Legalese

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Speaking Legalese: 5 Words Small Business Owners Should Know

May 14, 2018 - 6:18 pm
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Do you know all the different steps necessary to get your small business off the ground and running? For many individuals in this position, getting things headed in the right direction can prove more difficult than expected. Along with needing the financial footing to maneuver a small business operation, one must also be adept at the laws of the state or states in which they will be doing business. To do otherwise would be playing Russian roulette with one's finances.

As a responsible smaller business owner, it’s vital to know these terms of legalese and the concepts behind them.

 

Bad faith 

This involves one or more parties not following through with what had been originally agreed upon. Bad faith in a business relationship has the potential to cause you all kinds of problems. As such, it is important that you make sure anyone you get involved with sticks to their end of the agreement.

 

Implied contract

With an implied contract, you have what two or more parties discussed regarding their possible business dealings. For example, you perform services for someone who does not pay for the time and effort you made to provide said services. If the matter is taken to court, a judge may decide there's enough evidence to show that both parties had an understanding of what was to take place.

 

Indemnity and liability

In this matter, indemnification refers to an obligation by the business to offer protection to an employee, director or even investor. Such individuals may be exposed to liabilities in doing work for the business.

 

Covenant not to compete

Over time, employees come and go, especially as it relates to small businesses. Workers may decide that there are more opportunities awaiting them with a larger company. As such, you may want to draw up an agreement that says employees are not allowed to compete against your business for a set period of time. Keep in mind that denying someone the right to work elsewhere could land you in court in some instances. Therefore, making sure that what you propose to do with a covenant not to compete is legal and of the utmost importance.

 

Overtime

Having employees who work more than 40 hours each week means one of two things:

If employees are salaried (exempt), they are expected as part of their classification to work overtime without additional pay when required to meet company needs. If that is the case, the staff member may be offered comp time in return. For example, someone puts in a 50-hour workweek in order to get the job done. In return, he or she is granted 10 hours of comp time to use at a point in time when it's convenient for both your business and the employee to do so.

For those workers being paid by the hour, working more than 40 hours means paying them overtime. Many companies will do their best to try and get all the work done within in a 40-hour time frame each week as to avoid paying extra hours. In some cases, employers will decrease or remove overtime hours altogether.

 

 

This article was written by Dave Thomas for Small Business Pulse