BizLawBuz …. The Power of Know

It’s that time of the year again in the village of Wolverine Lake to “tell tall fishing tales” and it’s also “time to show your buddies the one that didn’t get away… and for kids of all ages to hook a nice prize ………”

Wright Penning & Beamer is pleased to be one of the sponsors this year of this fun event for both adults and children on Saturday, August 28th from 6 a.m. until 11 a.m. Prizes awarded during the Festival on September 12, 2010.

“The goal is for adults to take a child out on the lake and spend quality time together,” said Parks and Recreation Board member and fishing tournament organizer Phil Peters.

The “catch-and-release” contest is a tradition in the village, when residents go out in droves to fish for the largest catch of the day.

“You should see the expression on their faces when these kids weigh and measure their fish,” Peters said. “It’s priceless.”

Participants are directed to weigh in their catches at the state Department of Natural Resources and Environment (DNRE) boat ramp behind the village offices or on committee boats anchored in the lake. Yellow flags identify the DNRE weigh-in site and the committee boats. Tournament boats will be situated on Wolverine Lake at the Benstein Road end and another at the Penny Lake arm. Weigh in will be held from 7 a.m. until noon at the DNRE boat ramp; and 8 a.m. until 11 a.m. on tournament boats.

Residents are required to register for the event. The cost is $2 for children and $4 for participants 18 and older. Non-residents pay $3 for children and $7 for adults.

Fish caught must meet DNRE size and weight requirements. Winners are based on the largest fish in various categories according to weight. This year there are eight categories: bass, pike, walleye, pan fish (including sunfish and pumpkin seed), perch, crappie, and the most unusual fish.

Participants are divided into age groupings of 1-7 years of age; 8-12; 12-17, and 18-adult.

First-, second- and third-place prizes are awarded in all categories for participants 17 and under, and one first-place prize will be awarded to the winner of the adult categories.

“I try to get prizes that fit into each age bracket,” Peters said.

Grand prize winners will be published on the village website and listed at the village offices.

Awards will be presented at the village corn roast festival scheduled for September 12th.

The village is encouraging prize donations and volunteers to support the program.

Go out and have a great time and be sure to share some of your stories with us!

Dirk A. Beamer

In today’s difficult economic climate, businesses and their owners face increase risk of being sued. Given this risk, business owners should do all they can to minimize exposure of their personal assets with respect to possible liability resulting from these lawsuits.

Typically, incorporating a business is an effective means of protecting a business owner’s personal assets from exposure to claims against his/her business. However, simply incorporating the business alone will not protect personal assets if the business has not complied with the formalities and requirements that the law requires of a corporation. When a business owner neglects those requirements, courts sometimes “pierce the corporate veil” allowing a business owner’s personal assets to be exposed in satisfying claims against the business. Essentially, when the courts allow piercing of a corporate veil, the business owner has lost all protection of the corporation entity form.

The term “piercing the corporate veil” basically means that the law treats the business owner and the business owner’s assets as one complete entity, making the owners personal assets subject to liabilities incurred by the company. In those situations, the corporation is basically seen as a mere alter ego of the business owner.

Michigan courts look to three elements needed to pierce a company’s corporate veil:

1. Is the corporate entity operating as a mere alter ego of another entity or individual, meaning the business is being used in furtherance of another purpose rather than its stated mission?
2. Is the corporate entity being used to commit fraud or wrong doing?
3. A plaintiff in a lawsuit suffered an unjust loss or injury if recovery is limited only to the business and cannot extend to a business owner’s personal assets.

Fortunately, under Michigan law, only extraordinary circumstances justify a disregarding of a corporate entity exposing the owner to personal liability; however, that is not to say that a business owner will never be subjected to such a claim, especially in these unprecedented economic times.

Historically, Michigan courts in evaluating the aforementioned prerequisites look to a number of factors to decide whether these factors have been met and a corporate veil should be pierced.

The court looks to whether:

• the corporation is under capitalized (lacks sufficient funds to pay its bills);
• corporate books have, or have not, been maintained;
• there is a separation between individual and corporate finances;
• the corporation is used to support fraud or illegality;
• the corporation formalities have been honored especially with respect to complying with the terms and conditions of the Michigan Corporation Act, and
• the corporation has paid excessive dividends to its shareholders.

Where the court decides that a plaintiff’s claim meets the prerequisites to pierce the corporation, the court will find an abuse of the corporate form and allow a claim against the corporation to pass through and attach to a business owner’s personal assets.

A business owner, in order to protect himself/herself from potential claims to pierce a corporate veil, can initiate steps to protect themselves.

First, a business owner should always keep personal and business assets separate from one another. This can be accomplished by using separate bank accounts and books for personal expenses and for the separate expenses of the business.

Secondly, always observe and follow corporate legal formalities such as holding the required number of meetings, keeping track of meeting minutes and maintaining a comprehensive stock ledger regarding the ownership of the corporation.

Third, usually an owner of a business will be an officer, agent or employee of the corporation. In business dealings on behalf of the corporation with third parties, business owners should always portray himself/herself as acting in the role of as an officer, agent or employee on behalf of the business as opposed to dealing with third parties on an individual basis. When the business enters into transactions or agreements with any outside party, that person must be aware and understand that he or she is transacting business with the corporation and not with the business owner personally. This can be accomplished when the business owner executes contracts, the business owner should list the name of the business and the business owner should sign in the capacity as an officer on behalf of the business.

In this difficult economic environment, people with claims against businesses are often more willing to make the extra effort to make a claim for piercing the corporation to obtain a judgment against the business owner’s personal assets. If you have questions regarding this issue or would like assistance with conducting an audit of your corporation’s records to assess your risk of the possibility of a plaintiff being able to pierce your corporate veil, please do not hesitate to contact us.

