How To Stay Software Compliant And Avoid Big Trouble

How To Stay Software Compliant And Avoid Big Trouble

Your small business may not operate on a national or global level, but as a software user on any level, you are subject to licensing agreement laws. The unauthorized use or distribution of copyrighted software is more common than you think. Not thinking about it will also lead to legal trouble, like the $3 million penalty the City of Denver recently paid to Oracle. Examples of misuse include sharing, downloading, selling, or installing multiple copies of licensed software. Other examples are installing a piece of software more times than the license permits and sharing software license codes, activation keys, or user IDs and passwords for web-based software applications. It is equally as important to protect your business’s intellectual property as it is to protect it from threatening audits or penalties. A small business attorney will help keep you compliant and protected. This post will discuss:

  1. Different types of software licenses,
  2. Impact and consequences of unlicensed software, and
  3. Precautions concerning software and license choices every small business should take.

1. Staying Legal With Software Licenses

According to Wikipedia, a software license is a legal contract that governs the use or redistribution of software. All software is copyright protected, and a license grants the licensee/end-user specific permission to use one or more copies of the software. One exception is public domain software, where the software has been put into the public domain for anyone to use. Another exception to typical proprietary software is open source. Open source software is under copyright, but this type of license grants users the right to modify, reuse, and share the product while protecting the copyright holders from legal liability. One of the most popular of these licenses is a GNU General Public License, which takes measures to ensure that your software stays open source even if modified or redistributed. Other open source licenses include GNU Lesser General Public License, Apache License, MIT License, and BSD License. There are varying levels of complexity and restrictions among the different open source licenses each with their own benefits. A small business lawyer will help you determine what type of software and licenses are right for your business.

2. Impact And Consequences Of Failure To Comply With Software Licensing Laws

Software licensing or compliance audits are conducted to improve software distribution and to avoid or determine copyright infringement. Not only can an infringement result in your software being disabled, but it can lead to civil as well as criminal penalties. Unlicensed software also exposes businesses and consumers to security threats, like malware, ransomware, spyware, and viruses. A CBS Denver news story reveals that, as a result of the city’s violation of licensing agreements with Oracle, Denver taxpayers will pay millions of dollars more in 2017. The article states that Oracle threatened a $10 million penalty but settled for $3 million. Chief Information Officer for Denver Technology Services Scott Cardenas did not say how the city became out of compliance, only that the city has entered a new five-year contract with Oracle that is a “true-up” or balancing of its licensing with Oracle. A Forbes article indicates that companies, like Oracle, are giving more audit and breach notices, leaving businesses prone to losing their software programs and much more. It is easier than ever to fall out of compliance with the changing nature of software products and evolution of IT infrastructure. Your small business attorney will ensure your business stays compliant in order to avoid costly fines or loss of your current database.

3. Precautions When Considering Your Software And License Choices

Small businesses can learn valuable lessons from big entities and their mistakes or misfortunes with software licensing compliance. There are numerous precautions you should take to keep your small business out of big trouble. It is essential to find the right software and license fit for your company. Once you have done this, follow a checklist as it applies to your business.

  1. Keep an organized record of purchase orders, contracts, paid invoices, retail and other receipts for purchase, and original license certificates;
  2. Audit software installed on any desktop, portable, virtual computer, server, or personal computer/device used for company purposes;
  3. Compare and match software product names, version numbers, and types of licenses;
  4. Establish a company policy regarding software usage; and
  5. Monitor ongoing usage.

A small business attorney will ensure you have taken the necessary precautions and represent you in the event of a software licensing violation.

If you need help with software compliance or your small business contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Employee References – How to Tell the Truth and Avoid a Lawsuit

Employee References – How to Tell the Truth and Avoid a Lawsuit

As a small business owner, you are likely the boss and human resources (HR) department all in one. This means the unfortunate task of firing an employee is yours. Once the dreadful termination is done, you are relieved and ready to move forward. Then, a month later, you get a call from a prospective employer asking for a reference for the employee you fired. Before you panic, decline, or say too much, know your rights.

Employee Job Performance, Skills, and Abilities

In Colorado, employers cannot be sued for providing information about former employees unless the information given is false. In many cases, you are protected from liability for certain types of information you give out, like the employee’s job performance, including work-related skills, abilities, habits, suitability for reemployment, and reasons for separation. However, you should not give any of this information out without talking to a small business lawyer about your specific situation as you could be liable for even giving out this information. There are enough bad cases and an endless number of potential circumstances that can leave you feeling vulnerable. A small business attorney will help ensure you stay compliant with Colorado state employment laws, from hiring your first employee to increasing your workforce to deciding to let someone go.

