Study Block 3: Chapter 20,21,19,18

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9. Understand Shareholder rights and limitations and how proxies are used in the corporate structure

•Rights Shareholders have neither the right nor the obligation to manage the day-today business of the enterprise. (See whiteboard video in materials) • Right to Information • Under the Model Act, shareholders with a proper purpose have the right to inspect and copy the corporation's minute book, accounting records, and shareholder lists. • Right to Vote • A corporation must have at least one class of stock with voting rights. • Shareholders may vote by proxy (substitute voter). -are used to have shares voted by someone other than the owners. Gathered for the specific purpose of creating a "voting block" to impact process. Only voting rights are transferred; the rights to dividends and sell are not. Shareholder must be allow to vote before corporate actions in several areas (all deal with potential fundamental value of shares): • Mergers • Sale of major assets • dissolution of corporation or • amendment to the corporate charter (i.e. change in class of stock, number of stock, purpose of corporation.) • A publicly-traded company must hold an annual meeting of shareholders (required by the NY Stock Exchange and NASDAQ, though not required by all states). -At the annual shareholders meeting the vote on item that have been pre-submitted and sent to all shareholders. • Shareholders vote on a slate of directors for the corporation.

quorum

(e.g., how many people or shares must be present for a meeting to count), indicate the required number of directors

OSHA with new laws (employee data protection)

(newer)Employers may be liable for failure to take appropriate steps to secure and protect employee's personal info and data. So, workplace safety has been extended beyond the physical The Supreme Court of Pennsylvania held that an employer must use reasonable care to protect its employees' sensitive personal information.

3. Understand torts actions and compare each torts usage.

(tort law) - Workers have successfully sued their employers under following tort theories 1. Defamation- Employers may be liable for defamation when they give false and unfavorable references about an employee -More than half of the states recognize a qualified privilege for employers who give references about former employees. -Generally, courts have held that employers do not have a legal obligation to disclose information about former employees. But, in the case of violence, courts are divided. 2. Intentional infliction of emotional distress- Although, if a worker's behavior is particularly extreme and outrageous, employers may face liability under the tort of 3. Whistleblowing (infra)

8. Understand the application of Duty of Loyalty and Duty of Care.

)part 1 duty of loyalty - Good faith - Lawful purpose - Without conflict of interest - To advance the best interest of the corporation -- Prohibits managers from making a decision that benefits them at the expense of the corporation (fiduciary duty concept) - Self-dealing- is a violation of the duty of loyalty part 2 duty of care - The level of care that an ordinarily person would take in similar situation - Due diligence required officers and directors to act in best interest of Corp and to use the same care that an ordinarily prudent person would in the management of her own needs 1. Decisions must have a rational business purpose 2. Decisions and actions are legal 3. Managers must make informed decisions (that is, with the care that an ordinarily prudent person would take in a similar situation._

Sole proprietorships- the easiest (it's all about you)

- "Unincorporated (non-formalized) business owned by one person - Advantages- ease of formation (no formal steps needed to be taken), taxes (flow through tax entity) - Disadvantages- liability (for all debts), limited capital (no limited options for financing, debt is usually the only way) -76% of all businesses are operated as sole proprietorships -work well for businesses that do not need large capital funds

medical exams- -

- - there are 3 levels with applications, employer may not require medical exam, the interviewer may ask 1. Whether an applicant can perform the work 2. Applicant to demonstrate the work 3. What accommodation applicant would need to accomplish essential duties With entering employees, medical tests must be required of all employees and treated as confidential - With existing employees, medical exam is required to determine if a worker is still able to perform existing action of job

Financial protection (statutes, not made by courts) -FLSA -min wage and child labor fair labor standards act

- 1938, the Fair Labor Standards Act (FLSA) regulates wages (MIN wage and overtime pay) and - Limits child labor by age classification: (The FLSA also prohibits "oppressive child labor,") Under 14- limited to certain area like agriculture, family business, babysitting, etc. 14 and 15- limited hours, nonhazardous 16 and 17- unlimited hours, nonhazardous

safety (OSHA) occupational safety and health act -4

- 1970 congress passed the Occupational Safety and Health Act (OSHA) to ensure safe working conditions - Sets specific health and safety standards -general duties- Obliges employers to keep workplace "free from recognized hazards" - Requires employers to keep record of all injuries and accidents - Allows inspection of workplaces and fines for unsafe conditions and to may order conditions to be corrected OSHA may assess fines for violations and order employers to correct unsafe conditions.

Limited partnership (LP) -2 classes of partners

- 2 classes of partners a. General partner - Who make all business decision - Share profits and losses as stated in LP agreement - They are exposed to standard liability (no limitations) b. Limited partners (investors) - Who have no authority to make business decisions - Their risk of loss is limited to investment - May lose the shield if they participate in business decisions Ex: casino scenario

General partnerships

- A partnership that is an unincorporated association of two or more co-owners who carry on a business for profit - Each co-owner is a general partner - Each partner is a fiduciary of the others - Unless agreed, partners share profits, losses, and management equally (management rights) - Partnerships are easy to form (sometimes it happens unintentionally) - Partners can be held personally liable for the partnership actions and debts - Each is the agent/principal of each other (fiduciary)

shareholders meetings

- A publicly traded company must hold an annual meeting of shareholders (required by NY stock exchange and NADSAQ, though not required by all states - Companies not publicly traded can either hold an annual meeting or use written consents form their shareholders - Proxies are used to have shared voted by someone other than the owners. Gathered for the specific purposed of creating a voting block to impact process. Only voting rights are transferred the rights to dividends and sell are not

promoters liability (action before incorporation)

- Any business activity prior to incorporation creases possible liability - the promoter is personally liable on any contract signed before formation - the Corp is not liable unless it is adopted by the directors after incorporation - even if Corp adopts contract, the promoter is still liable until the 3rd party agrees to novation (new contract), unless the contract clearly indicates that the other party is relying only on the Corp, which they know does not yet exist

biggest disadvantage with LLC and agree disagree sprouse stuff

- Biggest disadvantage with LLC is legal uncertainty involved since it is new type of business. State laws vary, and case precedents are few Disagree - Wyoming created the first form in 1978 - IRS made determination to tax as pass through entity in - Most states look to partnership and corporate case law for legal precents Agree - Most of problem arise from fact that attorneys are not experiences in drafting Article of organization and O/A - Such inexperience leads to not anticipating issue that may arise - Publicly trade LLC are so new in concept that it is not clear what court will do when resolving problems - IRS will strip tax benefits as a partnership and law are fuzzy

NLRA- Labor Union

- Caesars entertainment Rio all suites hotel and casino and international union of painters and allied trades

Labor unions -CBA -collective bargaining agreement

- Collective bargaining agreement (CBA) a contract between a union and company - The parties may bargain almost any subject, but NLRA requires them to bargain wages, hours and other terms of conditions of employment - They are not required to reach an agreement, but they are required to bargain in good faith

Indenependant directors-

- Congress, SEC, and stock exchanges have all passe rules that require some degree of independence for board of directors - Independent means they are not employees of the corporation and are not close friends with CEO 1. Criteria is objective and one criterion is subjective

Management duties (fiduciaries of and to the corporation)

- Corporations have TWO sets of managers: directors and officers - Directors are fiduciaries to both the corporation and the shareholders. They are elected by the shareholders - Primary duty to set policy and procedures - Responsible for hiring firing overseeing officers - Officers are fiduciaries of corporation, board of directors, and S/H - Responsible to follow policy and procedure set by the board and to meet its goals - Responsible for the day-to-day decision (boots on the ground)

Intentional infliction of emotional distress (workplace bullying)

- Cruel treatment of workers creates liability under the tort of intentional infliction of emotional distress -Almost 60 percent of employees have been bullied at work. So far, however, courts and legislatures have generally been reluctant to consider bullying a violation of public policy. Although, if a worker's behavior is particularly extreme and outrageous, employers may face liability under the tort of intentional infliction of emotional distress.

social security -The federal Social Security system began in 1935, during the depths of the Great Depression, to provide a basic safety net. -and FUTA

- Currently, the social security system pays benefits to workers who are retired, disabled, or temporarily unemployed and to the spouses of the children of disabled or deceased workers - Employer pays half, employee pays half. Self-employed both half The Federal Unemployment Tax Act (FUTA) is the part of the Social Security system that provides support to the unemployed. -While receiving payments, a worker must make a good faith effort to look for other employment. A worker who quits voluntarily or is fired for just cause is not entitled to unemployment benefits.

directors elect

- Directors then elect (hire) the corporate officers

Criminal history and credit checks-

- EEOC prohibits criminal check and credit checks on protected class IF irrelevant to job qualification. Also, prohibits use of arrest records EEOC regulations prohibit companies from using criminal history information in a way that has an adverse impact on employees in a protected category if the background information is irrelevant in determining whether the employee is appropriate for the job. -Employers may not consider arrest records because that is not evidence of wrongdoing. The EEOC also discourages the use of credit checks because people of color tend to have worse credit ratings than Whites.

7. Be able to recognize proper hiring interview questions as distinguished from improper techniques.

- Easy place for employers to wrong. Here are pitfalls to avoid •Interviews •Know what questions not to even consider asking and what questions are ok to ask. •Social Media •Searches of social media can provide information that it is illegal for employers to act on.

Hiring process

Equal pay act of 1963

- Employee may not be paid at a lesser rate than employees of opposite sex for equal work - Equal work: tasks that require qual skill, effort, and responsibility under similar working conditions - How effective has it been? - Sham and shame of Citicorp in keeping Heidi poor (2012 happened)

Whistleblowers -what they do and protections

- Employees who disclose illegal behavior of their employers -Not surprisingly, some companies, when faced with such an accusation, prefer to shoot the messenger. protections of whistleblowers - The false claims act protects those who refuse to sign inaccurate reports to the feds (defrauding the gov) - The Dodd-frank act offers protection for those who provide info to the gov about violations of securities or commodity laws - The Sarbanes-Oxley act of 2002 protects employees of publicly traded companies who provide evidence of fraud to investigators (employees of public companies) -state laws- All 50 states have laws that protect whistleblowers from retaliation by their employers, but the scope of this protection varies greatly from state to state. Most courts, however, prohibit the discharge of employees who report illegal activity.

