, etc Hostile-environment harassment occurs when workplace is permeated with discriminatory intimidation, ridicule, and insult -- must be sufficiently severe or pervasive as to alter conditions of victim's employment and create an abusive working environment Courts determine whether the sexually offensive conduct was sufficiently severe or pervasive to create a hostile environment on a case-by-case basis -- typically, a single incident of sexually offensive conduct is not enough (have been exceptions) Court considers a number of factors in assessing severity and pervasiveness of alleged sexual harassment Although federal law (Title VII) does not prohibit discrimination or harassment based on a person's sexual orientation, a growing number of states have enacted laws that prohibit sexual orientation discrimination in private employment Many companies and organizations have voluntarily established nondiscrimination policies that include sexual orientation

Duties and Liabilities of Directors and Officers

Directors and officers are deemed fiduciaries of the corporation because relationship with corporation and shareholders is one of trust and confidence -- owe ethical and legal duties to corporation and shareholders as a whole Directors and officers must exercise due care in performing duties -- standard of due care has been variously described in judicial decisions and codified in many state corporation codes Generally, a director or officer is expected to act in good faith, to exercise the care that an ordinarily prudent person would exercise in similar circumstances, and to act in what they consider to be best interests of corporation Directors and officers whose failure to exercise due care results in harm to corporation or its shareholders can be liable for negligence Directors and officers are expected to be informed on corporate matters and to conduct a reasonable investigation of situation before making a decision -- means do what is necessary to keep adequately informed (attend meetings and presentations, ask for information from those who have it, read reports, and review other written materials) Can't decide on spur of moment without adequate research Directors are expected to exercise a reasonable amount of supervision when they delegate work to corporate officers and employees Corporate directors often have many business affiliations and a director may sit on board of more than one corporation Directors are precluded from entering into or supporting businesses that operate in direct competition with corporations on whose boards they serve Fiduciary duty requires them to fully disclose any potential conflicts of interest that might arise in any corporate transaction

Disparate-Impact Discrimination

Discrimination that results from certain employer practices or procedures that, although not discriminatory on their face, have a discriminatory effect Can prove disparate impact by comparing employer's workforce to pool of qualified individuals available in local labor market -- must show that as a result of educational or other job requirements or hiring procedures, the % of nonwhites, women, or members of other protected classes in employer's workforce does not reflect % of that group in pool of qualified applicants Prima facie case = plaintiff can show a connection between practice + disparity When a job requirement or hiring procedure excludes members of a protected class from an employer's workforce at a substantially higher rate than nonmembers, discrimination occurs, regardless of racial balance in employer's workforce EEOC ⅘ rule = determines whether an employment selection procedure is discriminatory on its face -- selection rate for protected classes < ⅘ of the rate for the group with the highest rate will generally be evidence of disparate impact

Classifying Corporations

Domestic corporation = home state (the state in which the corporation does business in, and is organized under the law of, that state) Foreign corporation = in a given state, a corporation that does business in the state they aren't incorporated in Alien corporation = a designation in the U.S. for a corporation formed in another country but doing business in the U.S. A corporation does not have an automatic right to do business in a state other than its state of incorporation -- in some instances, it must obtain a certificate of authority in any state in which it plans to do business Once the certificate has been issued, the corporation generally can exercise in that state all of the powers conferred on it by its home state If a foreign corporation does business in a state without obtaining a certificate of authority, the state can impose substantial fines and sanctions on the corporation, and sometimes on its officers, directors, or agents Most state statutes specify certain activities, such as soliciting orders via Internet, that are not considered doing business within the state → foreign corporation normally does not need a certificate authority to sell goods or services via Internet or by mail

Equal Employment Opportunity Commission

EEOC monitors compliance with Title VII -- victim of alleged discrimination must file a claim with EEOC before bringing a suit against employer → EEOC may investigate dispute and attempt to arrange an out-of-court settlement If a voluntary agreement can't be reached, EEOC may file a suit against employer on employee's behalf If EEOC decides not to investigate, victim may bring their own lawsuit against employer EEOC does not investigate every claim of employment discrimination -- generally only investigates "priority cases," such as cases involving retaliatory discharge and cases involving types of discrimination of particular concern to EEOC

Violations of the Clean Air Act

EPA can assess civil penalties up to $25,000/day -- additional fines of up to $5,00 per day for other violations, such as failing to maintain required records To penalize those more cost-effective to violate act than to comply, EPA is authorized to obtain penalty = to violator's economic benefits for noncompliance Persons who provide information about violators may be paid up to $10,000; private individuals can also sue violators Those who knowingly violate the act may be subject to criminal penalties, including fines up to $1 million and imprisonment for up to 2 years (for false statements or failures to report violations) Corporate officers are among those who may be subject to these penalties

Shareholders + Dividends

Each state determines general circumstances and legal requirements under which dividends are paid -- state laws also control sources of revenue to be used (only certain funds are legally available for paying dividends) Depending on state, dividends may be paid from: retained earnings, net profits, surplus -- ex: earned surplus (shareholder equity) -- a company's board may choose to pay dividends from surplus or use for some other corporate purpose Sometimes dividends are improperly paid from an unauthorized account, or payment causes corporation to become insolvent Generally, shareholders must return illegal dividends if knew they were illegal when payment was received or if paid when corporation was insolvent -- whenever illegal or improper, board can be held personally liable for amount of payment When directors fail to declare a dividend, shareholders can ask court to compel directors to meet and declare a dividend -- to succeed, shareholders must show directors have acted so unreasonably in withholding dividend that conduct is an abuse of their discretion Courts are reluctant to interfere with corporate operations and will not compel directors to declare dividends unless abuse of discretion is clearly shown