A Fortune article compares employment references to a legal hornet’s nest. Most business owners are well aware that they can be sued for defamation for badmouthing someone in a reference, but not many realize that you can be sued for giving a raving reference that does not match up to the employee’s performance in their new position. It is no wonder some employers shut down any requests for references.

Until you speak with a small business attorney, you should only answering the “who, what, and when” (i.e. job title, salary, and dates) of a former employee’s history. If you feel you need to answer more, for example because there are details that may be critical for a potential employer, speak with an attorney. What if you fired the person for frequent absence, poor performance, or grave misconduct? If you are reluctant to disclose such details, you can use a general comment like “I would really prefer not to say”.

Former Employees and Written Records

Some states have enacted service letter laws that require employers to provide former employees with basic written information about their employment – however, Colorado law does not affirmatively require it. Visit the Colorado Department of Labor and Employment for information on state labor laws that outline what employers can disclose about their former employees.

Hopefully, if you have had to fire an employee, you maintained documentation of the employee’s history with your business, particularly the details leading up to their termination. Despite your best efforts, they may blame you for their inability to obtain a new job, claiming slander or libel from your reference (or lack thereof). By speaking to a business lawyer before speaking to a potential employer, you can avoid or protect yourself from a lawsuit. Here are some precautions you can take.

Make a company reference policy. Be sure all of your employees are aware of the policy. If there are other staff members who are responsible for HR, make sure they know the policy well.
Keep it short. Do not volunteer extra or unsolicited information. It is best to keep your references short and to the point.
Provide only the facts. Keep your references as factual as possible. The truth is your best defense against defamation claims.
Designate who can give references. Select the most discrete and trustworthy employee, other than yourself, to give references. The more experience the person has with giving references, the less likely they are to say something wrong.
Create a reference request form. Include a statement about the possible disadvantages that are inherent to the reference process. This will provide you with another level of protection from liability. Requiring employees to review and fill out the form will supply you with detailed documentation as well as the right to decline a reference request if the employee did not fill out the form.

Employment Law is Complex

Employee references are just one small part of the large area of employment law. With its complex regulations and compliance requirements, employment law covers vast topics, such as contracts, hiring, and working with employees. The U.S. Department of Labor publishes an employment law guide for small businesses to develop employer policies on wages, benefits, safety and health, nondiscrimination and disclosure. For more on Colorado employment law essentials, see 7 New Business Essentials in Colorado Employment Law.

If you need help with employee references or employment law in general, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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5 Crucial Areas of Commercial Real Estate Law for Colorado Businesses

Real estate law is a broad and complicated legal area. Colorado is no exception with a tangled mass of statutes on everything from discloser and zoning laws to insurance and contract laws. Whether you lease or own your business location, you will likely encounter a property law issue at some point. Attorney Elizabeth Lewis, MS, JD can help guide you through real estate law at every level before it affects your business. The following post will discuss five crucial areas of commercial real estate law for Colorado businesses.

  • Landlord/Tennant Laws
  • Disclosure Laws
  • Zoning and Land Use Laws
  • Contract Law
  • Insurance Laws

Landlord/Tennant Laws

Whether you own or rent your business space, landlord/tenant laws are designed to protect the rights of both sides who have entered into a rental or leasing agreement. There are numerous areas within these laws, including taxation, right of privacy, payment of rental fees, disclosures, duration of agreements, and right to terminate agreements. As a Colorado business owner, it is essential to comply with state laws in order to prevent violations. It’s a good idea to hire a Colorado-based attorney to advise you on all of your real estate and leasing issues from initial set up to lease/contract review to protecting your assets.

Disclosure Laws

Before you buy or rent a business space, you want to know everything you are getting into. Are there any toxic substances, like asbestos or lead paint? Does the building have energy use restrictions or accessibility inspections? You may have found the perfect location, nestled in the bustling heart of downtown Denver, but it is important to know what you may not readily see. Like other real estate laws, discloser laws vary from state to state and deal with the location, condition, and restrictions of the property. Furthermore, a commercial lease and residential lease differ greatly and are subject to different laws. A small business attorney will review and advise you on existing or potential factors before you are ready to lease or buy a retail space.

Zoning and Land Use Laws

Your real estate choice, whether you operate out of a home office or huge warehouse, will affect your business. Commercial real estate can be divided into several categories, including office buildings, industrial, retail, restaurant, multifamily, undeveloped land, and more. Each of these properties are subject to Colorado state zoning and land use regulations.

