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Business Partners Should Talk About Breaking Up First

Handshake between business partners.

Talk about your business relationship, reduce it to a written agreement, sign it, then get to work with your partner.

When assisting business partners form their entities or when my litigation partner is consulting with me on a case I see the following scenario often:

A business partnership starts with a money person and an idea person. The idea person has a fantastic business plan and the money person has the cash. They think it is perfect. They rush to form a LLC or corporation, downloading an Operating Agreement or Bylaws from the Internet. It even might be worst, they do not even bother with a document. After that, they are running their business, but then several months into it they are fighting.

What do Business Partners Fight About?

Usually, they do not see eye-to-eye on major business decisions.  Decisions like:

  1. how much money should each person contribute;
  2. who has the authority to sign checks or what is the dollar limit each partner has for contract obligations;
  3. where should we locate our offices;
  4. when do we pay ourselves;
  5. what happens when one of us wants to leave; and
  6. so many other issues …

Business owners hate hearing this from their attorneys: slow down! They should be deliberative in their collaboration with their business partner. I sometimes remind people that getting a business partner is basically getting married. Also partnering with a friend is different than being a friend, you sometimes do not know their work ethic. This is why we urge business owners to get things in writing with their partners.

The goal when drafting Operating Agreements, Bylaws, and employment agreements* should be what are the processes that governs decision-making, what happens when there is disagreement, or if an owner wants to leave, etc. … Basically, preempt the fights by setting up contractual arrangements. *By the way, if an owner of a business wants to contribute work instead of capital, then the partners should consider an employment agreement. It is solely not just for contract law purposes, but for tax and accounting issues.

Business partners think that their idea will be a money-maker and that their partner is going to make it happen.  They fail to calculate that even in success that their business partner may have other ideas on the direction of the business.  There is nothing wrong with differences of opinion, but when decision-making is paralyzed it could stop the business from moving forward. Further, for its employees, vendors, and service-providers, knowledge of an ongoing dispute amongst the business owners can make them question the survivability of the business.

Protect your Business Relationship by Communicating

It is easy. Talk about it, come to an agreement, and then get it in writing before the business starts. Many people just want us attorneys to give them their documents or download their own forms for the Internet. They think it saves them time and money.  I’d contend that is the wrong way to look at it. The time and money spent on your governing documents is an investment in the relationship. They are a contractual foundation.

If not, you are just pushing disputes to a later date. Consider that when the money has been spent, you’ve worked countless days and nights, and now you are arguing.  Then you realize all you have for your contract rights is a poorly drafted document … or worst yet, you don’t have one at all.  So do yourself a favor, have the conversation now and plan for the future.  Communicating when you are on good terms with a partner is easier, then when you are fighting.

DISCLAIMER: This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Shopping Carts in Hawaii! What’s the Law?

 

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Today’s Post is Not About Sledgehammer Time: It’s Only Focused on the Shopping Cart Law

Hey all, I decided to jump on the bandwagon (may be the shopping cart?) and talk about shopping carts.  However, I am not going to get into whether Rep. Brower’s actions exposes him to civil or criminal liabilities or if they were right or wrong.  I think Civil Beat, attorney Marcus Landsberg, and the news outlet and social media has already beaten that cart into disrepair (yeah, I am going to keep trying to hammer away with the lame jokes and puns).

Anyway, what I would like to do is take a look at this matter from a business establishment perspective (those that put out the carts) and what the legislature has put forth as a law on point (looking at what is on the books.  It turns out that we have enacted a law specifically for shopping carts.  HRS § 633-16 discusses the unauthorized removal of shopping carts.  Further, as it is in Chapter 633, it puts this matter in small claims court.  

Breaking Down the Law

So looking at the law, as currently stated, it makes it a violation for a person to remove a shopping cart (including baskets and other devices) from the premises of business establishment (that owns the cart), if they are unauthorized.  The premises include the parking lot as well as the sidewalks adjacent to the business establishment’s premises.

The business establishment is the person who has the ability to bring a claim under this law if there is damage to the business or property.  The business may sue for damages and win an award equal to the replacement value of the cart (and keep in mind the average cost of a cart ranges from $100 – 250), basket, or device plus the cost of the suit.  The establishment can also sue to enjoin the unauthorized act.

So in order for a business to win in small claims court (under this law) the must nail down these elements: 

  1. they are the lawful owner of the cart, which has been identified;
  2. they gave notice, which means posting a conspicuous sign where the carts are stored that says the carts are not to be removed;
  3. that the cart was removed from the business location without proper authority; and
  4. the person accused of violating this law is in possession or had control of the cart.

Practicalities of the Law

In terms of policymaking it is understandable why the legislature gave such a legal action for business owners of these carts (as they are expensive).  However, in terms of reality is if these carts are being taken by people who are unable to pay the damages or the business cannot track them down its effectiveness as a law should be looked into.  In addition, how many shopping cart owners utilize this law for these purposes? All I know at this point though is that the bang of the gavel in your favor is a better sound than a squeaky cart on uneven pavement!

A Final Word

Although this post was focused on shopping carts, business owners for any type of legal action should always consider the cost of pursuing claims in court versus that of implementing practical solutions (where possible), or possibly a combination of legal and practical action, such as drafting contracts, policies, procedures, and other preventative measures.  Anyway, that’s it for this post.  Mahalo!

Business Entity Formation Talk at ING Direct Cafe in Waikiki

Business Entity Formation Talk at ING Direct Cafe in Waikiki

August 1st – I will be holding my Business Entity Formation Talk from 6:00 – 7:00 pm. Come learn the differences between the entities at ING Direct Cafe.

