Unit 3 - Chapters 17 & 18

What is the Right Level of Paranoia?

1. Plan to do good 2. Check with a lawyer early on 3. Recognize the predictable surprises of business and life 4. Manage risks

Design Patent

A 14-year patent for a new, original, and ornamental design for an article of manufacture

Subcontract

A contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform

Arbitration

A dispute resolution process held instead of court cases in which both sides present their case to a legal professional

Sarbanes-Oxley Act

A federal law describing the steps publicly traded businesses must take to protect and provide their key financial information

Retainer

A fee paid by a client to an attorney to engage the attorney's services

Litigation

A formal dispute resolution method that operates using the court system, typically with a lawyer representing each party

Patent

A grant by the U.S. government to an inventor for an idea that is new, useful, and non-obvious, giving the inventor the exclusive right to make, use, or sell his idea

Meritocracy

A management philosophy of selecting and promoting people based solely on their being the most capable person for the job

Flat Fees

A method of billing for lawyers in which a fixed amount is paid for a certain task

Employee Referal

An underused, low-cost method for finding workers that rewards your employees for recommending potential candidates that would be a great employee fit

Compensation, Benefits, and Perks

Bonuses and Long-Term Incentives; Health Insurance; Retirement Plans; Perks

Job Description

Defines and discusses all the essential knowledge, skills, and abilities that are needed to fill a position

On-the-Job Training

Delivered to employees while they perform their regular jobs; Techniques include orientations, job instruction training, apprenticeships, internships and assistantships, job rotation, and coaching

Copyright

Exclusive right given to the creator of a literary or artistic work to make use of that work

Off-the-Job Training

Includes lectures, special study, videos, television conferences, case studies, role-playing, simulation, programmed instruction, and laboratory training

Virtual Employees

Independent contractors who provide specialized business services or support from a distance, through the Internet, telephone, fax, or another method of communication

Vicarious (indirect) Liability

Indirect liability or responsibility for the actions of another

3 Components as CEO

Innovation, Operation, Inspiration

Good HR Practices for All Businesses

Transparent procedures with consistent application; Job basics; Job metrics; Task repair; Lines of communication; Clear termination rules; Line of appeal

You Need a Good Attorney

Usually with legal issues it is best to confront potential problems before they have a chance to get serious; Timely decisions and action may avoid a problem altogether or may make solving the problem much easier and cheaper

Training Your Employees

Where is training needed?; What key areas need the most attention?; What specifically must an employee learn in order to be more productive?; Who needs to be trained?

Contracts

agreements in which the parties exchange promises

Standard Contracts

company can just fill in the blanks as needed

501(c)(3)

refers to a section of the U.S. Tax Code that specifies the conditions for a nonprofit organization to be certified tax-exempt, meaning it does not pay any federal income taxes; In addition to saving taxes, 501(c)(3) status gives the recipient organization the ability to legally tell donors that their donations are also tax-exempt, which makes such donations a way to decrease the amount on which taxpayers would have to pay income taxes; This is one of the big incentives to nonprofits to increase the attractiveness of getting donations

Mediation

the dispute is put to a neutral third party who is not a judge

Employee Fit

the match between the needs, expectations, and culture of the small business with the expectations and the skills of the individual employee

Probationary Period

trial period in which an employee has temporary status before a formal offer to work full time is presented

Specialty Contracts

unique contract terms, large dollar amounts at stake

Small Claims Courts

work only when you are owed money, can prove it, and have exhausted other procedures like calls and letters to the customer; If there is a reason the other party did not pay—for example, he or she said your work was late,shoddy, or not as promised—you need to prove you are in the right; otherwise you will have a tough day in court

Three Characteristics of an Independent Contractor

1. Behavioral: The contractor solely decides how the work is to be done 2. Financial: The contractor pays his own expenses directly 3. Relational: The independent contractor is employed for a project and the service the contractor provides is not central to the operation of the business

Three Elements to Most Aspects of Business Law

1. Finding the right information 2. Negotiating the specific outcome you want 3. Taking care of the paperwork associated with it

Three Guidelines for Training

1. Give your employees opportunities to use their new skills 2. Make training an ongoing process 3. Think of training as an investment as opposed to an expense

Utility Patent

A 20-year patent covering a process, machine, article of manufacture, composition of matter, or any new or useful improvement of an existing one

Plant Patent

A 20-year patent that covers new strains of living plant organisms, algae, or macro fungi

Hourly Fees

A basis for legal charges in which the rate is based on a price per hour; Often lawyers will charge for fractions of an hour

Legal Entity

A being, human or nonhuman, such as a corporation, that is recognized as having rights and duties, such as the right to own property

Nonprofit Corporation

A business form specific to charitable organizations; Nonprofit business charters differ in the kinds of responsibilities the nonprofit has, compared to the other forms of for-profit business forms; Nonprofits are the only form of business that can seek 501(c)(3) status from the IRS, which permits donations to the nonprofit to be