Besides determining taxation, these laws define and enforce how a property is used. As a business owner, you already have a checklist a mile long when it comes to choosing your location – rent or buy, physical space, length of lease, affordability, renovations, maintenance, competitors, specifications for signs, accessibility, and much more. Learning that you must apply for rezoning to the local board is not something you want to add your list, and it does not guarantee that your application will be accepted. With the expert advice of an attorney, you can navigate through these real estate laws in order to select the perfect location.

Contract Law

After you have decided whether to buy or rent, reviewed the terms of disclosure, and confirmed zoning, you will enter into a contractual agreement. Specifically worded and structured, these legally binding documents are meant to stand up to any challenges by a landlord, tenant, or outside entity. Many savvy business owners have agreed to the terms of a contract only to fall victim to some unforeseen loophole or unintentional breach that leads to litigation. In this event, an attorney will represent you and help protect your business.

Insurance Laws

Based on the space you occupy and the business you operate, you are required to have certain insurance. This is to protect your investment and cover any property loss or liability issues. The type(s) of insurance you purchase depends on your status as lessor or lessee, the number of employees you have, as well as any building ordinance or state laws. In the unfortunate event of an accident, burglary, fire, or other disaster, additional insurance can help to cover the aftermath of damage to your business. A small business attorney can help you decide what coverage is right for you.

If you are a landlord or a tenant who needs help with Colorado commercial real estate, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
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3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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Classifying Your Workers and Why it is Crucial to Your Small Business

This week, we are going to dive into some details on classifying your workers and why it is crucial to your small business. Why? Because it is important for all Colorado small business owners to understand when they can call someone a contractor, and when that person is really an employee. Without this understanding, it is fairly easy to wind up on the wrong side of the law.

First, let’s define what we mean by Worker Classification and explain why it is important to all employers, not just small business owners.

Classifying your workers correctly means understanding if they are independent contractors or employees so that you can avoid breaking the law with regard to federal and state employment tax. It also means you can determine if you are following the Fair Labor Standards Act (FSLA) with regard to the individual worker.

Determine If Individuals Providing Services For Your Small Business are Employees or Independent Contractors

If individuals providing services for your small business are employees, you pay taxes on their earnings. If the same individuals are independent contractors, in most cases, you don’t. You may also have other obligations to employees that would not apply if the worker were an independent contractor. The temptation to call some one a contractor when he or she is really an employee is strong, but it is not worth it under any circumstance.

Let’s take a look at the rules, so you can feel confident about when someone can legally be classified as an independent contractor. For the sake of brevity, we are going to focus on how the IRS defines an independent contractor vs. a common law employee. There are different classifications of employee, and you should consider speaking with a business attorney if you think you may have workers who fall under these other categories (ex: statutory nonemployee).

Classifying a Worker as an Independent Contractor

The IRS provides the following insight:

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

They recommend the following test to determine if someone is a common law employee, but maintain there is “no magic formula” for knowing if someone is an employee or independent contractor:

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If you have tried to apply these test questions to your specific situation and are still not sure how to classify a worker, the IRS has a form you can submit and they will review on your behalf. Once they set the worker’s status, it becomes official, so you may want to ask a business attorney to review the form on your behalf before your submit it, if your goal is to establish that a worker is a contractor and not an employee.

What About the the Fair Labor Standards Act?

Most small business owners are at least aware that there are important differences between contractors and employees when it comes to paying State and Federal employment taxes, but many do not realize the classification of an employee also impacts the employer’s legal obligations under the Fair Labor Standards Act. First, a quick reminder of what the Fair Labor Standards Act is. Wikipedia gives a good explanation and some history:

The FLSA introduced the forty-hour work week, established a national minimum wage, guaranteed “time-and-a-half” for overtime in certain jobs, and prohibited most employment of minors in “oppressive child labor.”

If you have individuals who are performing work for you, you need to know if you owe them minimum wage, and time-and-a-half in compliance with the FLSA statute, or if you can claim an exemption. The easiest way to be exempt from the FLSA rules is to make sure the worker can be categorized as an independent contractor. That doesn’t mean calling someone an independent contractor when he or she isn’t. The IRS is not playing games when it comes to miss-classification:

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker.

If you think you may have mistakenly been paying someone as an independent contractor, you can qualify for forgiveness under a Relief Provision, but you have to do so before the IRS calls you out. If you think you may have made a mistake in this regard, talk to an attorney sooner than later. The expense of being caught is much greater than the expense of getting an attorney to help you now.

If you need help classifying your workers or understanding why it is crucial to your small business to know if a worker is an employee or an independent contractor, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
3773 Cherry Creek North Drive, Suite 575
Denver, CO 80209
720-258-6647
Elizabeth.Lewis@eclewis.com

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