- Employer liability- individual is liable for harm

- Employer is liable if victimized employee has suffered "tangible employment action" such as firing, demotion, or reassignment - Even if victimized employee has not suffered a tangible employment action, company is liable unless it can prove: 1. It used reasonable care to prevent and correct behavior 2. The employee unreasonably failed to take advantage of the company complaint procedures

guns

- Employers have the right to prohibit guns in the workplace but, in almost half to sates, bring your gun to work laws prevent companies from banning firearms in the parking lot - Arkansas- no right to have gun at work - Oklahoma- right to have it locked in vehicle Gun advocates argue that workers have the right to protect themselves during their commutes and that, ultimately, such laws improve employee safety. However, research indicates that workplaces with guns are five times as likely to suffer a homicide as one in which they are banned.

defamation

- Employers may be liable for defamation when they give false and unfavorable references about a former employee - More than half states recognize qualified privilege (employer is protected unless statement is known false or given in ill will) for former employers who give references. - Arkansas and OK must have signed permission from employee - Employers are generally not required to give any info about former employees - But may sometimes be held liable if potentially dangerous information is withheld - No information because of concerns of liability (think difference of problems that arise when wrong info vs no info)

hostile environment

- Employers violate title 7 if they permit or allow a work environment that is so hostile toward ppl in a protected category it affects their ability to work (can be disparate impact or treatment) aka (group or individual) - This concept of hostile environment first arose in context of sexual harassment (has been expanded to race and national origin) - Environment is not direct (posters on walls or constant jokes) - Two common categories 1. Quid pro quo- one thing in return for another (casting couch in acting, agreement role/promotion for sex) and (direct) 2. Hostile work environment- sexual talk and activity pervasive that interferes w work ability

equal work

- Equal work: tasks that require qual skill, effort, and responsibility under similar working conditions

Employment security (FMLA) -requirements

- Family and medical leave act (FMLA) - Guarantees both men and women up to 12 weeks of unpaid leave each year for childbirth, adoption, or a serious health condition of their own or in their immediate family -a family member is only a spouse, child or parent -An employee who takes a leave must be allowed to return to the same or an equivalent job with the same pay and benefits. - Applies only to companies with at least 50 workers and - Only to employee who have worked full time for one year - Only covers about 60% of employed persons

1. Duty of loyalty (seeking best interest)

- Good faith - Lawful purpose - Without conflict of interest - To advance the best interest of the corporation -- Prohibits managers from making a decision that benefits them at the expense of the corporation (fiduciary duty concept) - Self-dealing- is a violation of the duty of loyalty

Duration (traditional vs todays time)

- Historically, LLC could dissolve should a member leave LLC for any reason such as death, bankruptcy, or resignation. The trend now is to allow the LLC to continue doing business -• LLC unlike corporation cannot file for perpetual existence

Min wage - History of min wage

- History of min wage - 1938, set 25 cents an hour - Adjusted for inflation it would be $4.66 today - 1956 min was raised to $1.00 which would be $9.67 today - 1974 up to $2.00 = $10.67 today: minimum wage of $7.25 per hour, plus time and a half for any hours over 40 in one week. These wage provisions do not apply to managerial, administrative, or professional staff

Title VII of civil rights act of 1964

- Illegal for employers with 15 or more employees to discriminate on basis of race, color, religion, sec, or national origin referred to as "protected class/categories? (What about less than 15) - It does not apply to a company less than 15 employees - Prohibited activities (4 activities)

immigration

- Immigration- employer may not inquire about national origin, however, may inquire if applicant is authorized to work in the US -Under Title VII, it is illegal for employers to discriminate against noncitizens because "national origin" is a protected category. Therefore, employers should not ask about a job applicant's country of origin, but they are permitted to inquire if the person is authorized to work in the United States.

History of employment law (employment security)

- In preindustrial society, most people followed their parent's occupations - Employers knew their workers and expectations were understood - With the industrial revolution came changes in employment law too, and a trend toward employment contracts - Without a contract, a worker was an employee at will - Under initial development of the employee at will concept, an individual can be fired for a good reason, a bad one, or no reason at all

Financial protection (intern) -fair labor standards

- Interns (unpaid): must meet certain standard or will be considered an employee must 1. Be similar training as school education 2. Benefit the intern 3. Not displace regular employee and 4. Not provide an immediate advantage to the employer

Formation of LLC

- It is easy to form an LLC; the only required document is a certificate of organization (also called a charter). -File article of organization with sec of state for desires state - Some stated allow single member LLC while others do not - Owner of business is referred to as "member" not shareholder - Operating agreement is optional, but it is extremely unwise not to have one. O/A sets out the right and obligations of members

Flexibility (LLC) -3

- LLC can have members that are corporations, partnership, or aliens - LLC can have difference classes of members - LLC are NOT required to have annual meeting or maintain meeting minutes

Limited liability partnerships (LLPS)-

- LLP offers the limited liability of Corp and the tax status of a flow through organization - To form, partners must file statement of qualification with state officials -also must file annual reports

why do most states incorporate in delaware

- Large, well-established laws that favors management (expanded business judgement rule (BDR) - Established court system that hears only business case. The judges are experts in corporate law. ALL decisions are determined by a judge and NOT a jury -Delaware has a special court (called "Chancery Court") that hears nothing but business cases and has judges who are experts in corporate law. - Neutral arena - Jurys are persuaded through emotion not through law (judge goes off law)

corporation opportunity

- Managers are in violation of doctrine if they compete against the corporation without its consent - Business self-dealing- decision that benefit another company associated with the mangers - Personal self-dealing- decisions that benefit the manager directly - Corporate opportunity: it is a breach of duty to compete with the Corp without its consent. Self-dealing transition may be acceptable if

Americans with disabilities act (ADA)

- More commonly referred at ADA - Disability defined- disabled person is 1. Physical or 2. Mental impairment that substantially limits a major life activity or someone who is regarded as having such an impairment - Does not include present use of drugs, pyromania, sexual disorders, or compulsive gambling (recovery is considered impairment) - Central issue is can a person with reasonable accommodations, perform the essential duties of the job

Professional corporations (PC) -ex: lawyers and doctors

- Most states les professional incorporate - In most states PCs provide more liability protection than partnership -liability of a regular corporation - The Corp may be liable for an individual member's mistakes, but the innocent professionals are not at risk -PCs are a separate taxable entity, not a flow-through organization. Therefore, the tax issues can be complicated and are a major reason why most professional organizations now choose to be an LLC or an LLP.

shareholder voting rights- 4

- Must be allowed to vote before corporate actions in several areas (deal with potential fundamental value of shares) 1. Mergers 2. Sale of major assets 3. Dissolution of corporation or •4. amendment to the corporate charter (i.e. change in class of stock, number of stock, purpose of corporation.)

articles of incorporation includes

- Name of the corporation- name, usually ends with L corporation, incorporated, INC, limited, LTD - Address and registered agent

Dissociation

- Occurs when a partner quits - When dissociate, the partnership can either buy out the departing partner(s) and continue n business or wind up the business and terminate the partnership - A partner always can leave and has the power -voluntarily or by expulsion, death, or bankruptcy. -A partner always has the POWER to leave a partnership but may not have the RIGHT.

Workplace freedom and safety (off duty activities)

- Off duty activates - In the absence of a specific law to the contrary, employers do have the right to fire workers for off duty conduct -Employees have been fired or disciplined for such extracurricular activities as taking part in dangerous sports (such as skydiving), dating coworkers, smoking, or even having high cholesterol. - Lifestyle laws (a few states have laws protecting workers) 1. Smoking- (employers cannot prohibit in 60% of states) 2. Illegal drugs and alcohol (private employers may test for illegal drugs) 3. Legal medication- EEOC prohibits testing for prescription drugs (unless a worker seems impaired) or creates a safety issue - Federal law allows private employers to test for alcohol and illegal drugs - A few states, such as CA, have passed lifestyle laws that protect the right of employees to engage in any lawful activity or use any lawful product when off duty

Limited liability company (LLC)

- Offers the limited liability of a corporation and the tax status of a partnership, without the disadvantages of a S Corp -An LLC provides the limited liability of a corporation with the tax status of a flow-through entity.

parenthood

- Parenthood- family responsibility discrimination (pregnancy) Discrimination based on parental status is a violation of Title VII if it involves treating men and women differently

#metoo -and provisions

- People feeling powerless if they don't respond then they may lose the job - Focus attention on sexual harassment - Resulted in high-ranking executives were fired or charged with crime resulting from their imprisonment - Change in laws in some states (as a result) 1. Nondisclosure provisions in settlement agreements involving sexual misdeeds (important one) 2. Non disparagement rules that prohibit employees from criticizing the workplace (I hate Walmart.com) -Other contexts are based on race and national origin

Wrongful discharge (common law) -4 of them

- Prohibits an employer from firing a worker for a bad reason - The public policy rule prohibits an employer from firing a worker for a reason that violates basic social rights, duties, responsibilities, such as: -violates public policy 1. Refusing to violate the law (illegal price-fixing scheme, falsify required pollution control records, illegally discharge pollutants, or assist a supervisor in stealing from customers) 2. Performing a legal duty (jury duty/military) 3. Exercising a legal right 4. Supporting social values (religion, favored sports) -Courts are sometimes willing to protect employees who do the right thing, even if they violate the boss's orders.

proxies

- Proxies are used to have shared voted by someone other than the owners. Gathered for the specific purposed of creating a voting block to impact process. Only voting rights are transferred the rights to dividends and sell are not -Along with the proxy card, the Securities and Exchange Commission (SEC) requires companies to give shareholders a proxy statement and an annual report to aid them in voting their stock.

Trials of sandy

- Raised in Arizona ranch in the poorest conditions (no running water, no electricity) - Went to one of top universities (standard) at 16 - Accepted to law school (top tier), and graduated third in her class in 1952 - Out of school offered several positions as - A secretary applies to 40 law firms - Hired as deputy county attorney after she agreed to work for no salary, no office and would share space with secretary. - She was Sandra day O'Conner first woman US supreme court

religion

- Religion- employers cannot discriminate against a worker because of his religious beliefs (A and F- wearing of hijab) Employers must make reasonable accommodation for a worker's religious beliefs unless the request would cause undue hardship for the business.

retaliation def

- Retaliation means that the employers has done something that would deter a reasonable worker from complaining about discrimination

After incorporation (the first step of business is to organize)

- Shareholders elect board of directors whose numbers and term are determined in the articles - Directors then elect (hire) the corporate officers - In rare occasion (if allowed by state statute as a closed), all shareholders can agree to not have a board of directors - Minute book holds record of all meetings - Bylaws set the rules for the corporation - All corporate meetings (both shareholders and BD) must have a quorum) simple majority (at least 3)

Shareholders rights (owners' rights) -and what they are not entitled to

- Shareholders have neither the right nor the obligation to manage the day-to-day business of the enterprises Right to information- under the model act, shareholders with a proper purpose have the right to inspect and copy the corporations minute book, accounting records, and shareholder lists Right to vote- a corporation must have at least one class of stock with voting rights - Shareholders may vote by proxy (substitute voter)

Dalton school inc. and David Brune "who is the real villain" -violating the NRLA

- Social media policies that limit employee commentary violate the NLRA if they unreasonably limit employee speech about work conditions; but speech must be "concerted"

Disparate treatment (individual)

- Step 1- plaintiff must make prima facie showing that 1. She or he is black, Hispanic Puerto Rica (protected) 2. Suffered an adverse employment action (they were fired or not hired) 3. Was qualified for the job of which he fired or not fired 4. Replaced by or hired non protected person Step 2- employer must respond with evidence (rebut) that its decision was based on legitimate, nondiscriminatory reasons (poor job reviews, did not know how to turn a computer on) Step 3- to win, plaintiff must show that employers reasons are pretext and that the employer intentionally discriminated (never happened)

stocks

- Stock is representative of the intangible property right of the owners. Each share is a prorated flection of that ownership - Stocks can be 1. Authorized and unissued (not owned) 2. Authorized and issued (for outstanding) 3. Treasury stock (been issues, then bought back by company) - Par value- minimum issue price (not the same as market price) -authorized stock- represents the maximum shares the company can issue—unless it amends its charter.

