Submitted by: Christine Amrhein
Does your business have written contracts with clients, vendors or service providers or are you confident that a handshake will be sufficient to protect your revenue and assets and grow your business? Did you know that it is possible to enter into a legally binding contract without signing anything? Binding contracts can arise all sorts of ways a prudent business person should understand. They can be formed by a conversation, through the “battle of the forms” (your customer sends you a purchase order and you respond with an acknowledgment form), “click to agree” on a website, or via text. In those cases do you know what the deal is? Did you read and understand what you clicked? Have you made your position clear about what you will or will not do? What if something goes wrong or there is a misunderstanding? Will you be able to sort it out or absorb the loss and move on? What if the laws applicable to your business require a written contract or policy and you don’t have one?
If you need help drafting commercial agreements that make sense for your business, or it’s been a while since you’ve reviewed them, Fortis Law Partners invites you to contact one of our experienced commercial attorneys for assistance. We have helped many clients draft and revise their commercial agreements and understand the risks and benefits of agreements their customers, vendors and business partners send them.
For more information about the Fortis Team can be found here.
-Submitted by Tim Spiel
On October 18, 2018, the SEC issued a press release announcing the formation and launch of the commission's Strategic Hub for Innovation and Financial Technology (FinHub). FinHub will be headed by Valerie Szczepanik, Associate Director in the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation. FinHub's purpose is to serve as a resource for public engagement in the areas of Financial Technology and Innovation. FinHub will replace and further build on the work of several internal working groups previously established to focus on such matters in one centralized group with a dedicated website presence. Examples of current issues in this arena include distributed ledger technology/blockchain, digital marketplace financing (especially related to digital assets such as Initial Coin Offerings (ICOs) and digital tokens), an automated algorithm based investment advice, and artificial intelligence/machine learning.
According to the press release, FinHub will:
● Provide a portal for industry and the public to engage directly with SEC staff on innovative ideas and technological developments;
● Publicize information regarding the SEC's activities and initiatives involving FinTech on the FinHub page;
● Engage with the public through publications and events, including a FinTech Forum focusing on distributed ledger technology and digital assets planned for 2019;
● Act as a platform and clearinghouse for SEC staff to acquire and disseminate information and FinTech-related knowledge within the agency; and
● Serve as a liaison to other domestic and international regulators regarding emerging technologies in financial, regulatory, and supervisory systems.
With the SEC's recent focus on emerging technologies and the regulatory application of securities laws to such technology, it makes sense to create a centralized forum to collect information and invite public comment on such matters.
Fortis Law Partners LLC has experience representing clients in connection with the application of federal and state securities laws to financing activities as well as public company reporting obligations. Please contact us for your securities law, financing, and reporting obligation needs.
-Submitted by Robert LaManna
Hemp-derived cannabidiol (CBD) occupies a strange place in the current federal intellectual property framework. Many states authorize hemp production and CBD extraction, and many businesses do just that. At the federal level, however, both hemp and CBD are illegal. And this legal bind makes it impossible for CBD businesses to obtain federal trademark protection for their products.
All of this may change with the passage of the 2018 Farm Bill. The bill would remove hemp from the list of controlled substances in the Controlled Substances Act. It would also redefine “hemp” to explicitly include hemp extracts, including CBD, and permits their use in interstate commerce. In sum, the bill would legalize hemp-derived CBD at the federal level. As a result, CBD businesses will be able to apply for trademark protection with the U.S. Patent and Trademark Office.
Fortis Law Partners LLC has experience representing cannabis-related businesses in M&A deals, joint ventures, registering trademarks, and litigation. Please contact us for your cannabis-related legal questions.