Lie Detector Test

Employee Polygraph Protection Act generally prohibits employers from requiring employees or job applicants to take lie-detector tests or suggesting or requesting they do so Also restricts employers' ability to use or ask about the results of any lie-detector test or to take any negative employment action based on the results Certain employers are exempt from these prohibitions -- federal, state, and local government employers, and certain security service firms may conduct polygraph tests Companies that manufacture and distribute controlled substances may perform lie-detector tests Other employers may use polygraph tests when investigating losses attributable to theft, including embezzlement and the theft of trade secrets

Remedies under Title VII

Employer liability under Title VII may be extensive If the plaintiff successfully proves unlawful discrimination occurred, they may be awarded reinstatement, back pay, retroactive promotions, and damages Compensatory damages are only available in cases of intentional discrimination Punitive damages may be recovered against a private employer only if employer acted with malice or reckless indifference to an individual's rights Statute limits total amount of compensatory and punitive damages that the plaintiff can recover from specific employers, depending on size of employer Cap ranges from $50,000 for employers with 100 or fewer employees to $300,000 for employers with >500 employees

Discrimination Based on Religion

Employers can't treat employees more or less favorably based on their religious beliefs or practices and can't require/forbid employees to participate in any religious activity Employer must reasonably accommodate religious practices of its employees, unless to do so would cause undue hardship to the employer's business Employers must reasonably accommodate an employee's religious belief even if it is not based on doctrines of a traditionally recognized religion/denomination -- only requirement is belief is sincerely held by an employee If an employee's religion prohibits them from working on a certain day of the week or at a certain type of job, for instance, the employer must make a reasonable attempt to accommodate these religious requirements -- does not necessarily require employer to permanently give an employee the requested day off, if to do so would cause the employer undue hardship

Employer Retaliation (Sexual Harassment)

Employers sometimes retaliate against employees who complain about sexual harassment or other Title VII violations -- retaliation can take many forms Employer might demote or fire the person, or otherwise change the terms, conditions, and benefits of employment -- Title VII prohibits retaliation and employees can sue their employers In a retaliation claim, an individual asserts that they suffered a harm as a result of making a charge, testifying, or participating in a Title VII investigation or proceeding Plaintiffs do not have to prove challenged action adversely affected workplace or employment but must show it was one that would likely have dissuaded a reasonable worker from making or supporting a charge of discrimination Title VII's retaliation protection extends to an employee who speaks out about discrimination against another employee during an employer's internal investigation -- has also protected an employee who was fired after his fiancée filed a gender discrimination claim against their employer

Disparate-Treatment Discrimination

Employment discrimination that results when employer intentionally discriminates against employees who are in protected classes -- intent can be difficult to prove, courts have established certain procedures for resolving disparate-treatment cases Person must show: they are a member of a protected class, applied and were qualified for job in question, were rejected by employer who continued to seek applicants for position or filled position with person not in a protected class

Job Skill Test

Employment testing is legal as long as a professionally-developed employment test is administered according to the test developer's intended use -- testing the potential employee only on topics that are directly related to the job

Gender-Based Wage Discrimination

Equal Pay Act requires = pay for male and female employees doing similar work at the same establishment -- to determine violation, a court will look to the primary duties of the two jobs--content rather than description If wage differential is due to any factor other than gender, such as seniority or merit system, it does not violate the act Congress enacted the Lilly Ledbetter Fair Pay Act -- made discriminatory wages actionable under federal law regardless of when the discrimination began Overturned previous decision by U.S. Supreme Court that limited plaintiffs' time period to file a wage discrimination complaint to 180 days after employer's decision -- today, if a plaintiff continues to work for employer while receiving discriminatory wages, time period is basically unlimited

Implied + Express Powers of Corporations

Express powers of corporation are found in: articles of incorporation, corporate bylaws, law of the state of incorporation, and in the state and federal constitutions After bylaws are adopted, corporation's board of directors will pass resolutions that also grant or restrict corporate powers Barring express constitutional, statutory, or other prohibitions, corporation has implied power to perform all acts reasonably appropriate and necessary to accomplish its corporate purposes For this reason, a corporation has implied power to borrow funds within certain limits, to lend funds, and to extend credit to those with whom it has a legal or contractual relationship To borrow funds, corporation acts through board of directors to authorize loan

Negligence

Failure to exercise the standard of care that a reasonable person would exercise in similar circumstances Four Elements of Negligence 1. Duty of Care -- defendant owed a duty of care to plaintiff 2. Breach of the Duty -- defendant breached duty 3. Causation -- defendant's breach caused plaintiff's injury 4. Damages -- plaintiff suffered a legally recognizable injury Reasonable person standard = standard of behavior expected of a hypothetical "reasonable person" -- standard against negligence is measured and must be observed to avoid liability for negligence Objective -- not necessarily how a person would act but society's judgment on how people should act (careful, conscientious, even tempered, honest) Individuals are required to exercise a reasonable standard of care in their activities is a pervasive concept in business law In negligence cases, degree of care to be exercised varies, depending on defendant's occupation or profession, relationship with plaintiff, and other factors Whether an action constitutes a breach of the duty of care is determined on a case-by-case basis

Clean Air Act

Federal law that provides basis for issuing regulations to control multi-state air pollution -- covers both mobile and stationary sources of pollution

Advantages of Partnership

Firm itself does not pay federal income taxes, but must file an information return with IRS Profit from partnership (whether distributed or not) is "passed through" partnership to be taxed as an individual partner's personal income