2. Understand the significance of stock, what is represents and what are classes.

Termination- voluntary (the death of a corporation)

- Terminating a corporation is a three-step process: 1. vote by majority of the shareholders to dissolve 2. filing articles of dissolution with the secretary of state 3. winding up- paying debts and distributing assets. Once this is completed the corporation ceases to exist

dodd frank act (Violations of securities or commodities laws.

- The Dodd-frank act offers protection for those who provide info to the gov about violations of securities or commodity laws -anyone who provides information to the government about violations of securities or commodities laws is entitled to a portion of whatever award the government receives, provided that the award tops $1 million

sarbanes oxley act of 2002 (employees of public companies)

- The Sarbanes-Oxley act of 2002 protects employees of publicly traded companies who provide evidence of fraud to investigators -A successful plaintiff must be rehired and given back pay and attorney's fees

Executive compensation

- The board of directors sets the CEO's salary, which usually includes perks beyond monthly check - CEO's get signing bonuses of extended contracts - Stock options are often part of the payment - 1975, top 100 CEOs earned 39 times as much as average worker. 2011, ratio was over 300 times as much as average worker

false claims act

- The false claims act protects those who refuse to sign inaccurate reports to the feds

false claims act (defrauding the gov)

- The false claims act protects those who refuse to sign inaccurate reports to the feds (defrauding the gov) -The recovery is shared between the government and the whistleblower.

5. Understand whistleblower protection law and when to apply. -whistleblowers do: They are employees who disclose illegal behavior on the part of their employer.

- The false claims act protects those who refuse to sign inaccurate reports to the feds (defrauding the gov) -The recovery is shared between the government and the whistleblower. - The Dodd-frank act offers protection for those who provide info to the gov about violations of securities or commodity laws -anyone who provides information to the government about violations of securities or commodities laws is entitled to a portion of whatever award the government receives, provided that the award tops $1 million - The Sarbanes-Oxley act of 2002 protects employees of publicly traded companies who provide evidence of fraud to investigators -A successful plaintiff must be rehired and given back pay and attorney's fees -state laws- All 50 states have laws that protect whistleblowers from retaliation by their employers, but the scope of this protection varies greatly from state to state. Most courts, however, prohibit the discharge of employees who report illegal activity.

2. Duty of care (doing due diligence by using their best efforts)

- The level of care that an ordinarily person would take in similar situation - Due diligence required officers and directors to act in best interest of Corp and to use the same care that an ordinarily prudent person would in the management of her own needs 1. Decisions must have a rational business purpose 2. Decisions and actions are legal 3. Managers must make informed decisions

shareholders (owners of the corporation)

- The officers and directors of a corporation owe a fiduciary duty to both the corporation (a separate legal entity) and its shareholders - The Business judgment rule provides that managers (officers of the corporation) are not liable for decisions they make in good faith (not held to a standard of perfection but to the effort of due diligence in determining what is best of the corporation) - If a manger has acted in good faith, a court will not hold her personally liable for any harm her decision has caused the company

public policy rule

- The public policy rule prohibits an employer from firing a worker for a reason that violates basic social rights, duties, responsibilities, such as: (5 reasons) -violates public policy

retaliation

- Title 7 prohibits employers from retaliating against workers who oppose discrimination, bring a claim under the statute, or take part in an investigation or hearing - Retaliation means that the employers has done something that would deter a reasonable worker from complaining about discrimination - In attempt to prohibit employee form seeking protection under law. May be direct or indirect

Genetic information nondiscrimination act -title one and two

- Title one: health insurers may not use such information to decide coverage or premiums - Title two: employers with 15 or more workers may not require genetic testing or discriminate against workers because of their genetic makeup or family history - However, insurance companies may seek genetic testing before issuing disability life, or long-term care policies

Contract law (employment security) -common law

- Truth in hiring - Oral promises made during hiring process can be enforceable - An employee handbook has been interpreted to create a contract - Employer may use a Kc exclusion clause - Employer cannot have it to be Kx when it favors them and not a Kx when it favors employee (employer can fire with no notice but requires employee to give notice before quitting)

health insurance affordable care act

- Under the Affordable Care act (Obama care) employers with more than 50 full time employees must pay a penalty if they do not provide basic health insurance - 50 jobs mean if you can afford to pay it then you should - Losing your job does not mean that you must also give up your health insurance, at least not immediately with COBRA (18-month extension, however you must pay full premium)

NLRA- labor union -section 7 of the NLRA guarantees employees the right to:

- Unions are formed under fed law, the national labor relations act guarantees employees the right to 1. Organize and join unions 2. Bargain collectively through representative of their own choosing and 3. Engage in other concerted activities Note that supervisors are not employees (power) and do not have the right to join a union

1. Compare and contrast employee at will law with exceptions that protect employees.

- Without a contract, a worker was an employee at will Since employees could quit their factory jobs whenever they wanted, it was thought to be only fair for employers to have the same freedom to fire a worker - Under initial development of the employee at will concept, an individual can be fired for a good reason, a bad one, or no reason at all exceptions (wrongful discharge is common law) - The public policy rule prohibits an employer from firing a worker for a reason that violates basic social rights, duties, responsibilities, such as: 1. Refusing to violate the law 2. Performing a legal duty (jury duty/military) 3. Exercising a legal right 4. Supporting social values (religion, favored sports)

Workers' compensation

- Workers comp statutes ensure that employees receive (payment for injuries incurred at work, med pay, most wages, and loss use). -in return, However, no lawsuit possible by employee

tort law (common law) 3 of them

- Workers have successfully sued their employers under following tort theories 1. Defamation- this is the intentional tort from Ch 7 (untrue statement) 2. Intentional infliction of emotional distress (Ch 7) (workplace bullying) 3. Whistleblowing (infra)

what is considered a supervisor (can't be in union)

- anyone with authority to make independent decisions of hiring, firing, - Section 7 guarantees the right to organize and join unions, bargain collectively through representative of their own choosing and engage

polygraph laws (employer polygraph protection act of 1988)

- employer cannot require or suggest a polygraph be taken under the Employer Polygraph Protection act of 1988 - Normally, not allowed on job candidates Exception: if a crime has occurred (ongoing investigation), in the furtherance of the investigation, the employer may require the employee to submit to test

piercing the corporate veil (a court ordered death penalty) -four circumstances

- may be voluntary (shareholders vote) or forced (by court order). See whiteboard video on materials - Piercing the corporate veil- a court may hold shareholders liable for debts in four circumstances 1. Failure to observe formalities (such as holding meeting, keeping record) 2. Commingling of assets (using corporate funds to pay personal debts, etc.) 3. Inadequate capitalization (the corporation should obtain insurance against liability for torts) 4. Fraud (injured party may recover from the guilty party, even if the action was the corporations

par value

- minimum issue price (not the same as market price)

age discrimination

- n employer with 20 or more workers may not fire, refuse to hire, fail to promote or otherwise - Reduce a person's employment opportunities because he is 40 or older - Plaintiff can show discrimination in 1. Disparate treatment 2. Disparate impact 3. Hostile environment Reid v google (fuddy duddy case) "okay boomer"

stock 3 things

- number, par value (not market value) and types offered

parenthood continued

- parental status cannot impact employee as to opportunity for promotion, assignments, or benefits - Parental leave must be equal for similar conditions

Involuntary termination- 5 reasons

- reasons for the state to move for termination: 1. not able to make a profit 2. catastrophic event - damage beyond repair or replacement contingency (not enough insurance coverage) - judgement rendered beyond coverage of insurance or sale of all assets 3. creditors force into bankruptcy due to debt 4. failure to comply with government requirements 5. officer/board/shareholder at an impasse and cannot arrive at settlement or agreement

reasons for the state to move for termination (involuntarily)

qualifying to do business

- to qualify, a corporation must register in any states where it is doing business - opening an office or stablishing any other ongoing presence is doing business (international shoe v. Washington)

incorporation process -incorporating is a state statute

- where to incorporation (in a state)- either the home state of business or state which favorable laws for Corp (often Delaware which has more than 66% of all fortune 500 and 805 of all Corp that have IPO) - State statute only- no federal statute incorporations - You can choose any state to incorporate and chose any state to have headquarters - The Corp is referred as a domestic Corp in home state and foreign in all others

11. Understand difference of Economic strike and ULP strike and its effect on replacement workers.

-An economic strike is one intended to gain wages or benefits. During an economic strike, an employer may hire permanent replacement workers. When the strike is over, the company has no obligation to lay off the replacement workers to make room for the strikers. However, if and when the company does hire more workers, it may not discriminate against the strikers. -A union may also call a strike to protest a ULP, or to preserve work that the employer is considering sending elsewhere (legal) -After a ULP strike, union members are entitled to their jobs back, even if that means the employer must lay off replacement workers.

Transferability

-As a general rule, unless the operating agreement provides otherwise, the unanimous permission of all members is required to admit a new member or to sell any existing member's ownership rights. -LLC usually cannot freely transfer member ownership without permission of other members. However, O/A may state otherwise - LLC members cannot be added without unanimous agreement of existing members

shareholders meetings continued

-At the annual shareholders meeting the vote on item that have been pre-submitted and sent to all shareholders. • Shareholders vote on a slate of directors for the corporation. • Most corporations consider each slot separately. Some use a cumulative scheme which allow the elections of directors who represent the views of minority shareholders.

Section 8 prohibits unions from engaging in these ULPs:

-Interfering with employees who are exercising their labor rights and -Charging excessive dues. -The NLRA also established the NLRB to administer and interpret the statute and to adjudicate labor cases.

Section 8 of the NLRA prohibits employers from engaging in the following unfair labor practices (ULPs):

-Interfering with union organizing efforts, -Discriminating against a union member, and -Refusing to bargain collectively with a union.

To comply with the Model Benefit Corporation Act, an organization must:

-State in its charter that it is a benefit corporation, -Obtain approval of its charter from two-thirds of its shareholders, -Measure its social benefit using a standard set by an objective third party, and -Prepare an annual benefit report assessing its performance in creating a public benefit.

4. Know to whom and when the FMLA is applied.

-The Family and Medical Leave Act (FMLA) guarantees both men and women up to 12 weeks of unpaid leave each year for childbirth, adoption, or a serious health condition of their own or in their immediate family. -A family member is a spouse, child, or parent—but not a sibling, grandchild, or in-law. -An employee who takes a leave must be allowed to return to the same or an equivalent job with the same pay and benefits. -The FMLA applies only to companies with at least 50 workers and to employees who have been with the company full time for at least a year, which means that only about 60 percent of workers are covered by this statute.

the FDD must include (The purpose of the FDD is to ensure that the franchisor discloses all material facts.)

