by eclewis | Jun 10, 2015 | Business News
Here in the 10th Circuit, where Colorado is located, it was previously considered a requirement by the courts that discrimination claims under Title VII based on a religious accommodation required the employer to have actual knowledge of the religious accommodation request from the employee or prospective employee. In practice, this would mean that an employee or applicant would have to ask the employer for such accommodation before they could be liable for discriminating against them for this reason. At first glance, this sounds like it makes sense, but in practice, things are more complex. The Supreme Court recently reversed the 10th Circuit’s approach in an 8-1 opinion in the case of E.E.O.C. v. Abercrombie & Fitch Stores, Inc.
You may have heard of some of these cases in the news, as there have been a few. The gist of the facts from these different cases is that an applicant wearing a headscarf, as part of their religious beliefs, was not hired by Abercrombie, despite being qualified. The reason for this was because of the “Look Policy” that Abercrombie has for all of its employees, which prohibits “caps” to be worn by employees (there is no definition for caps in the policy but Abercrombie states this covers anything covering up a person’s head). Note however, that Abercrombie has since altered their Look Policy to allow for such religious headwear.
In the recent case, there was no discussion between the applicant and Abercrombie regarding her wearing the headscarf, other than that she was aware that Abercrombie had a “Look Policy” (but no details of the policy were discussed). The applicant never asked if the headscarf was okay and Abercrombie never asked the applicant if they would be wearing the headscarf on the job. Abercrombie simply assumed that the applicant would be wearing it, and did not hire her, since it would violate the Look Policy. The applicant won in district court, but the 10th Circuit ruled in favor of the employer. The 10th Circuit held that an applicant must communicate the need for a religious accommodation to an employer in order for the employer to be liable for discrimination. On review, the Supreme Court held instead that the need (or presumed need) for a religious accommodation only has to be a motivating factor for their decision not to hire the applicant, and that no actual knowledge of the need for such accommodation is necessary.
What does this mean exactly? No actual knowledge is required? Basically speaking, what the court seems to be telling us is that there is a clear distinction between knowledge and motive, and that employment decisions can be motivated by something, despite the employer not knowing with complete certainty as to its truthfulness. Here’s some insight from the Court’s opinion:
“Motive and knowledge are separate concepts. An employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive. Conversely, an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.”
Here’s an example provided by the Court:
“…suppose that an employer thinks (though he does not know for certain) that a job applicant may be an orthodox Jew who will observe the Sabbath, and thus be unable to work on Saturdays. If the…employer’s desire to avoid the prospective accommodation is a motivating factor in his decision, the employer violates Title VII.“
What does this mean for businesses? It is simple, do not discriminate based on an applicant‘s (or employee’s) religious beliefs, or even based on religious beliefs that you think they have (even if you don’t know for sure). If you suspect that an applicant (or employee) will need a religious accommodation, and you make an employment decision motivated by this, then you have discriminated against that person under Title VII.
If you have questions about how to go about making employment decisions for your business in compliance with the law, please contact the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
by eclewis | Jun 3, 2015 | Business News
The next part of our series on Due Diligence will discuss Employee Due Diligence.
Now if the business you are looking to buy does not have any employees then this may be a simple process, but it may not be as simple as you would think. For example, the business that you are looking to buy may not have any employees per se, but they may instead utilize independent contractors, which may in fact be more properly classified as employees. This could bring up some significant liability and operational concerns going forward, so you will want to have these relationships carefully scrutinized by yourself and a knowledgeable attorney. This way you will know what you are getting into with this business purchase.
Some of the documents you should be looking for are:
- Employment contracts
- Independent contractor agreements
- Non-Disclosure, Confidentiality, Intellectual Property and Non-Compete agreements
- Any employment or Human Resources policies or handbooks
- Documents showing any employee benefit plans such as (health insurance, retirement, bonuses, etc.)
All of these documents can bring up a variety of issues. You need to think about whether or not you want to continue using the same contractors and employees going forward. It may be a good idea for business continuity and transition, but it may also be a good time to make a change as well, especially if you have significant changes in mind or want to bring in key new staff of your own. The enforceability and terms of these agreements can have a substantial impact on the value and continuation of the business, and you need to be sure that you are getting a fair deal with the purchase.