Tangible Employment Action

For an employer to be held liable for a supervisor's sexual harassment, supervisor normally must have taken a tangible employment action against employee Tangible employment action = significant change in employment status or benefits, such as employee being fired, refused a promotion, or reassigned to a lesser position, constructive discharge Only a supervisor or another person acting with authority of employer can cause this sort of injury

Partnership

General partnership = an agreement by two or more persons to carry on, as co-owners, a business for profit 3 elements: (1) sharing of profits and losses, (2) joint ownership of business, (3) equal right in management of business Limited liability partnership = designed for professionals who normally do business as partners in a partnership -- allows professional to enjoy tax benefits of a partnership while limiting personal liability for malpractice of other partners

Protected Class

Group of people protected by specific laws because of the group's defining characteristics, including race, color, religion, national origin, gender, age, and disability

Limited Liability Company (LLC)

Hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership LLC must be formed and operated in compliance with state law ~¼ of states specifically require LLCs to have at least two owners, called members Member = a person who has an ownership interest in a LLC To form an LLC, articles of organization must be filed with a state agency (usually secretary of state's office) -- typically required to set forth such information as name of business, its principal address, name and address of a registered agent, names of owners, and information on how LLC will be managed Business' name must include LLC or full title

Collective Bargaining

If NLRB certifies union, it becomes exclusive bargaining rep of workers Central legal right of a union = engage in collective bargaining on members' behalf Collective bargaining = process by which labor and management negotiate terms and conditions of employment, including working hours and workplace conditions -- allows union reps elected by union members to speak on behalf of members at bargaining table Bargaining does not mean one side must give in to the other or that compromise must be made but does mean that a demand to bargain with employer must be taken seriously and that both sides must bargain in "good faith" If an employer (or union) refuses to bargain in good faith without justification, it has committed an unfair labor practice

Hot-Cargo Agreements

Illegal agreement in which employers voluntarily agree with unions not to handle, use, or deal in nonunion-produced goods of other employees

Business Judgment Rule

Immunizes corporate management from liability for decisions that result in corporate losses or damages if decision-makers took reasonable steps to become informed, had a rational basis for decisions, and did not have a contract of interest with corporation Does not apply when a director engages in fraud, dishonesty, or other intentional reckless misconduct

Operating Agreement

In LLC, agreement in which members set forth details of how business will be managed and operated -- typically include provisions relating to management, how profits will be divided, transfer of membership interests, whether LLC will be dissolved on death or departure of member, etc In many states, an operating agreement is not required for LLC to exist, and if there is one, it need not be in writing but members should protect their interests by forming a written operating agreement If no agreement covering topic under dispute, state LLC statute will govern outcome → when an issue is not covered by an operating agreement or an LLC statute, the courts often apply the principles of partnership law LLC members are bound to the operating agreement they make

Drug Testing (+ Background Checks)

In the interests of public safety and to reduce unnecessary costs, many employers, including the government, require their employees to submit to drug testing Government (public) employers are constrained in drug testing by Fourth Amendment which prohibits unreasonable searches and seizures Drug testing of public employees is allowed by statute for transportation workers Courts normally uphold drug testing of certain employees when drug use in a particular job may threaten public safety and when there is a reasonable basis for suspecting public employees of drug use Fourth Amendment does not apply to drug testing conducted by private employers → privacy rights and drug testing of private-sector employees are governed by state law Many states have statutes that allow drug testing by private employers but put restrictions on when and how the testing may be performed A collective bargaining agreement may also provide protection against (or authorize) drug testing Permissibility of a private employee's drug test often hinges on whether the testing was reasonable -- random drug tests and "zero-tolerance" policies (deny a second chance to employees who test + for drugs) have been held reasonable Federal government employees have long been required to submit to background checks as a condition of employment Many workers who work at U.S. government facilities are employees of private contractors, not of the government → generally have not been subject to background checks but recent standards now require them for all federal workers, including contract employees

Independent Contractor

Independent contractors are not employees because those who hire them have no control over the details of their physical performance Section 2 of the Restatement (Third) of Agency: Independent contractor = one who works for and receives payment from an employer but whose working conditions and methods are not controlled by the employer -- not an employee but may be an agent Building contractors and subcontractors are independent contractors--a property owner does not control the acts of either of these professionals Truck drivers who own their equipment and hire themselves out on a per-job basis are independent contractors, but truck drivers who drive company trucks on a regular basis are usually employees

Bribery

Involves offering something of value to someone in an attempt to influence them, usually, a public official, to act in a way that serves a private interest Intent must be present + proved, bribe itself can be anything recipient considers valuable 3 types of bribery are considered crimes -- bribery occurs when bribe is offered, accepting is separate crime 1. Bribery of public officials 2. Commercial bribery -- involves corrupt dealings between private persons or businesses -- typically to obtain proprietary information, cover up an inferior product, or secure new business Industrial espionage, kickbacks, or payoffs for special favors or services, area form of commercial bribery in some situations 3. Bribery of foreign officials

Labor-Management Relations Act (Taft-Hartley Act)

Labor-management Relations Act (Taft-Hartley Act) -- 1947, proscribes certain unfair union practices Closed shop = requires union membership by workers as condition of employment Union shop = requires all workers, once employed, to become union members within specified period of time as a condition of their continued employment (technically illegal in the 23 states that have right-to-work laws) Prohibited unions from refusing to bargain with employers, engaging in certain types of picketing, and featherbedding (causing employers to hire more employees than necessary) Allowed individuals to pass right-to-work laws -- state law providing that employees may not be required to join a union as condition of retaining job