-The history of the franchisor and its key executives -Litigation with franchisees -Bankruptcy filings by the company and its officers and directors -Costs to buy and operate a franchise -Restrictions, if any, on suppliers, products, and customers -Territory—any limitations (in either the physical or online worlds) on where the franchisee may sell or any restrictions on other franchisees selling in the same territory -Business continuity—the circumstances under which the franchisor can terminate the franchisee and the franchisee's rights to renew or sell the franchise -Required advertising expenses -A list of current franchisees and those that have left in the prior three years

authorized stock

-authorized stock- represents the maximum shares the company can issue—unless it amends its charter.

exceptions of unequal pay

-unequal pay is legal if it is the result of these four exceptions: 1. Seniority 2. Merit 3. Quantity or quality of work 4. Any other factor other than sex

what makes a strike illegal

1 Cooling-off period. Before striking to terminate or modify a CBA, a union must give management 60 days' notice. 2. Statutory prohibition. Many states have outlawed strikes by public employees because these employees are so important to public health and welfare. 3. Sit-down strikes. In a sit-down strike, members stop working but remain at their job posts, physically blocking replacement workers from taking their places. 4. Partial strikes. A partial strike occurs when employees strike intermittently, stopping and starting repeatedly. This tactic is particularly disruptive because management cannot bring in replacement workers. A union may either walk off the job or stay on it, but it may not alternate.

ease of creation

1. (how little can I do to get it created) or how expensive is it

- For publicly traded companies, independent directors must compromise: (4)

1. A majority of the board 2. The entire audit committee (required by SOC); and 3. The entire compensation, corporate governance, and nominating committees 4. meet regularly on their own without inside directors, that is, without members of the board who are also employees of the corporation.

3 main relationships you should develop

1. Attorney- one who is familiar with the business law, not the one you used on your last divorce 2. CPA- one who is comfortable with the form of business you have (partnership vs. S-Corp) 3. Banker- one who is willing to help you grow your business

2. Compare the different types of corporations. (4 of them)

1. C corp 2. B corp 3. S corp 4. close corporations

7. Understand the steps of organizing a Union.

1. Campaign: organizers can talk with employee to persuade (on breaks) non-employee may be involved by not allowed on company property (arriving, leaving work, or outside of work hours) 2. Authorization cards: organizers distribute card to be signed by individual workers requesting a particular union represent them (NLRA permits employer to refuse union recognition) 3. Petition: union petition NLRB for an election. Petition must reflect at least 30% of worker (NLRB order election) bargaining unit: a group of employees with a clear and identifiable community of interest (assembly line) 4. Election: NLRB supervises election for fairness (if more than 50% of workers vote for union, that union is recognized to represent the rights of all workers)

Organizing a union: actions - Stages of union organization -4 of them

what are the four prohibited activities

1. Disparate treatment- involves treatment of individual who is within protected class that is different than those outside of class 2. Disparate impact- treatment of group who is within protected class 3. Hostel environment 4. Retaliation

the steps in terminating a partnership through dissociation (3 steps)

1. Dissolution. A partnership dissolves anytime the business cannot continue, such as when a partner leaves and the remaining partners cannot agree unanimously to continue, the partners decide to end the partnership, or the partnership business becomes illegal. 2. Winding up. During the winding-up process, all debts of the partnership are paid, and the remaining proceeds are distributed to the partners. 3. Termination. Termination happens automatically once the winding up is finished. The partnership is not required to do anything official.

1. Compare the 5 considerations for each business entity. A. Tax Consideration B. Liability Consideration C. Capitalization D. Continuity E. Ease of creation

1. Ease of creation- (how little can I do to get it created) or how expensive is it 2. Liability- Risk of loss (RoL) and risk management 3. Tax considerations- (Uncle Sam gets his way one way or another) but you only want to pay what you are required to pay 4. Capitalization- how can I raise the value of my business and what is the value right now 5. Continuity- how easy is it to transfer the ownership and how long will it last

4 main topics of chapter 18

1. Employment security 2. Workplace freedom 3. Financial protection 4. Labor unions 5. Employment discrimination (chapter 19) Law attempts to balance needs of employer and desires of employee. Both common law and statutory law reflects and difficulties in perfecting that balance. As with our coin example of two sides, each side is very different in appearance

Business judgement rule (court made rule) 3 goals

1. It permits directors or managers to do their job without the obligation of perfection 2. It keeps judges and the courts out of corporate management by second guessing the actions of the board or mangers 3. It encouraged directors to serve and allows the mangers to do job without constant interference - The courts analysis for the application of business judgment rule is divides into two parts (duty of loyalty and duty of care)

3. Understand the scope, use, advantages and disadvantage of LLCs.

1. Limited liability- like Corp (not responsible for debts of company only investment) 2. Flexibility- other entities, aliens(non-citizens) can be members and no required annual meeting 3. Transferability of interest- limited must have approval of other members 4. Duration- some limitations 5. Management- who will run the show. If all the members run it, it is called "member management" Separate taxable entity- no personal liability for owners- no ease of formation-Charter is easy but should have thoughtful operating agreement. transferrable interest- Yes, if the operating agreement permits perpetual existance- Varies by state, but generally, yes downside Becomes taxable entity if it goes public

why are LLC's popular -5

1. Limited liability- like Corp (not responsible for debts of company only investment) 2. Flexibility0 other entities, aliens(non-citizens) can be members and no required annual meeting 3. Transferability of interest- limited must have approval of other members 4. Duration- some limitations 5. Management- who will run the show. If all the members run it, it is called "member management"

- Three avenues to establish action to rehabilitate previous discrimination -Affirmative action is not required by Title VII, nor is it prohibited. Affirmative action programs have three different sources:

1. Litigation - court action 2. Voluntary action- employer and education introduced 3. Government contracts-The government may use affirmative action programs when awarding contracts only if it can show that the programs are needed to overcome 1. specific past discrimination, 2. they have time limits, and 3. nondiscriminatory alternatives are not available.

merit

1. Merit- defendant is not liable if he shows that the person, he favored was the most qualified

accommodating disable worker

1. Reasonable accommodations expected Make facilities accessible •Permit part-time schedules •Acquire or modify equipment •Assign a disabled person to an open position that s/he can perform 2. Can perform essential functions of the job which according to EEOC is: Essential functions are the basic job duties that an employee must be able to perform or in other words, complete the task for which that the job exists. 3. Accommodation is not reasonable if it would create undue hardship for the employer

seniority

1. Seniority- legitimate seniority system is legal even if it perpetuates past discrimination Seniority system must pass scrutiny for reasonable nondiscriminatory application

tax considerations

1. Uncle Sam gets his way one way or another) but you only want to pay what you are required to pay

3. Compare and contrast the four areas of discriminatory acts cover by Title VII

1. disparate treatment- involves treatment of individual who is within protected class that is different than those outside of class 2. disparate impact- treatment of group who is within protected class 3. hostile work environment- - Employers violate title 7 if they permit or allow a work environment that is so hostile toward ppl in a protected category it affects their ability to work (can be disparate impact or treatment) aka (group or individual) - This concept of hostile environment first arose in context of sexual harassment (has been expanded to race and national origin) 4. retaliation- - Title 7 prohibits employers from retaliating against workers who oppose discrimination, bring a claim under the statute, or take part in an investigation or hearing - Retaliation means that the employers has done something that would deter a reasonable worker from complaining about discrimination

4. Compare domestic, foreign and alien corporation.

1. domestic- a corporation in the state in which it is incorporated 2. foreign- everywhere else it is not incorporated -- A foreign corporation is one that does business in any other state besides the state of incorporation 3. alien- a corporation chartered by a foreign government and conducting business in the United States -- Outside of the US, not in the country but coming in and doing business (Mexico, China)

bona fide occupational qualification (3 circumstances)

1. employer is permitted to establish discriminatory job requirements if they are essential to the position in question - Employers consider customer preference in such situation 1. Safety- fire fighter require to carry 175 pounds 2. Privacy- sale clerk required in dressing area 3. Authenticity- native American required in a tribal re-enactment village

4. Compare the goals of "for-profit" entities vs. "limited profit" entities vs. "not-forprofit"

1. for profit- They are generating profits from the products or services that they sell in the open market 2. limited profit- Social enterprises pledge to behave in a socially responsible manner, even as they pursue profits. (low profit) 3. non profit (not for profit)- corporations are created to serve the community but not profit an individual (Also referred as 501c3 (reference to tax code that exempts the paying of taxes))

defenses charged of discrimination (4)

1. merit 2 seniority 3. bona fide occupational qualification 4. affirmative action

4. Compare and contrast the defenses available to an employer who is facing discrimination allegation.

1. merit- defendant is not liable if he shows that the person, he favored was the most qualified 2. seniority- legitimate seniority system is legal even if it perpetuates past discrimination Seniority system must pass scrutiny for reasonable nondiscriminatory application 3. bona fide occupational qualification- employer is permitted to establish discriminatory job requirements if they are essential to the position in question - Employers consider customer preference in such situation - Safety- fire fighter require to carry 175 pounds - Privacy- sale clerk required in dressing area - Authenticity- native American required in a tribal re-enactment village

7. Compare Shareholder with Stakeholder.

1. shareholder- they own shares in the company (stocks) 2. stakeholder- (that is, shareholders, employees, customers, the community, the country, and the world)

6. Be familiar with Comparison Chart page 402 ebook (sole, corp, close corp, s corp, llc, general partnership, LLP, PC, franchise 1. Separate Taxable Entity? 2. personal liability for owners? 3. ease of formation? 4. transferable interest (easily bought and sold)? 5. perpetual existence? 6. Other features

1. sole proprietorship- .1 no, 2. yes, 3. very easy, 4. no, can only sell entire business, 5. no 2. corporation- 1. yes 2. no, 3. difficult, 4. yes, 5. yes, 3. close corporation- 1. yes for C, no for S, 2. no, 3. easy for C, difficult for S, 4. more transfer restrictions 5. yes, 6. protection of minority shareholders. no board of directors is required 4. s corporation- 1. no, 2. no, 3. difficult, 4. transfer restrictions., 5. yes, 6. Only 100 shareholders. Only one class of stock. All shareholders must agree to S corp status and must be citizens or residents of the United States. Partnerships and corporations cannot be shareholders 5. limited liability company (LLC)- 1. no, 2. no, 3. Charter is easy but should have thoughtful operating agreement. 4. yes, if operating agreement permits, 5. varies by state, but generally yes, 6. becomes a taxable entity if goes public 6. general partnership- 1. no, 2. yes, 3. easy, 4. no, 5. depends on remaining partners, 7. limited liability partnership- 1. no, 2. no, 3. difficult, 4. no, 5. depends on the partnership agreement 8. professional corporation- 1. yes, 2. no, 3. difficult, 4. All shareholders must be members of same profession. 5. yes, as long as it has shareholders, 6. complex tax issues 9. franchise- All these issues depend on the form of organization chosen by participants.