-Submitted by Leni Plimpton
A professional employer organization (“PEO”) can be a great business choice for some companies. But are you fully aware of what you are getting into? A PEO becomes the co-employer of your employees and charges you a fee to take over human resources and payroll functions for your company, and often benefits administration as well. But there are many pitfalls to be aware of. To be sure you’re making a smart business choice and that you understand the risks and benefits involved, it is imperative to look closely at the terms of your contract. For example, Fortis attorneys have seen PEO contracts that allocate all liability for HR issues such as discrimination to the employer. An employment discrimination lawsuit is expensive and disruptive; and what if the PEO organization is the one who engaged in the discrimination? Before hiring a PEO, stop and think, review the documents closely, and strongly consider hiring a lawyer to look over the contract and raise any red flags before it is too late.
Fortis Law Partners has a team of skilled professionals who are experienced in advising companies with questions about contracts, Human Resources issues, and wage and hour questions. If you would like more information on a contract your company is considering entering, or if you are concerned about an employment issue your company is facing, do not hesitate to contact one of our attorneys.
-Submitted by: Leni Plimpton
Misclassification: what is it, and what does it mean for your company? The term “misclassification” can be confusing because it is used in a few ways: first, employers can misclassify a worker as an “independent contractor” who is really an employee. While a serious issue in its own right (and a very common problem) today we are going to talk about the other kind of misclassification: misclassification of employees as exempt vs. non-exempt.
In short: non-exempt workers get overtime, exempt workers do not. Many people think of this difference as being the same as the difference between being “salaried” vs. “hourly”—but this is not quite accurate: simply paying a salary vs. by the hour is not the deciding factor as to whether someone must be paid overtime.
The Fair Labor Standards Act is the primary federal law that governs overtime and minimum wage, and this law covers almost every employer in the nation. The FLSA requires that most employees earn at least minimum wage for all hours worked, and “time and a half” for all hours worked over 40 in a workweek. This seems simple but it can get complicated quickly.
How you calculate time, how accurate the time records are, what you include in the pay stub, and how you set the workweek are all areas where employers can stumble. Did you know that you must pay a non-exempt employee overtime even if the employee was instructed not to work overtime but did anyway? It’s true. What if the employee works off the clock, and you know about it?
Same answer: you must pay the wages. All hours worked by your employees must be paid, but you can address the violation of policies through the use of discipline, which can include termination. And as for deciding whether someone qualifies as exempt or not—the definitions can be confusing and many employers have come to the wrong conclusion and paid a steep price.
On a state level, the Colorado Wage Act applies to Colorado employers, and more specifically, the Colorado Minimum Wage Order governs the payment of minimum wage and overtime in Colorado. The order applies to employers in four specific industries: retail and service, commercial support service, food and beverage, and health and medical.
If you would like to ensure that your company is compliant with federal and state law regarding payment of wages, if you realize you have misclassified an employee, or if you have been served a demand letter or a lawsuit alleging wage payment issues, don’t hesitate to contact one of the knowledgeable employment attorneys at Fortis Law Partners and we would be happy to help.
-Submitted by: Leni Plimpton
On Tuesday, October 16, 2018, the Colorado Supreme Court heard arguments in Colorado Custom Maid, LLC v. Industrial Claim Appeals Office. The issue in the case is whether the Court of Appeals erred when it determined that individuals who worked for a cleaning service were employees of the service rather than independent contractors for purposes of the Colorado Employment Security Act (“CESA”). In this case, the cleaning professionals were “matched” to a home by the Company, but the facts went both ways as to whether the company exercised control over the cleaners.
CESA is the Colorado law that provides people who lose their job with unemployment payments. Under CESA, an employer must pay premiums into the fund based on wages paid to current employees and the amount of claims made by former employees. The Colorado Division of Unemployment Insurance enforces these obligations and conducts audits. If it determines that your company failed to pay for a worker who qualifies as an employee, it will come after you for the money during an audit.
It is important to recognize that the definition of an employee is unique to CESA, and this definition is not necessarily the same as any other law or for any other purpose (such as the definition of an employee for purposes of FLSA or the definition that the IRS uses). Under the applicable subsection of CESA, an individual who performs service for your business will be deemed to be an employee for purposes of the statute “unless and until it is shown” that the person is (1) “free from control and direction in the performance of the service” and (2) “customarily engaged in an independent trade, occupation, profession, or business related to the service performed.” C.R.S. § 8-70-115(b). The statute then lists nine factors that may show that the person meets both elements of the test. If you obtain a signed contract that satisfies these factors, you may benefit from a “rebuttable presumption,” that the person is an independent contractor, so long as you also include a crucial disclosure in underlined or bold font relating to the person’s ineligibility for unemployment insurance benefits.