Beyond the documents themselves, it may be a good idea to gauge employee feelings regarding an acquisition and possible change in management. If employees are not happy about such a large change, it could be a disaster in the making to take buy the business. Think carefully and don’t let the excitement of being an entrepreneur cloud your judgment. Trust experienced professional advisors to help you with deals of this significance.
If you need assistance with legal help and/or document drafting for your business sale, please contact the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
by eclewis | May 27, 2015 | Business News
Continuing as part of our series on Due Diligence, we have already outlined Financial Due Diligence, and this time we will take a look at due diligence regarding issues that are more legal in nature.
As part of the due diligence process, it is important that you have the legal documents of the business reviewed, just like you would the business’ financial statements. This can help identify irregularities or potential problems with the acquisition. In addition to documents to review, it may also be a good idea to interview the owners and employees of the company to see if what happens in practice with the business lines up with its legal documentation.
Some of the documents to review include:
- Articles of Incorporation/Organization, Bylaws/Operating Agreement, or any other equivalent document (like a Partnership Agreement)
- Minutes of meetings as well as any stock or other buy-sell agreements between owners regarding their ownership interests
- Documents showing capitalization of the company (meaning who are the stock or ownership interest holders)
- Major contracts the company has with its suppliers, distributors, etc.
- This can also include employment contracts
- Insurance policies benefiting the company
- Any intellectual property rights, licenses, trade secret information etc.
- Documents relating to any lawsuits against the company
These documents will indicate how the company has been formed, as well as who all of the owners are, what types of restrictions have been placed on the company or its owners, and other key legal issues. This can help determine if there will be any complications regarding the transaction, as well as if the business has been run properly and in accordance with the legal documents. Additionally, having this type of documentation reviewed can help understand the business better, which can also help in determining a good valuation of the company. Finally, having these legal documents reviewed can also provide insight into existing or potential liabilities the business is exposed to, so you can understand what you are getting yourself into by purchasing the business.
If you need assistance with legal help and/or document drafting for your business sale, please contact the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
by eclewis | May 20, 2015 | Business News
Whenever you are thinking about buying a business (or selling a business) it is expected that you will perform your due diligence before the sale is final to help decide whether or not the purchase is a good idea by verifying the material facts related to the transaction. This post discussing financial due diligence will be the first in a series discussing the different aspects of due diligence that should be performed prior to finalizing a transaction.
The idea behind financial due diligence is to help determine the value of the company you are buying by reviewing their financial documents. These financial documents should be audited independently to determine their accuracy.
- Financial statements for the past few years
- Income statements for the past few years
- Tax returns for the past few years
- Balance Sheets for the past few years
- Description and valuation of significant assets (including real estate and accompanying title and tax information, as well as information of depreciation schedule)
- Any current budgets, revenue projections, or other similar documents
- Any loan or other promissory note documentation (as well as any security interests against the business or its assets)
You want to be sure that nothing in these documents is questionable or raises any concerns about the current and future value of the company or assets that you are purchasing. You want to be sure that you have all the right information so that you can negotiate in a fair and informed way. If the other party is unable to produce these documents, that may raise a red flag as well, and you will want to be sure that you raise these issues with your professional advisors (attorney, accountant, etc.) to determine what the next course of action should be.
Big purchases can be very emotional, whether it is buying a home or a car, it can be easy to get emotionally attached to the prospective purchase. However, you don’t want to let yourself get so caught up in the emotional excitement of taking over a business that you lose site that this is a business transaction. You need to independently verify that everything is what the current owners say it is with regard to the business you are thinking about buying.
If you need assistance with legal help and/or document drafting for your business sale, please contact the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
by eclewis | Apr 22, 2015 | Business News
In a previous post, we talked about the importance of diversifying your business and the benefits that it can have toward your success. This time, we’ll talk more about developing an initial idea for a business.
You’ve probably heard it said before, that they key to a successful business is usually in the form of one of two ideas. The first is for your business to do something that other businesses are already doing but doing it in a different or better way. The second is for your business to do something completely different, something new, that nobody else is really doing (or perhaps just nobody in that particular area).