In deciding between an LLC or a corporation, an entrepreneur will want to consider these issues: (5)

1. taxation 2. establishment 3. law 4. transferability 5. operation

CPA Question Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has: both common and preferred stockholders. a partnership as a stockholder. 100 or fewer stockholders. the consent of a majority of the stockholders.

100 or fewer stockholders

min wage today in other states

29 states have min wage higher than federal standard - Arkansas is $11.00 as of 21 - 5 states have no min laws

annual shareholder meetings

A corporation must hold some version of an annual shareholders meeting to conduct such matters as electing directors. -At the annual meeting, shareholders have the right to elect directors. But "corporate democracy" is not the same as political democracy. Traditionally, successful candidates did not have to receive a majority of all votes cast; they simply needed more than any opponent. Since there were no opponents, one vote was sufficient (and that vote could be the candidate's own). This method is called plurality voting. However, because of pressure from shareholder activists, 90 percent of large companies now require majority voting, that is, directors must resign if more than half the shares that vote in an uncontested election withhold their vote from them.

right to vote -four fundamental changes

A corporation must seek a shareholder vote before undergoing any of the following fundamental changes: charter amendments, merger, the sale of major assets, or dissolution.

C corporations or C corps (the most difficult to form) not about you

A corporation that provides limited liability to its owners but is a taxable entity. -- Most formal of the organizational types - Most difficult of the organizational types (legal advice is wise) - Most complex to maintain because of the yearly requirements

Franchise Disclosure Document (FDD)

A disclosure document that a franchisor must deliver to a potential purchaser.

partnership

A partnership is an unincorporated association of two or more co-owners who operate a business for profit. Each co-owner is called a general partner.

qualified privilege

A qualified privilege means that employers are liable only for false statements that they know to be false or that are primarily motivated by ill will.

majority voting

A voting system in which a candidate must win more than 50 percent of votes to win the election. If no candidate wins enough votes to take office, a runoff election is held between the top two vote-getters. -90% of large companies

plurality voting

A voting system in which the candidate who receives the most votes within a geographic area wins the election, regardless of whether that candidate wins a majority (more than half) of the votes. -70% of small companies

employee at will

A worker without an employment contract.

obesity

According to the EEOC, just being overweight is not a disability unless it has some underlying physiological cause, such as a thyroid disorder. However, being morbidly obese (defined as having double the normal body weight) is a disability, no matter what the cause.

advantages and disadvantages of partnerships

Advantage - Don't pay taxes as separate entity - Easy to form - Partners help with work and financing Disadvantages - Each partner is liable personally - Funding may be difficult (can't sell shares) - Management may be difficult - Transferability is limited (A partner cannot sell their individual share of the organization without the permission of the other partners)

advantages and disadvantages of franchises

Advantages - Owning a business, support Disadvantages - Control, cost, legal requirements Protections: Franchise Disclosure Document (FDD): a disclosure document that a franchisor must deliver to a potential purchaser (regulated by FTC)

going public

After going public, LLCs often opt to become corporations because, at that point, federal tax law requires them to be taxed as a corporation anyway. And the law regulating corporations is better established and more consistent across the country.

B corporation

Also know as a benefit corporation, in which the company is legally required to adhere to socially beneficial practices, such as helping consumers, employees, or the environment

what are the rules for close corporations (provisions) -7 of them

Although the rules of close corporations may vary from state to state, generally these organizations share certain features: 1. Small number of shareholders (usually fewer than 50). 2. Stock that is not publicly traded. 3. Shareholders who play an active role in management. 4. Protection of minority shareholders. - - No public market for share so there is a fiduciary duty between shareholders - Unanimous agreements as to 1. Officers 2. Salaries, and 3. Dividends 5. transfer restrictions- - As to whom and when shares can be sold (sometime referred to as "golden handcuffs") - Must offer to other shareholder first at time of sale 6. flexibility- - May do away with some of the meeting requirements such as annual meeting and the notice of meetings - Fewer shareholders and easier to work with on short notice 7. dispute resolution- - Buy out agreements that include how to value the shares In an Equitable manner - May have structured dissolution in place if conflict arises

5. Understand when and how to apply Bona fide occupational qualification defense.

An employer is permitted to establish discriminatory job requirements if they are essential to the position in question. The business must show that it cannot fulfill its primary function unless it discriminates in this way. Such a requirement is called a bona fide occupational qualification (BFOQ). Note that only religion, sex, or national origin can be a BFOQ—never race or color. -However, courts recognize three situations in which employers may consider customer preference: 1. safety 2. privacy 3. authenticity

hiring process w medical

An employer may not ask about disabilities before making a job offer. The interviewer may ask only whether an applicant can perform the work. Once a job offer has been made, the company may require a medical test if it is required of all entering employees in similar jobs.

relationships with disabled persons

An employer may not discriminate against someone because of his relationships with a disabled person (spouse has AIDS) - Physical and mental abilities are to be treated the equally (cannot hire physical impaired while automatically excluding mental impaired) - Disparate treatment and disparate impact group, hostile work environment fall under this •Hostile work environment

disabilities

An employer may not refuse to hire or promote people with a disability so long as they can, with REASONABLE ACCOMMODATION, perform the ESSENTIAL FUNCTIONS of the job. An accommodation is unreasonable if it would create UNDUE HARDSHIP for the employer.

Legality with the BJR

An illegal activity automatically violates the business judgment rule, even if it actually helps the company and is entirely fair.

activist investors

An individual or group that purchases large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change in the company. -influence direction and decisions

flow-through tax entity (pass through)

An organization that does not pay income tax on its profits but instead passes them through to its owners who pay personal income tax on all business profits; also known as a pass-through.

fair workweek laws

As a result, some states (such as Connecticut and Oregon) and cities (such as Chicago and Seattle) have passed laws that require employers to: -provide 14 days' notice of work schedules, -pay workers extra for each shift cancelled on short notice, and -pay extra for split shifts.

ferret v Courtney issue

Both Delaware law and the Uniform Limited Liability Company Act (ULLCA) permit oral operating agreements, which adds a whole new level of complication. How can you tell (without litigating) if the members agreed to the terms of an unsigned operating agreement or, indeed, whether any other discussions could be interpreted to be an enforceable agreement? And then you have to determine whether the Statute of Frauds requires a writing. In short, be careful.

Executive performance and ties with stock

CEO pay went up at a significantly faster rate than the stock market, which means that the average CEO did much better than the average investor. And whatever explains CEO pay increases, it is not, by and large, improved performance. TSR is the most common measure of CEO performance, but it is flawed at best because many factors determine a company's share price.

COBRA applies to

COBRA applies to any company with 20 or more workers.

10. Be familiar with the concept of Concerted Action and understand limitation of both employer and employee.

Concerted action refers to any tactics that union members take together to gain some bargaining advantage. It is this power that gives a union strength. The NLRA guarantees the right of employees to engage in concerted action for mutual aid or protection. 1. The NLRA guarantees employees the right to strike, but with some limitations. 2. . Picketing the employer's workplace in support of a strike is generally lawful. secondary boycotting is illegal -When employees go on strike, management has the right to use replacement workers to keep the business operating. -After a ULP strike, union members are entitled to their jobs back, even if that means the employer must lay off replacement workers. -This is a lockout: Management is prohibiting workers from entering the premises and earning their paychecks. By withholding work and wages, the company hopes to pressure the union to bargain less aggressively. Most lockouts are legal.

S corporations (federal tax law)

Congress created S corporations (aka "S corps") to encourage entrepreneurship through tax breaks. Shareholders of S corps have both the limited liability of a corporation and the tax status of a flow-through entity. Thus, all of an S corp's profits (and losses) pass through to the shareholders, who pay tax at their individual rates. -- They don't pay taxes but report income, flows to shareholders and they pay taxes. - Not double taxation, and have limited liability

There is, however, one additional wrinkle to the business judgment rule:

Controlling shareholders have a fiduciary duty to shareholders without control (so-called "minority shareholders"). These controlling shareholders can avoid liability under the business judgment rule only if either: -the disinterested members of the board AND the disinterested shareholders approve the decision; or -a court determines that the decision was entirely fair.

corporations (c corp) why are they dominant

Corporations are the dominant form of organization for a simple reason—they have been around for a long time and, as a result, they are numerous and the law that regulates them is well developed. -appear on stock exchange

close corporations (state law) -closely held corporation

Corporations with a small number of shareholders, often family members. -- Closely held corporation, are terms that refer to Corp whose stock is not publicly traded on a Stock exchange

Which of the following activities is legal under Title VII? Answer When Taggart comes to a job interview, he has a white cane. Ann asks him if he is blind. Craig refuses to hire Ben, who is blind, to work as a playground supervisor because it is essential to the job that the supervisor be able to see what the children are doing. Concerned about his company's health insurance rates, Matt requires all job applicants to take a physical. Concerned about his company's health insurance rates, Josh requires all new hires to take a physical so that he can encourage them to join some of the preventive treatment programs available at the company. Jennifer refuses to hire Alexis because her child is ill, and she frequently has to take him to the hospital.

Craig refuses to hire ben who is blind to work as a playground supervisor because it is essential to the job that the supervisor be able to see what the children are doing

partnership liability

Each partner is personally liable for the debts of the enterprise whether or not they caused them

defamation (tort law)

Employers may be liable for defamation when they give false and unfavorable references about an employee. -Generally, courts have held that employers do not have a legal obligation to disclose information about former employees. But, in the case of violence, courts are divided.

Intentional Infliction of Emotional Distress (IIED)

Extreme and outrageous conduct that causes serious emotional harm.

raising capital in partnerships

Financing a partnership may be difficult because the firm cannot sell shares as a corporation does. The capital needs of the partnership must be provided by contributions from partners or by borrowing.

what are the considerations in choosing if a LLC is correct for you -5 of them

Formation Flexibility Transferability Duration going public

formation of partnerships

If two or more people do business together, sharing management, profits, and losses, they have a partnership,

Operating Agreement

In a limited liability company, an agreement in which the members set forth the details of how the business will be managed and operated.

lockouts

Management is prohibiting workers from entering the premises and earning their paychecks. By withholding work and wages, the company hopes to pressure the union to bargain less aggressively. Most lockouts are legal.

Which of the following activities would not be considered sexual harassment? Shannon tells Connor that she will promote him if he will sleep with her. Kailen has a screen saver that shows various people having sex. Paige says she wants "to negotiate Owen's raise at the Holiday Inn." Nancy yells "Crap!" at the top of her lungs every time her Rotisserie Baseball team loses. Quid pro quo.