Corporation

Legal entity formed in compliance with statutory requirements that is distinct from it shareholder-owners Board of directors, elected by shareholders, manages business -- normally employs officers to oversee day-to-day operations Corporation can consist of one or more natural persons (as opposed to the artificial legal person of the corporation) identified under a common name Corporation can be owned by a single person or even millions Corporation substitutes itself for its shareholders in conducting corporate business and in incurring liability but its authority to act and liability for its actions are separate and apart from individuals who own it A corporation is recognized as a person and it enjoys many of the same rights and privileges under state and federal law that natural person enjoy Corporation owners (shareholders) have limited liability -- not personally liable for obligations of corporation beyond extent of their investments In certain limited situations, a court can pierce the corporate veil and impose liability on shareholders for the corporation's obligations Under modern criminal law, a corporation may be held liable for the criminal acts of its agents and employees, provided the punishment is one that can be applied to the corporations Corporations can be fined, corporate directors and officers can be imprisoned Under sentencing guidelines for crimes committed by corporate employees, corporate lawbreakers can face fines amounting to hundreds of millions of dollars A corporation is liable for the torts committed by its agents or officers within the course and scope of their employment -- this principle applies to a corporation exactly as it applies to other agency relationships, such as those that exist between an employer and employee

Advantages of LLC

Liability of members is limited to amount of their investments LLC with 2+ members can choose to be taxed as partnership or corporation Unless LLC indicates it wants to be taxed as a corporation, IRS automatically taxes it as a partnership -- LLC as an entity pays no taxes → profits are "passed through" LLC to members, who then personally pay taxes on profits If an LLC's members want to reinvest profits in the business, rather than distribute to members, may prefer LLC be taxed as a corporation -- corporate income tax rates may be lower than personal tax rates For federal income tax purposes, one-member LLCs are automatically taxed as sole proprietorships unless they indicate they want to be taxed as corporations With respect to state taxes, most states follow IRS rules Flexibility in terms of business operations and management Foreign investors can participate in an LLC, LLC form of business is attractive as a way to encourage investment

Retirement Plans (ERISA)

Major federal act regulating employee retirement plans = Employee Retirement Income Security Act (ERISA) -- its provisions govern employers that have private pension funds for their employees ERISA created Pension Benefit Guaranty Corporation -- independent federal agency, provide timely uninterrupted payment of voluntary private pension benefits Pension plans pay annual insurance premiums (at set rates adjusted for inflation) to the PBGC, which then pays benefits to participants in event that a plan is unable to do so ERISA does not require employer to establish a pension plan but when a plan exists, it specifies standards for its management, including investment of funds and record-keeping requirements Vesting = creation of absolute or unconditional right to power -- gives employee legal right to receive pension benefits at some future date when they stop working ERISA establishes complex vesting rules but generally all employee contributions to pension plans vest immediately, and employee rights to employer contributions to a plan vest after five years of employment

State and Local Regulations (Environmental Law)

Many states have enacted laws to protect environment -- may restrict a business' discharge of chemicals into air or water, or regulate disposal of toxic wastes or regulate disposal or recycling of other wastes and may restrict emissions from motor vehicles City, county, and other local governments regulate some aspects of environment EX: local zoning laws may be designed to inhibit or regulate growth of cities and suburbs or to protect natural environment -- in interest of safeguarding environment, such laws may prohibit certain land uses Even when zoning laws permit a business' proposed development, the plans may have to be altered to lessen development's impact on environment Cities and counties may impose rules regulating methods of waste removal, appearance of buildings, max noise level, and other aspects of local environment State and local regulatory agencies play a significant role in implementing federal environmental legislation -- typically, federal government rely on state and local governments to enforce federal environmental statutes and regulations

Dissociation (LLC)

Member of LLC has power to dissociate at any time but may not have right to Events that may trigger dissociation in an LLC are similar to events causing a partner to be dissociated -- include voluntary withdrawal, expulsion by other members or by court order, bankruptcy, incompetence, and death Generally, even if a member dies or otherwise dissociates from an LLC, the other members may continue to carry on LLC business, unless the operating agreement has contrary provisions Dissociated member has right to have their interest in LLC bought by other members If member's dissociation violates LLC's operating agreement, it is considered legally wrongful and dissociated member can be held liable for damages caused by dissociation

Monitoring communications at work (electronic)

More than half of employers engage in some form of electronic monitoring of their employees -- many employers review employees' email, blogs, instant messages, social media, smartphone, and Internet use Employers may also video employees at work, record and listen to telephone conversations and voicemail, and read text messages and social media posts Employees of private (nongovernment) employers have some privacy protection under tort law and state constitutions State and federal statutes may limit an employer's conduct in certain respects Electronic Communications Privacy Act -- prohibits employers from intercepting an employee's personal electronic communications unless they are made on devices and systems furnished by the employer Employers have considerable leeway to monitor employees in workplace Private employers are generally free to use filtering software to block access to certain websites -- First Amendment's protection of free speech prevents only government employers from restraining speech by blocking websites When determining whether an employer should be held liable for violating an employee's privacy rights, courts generally weigh employer's interests against employee's reasonable expectation of privacy Normally, if employees have been informed their communications are being monitored, they can't reasonably expect those interactions to be private If the employer provided the email system, blog, or social media network, a court will typically hold the employee didn't have a reasonable expectation of privacy If employees are not informed that certain communications are being monitored, the employer may be held liable for invading their privacy Most employers that engage in electronic monitoring notify their employees about the monitoring but a general policy may not sufficiently protect an employer who monitors forms of communications that the policy fails to mention Employers can't make employees give passwords