The Supreme Court, in this case, will have an opportunity to revisit and perhaps refine the well-established “Softrock” “totality of the circumstances” test that illuminated the analysis of an independent contractor under CESA.
If you have questions about unemployment insurance or classifying workers as independent contractors, or if you need help drafting independent contractor agreements that meet the very specific standards required to obtain the rebuttable presumption under CESA, please contact Leni Plimpton or Chris Lamb.
-Submitted by Leni Plimpton
October 12, 2018. Governor John Hickenlooper has issued a proclamation that declares October as “Disability Employment Awareness Month.”
The proclamation urges employers to recognize that a culture of belonging that welcomes, supports, and celebrates the contributions of persons with disabilities will pay significant dividends in the workplace. As most employers are aware, employing disabled individuals is not only great for the workplace in that the disabled are skilled, independent, and productive workers, but also because it is illegal to discriminate against a person or applicant with a disability. Think you know whether someone has a disability? Think again! Not all disabilities are visible. Claims of discrimination based on mental health issues are on the rise: are you ready?
Accommodating a disabled employee can range from extremely easy (providing a stool for someone with a knee injury) to very challenging (when your employee claims that their manager triggers the employee’s PTSD).
The ADA requires employers to engage in an “interactive process” with a qualified employee and to then provide a reasonable accommodation that allows the employee to engage in their essential job duties. The ADA is a nuanced law with many different elements, considerations, and standards. When you become aware of a disability or when a worker or applicant requests an accommodation, do you know how to handle it?
This October, take some time and evaluate your company’s policy with regard to the ADA and hiring disabled workers. Don’t let a disability discrimination claim be your October surprise.
Fortis Law Partners has a team of skilled professionals who are experienced in advising companies who face disability discrimination issues, requests for accommodations, and creating optimal workplace policies. If you would like more information on any employment issue your company is facing, do not hesitate to contact Chris Lamb or Leni Plimpton.
It is an honor to announce Fortis Law Partner’s newest client Global Cannabinoids.
Fortis will serve as new legal counsel for Global Cannabinoids to strengthen global supply and distribution agreements. This is to ensure that all parties are protected in any or all transactions. More information about Fortis Law Partners involvement with Global Cannabinoids can be found here.
-Submitted by Elizabeth (Liz) Hartsel
Regulation of the cannabis industry is constantly evolving. Although marijuana remains an illicit substance under federal law, more and more states are legalizing cannabis for both recreational and medical use. The sale of industrial hemp, which is legal under Colorado law, may also soon become legal under federal law if the Senate’s version of the 2018 Farm Bill is passed. And most recently, the DEA placed certain products containing cannabidiol (CBD) that have been approved by the FDA in the least restrictive category of the Controlled Substances Act.
On September 24, 2018, a Denver Startup Week panel discussed the “States of Cannabis,” and described (1) areas for growth, and (2) the challenges many startups face when entering the cannabis industry. The marijuana industry in Colorado is already saturated. Therefore, there is more growth potential for industrial hemp companies, and companies offering ancillary services such as information about compliance, products used in cannabis cultivation (such as mulch and hydroponic growing systems), technology (seed to sale tracking, growth metrics), packaging, accounting, finance, and marketing and branding.
As long as cannabis remains an illicit substance under federal law, however, all cannabis-related companies (even those offering ancillary services) will continue to face roadblocks, such as local regulations, difficulties raising capital, and prohibitions in banking and credit card processing. These companies are also vulnerable to civil suits under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
Fortis Law Partners LLC has experience in assisting clients navigate these roadblocks, and has represented cannabis-related businesses in M&A deals, joint ventures, registering trademarks, and litigation. Please contact us for your cannabis-related legal questions.