Nancy yells crap and the top of her lungs every time her rotisserie baseball team loses

8. Know the concepts of Collective Bargaining

Once a union is formed, a company must then bargain with it toward the goal of creating a new contract, which is called a collective bargaining agreement (CBA). -it requires them to bargain wages, hours, and other terms and conditions of employment. -The union and the employer are not obligated to reach an agreement, but they are required to bargain in good faith.

9. Understand the process of union enforcement of the CBA.

These are some of the reasons why directors do not actually tie pay to company performance: (5)

Other people's money -a cooperative culture -consultants -data manipulation -business judgment rules

classes and series of stocks-

Owners of preferred stock have preference on dividends and liquidation - Common stock Is last in line for any corporate payouts, included dividends and liquidation (voting rights)

prima facie

Prima facie: prom Latin, "from its first appearance" something that appears true upon first look

what is the issue with modern corporations

Problem of modern corporation is that the interest of managers, shareholders, and stakeholders (employees of big Corp crash) often conflict - Has a trickle effect to towns

protected categories

Race, color, religion, sex, or national origin.

social enterprises

Revenue-generating business with social objectives at the core of their operations. They can be for-profit or non-profit businesses, but all profits or surpluses are reinvested for that social purpose rather than being distributed to shareholders and owners. -referred to a B corps -Well more than half the states now offer charters to some type of socially conscious organization, collectively referred to as social enterprises (SEs). -Social enterprises pledge to behave in a socially responsible manner, even as they pursue profits. (not nonprofit) 1. planet 2. people 3. profit

6. Understand Affirmative Action process and know its sources.

Reverse discrimination (affirmative action)- is the employment decision that affects a historically advantages (white man) person or man because of race, color, or gender. It is just as discriminatory as the same action against a protected class - Affirmative action is not required by title 7 - Not prohibited by title 7 (maybe) sources • Litigation • Voluntary action • Government contracts • Educational institutions ( Students for Fair Admissions challenge may change this if S.Ct agrees with that position)

reverse discrimination (affirmative action)

Reverse discrimination is the employment decision to that affects a white person or man because of race, color, or gender Reverse discrimination (affirmative action)- is the employment decision that affects a historically advantages (white man) person or man because of race, color, or gender. It is just as discriminatory as the same action against a protected class - Affirmative action is not required by title 7 - Not prohibited by title 7 (maybe)

5. Compare advantages and disadvantages of each partnership type.

S corps advantages -- They don't pay taxes but report income, flows to shareholders and they pay taxes. - Not double taxation, and have limited liability -tax breaks disadvatanges (restrictions) -only one class of stocks -- Shareholders are limited number to no more than 100 shareholders, limitation on who can be owners, partnerships or to other corporations cannot -- Must be US citizen or resident -Shareholders must be individuals, estates, charities, pension funds, or trusts, not partnerships or corporations. -All shareholders must agree that the company should be an S corporation. Corporations (general) or C corp advantages 1. limited liability- usually managers and investors personal property is not at risk. But not for their own wrongdoing (individuals are always responsible for their own acts) 2. transferability of interest- transfer ownership of shares. Partnership interests are not transferable without eh permission of the other partners. S/P must transfer title to individual item which is not convenient. 3. duration/continuity-when a sole proprietor dies, legally so does the business. But corporations have perpetual existence. 4. established rules-there exists a large body of law over many years Disadvantages 1. logistics-corporations require substantial expense and effort to create and operate (annual meetings with notice) 2. taxes-a corporation is a taxable entity, which means it must pay income taxes on its profits and file a corporate tax return. Shareholders must then pay tax on any dividends from the corporation which is referred to a double taxation 3. inflexibility- hierarchy of control- board of directors, officers and shareholder have rights and responsibilities that impact the nimbleness in making decisions partnerships Advantage - Don't pay taxes as separate entity - Easy to form - Partners help with work and financing Disadvantages - Each partner is liable personally - Funding may be difficult (can't sell shares) - Management may be difficult - Transferability is limited (A partner cannot sell their individual share of the organization without the permission of the other partners) franchises Advantages - Owning a business, support Disadvantages - Control, cost, legal requirements Protections: Franchise Disclosure Document (FDD): a disclosure document that a franchisor must deliver to a potential purchaser (regulated by FTC) LLC's Separate taxable entity- no personal liability for owners- no ease of formation-Charter is easy but should have thoughtful operating agreement. transferrable interest- Yes, if the operating agreement permits perpetual existance- Varies by state, but generally, yes downside Becomes taxable entity if it goes public

secondary boycott

Secondary boycott: a picket line established not at the employers premises but at a different workplace and is generally illegal

Self-Dealing

Self-dealing means that managers make a decision benefiting either themselves or another company with which they have a relationship.

sexual harassment

Sexual harassment involves unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that are so severe and pervasive that they interfere with an employee's ability to work.

10. Can define the process of election and remove of directors.

Shareholders elect Board of Directors whose number and term is determined in the Articles/I -A shareholder wishing to remove a director must give special notice of their intention to the company, which then has 28 days to call a general meeting. At this meeting, shareholders will vote on the proposed resolution. If it is passed by a simple majority, then the director will be removed from their position. -90 percent of large companies now require majority voting, that is, directors must resign if more than half the shares that vote in an uncontested election withhold their vote from them. Among smaller companies, 70 percent still permit plurality voting, where one vote is often sufficient to insure election.

promotor

Someone who organizes a corporation -Promoters are personally liable on any contract they sign before the corporation is formed.

total shareholder returns (TSR) 2 of them

Stock price appreciation and dividends

8. Know EEOC jurisdiction and require process to bring a discrimination lawsuit.

ENFORCEMENT

The EEOC is the federal agency responsible for enforcing the Equal Pay Act, Title VII, the Pregnancy Discrimination Act, the ADEA, the ADA, and GINA. •Before a plaintiff can bring suit under one of these statutes, s/he must first file a complaint with the EEOC- -After it receives a filing, the EEOC conducts an investigation and also attempts to mediate the dispute. If it determines that discrimination has occurred, it will typically file suit on behalf of the plaintiffs. -Remedies available to the successful plaintiff include hiring, reinstatement, retroactive seniority, back pay, front pay (to compensate for future lost wages), reasonable attorney's fees, and damages up to $300,000. However, employers now often require new hires to agree in advance to arbitrate, not litigate, any future employment claims.

strikes

The NLRA guarantees employees the right to strike, but with some limitations. A union has the right to call a strike if the parties are unable to reach a CBA. A union may also call a strike to protest a ULP, or to preserve work that the employer is considering sending elsewhere. -◦Strikes: The NLRA guarantees employees the right to strike, but with limitations ◦Sit-Down Strike: Members stop working but remain at the job posts, blocking replacement workers ◦Rights of employee may depend on reason for strike

net returns and invested capital

The company's return on its capital investments, such as plants and equipment, less the opportunity cost of those investments.

government regulation

The federal government has acted to change the landscape of corporate governance and executive compensation in the following ways: -lead director -Clawbacks. The SEC has the right to clawback some CEO and CFO compensation if misconduct on the part of any employee causes the company to restate its financials. -disclosure -Say-on-pay. At least once every three years, companies must take a non-binding shareholder vote on the compensation of the five highest-paid executives.

picketing

The goal of picketing is to discourage employees, replacement workers, and customers from doing business with the company. Picketing the employer's workplace in support of a strike is generally lawful. However, the picketers are not permitted to use physical force to prevent someone from crossing the line.

most common gaffe in hiring

The most common gaffe on the part of interviewers? Asking women about their childcare arrangements. That question assumes the woman is responsible for childcare.

Partnerships are flow-through entities:

The partnership itself does not pay income tax; instead, the profits pass through to the partners, who report it on their personal returns.

social media

To help prevent this type of liability, some employers keep the role of hiring separate from that of "cyber-vetting" and even hire outside consultants to do the checking.

3. Compare the management duties and responsibilities of directors and Officers

To protect these outside investors, the courts have long ruled that directors and officers (who are also known as "managers") owe a fiduciary duty to, and must act in the best interest of, both the corporation and its shareholders. -- Shareholders elect board of directors whose numbers and term are determined in the articles - Directors then elect (hire) the corporate officers - In rare occasion (if allowed by state statute as a closed), all shareholders can agree to not have a board of directors 1. directors - Corporations have TWO sets of managers: directors and officers - Directors are fiduciaries to both the corporation and the shareholders. They are elected by the shareholders - Primary duty to set policy and procedures - Responsible for hiring firing overseeing officers -2. Officers are fiduciaries of corporation, board of directors, and S/H - Responsible to follow policy and procedure set by the board and to meet its goals - Responsible for the day-to-day decision (boots on the ground)

Disparate impact

To prove disparate impact, plaintiffs must show that their employer has a rule that on its face is not discriminatory, but in practice, excludes too many people in a protected group. Step 1- plaintiffs must represent a prima facie case that employment practices exclude several people (impact to group) 40 and older Step 2- employer must overcome the prima facie showing (employer wins if decision was based on reasonable factor other than ages 3- plaintiff must now prove either that the employers reason is a pretext or that other less discriminatory rules would achieve the same results

proxy access

Under new SEC rules, a company must adopt proxy access if a majority of shareholders vote in favor.

to win age discrimination

Under the ADEA, the plaintiff must show that, but for their age, the employer would not have taken the action it did. In other words, to win a case under the ADEA, the plaintiff must show that age was not just one factor, it was the deciding factor

Business Judgment Rule (BJR)

Under the business judgment rule, managers are not liable for decisions they make -duty of loyalty In good faith For a lawful purpose Without a conflict of interest To advance the best interests of the corporation -duty of care With the care that an ordinarily prudent person would take in a similar situation

organizing- exclusivity

Under §9 of the NLRA, a validly recognized union is the exclusive representative of the employees. This means that the union represents all of the designated employees, even if a particular worker does not want to be included, has not joined the union, or has not paid dues. The company may not bargain directly with any employee in the group, nor with any other organization representing the designated employees. Along with a union's exclusive bargaining power goes a duty of fair representation, which requires that it treat all members fairly, impartially, and in good faith.

union trends over the years

Union membership over the years is on downward slope Labor union change is trending upward - In Dec of 2021, the first Starbuck to unionize was voted in Buffalo - Amazon, starting to form unions (they have bad working conditions)

minute book

a book that contains a record of a corporation's official actions -holds records of all meetings

alien corporation

a corporation chartered by a foreign government and conducting business in the United States -- Outside of the US, not in the country but coming in and doing business (Mexico, China)

domestic corporation

a corporation in the state in which it is incorporated

Piercing the company veil

a court holds members of an LLC personally liable for the debts of the organization -- If members abuse their rights, a court may remove their limited liability, a process called piecing the veil (Corp has same) A court may pierce a LLC veil if members: 1. Fail to observe formalities (organize correctly)- like Corp, legitimate contracts need to be signed 2. Commingle assets (surest way to have veil pierced) 3. Fail to provide adequate capital 4. Commit fraud

bargaining unit

a group of employees with a clear and identifiable community of interest (assembly line)