Environmental Impact Statement

National Environmental Policy Act requires environmental impact statement be prepared for every major federal action that significantly affects quality of environment Must analyze: impact on environment action will have, any adverse effects on environment, alternative actions that might be taken, and any irreversible effects action might generate "Major" if involves substantial commitment of resources (monetary or otherwise) "Federal" if a federal agency has power to control it -- if an agency decides an EIS is unnecessary, must issue a statement supporting this conclusion Private individuals, consumer interest groups, businesses, and others who believe federal agency's activities threaten environment often use EIS as means to challenge activities

National Labor Relations Act

National Labor Relations Act -- 1935, established rights of employees to engage in collective bargaining and to strike Also specifically defined a number of employer practices as unfair to labor: -Interference with efforts of employees to form, join, or assist labor organizations or to engage in concerted activities for mutual aid or protection -An employer's domination of labor organization or contribution of financial or other support to it -Discrimination in hiring or awarding of tenure to employees based on union affiliation -Discrimination against employees for filing charges under act of giving testimony under the act -Refusal to bargain collectively with duly designated representative employees National Labor Relations Board -- oversee union elections and prevent employers from engaging in unfair and illegal activities and unfair labor practices NLRB has authority to investigate employees' charges of unfair labor practices and to file complaints against employers in response to these charges -- when violations are found, may also issue a cease-and-desist order compelling the employer to stop engaging in unfair practices Cease-and-desist orders can be enforced by a federal appellate court if necessary After NLRB rules on claims of unfair labor practices, its decision may be appealed to a federal court Under NLRA, employers and unions have a duty to bargain in good faith -- bargaining over certain subjects is mandatory and a party's refusal to bargain over these subjects is an unfair labor practice that can be reported to NLRB

Is sexual orientation protected by federal government?

No

Disadvantages of Partnership

Partners are subject to personal liability for partnership obligations -- are jointly and severally liable for partnership obligations, including contracts, torts, and breaches of trust Joint and several liability = a doctrine under which a plaintiff can use, and collect a judgment from, all of the partners together (jointly) or one more more partners separately (severally) All partners in a partnership can be held liable regardless of whether they participated in, knew about, or ratified conduct that gave rise to lawsuit Normally the partnership's assets must be exhausted before a creditor can enforce a judgment against a partner's separate assets Judgment against one partner severally does not extinguish other's liability

File-Sharing Software

Peer-to-peer (P2P) networking = sharing of resources (such as files, hard drives, and processing styles) among multiple computers without requirement of a central network server Distributed network = network that can be used by persons located (distributed) around the country or the globe to share computer files Parts of the network may be distributed all over the country or the world, which offers an unlimited number of uses Cloud computing = delivery to users of on-demand services from third-party servers over a network -- can deliver a single app through a browser to multiple users Might be a utility program to pool resources and provide data storage and virtual servers that can be accessed on demand When file-sharing is used to download others' stored music files, copyright issues arise Recording artists and labels stand to lose large amounts of royalties and revenues if few downloads or CDs are purchased, then made available on distributed networks -- prompted recording companies to pursue individuals for file-sharing copyrighted works File-sharing creates problems for the motion picture industry, which loses significant amounts of revenue annually as a result of pirated DVDs -- numerous websites offer software that facilitates the illegal copying of movies which enables users to download HQ files from the internet

Proving a prima facie case

Plaintiff has produced sufficient evidence of their claim that the case will be decided for them unless defendant produces evidence to rebut it (burden shifts to employer-defendant, who must articulate legal reason for not hiring plaintiff)

Shareholder Rights

Power of Inspection = every shareholder is entitled to examine specified corporate records in person or attorney, accountant, or other authorized assistant can as shareholder's agent -- has potential abuses and corporation is allowed to protect itself from them (deny to prevent harassment, protect trade secrets or other confidential corporate information) Some states require a shareholder to have held their shares for a min period of time immediately preceding demand to inspect or must hold a min number of outstanding shares Corporate stock represents ownership right in intangible personal property -- law generally recognizes right to transfer stock to another person unless there are valid restrictions on its transferability Until corporation is notified shares have been transferred, all rights remain with current record owner

Case Law

Precedent Rules and decisions made by courts -- interprets statutes, regulations, constitutional provisions, and other case law Governs all areas of law not covered by statutory or administrative law Common law = the body of law developed from custom or judicial decisions in English and U.S. courts, not attributable to a legislature

Preemption (Shareholders + Law)

Preemptive rights = rights that entitle shareholders to purchase newly issued shares of a corporation's stock, equal in percentage to shares already held, before the stock is offered to outside buyers Generally apply only to additional, newly issued stock sold for cash, and the preemptive rights must be exercised within a specified time period, usually 30 days Shareholder who is given preemptive rights can purchase same percentage of new shares being issued as they already hold -- allows shareholder to maintain their proportionate control, voting power, or financial interest in the corporation Most important in close corporations because each shareholder owns a relatively small number of shares but controls a substantial interest in corporation