Check the Box Taxation

A choice LLCs can make on their tax returns to be taxed as a corporation or a partnership

Nonexempt

A federal government descriptor of employees under the Fair Labor Standards Act who get an hourly wage and time-and-a-half for overtime

Exempt

A federal government descriptor of employees who are exempt from the Fair Labor Standards Act and are generally paid salaries

Nepotism

A management philosophy of selecting and promoting people based on family ties

Hold Harmless

A type of waiver in which a party agrees not to hold another party responsible for certain events

Articles of Partnership

Agreement between the partners of a firm on matters pertaining to the formation and operation of the partnership

Open-Book Policy

Concept that key employees should be able to see and understand a firm's financials; should have a part in moving the numbers in the right direction; should have a direct stake in the strategy and success of the firm

Trade Secret

Confidential information within a company that gives that company a competitive advantage

Evaluating Job Prospects

Create same specific questions you will ask of all candidates; Ask that person to demonstrate their skills; Consider involving one or two other interviewers; Never hire a moderately qualified person just because you need someone now

Trademark

Distinctive word, slogan, or image that identifies a product and its origin

Articles of Organization

Document setting forth information about a limited liability company that is filed with the state to establish an LLC

Pass Through (Taxation)

Earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings

Single Taxation

Earnings of the business are taxed once with the owners paying the taxes

Double Taxation

Earnings of the business are taxed twice with the business as well as its owners being subject to tax

Contingency Fee

Fee paid by a client to an attorney for legal services that is dependent upon the outcome of a case

Assumed Name Filing or a Fictitious Name Filing

Filing made with a state(s) in which the business operates disclosing the trade name or assumed name of the business along with the owners of the business

The Scope of Authority Argument

If employees make a decision requiring more authority than they really possess, the business can argue that it was not liable for the problem; Firm must fully train employees of the exact authority they possess

You and the Law (C17)

In a 2002 poll, less than 1 in 10 small business had been sued in the prior five years; It is easy to underestimate the number of laws that apply to small businesses; State laws applicable to small businesses are extraordinarily varied

Internet Recruiting

Method of recruiting that allows you to search a résumé database or post a job description to the Web; A small business owner who knows exactly what he or she wants can use filters to search vast numbers of résumés with pinpoint accuracy

Attracting Employees - Sources

Networking; Internet recruiting; Employee referral; Company websites; Career service offices; Professional groups; Outsourcing; Local churches and pastors; Local high school for entry-level jobs; State unemployment offices

The Bigger Small Business: Hiring Employees (C18)

No decision is as important or complex as the decision to hire an employee; Of the more than 28.2 million businesses in the United States in 2012, over 22.3 million had no employees at all; Adding employees increase amount of work that can be done - serving more customers, staying open longer

Dividing Up Ownership and Dividends

Owners of corporations often receive the base of their compensation as a salary; Family members receive similar packages: Higher than non-family members; Create profit sharing plans or bonus system for non-family members

Waiver

Part of a contract in which a party intentionally gives up legal rights or claims

Exculpatory Clause

Part of a contract in which a party to the contract states that he or she will not be responsible for certain actions

Noncompete Clause

Part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time

Six Major Factors at Play

Personal liability of the business owner; Taxation of both the entity and its owners; Complexity and organizational costs in setting up; Control of the business; Continuity of the business; Ability of the business to raise capital

Independent Contractors

Persons working to achieve a certain goal without being subjected to substantial controls by another

4 Steps to Structure a Negotiation

Prepare what you need to achieve; Position by putting your best foot forward; Propose solutions that provide value and balance; Pounce when agreement on any part of the negotiation appears at hand

Intellectual Property

Property coming from some sort of original thought; for example, patents, trade secrets, trademarks, and copyrights

Intangible Property

Property that has no value of its own but that represents value, such as a stock certificate

Psychological Contract

Refers to employees' beliefs about the promises between the employee and the firm; Beliefs are based on the perception that promises have been made in exchange for certain employee obligations

Infringer

Someone who uses intellectual property without the permission of the owner

Crafting a Job Description

Start with a title 2. Give a job overview 3. Define the duties and responsibilities 4. Knowledge, skills, and abilities 5. Credentials and experience 6. Special requirements

Factors Most Valuable to Employees

Teamwork; Recognition; Training; Empowerment; Contribution

Living Wage

The amount needed for a person (or family of a particular size) to meet the basic necessities of life from a single job

Piercing the Veil

The dissolution of a corporate form, making it back into a sole proprietorship or general partnership, if the court finds that the owner carelessly mixed up personal and business assets or finances

Job Analysis Description

The job itself; The tasks of the job; The critical tasks; The critical competencies

Trade Name or Assumed Name or a Doing Business as (dba)

The name under which a business is operated

Entrepreneurial Leadership

leadership really means administration; Two key factors: Task and Person