Dan A. Penning

“In response to this increased risk, Wright Penning and Beamer has developed a comprehensive MIOSHA manual that addresses the areas most cited by MIOSHA inspectors.”

With the current economic climate, many businesses are having to re-evaluate their workforce and reduce the number of employees based on economic constraints. This can result in terminated employees filing complaints with various agencies regarding alleged labor violations, including MIOSHA violations. Inspections by governmental agents under MIOSHA can be very costly both in time and money to a business. In response to this increased risk, Wright Penning and Beamer has developed a comprehensive MIOSHA manual that addresses the areas most cited by MIOSHA inspectors. It should be noted that MIOSHA inspections do not only occur in manufacturing businesses but can occur in all types of businesses.

Many businesses do not have a full understanding of their rights when a MIOSHA inspector walks in the door unexpectedly to conduct an inspection. For example, employers are entitled to a pre-inspection conference, they may appoint a representative to walk with the inspector during the inspection, and many more rights are available to protect an employer. At the very least, each business should have a plan in place before an inspection occurs. A designated employer representative should prepare a MIOSHA inspection plan, with names and telephone numbers of top management and counsel to contact immediately. Also, a prepared and updated list of trade secrets to be protected should be readily available due to the fact that citation information is available via the Freedom of Information Act, and to protect trade secrets, an employer must, at the beginning of the inspection, identify the trade secrets that should be protected. Other management personnel should be trained not to consent to an inspection without proper procedures being followed. The more people involved in an inspection usually results in more inconsistent statements to the inspector and thus more scrutiny.

If you are interested in discussing this matter further, please contact me and I would be happy to provide you with more information regarding how you may want to proceed to protect your company with respect to possible MIOSHA inspections and other labor related types of claims.

Dan A. Penning

If you or your business makes donations, you should keep the following points in mind. First, you can easily evaluate an organization prior to donating since tax-exempt organizations must make their application for exemption and their tax returns available for public inspection. You may request documents in writing, and the organization has 30 days to respond. Second, if privacy is important to you, know that donor lists are not public information unless the organization is a private foundation or a political organization.

Additionally, use caution in making donations, as not all exempt organizations are eligible to receive tax-deductible charitable donations. To determine eligibility, contact the charity directly or look online at IRS.gov for the Internal Revenue Service Publication 78 and the “Search for Charities” page. If organizations are seeking contributions that are not tax-deductible, the organizations must disclose that fact.

If you suspect improper activities from a tax-exempt organization, you may file a complaint with the Exempt Organizations Examination Division by completing Form 13909 (“Tax-Exempt Organization Complaint (Referral) Form”), located online at IRS.gov.

Dirk A. Beamer
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Michigan’s Unemployment Security Act was recently amended to extend unemployment benefits to certain employees who previously would not have been eligible.

Generally, individuals who leave work voluntarily are not eligible for unemployment benefits. The change to the Act creates an exception for an individual who is the spouse of a full-time member of the United States armed forces and who is forced to resign and relocate because of the military reassignment of the spouse.

Beginning after March 30, 2009, benefits paid to such individuals shall not be chargeable to the employer, but instead to the “nonchargeable benefits account” covered by the state.

Dirk A. Beamer

Our good friends at American Industrial forwarded some practical advice they had received online about easy steps you can take to minimize the risk of credit and identity theft. The advice is certainly well worth passing along, so here are some practical do’s and don’ts:

1. Do not sign the back of your credit cards. Instead, put “Photo ID Required.”

2. When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the “for” line. Instead, just put the last four numbers.

3. Put your work phone number on your checks instead of your home phone. If you have a P.O. Box, use that instead of your home address. If you do not have a P.O. Box, use your work address. Never have your Social Security number printed on your checks.

4. Place the contents of your wallet on a photocopy machine. Copy both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place.

5. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.

6. File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers that you were diligent, and this is the first step toward an investigation (if there ever is one).

7. If your wallet is stolen, call the three national credit reporting organizations immediately to place a fraud alert on your name and also call the Social Security fraud line number:

Equifax: 1-800-525-6285
Experian (formerly TRW): 1-888-397-3742
Trans Union: 1-800-680-7289
Social Security Administration (fraud line): 1-800-269-0271

The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.

Dirk A. Beamer

In November of 2008, Michigan voters approved Proposition 1 to permit the use of marijuana for medical treatment by properly registered patients. Cautious employers need to be proactive to ensure that workers do not misunderstand the new Act as license to bring marijuana into the workplace.

The Act states specifically that Michigan employers are not required to allow employees to use marijuana in the workplace or to work under the influence of marijuana. However, it also prohibits employers from taking adverse action against an employee who is properly registered as a legal medical user just because she in fact uses marijuana.

Employers who do not have an explicit, written policy prohibiting the use of drugs in the workplace, and also prohibiting employees from reporting to work under the influence of controlled substances, should put such policies in place immediately. For employers who already have such policies, experts suggest that the policies be republished and brought to the workforce’s attention to ensure a proper understanding of the prohibitions notwithstanding the new medical marijuana act. Additionally, employers need to use caution when an employee is found to have, or is suspected to have, marijuana in his possession at work if he shows no sign of being under the influence of the drug.

The Michigan Department of Community Health must promulgate rules under the Act by April 4, 2009. Additional information about the Act and the proposed rules can be found at www.michigan.gov/mmp.

Dirk A. Beamer

Last January, we reported on the new I-9 form that employers must complete within three days of hiring a new employee. The new form updates the criteria for acceptable documentation that can be used to prove that an employee is lawfully entering the workforce.

The new forms must be used for any new hires beginning February 2, 2009. If you have not already obtained updated forms, the time to do so is now. Sample forms are available at www.uscis.gov/files/formi-9.pdf.