Forming a Corporation

Primary document needed to incorporate (form corporation under state law) = articles of incorporation -- contains basic information about corporation, person forming it, business functions, and sometimes structure; filed with appropriate governmental agency, usually secretary of state, when a business is incorporated Unless the articles specify otherwise, corporation has perpetual existence As soon as a corporation is formed, an organizational meeting is held to adopt bylaws Bylaws = internal rules of management adopted by a corporation or other association If the articles did not name directors (typical) then a board is elected Routine business matters are transacted, such as authorizing issuance of shares and hiring employees Corporations normally are financed by issuance and sale of securities Securities = generally, stocks, bonds, and other items that represent an ownership interest in a corporation or a promise of repayment of debt by a corporation Stocks = an ownership (equity) interest in a corporation, measured in units of shares Bonds = a security that evidences a corporate (or government) debt Start-up businesses and high-risk enterprises often obtain venture capital financing Venture capital = financing provided by professional, outside investors (venture capitalists) to new business ventures

Federal Regulations (Environmental Law)

Primary federal agency regulating environmental law = Environmental Protection Agency -- coordinates federal environmental responsibilities Other federal agencies with authority for regulating specific environmental matters = Department of the Interior, Department of Defense, Department of Labor, FDA, and Nuclear Regulatory Commission All federal agencies must take environmental factors into consideration when making significant decisions Most federal environmental laws provide that citizens can use them to enforce environmental regulations if government agencies fail to do so or to limit enforcement actions if agencies go too far in their actions -- threshold hurdle in such suits is meeting requirements for standing to sue

Americans with Disabilities Act (ADA)

Prohibits disability-based discrimination in workplaces with 15+ workers (with exception of state government employers) Requires employers reasonably accommodate needs of persons with disabilities unless it would cause employer to suffer an undue hardship ADA Amendments Act broadened coverage of ADA's protection

Title VII of the Civil Rights Act

Prohibits discrimination against employees, applicants, and union members on basis of race, color, national origin, religion, or gender at any stage of employment Applies to employers with 15+ employees and labor unions with 15+ members Applies to labor unions that operate hiring halls (to which members go regularly to be rationed jobs as they become available), employment agencies, and state + local governing units or agencies Special section of act prohibits discrimination in most federal government employment

Disadvantages of a Sole Proprietorship

Proprietor alone bears burden of any losses or liabilities incurred by the business -- has unlimited liability for all obligations incurred in doing business Any lawsuit against business or its employees can lead to unlimited personal liability for the owner of a sole proprietorship Creditors can go after owner's personal assets to satisfy any business debts Lacks continuity on death of proprietor -- owner dies = business is automatically dissolved Proprietor's opportunity to raise capital is limited to personal funds and funds of those willing to make loans

Advantages of a Sole Proprietorship

Proprietor owns entire business and has right to receive all profits (because they assume all the risk) Often easier and less costly to start than any other kind of business -- don't need to file any documents with the government (may need a state business license to operate certain businesses) Allows more flexibility than partnership or corporation -- free to make any decision they want concerning the business Can sell or transfer all or part of business to another party at any time and do not need approval from anyone else Pays only personal income taxes on business' profits, which are reported as personal income on their personal income tax return -- includes self-employment tax, which consists of Social Security and Medicare taxes Allowed to establish certain retirement accounts that are tax-exempt until funds are withdrawn

Norris-LaGuardia Act

Protects peaceful strikes, picketing, and boycotts Statute restricted power of federal courts to issue injunctions against unions engaged in peaceful strikes Act established a national policy permitting employees to organize

Greenbank

Quasi-public State Entity - Created by State of Connecticut in 2011 and successor organization to a grant based entity Focus = finance clean energy, renewable energy, energy efficiency, and alternative fuel vehicles and infrastructure -- NOT tech innovation and venture capital Supported by a: - $0.001/kWh surcharge on electric ratepayer bills (~$10 per household per year) provides approximately $27 MM a year for investments, - RGGI about $3 MM a year for renewable energy, - federal competitive solicitations and non-competitive resources (i.e. ARRA-SEP), - private capital, private foundations, and ROI Mission = support strategy to achieve cheaper, cleaner, and more reliable sources of energy while creating jobs and supporting local economic development Goals = Attract and deploy private capital investment to finance clean energy policy goals for state; Leverage limited public funds to attract multiples of private capital investment while reinvesting public funds over time; Develop and implement strategies that bring down the cost of clean energy in order to make it more accessible and affordable to customers; Support affordable and healthy homes and businesses in distressed communities reduce energy burden and address health & safety

Mobile Sources

Regulations governing air pollution from automobiles and other mobile sources specify pollution standards and establish time schedules for meeting standards EPA periodically updates the pollution standards in light of new developments and data, usually reducing the amount of emissions allowed Obama admin announced long-term goal of reducing emissions of nitrogen oxide and other pollutants, including those from automobiles, by 80% by 2050 2010 -- admin ordered EPA to develop national standards reg fuel economy + emissions for medium- and heavy-duty trucks, starting with 2014 models Clean Air Act didn't specifically mention CO2 emissions → until 2009, EPA didn't regulate CO2 emissions from motor vehicles -- EPA later concluded greenhouse gases, including CO2 emissions, do constitute a public danger

Fiduciary Relationship

Relationship founded on trust and confidence Each partner must act in good faith for the benefit of the partnership -- fiduciary duties include a duty of loyalty and a duty of care Duty of loyalty has two aspects -- partner must account to the partnership for any profit or benefit from the firm's business or use of its property and must refrain from dealing with the firm as an adverse party or competing with it Duty of care -- limited to refraining from negligent or reckless conduct, intentional misconduct, and violations of the law

Value of Competition in Green Energy

Renewable energy is cheaper than fossil fuel; more people working to create renewable energy creates more sources of renewable energy and less use of fossil fuels which is better for the environment

All powers not delegated to the federal government are...?