1. Understand Federal statue requirements: A. Equal Pay B. Title VII 1964 Civil Rights Act (Title VII) C. Pregnancy Discrimination Act D. Age Discrimination Act E. American with Disability Act (ADA) 6 F. Genetic Information Nondiscrimination Act (GINA)

a. equal pay - The Equal Pay Act (EPA) requires that men and women in the same workplace be given equal pay for equal work. -unequal pay is legal if it is the result of these four exceptions: 1. Seniority 2. Merit 3. Quantity or quality of work 4. Any other factor other than sex -b.civil rights act -Under Title VII of the Civil Rights Act of 1964, it is illegal for employers to discriminate on the basis of race, color, religion, sex, or national origin. Discrimination under Title VII applies to every aspect of the employment process c. pregnancy discrimination- The Pregnancy Discrimination Act (PDA) prohibits employers from firing, refusing to hire, or failing to promote a woman because she is pregnant. An employer must treat pregnancy and childbirth as any other temporary disability. -The PDA also protects a woman's right to terminate a pregnancy. An employer cannot fire a woman for having an abortion. d.age- Under the Age Discrimination in Employment Act (ADEA), employers may not fire, refuse to hire, fail to promote, or otherwise reduce a person's employment opportunities because that person is 40 or older. Nor may an employer require workers to retire at a certain age. e. disability- A person with a disability is someone with a physical or mental impairment that substantially limits a major life activity or the operation of a major bodily function or someone who is regarded as having such an impairment. -An employer may not refuse to hire or promote people with a disability so long as they can, with REASONABLE ACCOMMODATION, perform the ESSENTIAL FUNCTIONS of the job. An accommodation is unreasonable if it would create UNDUE HARDSHIP for the employer. f. genetics- . Under GINA, employers may not require genetic testing or use information about genetic makeup or family medical history as a factor in hiring, firing, or promoting employees.

6. Know when to apply the Business Judgment Rule and why the rule exists.

accomplishes 3 goals 1. It permits directors or managers to do their job without the obligation of perfection 2. It keeps judges and the courts out of corporate management by second guessing the actions of the board or mangers 3. It encouraged directors to serve and allows the mangers to do job without constant interference - The courts analysis for the application of business judgment rule is divides into two parts (duty of loyalty and duty of care) part 1 duty of loyalty - Good faith - Lawful purpose - Without conflict of interest - To advance the best interest of the corporation -- Prohibits managers from making a decision that benefits them at the expense of the corporation (fiduciary duty concept) - Self-dealing- is a violation of the duty of loyalty part 2 duty of care - The level of care that an ordinarily person would take in similar situation - Due diligence required officers and directors to act in best interest of Corp and to use the same care that an ordinarily prudent person would in the management of her own needs 1. Decisions must have a rational business purpose 2. Decisions and actions are legal 3. Managers must make informed decisions (that is, with the care that an ordinarily prudent person would take in a similar situation.)

advantages and disadvantages of s corporations

advantages -- They don't pay taxes but report income, flows to shareholders and they pay taxes. - Not double taxation, and have limited liability of C corp -tax breaks disadvatanges (restrictions) -only one class of stocks -- Shareholders are limited number to no more than 100 shareholders, limitation on who can be owners, partnerships or to other corporations cannot -- Must be US citizen or resident -Shareholders must be individuals, estates, charities, pension funds, or trusts, not partnerships or corporations. -All shareholders must agree that the company should be an S corporation.

corporations in general- advantages and disadvantages

advantages 1. limited liability- usually managers and investors personal property is not at risk. But not for their own wrongdoing (individuals are always responsible for their own acts) 2. transferability of interest- transfer ownership of shares. Partnership interests are not transferable without eh permission of the other partners. S/P must transfer title to individual item which is not convenient. 3. duration/continuity-when a sole proprietor dies, legally so does the business. But corporations have perpetual existence. 4. established rules-there exists a large body of law over many years Disadvantages 1. logistics-corporations require substantial expense and effort to create and operate (annual meetings with notice) 2. taxes-a corporation is a taxable entity, which means it must pay income taxes on its profits and file a corporate tax return. Shareholders must then pay tax on any dividends from the corporation which is referred to a double taxation 3. inflexibility- hierarchy of control- board of directors, officers and shareholder have rights and responsibilities that impact the nimbleness in making decisions -major provisions in law 1. major corporate tax deductions (c corps) 2. tax benefits for some flow through entities (s corps) 3. lower capital gains taxes ( c corps)

CPA Question A corporate stockholder is entitled to which of the following rights? Elect officers Receive annual dividends Approve dissolution Prevent corporate borrowing

approve dissolution

appearance

attractiveness, weight, and hair are not usually protects but standards may not impose greater burden on one sex than the other -Thus, it is legal for employers to discriminate based on attractiveness by hiring people whom they consider the best looking. -Generally, employment decisions based on a worker's weight are legal.

The CBA at Red Corp. has expired, as has the CBA at Blue Corp. At Red, union and management have been unable to reach a new CBA. Suddenly, Red locks out all union workers. The next day, during a bargaining session at Blue, management announces that it will not discuss pay increases. Answer Red has committed a ULP, but Blue has not. Blue has committed a ULP, but Red has not. Both Blue and Red have committed ULPs. Neither company has committed a ULP. Red and Blue have violated labor law, but not by committing ULPs.

blue has committed a ULP, but red has not

An LLC: Answer is regulated by a consistent and well-established body of law. pays taxes on its income. cannot have members that are corporations. is a form of organization favored by venture capitalists. can have an oral operating agreement.

can have an oral operating agreement

2. Know sources for employment contract.

common law protections- Many employment statutes were passed by Congress and therefore apply nationally. The common law, however, comes from state courts and only applies locally. We look at a sampling of cases that illustrates trends, even though the law varies from state to state. 1. promises made during the hiring process- Promises made to job applicants are generally enforceable, even if not approved by the company's top executives. 2. employee handbooks- If a handbook states that it is not a contract, then employers cannot enforce provisions favorable to them, such as required arbitration clauses. - if it implies it as a contract, it is valid -has been interpreted to create a contract

business self dealing

decision that benefit another company associated with the mangers

personal self dealing

decisions that benefit the manager directly

zombie directors

directors who serve on a board with less than majority support from shareholders

Under the FMLA: both men and women are entitled to take a leave of absence from their jobs for childbirth, adoption, or a serious health condition of their own or in their immediate family. employees are entitled to 12 weeks of paid leave. employees are entitled to leave to care for any member of their household. employees who take a leave are entitled to return to the exact job they left. all employees in the country are covered.

employees who that a leave are entitled to return to the exact job they left

foreign corporation

everywhere else it is not incorporated -- A foreign corporation is one that does business in any other state besides the state of incorporation

A company must include in its proxy materials the names of all shareholder nominees for the board of directors.

false

A corporation can be formed in any state or under the federal corporate code.

false

An employee may be fired for a good reason, a bad reason, or no reason at all.

false

Benefit corporations are nonprofits.

false

Employers always have the right to insist that employees submit to a lie detector test.

false

Employers that have contracts with the federal government are required to fill a quota of women and employees of color.

false

Federal law limits the number of hours every employee can work.

false

If more Whites than Native Americans pass an employment test, the test necessarily violates Title VII.

false

In both a general partnership and a limited liability partnership, the partners are not personally liable for the debts of the partnership.

false

Only workers, not their spouses or children, are entitled to benefits under the Social Security system.

false

Oral promises made by the employer during the hiring process are not enforceable.

false

Privately held companies that begin as corporations often change to LLCs before going public.

false

Shareholders own the corporation; thus, they have the right to manage the corporate business.

false

Sole proprietorships must file a tax return.

false

While organizing, workers may not discuss union issues on company property but may do so off the premises.

false

When Brook went to work at an advertising agency, his employment contract stated that he was "at will and could be terminated at any time." After 28 months with the company, he was fired without explanation. Which of the following statements is true? Answer The company must give him an explanation for his termination. Because he had a contract, he was not an employee at will. He could only be fired for a good reason. He could be fired for any reason. He could be fired for any reason except a bad reason.

he could be fired for any reason except a bad reason

capitalization

how can I raise the value of y business and what is the value right now

continuity

how easy is it to transfer the ownership and how long will it last

Which of the following statements is true? Answer In about half the states, employees have the right to bring guns into their workplace. In about half the states, employees have the right to bring guns into their workplace parking lot. Both A and B are true. None of these are true.

in about half the states, employees have the right to bring guns into their workplace parking lot

family responsibility discrimination

is a violation of title 7 if it involves men and women being treated differently (ex: women allowed leave of absence with newborn child, men are not, or women allowed 6 weeks and men allowed 2 weeks)

National Labor Relations Board

is the administrative agency empowered by the NRLA to administer, investigate and enforce.

corporate opportunity

it is a breach of duty to compete with the Corp without its consent. Self-dealing transition may be acceptable if

While working part time at a Supercorp restaurant, Jenna spills a bucket of hot French fries on a customer. Who is liable to the customer? Supercorp alone Jenna alone Both Jenna and Supercorp Jenna, Supercorp, and the president of Supercorp Jenna, Supercorp, and the shareholders of Supercorp

jenna and supercorp

picketing is generally

lawful

replacement workers types

management may replace striking workers to stay in business Type 1: economic- During an economic strike, an employer may hire permanent replacement workers. When the strike is over, the company has no obligation to lay off the replacement workers to make room for the strikers. However, if and when the company does hire more workers, it may not discriminate against the strikers. Type 2: ULP (unfair labor practice)- After a ULP strike, union members are entitled to their jobs back, even if that means the employer must lay off replacement workers.

