Employee background checks are governed by federal and state law. The Fair Credit Report Act (FCRA) (15 U.S.C. § 1681 et seq.) covers the federal law and excludes in-house background checks.
In Louisiana, criminal background checks are done through the Bureau of Criminal Identification and Information. Their website is incredibly helpful, and allows employers to conduct an online search through the Louisiana State Police. Before conducting the background check, your employee must fill out an authorization form. You must also fill out the general disclosure form.
Contact Information for the Bureau of Criminal Identification and Information can be found on their website.read more
If you have a corporation, it’s important that you observe the corporate formalities in order to claim the limitation of personal liability. Some of the formalities include shareholder meetings, board of director meetings, and board committee meetings. In order to show that the meetings actually took place, minutes should be taken every time one occurs. Your minutes shouldn’t be just a transcript, rather, it should be a brief narrative describing the actions taken. Unnecessary details may make the record confusing and possibly create legal difficulties.
Decisions should be recorded as resolutions, and make sure to keep a record of how everyone voted.
Examples of things to include in your shareholder meeting minutes:
Examples of notes to include in the minutes from your board of director’s meeting:
I’ve noted previously that corporate formalities must be observed in order to avoid personal liability. The three most important corporate formalities are shareholder decision making, director decision making, and separation of corporate and personal assets.
The shareholders must elect a board of directors annually. Usually, this will be done at a shareholder’s meeting. It can also be done by written consent if your bylaws allow. Amendments to the articles of incorporation, a sale of a substantial amount of assets, or a decision to merge or consolidate the corporation must be authorized by shareholders.
The board of directors handles matters of general operating policy for the corporation. There is no set timeline for meetings, but in general they should be held quarterly. Board members may also taken action be unanimous written consent, if the bylaws allow. Actions of the board should be entered into the corporation’s minutes.
The final corporate formality is separation of assets. Even small corporations must keep books separate from their shareholders, directors, and employees. This is a common problem with small businesses, but is luckily easy to fix. If the shareholders of the corporation are treating the corporation as their own bank account, creditors and anyone else with a claim against the corporation may attempt to pierce the corporate veil, and make the shareholder pay corporate debts out of her personal funds.
The corporation should also keep up on annual filings with the secretary of state, and make sure to always pay state and local taxes.
Finally, anytime you hold a meeting, make sure to keep a record of the minutes.read more
Liability refers to a person’s legal responsibility to correct some wrong caused by their fault. If you cause a car wreck, you’re probably liable and you (or, hopefully, your insurance) will have to pay. If an accident happens at your business, you want to make sure that your home, car, and other personal assets can’t be seized to satisfy any liability. There a few different ways to avoid personal liability
One of the main reasons business owners cite in favor of creating a business entity is protecting themselves from liability, and they’re right. Most entities create separate realms of liability, so your business and personal life become separated. If an accident happens at your business, you can prevent someone from taking your house to pay their medical bills. If you’re printing signs, letterheads, and business cards, it’s important to put the business name on them so that third-parties are aware that they are dealing with your business, and not with you personally.
When you do create a business entity, you need to make sure you observe the corporate formalities of your business. For example, Louisiana LLCs must file an annual report. Corporations must have annual shareholders and directors meetings. Basically, you need to play by the rules in order to claim protection from personal liability. Also, whenever you sign a document on behalf of the business entity, make sure you indicate that below the signature line.
The next step is to avoid personal guarantees. Many small business owners face the issue of making a personal guarantee for a loan, lease, or other business opportunity. If they don’t make that personal guarantee, they may lose that business opportunity. You should avoid a personal guarantee if at all possible. Even if you have a business entity, making a personal guarantee can result in personal liability.
Always pay your taxes. This seems to be a recurring theme around here. Certain taxes can give rise to personal liability if they go unpaid.
Finally, carry insurance. I know, it gets expensive, as I pay professional liability insurance myself. When in doubt, ask your agent about an umbrella policy, which is insurance to cover things that aren’t already covered by insurance (maybe I should have been an insurance agent).
Following these 5 rules can’t guarantee that you’ll be free from personal liability, but if you’re going to spend the time, money, and expense to develop a business and form an entity, it’s better to be safe than sorry.read more
Oral agreements are difficult, expensive, and sometimes impossible to enforce, so you should assume that it is always better to have an agreement in writing. Any agreement that is not in writing is vulnerable to the three “M’s:” memory, misinterpretation, and mood.
Misinterpretation occurs when two parties agree to something, but what they think they’re agreeing to isn’t the same. Putting the agreement in writing may show that the parties did not accurately understand each other in prior discussions.
Mood changes how a person feels about an agreement. If someone discovers that a previous agreement doesn’t feel right a few months or years later, they may change their mind and attempt to change the terms of the contract.read more