Reserved for states

Dissociation

Severance of the relationship between a partner and a partnership Partner can voluntarily withdraw from firm or certain events, such as a partner's bankruptcy or death, can cause the partner to be dissociated from partnership Partner always has power to dissociate, but may not have right to -- when a partner's dissociation is in breach of partnership it is wrongful Dissociation normally entitles partner to have their interest purchased by the partnership and terminates their actual authority to act for partnership and to participate in running the business Partnership can continue to do business without the dissociating partner Remaining partners can also choose to dissolve partnership after a partner's dissociation

Shareholders + Control

Shareholders exercise ownership control through power of their votes Corporate business matters are presented in form of resolutions, which shareholders vote to approve or disapprove Each shareholder is entitled to one vote per share of stock, although articles of incorporation can exclude or limit voting rights, particularly for certain classes of shares If a state statute requires specific voting procedures, the corporation's articles or bylaws must be consistent with the statute For shareholders to conduct business at a meeting, a quorum must be present which usually exists when shareholders holding >50% of the outstanding shares are present → voting can proceed, majority vote of shares represented at meeting usually is required to pass resolutions At times, more than a simple majority vote is required either by state statute or by corporate articles Most states permit, and many require, shareholders to elect directors by cumulative voting -- voting method designed to allow minority shareholders to be represented on board of directors Each shareholder is entitled to total number of votes equal to number of board members to be elected multiplied by number of voting shares a shareholder owns Shareholder can cast all these votes for one candidate or split them among several nominees for director All nominees stand for election at the same time When cumulative voting is not required either by statute or under the articles, entire board can be elected by majority of shares at a shareholders' meeting Before a shareholders' meeting, group of shareholders can agree in writing to vote their shares together in a specified manner (shareholder voting agreements) usually held to be valid and enforceable Shareholder can also appoint a voting agent and vote by proxy

Proxy

Shareholders' meetings must occur at least annually and special meetings can be called to deal with urgent matters Corporation must notify shareholders of date, time, and place, of annual or special shareholders' meeting Usually not practical for owners of only a few shares of stock of publicly traded corporations to attend shareholders' meetings → law allows stockholders to vote in person or appoint another person as their agent to vote their shares Proxy = in corporate law, a written or electronically transmitted form in which a stockholder authorizes another party to vote the stockholder's shares in a certain manner Management often solicits proxies but any person can solicit proxies to concentrate voting power When shareholders want to change a company policy, they can put their idea up for a shareholder vote -- submit a shareholder proposal to board and ask it to include proposal in proxy materials sent to all shareholders before meetings Securities and Exchange Commission (SEC) -- regulates purchase and sale of securities Has special provisions relating to proxies and shareholder proposals

Sole Proprietorship

Simplest form of business, in which the owner is the business -- owner reports business income on their personal income tax return and is legally responsible for all debts and obligations incurred by business Usually small enterprises -- 99% in U.S. have revenue of <$1 million/year Can own and manage any type of business

Social Media Posts and Litigation + Infringement without Permission

Social media posts are routinely included in discovery in litigation because they can provide damaging information that establishes a person's intent or what they knew at a particular time and can also be used to reduce damage awards Law enforcement uses social media to detect and prosecute criminals Federal regulators use social media posts in investigations into illegal activities Employees who use social media in a way that violates their employer's stated policies may be disciplined or fired from their jobs -- courts and administrative agencies usually uphold Some state laws prohibit employers from taking adverse action against an employee or job applicant based on what they posted online and also applies to email and cloud storage accounts Federal government is considering legislation that would prohibit employers and schools from demanding passwords to social media accounts -- even if legislation is passed, it will not completely prevent employers and others from taking actions against a person based on their social network postings Management and HR personnel are unlikely to admit they looked at someone's social media and that it influenced their decision Employer or school may use private browsing, which enables people to keep their web browsing activities confidential An important advantage to using an internal system for employee communications is that the company can better protect its trade secrets -- company usually decides which employees can see particular intranet files and which employees will belong to each specific "social" group within the company Companies providing internal social media networks often keep the resulting data on their own servers in secure "clouds" Internal social media systems also offer additional benefits such as real-time information about important issues, such as production glitches Posts can include tips on how to best sell new products or deal with difficult customers, as well as information about competitors' products and services Significant reduction in use of email by posting messages or collaborating on presentations via the company's social network

Statute vs. Ordinance

Statutes = laws enacted by U.S. Congress and state legislatures Includes local ordinances (noise ordinances, parking, alarm, etc.) and uniform laws and codes adopted by states, such as Uniform Commercial Code A federal statute applies to all states whereas a state statute applies only within state's borders → state laws may vary from state to state Ordinance = a regulation enacted by a city or county legislative body that becomes part of that state's statutory law

Strikes

Strike = action undertaken by unionized workers when collective bargaining fails -- workers leave jobs, refuse to work, and typically picket employer's workplace Striking workers lose rights to be paid and management loses production and may lose customers when orders can't be filled Most strikes take form of economic strikes, initiated because union wants better contract Right to strike is guaranteed by NLRA, within limits, and strike activities, such as picketing, are protected by the free speech guarantee of the First Amendment Nonworkers have right to participate in picketing an employer NLRA gives workers right to refuse to cross a picket line of fellow workers engaged in a lawful strike In typical economic strike over working conditions, employer has right to hire permanent replacements during strike and need not terminate them when economic strikers seek to return to work -- striking workers are not guaranteed right to return to jobs after strike if satisfactory workers have been found but if employer hasn't hired replacement workers to fill strikers' positions, they must rehire economic strikers to fill any vacancies Employers may not discriminate against former economic strikers and those who are rehired retain their seniority rights

