By Erica Brinitzer
Many business owners are savvy enough to recognize the benefits and liability protection associated with incorporating their business. Corporations are generally treated as a separate legal entity, with separate liabilities and obligations from its owners. Therefore, many business owners assume that incorporating their business will protect them from being personally liable for the business’s debts and liabilities.
Unfortunately, many business owners fail to recognize that merely filing articles of incorporation with the secretary of state is not enough to protect their personal assets from the corporation’s creditors. In order for a corporation to be treated as a separate legal entity, the corporation must be managed as one. This includes appointing a board of directors, electing executive officers, holding director and shareholder meetings, and managing the corporation’s finances and accounts as separate from that of the shareholders.
This can often be a problem for small business owners who are the sole shareholders in their corporations. While these business owners want the personal liability protection afforded by the corporate entity, they do not want to be forced to drastically alter their day-to-day management of their businesses. Holding board of directors’ meetings and appointing officers of the corporation seem like an unnecessary hassle for a sole shareholder who is already effectively running his or her business.
However, in order to ensure that their corporation is actually providing protection from personal liability, it is of the utmost importance that shareholders go through the process of adopting corporate bylaws, appointing a board of directors, electing officers, setting up bank accounts, and establishing the corporation as an entity separate and apart from its shareholders. If these and other corporate formalities are not properly followed, the shareholders are at risk of being held personally liable for the corporation’s debts and liabilities. The rationale is that if shareholders do not properly maintain their corporation as a separate entity, they should not be able to hide behind the “corporate veil” and protect themselves from personal liability to the corporation’s creditors.
Luckily, corporate bylaws, and if necessary, the use of a shareholders agreement, can be structured to significantly decrease the difficulties associated with complying with the necessary corporate formalities. Limited Liability Companies (LLCs) also provide an effective means by which to protect business owners from personal lability and can be structured so as to eliminate the need for many of the corporate formalities associated with corporations.
An experienced business attorney can assist you with selecting and structuring the most appropriate form for your business entity to ensure you remain protected from personal liability without having to sacrifice the ease of running your business. While many business owners shy away from spending the extra time and expense to retain an attorney to help them properly structure their business up front, doing so often saves business owners substantial money down the road and ensures that business owners are actually receiving the personal liability protection they desire.
By Brianna M. Neasham
Employees considering whether to file a civil lawsuit against their employer for work-related misconduct may be unaware of the procedural hoops they must jump through before they may be eligible to pursue civil litigation in a court of law.
This frequently involves filing a complaint with an Administrative Agency established by Congress or the State of California to handle grievances that occur under its particular purview.
These administrative requirements are not limited to California statutory based claims but include almost all major federal and state statutory based employment based claims, including but not limited to, the Americans with Disabilities Act (“ADA”), National Labor Relations Board (“NLRB”) Claims, and Title VII discrimination claims.
The rationale behind requiring parties to exhaust administrative remedies is that the agencies assigned to initially investigate claims have specialized knowledge and experience with respect to interpretation and enforcement of the various labor and employment statutes. Additionally, the administrative scheme was designed to promote conciliation between the employee and employer by avoiding litigation through the introduction of a third party neutral (the administrative agency) as the first step.
Unfortunately, rather than serving to expedite or provide for non-litigation based resolution of the claims, more often than not, the administrative remedy requirement serve only as a bar to litigation for individual employees unfamiliar with these prerequisites. It is not uncommon for employer defendants to rely upon these requirements as an opportunity to potentially dismiss a lawsuit due to the procedural deficiency in a plaintiff employee’s complaint.
In addition to acting as a bar to otherwise legitimate lawsuits, exhausting administrative remedies can also be a lengthy and time consuming process depending upon the agency and the particular investigative process – delaying the litigation process, the potential loss of witnesses over time, and compounding the effects of your unemployment. However, there are some mechanisms to expedite the process depending upon the discretionary authority of the agency and different procedural options.
An experienced employment and labor attorney can assist you with navigating this process and properly presenting your claims. We encourage you to consult with an attorney at the earliest convenience to determine if your claims are subject to an administrative remedy scheme.
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