Three Legal Tips to Protect A Small Business

Business owners should take the time at least once per year to look over their core policies and documents to make sure they are effectively protecting their business, and summer is the perfect time. 

From employment agreements to social media policies, Matthew Villmer, attorney, Sodoma Law, P.C offers three tips that can ensure a company is successful. 

1.       Insist on an Employment Agreement for Everyone: After hiring a new employee, every business owner hopes the person will turn out to be Mr. or Mrs. Right.  But sadly, that’s not always the case.  Make it a point to review any dusty or outdated agreements now, because a well-drafted employment contract protects you from employees who might do harm to your business in the future.  At a minimum, every employment agreement should include a description of the new-hire’s expected duties, their compensation, the required time commitment for the position, and some termination terms.   
In addition to these clauses, several other additions will go a long way towards protecting your business.  A carefully drafted non-compete agreement can prevent your employees from leaving the company, stealing your clients, and starting their own competing business.  Likewise, non-disclosure and confidentiality clauses can make sure a departing employee stays tight-lipped about the company’s private information. 

2.       Properly Classify Workers as Employees or Independent Contractors: Considered whether workers are employees or independent contractors?  Understanding the difference between these classifications can save thousands in IRS penalties and back-taxes. The IRS typically looks at several factors when figuring out whether a worker is an employee, requiring the employer to withhold and pay taxes, or an independent contractor, requiring the worker to withhold and pay his own taxes.  If the small business controls every aspect of how workers complete their job, they probably are employee.  If workers are required to provide all their own equipment and cover their own business expenses, then it’s likely that they are an independent contractor. 
If the company is on the fence about how to classify workers, it can always reach out to the IRS directly.  The revenue agency will typically give an opinion on the matter after the company files the right forms.  Making sure all workers at the small business are properly categorized will keep the IRS off the company’s back and ensure that it is fully protected as fall turns into winter

3.       Institute A Social Media Policy:  Social media is wildly popular, and people are talking about the company online whether management likes it or not.  If the small business has an online presence, it should definitely have a social media policy that lets employees know what is expected when they communicate to the outside world through social media.
Some employees think that they have a right to say whatever they want online, even if what they say harms your business.  While it’s true that the freedom of speech is alive and well in the United States, just because your employees have the right to say something doesn’t mean there aren’t any consequences for saying it.  A good social media policy makes employees take responsibility for what they write, and it encourages them to use common sense when expressing themselves.
When drafting the business’ policy, management should consider including requirements that employees steer away from comments involving slurs, demeaning language, and other types of disparaging remarks.  This policy should also make sure employees respect copyrights and protect the company’s confidential and proprietary information.  Without giving specifically defined boundaries to social media use, the small business may find that it’s star employee spilled the beans on Twitter about the company’s pending acquisitions or newest product! 

Take these three tips and use them to improve your business today.  Don’t let another year go by without sprucing up the company’s policies and contracts!  

Matthew Villmer leads thr Business Litigation practice group at Sodoma Law, based in Charlotte, N.C.