Ethics

Study of right and wrong behavior; whether an action is fair, right or just In business, ethical decisions are application of moral and ethical principles to marketplace and workplace Most companies attempt to link ethics and law through creation of internal code of ethics Company codes are not law -- they are rules company sets forth that it can enforce (termination, etc.) Typically outline company's policies on particular issues and indicate how employees are expected to act Codes can give guidance to decision makers facing ethical questions -- violation of a code may result in discipline of an employee or sanctions against a company from the industry organization Moral minimum = minimum degree of ethical behavior expected of a business, which is usually defined as compliance with the law Having good individual morals is not enough to stop ethical misconduct Ethics training helps provide collective agreement in diverse organizations -- business ethics decisions can be complicated and it helps identify ethical issues when they arise and recognize approaches available to resolve them

Superfund + Liability

Superfund provides that when a release or a threatened release of hazardous chemicals from a site occurs, the EPA can clean up the site and recover the cost of the clean-up from the following persons: Person who generated wastes disposed of at the site; who transported wastes to site; who owned or operated site at time of disposal; Current owner or operator; Potentially responsible party (PRP) = a party liable for costs of cleaning up a hazardous waste-disposal site under the CERCLA -- if PRPs do not clean up site, EPA can clean it up and recover costs of doing so from PRPs Superfund imposes strict liability on PRPs and that liability can't be avoided through transfer of ownership Liability extends to businesses that merge with or buy corporations that have violated CERCLA Liability under Superfund is usually joint and several -- person who generated only a fraction of the hazardous waste disposed of at the site may nevertheless be liable for all clean-up costs CERCLA authorizes a party who has incurred clean-up costs to bring "contribution action" against any other person who is liable or potentially liable for % of costs

Determining Employee Status

The courts are frequently asked to determine whether a particular worker is an employee or an independent contractor -- how a court decides this can have a significant effect on the rights and liabilities of the parties In determining whether a worker has the status of an employee or an independent contractor, the courts often consider the following: If an employer can exercise considerable control over the details of the work, this would indicate employee status (perhaps most important factor weighed by courts in determining employee status) Is the worker engaged in an occupation or business distinct from that of the employer? -- yes = independent-contractor Is the work usually done under the employer's direction or by a specialist without supervision? -- usually done under the employer's direction = employee Does the employer supply the tools at the place of work? -- yes = employee For how long is the person employed? -- long period of time = employee What is the method of payment--by time period or at completion of job? -- Payment by time period = employee What degree of skill is required of the worker? -- little skill required may = employee IRS has established its own criteria for determining whether a worker is an independent contractor or an employee -- most important factor is degree of control business exercises over worker IRS tends to closely scrutinize a firm's classification of its workers because employers can avoid certain tax liabilities by hiring independent contractors instead of employees Even when a firm classifies a worker as an independent contractor, IRS may decide the worker is actually an employee → employer will be responsible for paying any applicable Social Security, withholding, and unemployment taxes

Supreme Law of U.S.

U.S. Constitution 51 total constitutions -- 50 state and 1 supreme law

Overtime

Walsh-Healey Act -- applies to U.S. government contracts; requires minimum wage, as well as overtime pay at 1.5x regular pay rates, be paid to employees of manufacturers or suppliers entering into contracts with agencies of federal government Under FLSA, employees who work more than 40 hours per week normally must be paid 1.5x their regular pay for all hours over 40 -- apply only after an employee has worked more than 40 hours per week Certain employees--usually executive, administrative, and professional employees, as well as outside salespersons and computer programmers--are exempt from overtime -- employers are not required to pay overtime wages to exempt employees Employers can voluntarily pay overtime to ineligible employees but can't waive or reduce overtime requirements of FLSA

Advantages of Corporation

When a corporation earns profits, it can either pass them on to shareholders in the form of dividends or retain them as profits Dividends = a distribution to corporate shareholders of corporate profits, or income, proportionate to number of shares held Retained earnings = portion of a corporation's profits not been paid out as dividends -- if invested properly, will yield higher corporate profits in the future → cause price of company's stock to rise Individual shareholders can reap benefits of retained earnings in capital gains they receive when they sell their stock Whether a corporation retains its profits or passes them on to the shareholders as dividends, those profits are subject to income tax by various levels of government

Shareholder's Derivative Suit

When corporation is harmed by actions of third party, directors can bring a lawsuit in name of corporation against that party -- if corporate directors fail to bring a lawsuit, shareholders can do so "derivatively" Before shareholders can bring a derivative suit, must submit written demand to corporation, asking board to take appropriate action → directors have 9 days to act and derivative suit only goes forward if they refuse Right of shareholders to bring a derivative action is especially important when wrong suffered by corporation results from actions of corporate directors or officers Court will dismiss a derivative suit if majority of directors or an independent panel determines in good faith the lawsuit is not in best interests of corporation When shareholders bring a derivative suit, they are not pursuing rights or benefits for themselves personally -- are acting as guardians of corporate entity (if successful, damages recovered normally go to corporation's treasury, not shareholders)

Articles of Partnership

Written agreement that sets forth each partner's rights and obligations with respect to the partnership Not required but strongly recommended for practical reasons Partners may agree to almost any terms when establishing the partnership as long as they are not illegal or contrary to public policy Articles usually specify name and location of business, duration of partnership, purpose of business, each partner's share of profits, how partnership will be managed, and how assets will be distributed on dissolution, among other things