May 28th, 2020 Update
The Johns Hopkins CSSE dashboard is reporting 5,877,503 confirmed cases, 362,769 deaths and 2,464,595 recovered globally.1,734,986 million US cases and we have reached a grim milestone at 102,286 deaths and 399,991 recovered as of 1:08pm on May 29.
Topic: Field service business legal questions answered with Rocket Lawyer
Special Guests: Mario Jaramillo from Rocket Lawyer
Tell us about yourself. What type of law do you practice?
I’ve been practicing law for 20 years and I went to USC Law School. This profession has progressed. I began with big firms, initially representing doctors, nurses, the medical profession defending them in cases. I’ve represented big and small companies and about 2 years in or so, I realized the long hour work style wasn’t working for me, so I created my own firm and that grew enormously.
Then I came across the legal plan world and met a group of awesome people at Rocket Lawyer, which is what I’m primarily associated with now. And together, we’ve built a pretty robust legal benefits plan for its members. We service all kinds of needs, we get from, you know, small mom and pop shops to established companies. The recent change in the law as to what constitutes an independent contractor versus an employee, and that’s confusing to a lot of people.
Initially I got in because my father was a chiropractor growing up and I was supposed to take over his practice. But I didn’t like the way attorneys were treating them. So I wanted to be on the flip side of it and be that attorney that treats people the way they should be treated.
How do laws get passed?
Speaking as a California attorney, laws can be voted on , you know we have elections, we have ballots and those ballots, depending on what’s being proposed. That could also be bills passed you know assembly bills is also the hot topic now. Also, what constitutes an independent contractor versus an employee, which is really what codified what’s called dynamics ruling.
Then there’s also laws that are created by what’s called case law. Example, superior court cases for your small claims, lawsuit stuff that’s filed in again in Superior Court that’s above small claims jurisdiction. That doesn’t create law. What creates law is when that stuff gets appealed. And the statutory law comes from ballads and assembly bill,
Are we required by law to provide PPE for employees? What can happen if small businesses don’t?
Yes, you are required by law to provide PPE for employees. For the most part of the general premise, you have to provide your employees with all the tools that they need to be able to conduct their work in a safe manner. If employees bring their own equipment that doesn’t meet certain standards by the state, then you don’t have a safe working environment and could fall into liability issues ranging from OSHA complaints.
What, from a legal perspective, do businesses owners need to be thinking about protecting their payment transactions now that cash is not encouraged to be used?
Nobody wants to touch cash now. You can never prevent s chargeback by merchant, and it just happens sometimes. There are no set laws on how a merchant is to determine whether or not that was a valid charge or not, every merchant service provider has their own policy on it.
So, you might have a situation where you’re doing everything that you want that was per the services to be provided. Everything was great. The agreed upon fee was paid, but you end up getting a chargeback. You should respond to disputes quickly, have proper documentation, and communicate. Have copies of text messages, emails, invoicing, and other information. Key terms and conditions is another defense for you. The terms and conditions should lay out all services performed. However, a merchant service company isn’t a judge or court, so they have their own policies and procedures. Unfortunately, at that point, you’re going to have to use a court of law.
Your cap in California is at $5,000 or less if you’re an individual providing personal services, then you could sue for up to $10,000 (but generally on business related matters).
Another important thing is to check with your merchant service provider and see if they require a copy of the driver’s license of the individual, or a copy of their credit card to be able to sustain a chargeback. Don’t just trust stuff like DocuSign.
Independent contractor vs. full time employee
There’s what’s called the ABC test. Let’s say, somebody to come in and handle calls for me on a part time basis 30 hours a week just to work on phone calls and that person wants to be paid as an independent contractor, then we sign an agreement. Conversely, if I were to hire someone to water my plants, that’s an independent contractor and not an essential part of my business.
The key element is can that person have their own corporate structure of their own. The other part is control. Are you controlling the work day of the individual? If you’re controlling the work they have, then that’s an employee regardless of how many hours they work. Some self licensed people might be exceptions.
Beware not to misclassify independent contractors. If both of us signed an independent contractor agreement and they agree they’re independent contractors and I agree. Isn’t that fine? No, it’s not. Not as a law, and that is an invalid agreement.