Which of the following employers has violated Title VII? Answer Carlos promoted the most qualified employee. Hans promoted five White males because they were the most senior. Luke refused to hire a Buddhist to work on a Christian Science newspaper. Max hired a male corporate lawyer because his clients had more confidence in male lawyers. Dylan refused to hire a woman to work as an attendant in the men's locker room.

max hired a male corporate lawyer because his clients had more confidence in male lawyers

special forms for corporations (3 of them)

most common C corp- form of for appearing on stock exchange 1. non profit (not for profit)- corporations are created to serve the community but not profit an individual (Also referred as 501c3 (reference to tax code that exempts the paying of taxes)) 2. New: B corp or benefit corporation- Arkansas is one of the 27 states that allow this. Legitimize use of corporate funds to benefit community

Oil Co. was a controlling shareholder of Pogo, a company that drilled for oil and gas in the Gulf of Mexico. When some additional leases became available, Oil Co. purchased all of them for itself. How could Oil Co. avoid liability? By first offering the leases to Pogo's board of directors By first offering the leases to Pogo's other shareholders Just I Just II Both I and II. Neither I nor II.

neither 1 or 2

6. Understand employee's protection laws in both safety and financial areas.

off duty 1. Smoking- (employers cannot prohibit in 60% of states) 2. Illegal drugs and alcohol (private employers may test for illegal drugs) 3. Legal medication- EEOC prohibits testing for prescription drugs (unless a worker seems impaired) - Federal law allows private employers to test for alcohol and illegal drugs - A few states, such as CA, have passed lifestyle laws that protect the right of employees to engage in any lawful activity or use any lawful product when off duty free speech NLRA also protects all employees 1. who engage in collective activity 2. relating to work conditions and 3. who are not supervisors. social media 1. an employer has the right to monitor workers' electronic communications if 2. the employee consents; 3. the monitoring occurs in the ordinary course of business; or in the case of email, if the employer provides the computer system. lie detector Under the Employee Polygraph Protection Act of 1988, employers may not require, or even suggest, that an employee or job candidate submit to a lie detector test except as part of an "ongoing investigation" into crimes that have occurred. OSHA Congress passed the Occupational Safety and Health Act (OSHA) to ensure safe working conditions. OSHA has the following provisions: 1. general duty 2. Specific health and safety standards. 3. records 4. oversight employee data -must keep it confidential guns Employers have the right to prohibit guns in the workplace but, in almost half the states, Bring Your Gun to Work Laws prevent companies from banning firearms in their parking lot. financial protection The Fair Labor Standards Act (FLSA) regulates wages and limits child labor nationally. -Fair Workweek Laws -Workers' compensation statutes provide payment to employees for injuries incurred at work. -health insurance- Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), former employees must be allowed to continue their health coverage for 18 months after leaving their job. -The Social Security system pays benefits to workers who are retired, disabled, or temporarily unemployed and to the spouses and children of disabled or deceased workers.

economic strike

one intended to gain wages or benefits

quid pro quo

one thing in return for another (casting couch in acting, agreement role/promotion for sex) and (direct)

incorporator

person who signs the charter and delivers it to the secretary of state for filing (perhaps the lawyer or the promoter)

affirmative action

preferred hiring of minority class (Sometimes referred to as "positive discrimination." or more negatively as "reverse discrimination") • "Affirmative action . . . taken by covered employers to recruit and advance qualified minorities, women, persons with disabilities, and covered veterans." D.O.L.

Pregnancy discrimination act (PDA)-

prohibits employer from firing, refusing to hire or fail to promote a woman due to pregnancy. Also, failure to give accommodation in line with other exception for temporary disability

2. Compare and contrast the protective classes of Title VII

prohibits employment discrimination based on race, color, religion, sex and national origin.

The duty of care: is not a requirement of the business judgment rule. protects directors who make an uninformed decision if it was entirely fair to the company. protects a decision that has a rational business purpose, even if the activity was illegal. will not protect directors who make a decision that harms the company.

protects directors who make an uninformed decision if it was entirely fair to the company

A limited liability partnership: Answer protects partners from liability for their own misdeeds. protects the partners from liability for the debts of the partnership. must pay taxes on its income. is easy to form. None of these.

protects the partners from liability for the debts of the partnership

what are the two categories of sexual harassment

quid pro quo and hostile environment

CPA Question Generally, a corporation's articles of incorporation must include all of the following except the: Answer name of the corporation's registered agent. name of each incorporator. number of authorized shares. quorum requirements.

quorum requirements

CPA Question An unemployed CPA generally would receive unemployment compensation benefits if the CPA: was fired as a result of the employer's business reversals. refused to accept a job as an accountant while receiving extended benefits. was fired for embezzling from a client. left work voluntarily without good cause.

refused to accept a job as an accountant while receiving extended benefits

A sole proprietorship: Answer can easily raise capital. requires no formal steps for its creation. must register with the secretary of state. may sell stock. provides limited liability to the owner.

requires no formal steps for its creation

liabilty

risk of loss and risk managment

sexual orientation and transgender

sexual orientation are protected categories under title 7. Discriminating against someone for being transgender is a violation of title 7 -"gender must be irrelevant to employment decisions."

hostile work enviroment

sexual talk and activity pervasive that interferes w work ability

what are the two types of concerted action

strikes and picketing

concerted action

tactics taken by union members to gain bargaining advantage - The NLRA guarantees the right of employees ot engage in concerted action for mutual aid or protection -The NLRA guarantees the right of employees to engage in concerted action for mutual aid or protection. The most common forms of concerted action are strikes and picketing

double taxation

taxation of dividends both as corporate profit and as personal income

novation

that is, a new contract with the corporation alone for liability

free speech in the workplace (NRLA)

the national labor relations act (NRLA) protects all employees who engage in 1. collective activity 2. in connection with work conditions 3. and who are not supervisors -even non-unionized workers cannot be fired for discussing workplace issues (including salary information) with other employees, so long as these discussions are not inappropriately hostile or violent.

An employer can legally require all employees to have a high school diploma if: all of its competitors have such a requirement. most of the applicants in the area have a high school diploma. shareholders of the company are likely to pay a higher price for the company's stock if employees have at least a high school diploma. the company intends to branch out into the high-tech field, in which case a high school diploma would be needed by its employees. the nature of the job requires those skills.

the nature of the job requires those skills

charter

the only required document is a certificate of organization (also called a charter).

Which of the following steps is not required in a disparate treatment case? Answer The plaintiff must file with the EEOC. The plaintiff must submit to arbitration. The plaintiff must present evidence of a prima facie case. The defendant must show that its action had a nondiscriminatory reason. The plaintiff must show that the defendant's excuse was a pretext.

the plaintiff but submit to arbitration

franchises

the right to operate a business or to sell a product -- Not actually separate form of business- they can take almost any one of the ones discussed already -Most franchisors and franchisees are corporations or LLCs, although some franchisees are sole proprietorships. -All franchisors must comply with the Federal Trade Commission's (FTC) Franchise Rule. In addition, some states also impose their own requirements.

workplace freedom

the right to personal lifestyle choices and to the public expression of opinions about the workplace.

The president of R. Hoe & Co., Inc., refused to call a special meeting of the shareholders, even though 55 percent of them requested it. One purpose of the meeting was to reinstate the former president. Do shareholders have the right to make these two requests? Answer Yes to both No to both The shareholders have the right to call a meeting, but not to reinstate the president. The shareholders have the right to reinstate the president, but not to call a meeting.

the shareholders have the right to call a meeting but not the reinstate the president

privacy on social media (SCA) stored communications act

the stored communications act (SCA) prohibits unauthorized access to electronic communications, which includes email, voice mail, and social media. However, an employer has the right to monitor workers' electronic communications if 1. the employee consents; 2. the monitoring occurs in the ordinary course of business; 3. or in the case of email, if the employer provides the computer system.

If managers engage in self-dealing, which of the following answers will NOT protect them from a finding that they violated the business judgment rule? Answer The disinterested members of the board approved the transaction. The transaction was of minor importance to the company. The disinterested shareholders approved the transaction. The transaction was entirely fair to the corporation.

the transaction was of minor importance to the company

what happens when a company adopts a contract

they become liable too

purpose

this can be a broad statement such as "to conduct any lawful business"

Employers do not have to accommodate an employee's religious beliefs if doing so would impose an undue hardship on the business.

true

In a disparate impact case, an employer may be liable for a rule that is not discriminatory on its face.

true

Managers have a fiduciary duty to shareholders.

true

Most companies use a very broad purpose clause in their charter.

true

Ownership in a partnership is not transferable.

true

Title VII applies to all aspects of the employment relationship, including hiring, firing, and promotion.

true

right to information (model act)

under the model act, shareholders with a proper purpose have the right to inspect and copy the corporations minute book, accounting records, and shareholder lists

5. Understand the process referred to as "Death of the Corporation". -termination -voluntarily (shareholders) -involuntarily (state)

voluntarily - Terminating a corporation is a three-step process: 1. vote by majority of the shareholders to dissolve 2. filing articles of dissolution with the secretary of state 3. winding up- paying debts and distributing assets. Once this is completed the corporation ceases to exist involuntarily 1. The secretary of state may dissolve a corporation that fails to comply with state requirements such as paying the required annual fees. 2. A court may also dissolve a corporation or order that it be sold, if it is insolvent or if its directors and shareholders cannot resolve conflict over how the corporation should be managed. 3. As is the case with LLCs, courts may pierce a corporation's veil and hold its owners personally liable for its debts in any of the following circumstances: -Failure by the shareholders to observe corporate formalities, -Commingling of personal and corporate assets, -Capitalization so inadequate that the organization cannot pay its reasonable debts, or -Fraud.

1. Understand the incorporation process.

where to incorporation (in a state)- either the home state of business or state which favorable laws for Corp (often Delaware which has more than 66% of all fortune 500 and 805 of all Corp that have IPO) - State statute only- no federal statute incorporations - You can choose any state to incorporate and chose any state to have headquarters - The Corp is referred as a domestic Corp in home state and foreign in all others -To encourage similarity among state corporation statutes, the American Bar Association drafted the Model Business Corporation Act (the Model Act) as an example. -Companies typically must pay filing fees and franchise taxes in their state of incorporation, plus in any state in which they do business. To avoid this double set of fees, a business that will be operating primarily in one state would probably select that state for incorporation.

bylaws

which list the organizational rules. For example, bylaws set the date of the annual shareholders' meeting, define what a quorum is (e.g., how many people or shares must be present for a meeting to count), indicate the required number of directors, give titles to officers, and establish the fiscal (i.e., tax) year of the corporation. -set the rules for the corporation

• It is not required by Title VII and if implemented,

will be subject to strict scrutiny review by the courts.

BUSINESS JUDGMENT RULE Protection available beyond BJR -3 protections

• Courts will still allow a manager's action to stand and grant protection from liability even if that manager has violated the BJR under limited circumstances: • 1. Disinterested* members of board form a special committee to review and approve the action. (*disinterested means they gain no benefit from the action.) • 2. Disinterested shareholder (see above) approve the action. • 3. Neither BD or shareholder approve but the Court determines the act was entirely fair to the corporation.

financial protection - SS continued

• It exists as part of the Social Security system. • Most [but not all]of the standards are set by the individual states. • Each state sets it pay schedule and amount of benefits. (Usually reflects cost of living in a state.) • Requirements include: • Good faith efforts to locate and apply for job AND • individual did not quit job OR • individual was not terminated for cause.

• Sources that have created affirmative actions

• Litigation • Voluntary action • Government contracts • Educational institutions ( Students for Fair Admissions challenge may change this if S.Ct agrees with that position)

Even managers who violate the business judgment rule are protected from liability (and their decisions are upheld) under any of the following circumstances: (3 of them)

• The disinterested members of the board of directors approve the transaction. • The disinterested shareholders approve it. • The transaction was fair to the corporation. Neither board members nor shareholders approve the decision, but the court determines it was entirely fair to the corporation

unions may not

•1) To interfere with employees who are exercising labor rights (non-union employees working at union shop); •2) To cause employer to discriminate against (non-union) worker to strengthen union; or •3) To charge excessive dues.

employers may not

•1) To interfere with union organizing efforts. •2) To dominate or • interfere with any union. •3) To discriminate against • a union member, or •4) To refuse to bargain with a union.

Study Block 3: Chapter 20,21,19,18

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