When you are doing something that others are already doing, in order to succeed, you probably need some kind of differentiator to make your business stand out. Maybe you will provide better customer service, maybe your business has greater expertise in the area than competitors, or maybe you are just in a more convenient location than the rest. There are benefits to this approach though too. By doing something others are doing, you know that there are customers out there, you know that it is possible to succeed. Basically, you don’t have to reinvent the wheel.
If you are doing something different, that nobody else is doing, it can be even riskier endeavor. Sometimes there’s a reason that nobody else has done it. Perhaps others have tried and failed, maybe there are legal or regulatory challenges in the way, or it could just be a concept that won’t generate enough customers to survive. However, by doing something new, it may be easier to attract customers, since you don’t have any direct competitors (for now—remember if your business is successful, it is only a matter of time before others try to jump in and compete).
Either route toward success will be challenging, but can be very rewarding.
It can seem hard to come up with that great business idea, something that nobody else is doing, or coming up with that critical differentiator to make your business do what others do, so much better than the competition. Sometimes you may be able to find a way to get some of the benefits of both approaches.
For example, you may consider combining two things that people already do and like to form a sort-of new, hybrid business. This can go hand in hand with that idea of diversifying your business that we have discussed before. With this approach, you can attract traditional customers of either business, as well as bring in new customers as a result of this new business concept. You also aren’t tasked with coming up with a completely new idea or way of necessarily being better than all the competition of the individual businesses. This could help you capture some of the benefits of either approach to coming up with a good business idea.
The current age of technology and rapid changes taking place in the economy are opening up all kinds of opportunities that would not have existed or been considered 5 or even 10 years ago. People seem to be more willing to try new things now than ever before, so this can open up the door for small businesses and entrepreneurs to find new and creative ways to bring new value or consolidate the value provided by other businesses in a new and exciting way. Another aspect of this is that this fast-paced change can also make it even more difficult to predict how successful a business will be. Moreover, this could make it nearly impossible to project the successfulness of a business over the long-term.
With whatever idea you come up with or consider, you should be sure to speak with experienced professionals and advisers before getting started. This way you can be more aware of the potential risks and know what challenges you will face with starting a business.
If you’re thinking about making that leap to start your own business, do not hesitate to reach out for legal help and guidance from the Law Office of E.C. Lewis, PC, home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
by eclewis | Apr 8, 2015 | Business News
Colorado was recently ranked 3rd among US state economies by Business Insider. You can see the full report here. This is not too surprising since Business Insider also ranked CO as being the fastest growing state economy last year. A large part of the methodology of the new ranking, Business Insider was looking at factors such as GDP per capita, unemployment rate, weekly wages, and state government budget situation.
Naturally, all of these individual factors are significantly affected by the state of the energy market, especially for states like Colorado with significant oil and gas exploration and development. It’s interesting to note that North Dakota came in at #1 on this list and Texas at #2, two states that also have substantial energy-based economies. With the recent drop in oil prices and reduction in related jobs, it will be interesting to see how this impacts Colorado’s economy. We already discussed in a previous post about how the lower gas prices have increased hiring and business overall in other sectors of the economy.
So far, it has been reported that Colorado has not been significantly impacted by the drop in oil prices yet, at least as far as the recent data is able to show. However, this will not likely remain the case. It was reported that half of Colorado’s drilling rigs have not been in operation for months. Growth and other economic projections for the state’s future are not as bright as they once were. This is expected to increase unemployment, reduce GDP, and also reduce state tax revenues too.
Colorado does have a diversified economy, certainly much more so than say, North Dakota, and the state is expected to weather the storm in the energy market better than other areas, with continued growth and low unemployment rates continuing, just perhaps not quite as strong, into the future. After all, business confidence here in Colorado is still continuing to rise. Colorado is and will continue to be a top state for businesses both big and small.
If you have questions about legal matters for your business, don’t hesitate to reach out to the Law Office of E.C. Lewis, PC, home of your Denver Business Attorney, Elizabeth Lewis, at 720-258-6647 or email her at elizabeth.lewis@eclewis.com.