If that person gets injured and what happens is they make a workers comp claim and now the company doesn’t have workers comp insurance. Your business might receive a giant bill in the end.
If I hire my daughter to work for my business, do I need to pay worker’s compensation for her, or should I hire her as a 1099?
Family members are exempt. The policy is different behind a family and a family business where the family works together. You still need to provide PPEs to keep the work environment safe.
Can you do an individual worker’s comp plan for the IC?
Depending on the insurance, and make sure that it’s truly an independent contractor and that it meets the criteria. You’d have to talk to your workers comp insurance company and see if they do cover that
What liability do I have to customers?
Have the proper protocol put into place. Make sure your employees are sent into a safe environment. When you’re speaking with somebody on the phone, or you have reason to know that that person could possibly be sick and you’re sending somebody over there to perform a service. If you’re not essential, you’re conducting business when you shouldn’t be, and that just screams liability all over it.
What’s the most effective but inexpensive way to collect past due invoices from commercial and residential customers? Is it better to have a local lawyer for these collections or go through a collection agency?
The more you explain early on and set expectations for your customers, the easier it might be to collect invoices. Whether you should get a lawyer to collect payment might have to do with the amount you’re owed. It might be hard to hire a lawyer for these cases, a person can file bankruptcy, you can get a judgment, but they don’t pay it. And now you got to go chase them or chase their assets.
If the amount is not significant, maybe as for small claims assistance through a service like Rocket Lawyer.
Is there a legal document about photo/media and or likeness and testimonials agreement to use them in marketing; website, social media, etc?
There is a template from Rocket Lawyer if you want to look for something that involves licensing or granting of rights.
What can business owners require from their employees to make them sign some sort of work release form?
You can waive liability for your independent contractors that can be a bit different, but not for your employees. You have to provide a safe work environment.
What if employees won’t come back to work?
If they don’t come back to work and it’s not for a protected reason such as something that’s protected under The Family Medical Leave Act or something similar because they got to take care of someone that’s sick with COVID-19 or they have a situation where schools are closed so they have to take care of kids, things of that nature are protected either on the state of federal level.
If you’re able to provide a safe working environment compliant with state and federal guidelines and they choose not to come back and it’s an abandonment, a position.
How are you able to give out company shares? Can you do it with an LLC or does it have to be a C Corp or S Corp?
Be careful of what you wish for because if an employee becomes a co-owner and if the employee doesn’t perform well, they still own part of the company even if they’re fired. Prevent them going to competitive industries or companies or what have you, typically what I’ve seen people do there is you can create a bonus structure. You don’t have to give them ownership. Also, outline these things in the employee handbook.
If a property owner has dangerous or illegal plumbing/HVAC/electrical issues, and companies do minor repairs but refuses to fix the dangerous items, are businesses liable for the outcomes?
Yes, you can still have liability, but you should make sure you are properly insured for your business. In case something goes wrong, you want your insurance company to come in and pay for attorney fees.
Don’t copy and paste contracts
I understand that when people are in the same industry, they tend to borrow each other’s contracts and then use it and modify it for their own use. What ends up happening is that it gets diluted time and time again. The document might not even make legal sense anymore. It’s important to have your attorneys review your documents.
One of my contractors just got the PPE and one of his techs just quit, what should he do once he loses it?
There should be outlined in their certain terms and conditions as to how you can use that money for payroll and employment related purposes to make it a forgivable loan or what have you. You might still need that money for other things such as rent, overhead, and other business related expenses. But again, you have to look at those line items to see how you could qualify. I suggest you talk to your CPA or accountant.
I did work for another company years ago and never charged them (it was a large sum of money), what can I do to take them to court?
If you have something in writing. It’s called breach of contract would be a breach of contract issue for non payment.
How to hire great leaders for your field service business
Control. It’s probably why you started your own business in the first place. You wanted control over your time and your earnings. Control the way things get done. But as your business grows, you realize you can’t do everything yourself. So if you want a business that’s yours, but also one which can grow into something great – you need to hire great leaders. Download our ebook, Hanging up your boots and hiring leadership, to learn how to move away from being the boots on the ground and become the visionary that scales a truly great company.