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BTW Legalese: Parties that end in “or” or “ee”

By the way, you may have noticed, contract law there are a lot of terms that describe the parties involved that end with “or” or “ee”. For example, offeror and offeree from this week’s Draw the Law.  If you see this in a long legal document you can immediately recognize the relationship of the parties involved.
The ”or” person is the originating person of the action.  It starts with them, and then ends with the “ee” person.  Like’s take the example of offerror and offeree.  The offeror is the one making the offer, whereas the offeree is receiving the offer.

This works for other relationships like in an assignment, where there is the assignor, the one assigning property or interest rights in something, and the assignee, the one receiving the property or interest rights.  Some relationships, do not necessarily follow this categorization, as you will see below (i.e. trustor and trustee).

Consider the following pairs:

  • Offeror/offeree – offeror makes an offer to the offeree
  • Payor/payee – the payor makes payment to the payee (i.e. the payee is the one who endorses a received check)
  • Lessor/lessee – the lessor leases property (or the right to use property) to the lessee
  • Licensor/licensee – the licensor grants a license of the right to use something (IP) to the licensee
  • Assignor/assignee – the assignor transfers rights or property to the assignee (via an assignment)
  • Grantor/grantee – the grantor grants title in real property to the grantee
  • donor/donee – the donor donates (gifts something) to the donee)
  • *Settlor (trustor)/trustee – the settlor creates the trust, which the trustee holds and manages for the benefit of the trust’s beneficiaries

Social Media and the Law, as well as other Fun Legal Info

Well, it’s amazing isn’t it? The month of January of 2012 is almost done and so much has already happened. Here are some interesting social media and the law news that I found, as well as some other fun pieces to carry you over for the day until tomorrow’s Draw the Law.

Google and Privacy Concerns (this well continue to be an issue for 2012 for all Social Media)

Have you noticed that Goolge is making some major pushes lately?  Well come March 1 the search engine plans on doing a turnabout and begin combining information it collects about the user from various sites/services into a single profile. Definitely a privacy issue brewing, especially when the privacy officer has to issue statements. Click: Google to merge user data across its services – CNN.com You can also read the lengthy notification, which you keep bypassing when you log onto your Google+ page.

GPS = 4th Amendment “Search” as Determined by SCOTUS

For all of you interested in criminal law, like Marcus Landsberg criminal lawyer extraordinaire, notice that the Supreme Court- GPS Tracking Is Illegal Without Warrant. Basically, SCOTUS feels that the use of a GPS Tracking device is a “search” for the purposes of the 4th Amendment, thus cops must get a warrant.

Mutant Toys or Mutant Dolls? Yes, it Matters

This was a great listen if you love comic books and would like to theorize that certain superheroes are not human. Basically, the point of this podcast: Mutant Rights – Radiolab, was showing the importance of the word “doll” versus “toy” – you may not think it means much, but if you are an IP attorney and have an import business getting a cheaper rate for your action figures is a must and it all boils down to if a mutant is a human or not.

Department of Homeland Security Following Facebook Posts

Earlier this month DHS released a document stating it is monitoring social media and news sites. They cited federal law that they have to “provide situational awareness” to federal, state, local and tribal governments. You can read more about this here: DHS watching social media, news sites | Greeley Gazette.

NLRB Finds Certain Arbitration Clauses Violate Labor Laws

The National Labor Relations Board (NLRB) has determined that mandatory arbitration agreements that prevent employees from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court violate federal labor laws. Check that announcement here: Board finds that certain mandatory arbitration agreements violate federal labor law.

Local Startup and Social Media Infromation

For you startup lovers, don’t forget tomorrow night will be Startup Hawaii kickoff. For more information, check it out here: Startup America Comes to Hawaii | Aloha StartUps. It will be at Bar 35 downtown. Definitely come on down if you started or are going to start a business!

Also check back at Alohastartups.com as I will be writing some future posts talking about Hawaii’s new legal non-profit aimed at helping entrepreneurs and startups, Business Law Corp. (businesslawcorps.org). I hope to get some interviews with the founders soon!

Finally, clear sometime in February as I will be getting down with Social Media and the Law as I will be trying to schedule a talk at The Greenhouse Innovation Hub and will be a panelists at Social Media Club Hawaii’s Creating a social media policy for business – what, how and when? event at Amuse Wine Bar on Feb. 21st. Hope to see you there!

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Last Post of 2011 and Looking Forward to 2012


Aloha Everyone!

Hope you are having an awesome Friday for this last aloha Friday of 2011. I just wanted to take the time, as I close out for the day to wish you all a happy and safe New Year’s Eve and for a start of a good New Year. In addition, I would like to thank all my friends, acquaintances, clients, readers, supporters, and yes even my Twitter followers for making 2011 a good start for me.

Storytelling in 2011 

I appreciate getting to know you all in the various settings that I have and welcome meeting new people and reconnecting with old friends whether it be in social media, IRL networking, or for coffee. Also thank you for allowing me to tell you all my story and journey of an attorney that loves the intersection of law, business, and politics in the realm of small business and startups.

Past Highlights 

I would like to highlight thanks to all of you for the positive feedback regarding this site and my services. In particular, I would like to continue to make this site a place a resource for small businesses and startups navigating transactional and compliance issues. Thus from this 2011 you will continue to see posts series like the following:

Because I care about the Hawaii community and am finding that I meet new people of this great state via social media I will continue to do special write-ups on:

New Features for 2012 

Although like all good growing businesses, their ideas change and grow I will be rolling out new features and ways to get information into struggling business owners’ hands. In fact, I’ll admit that being an attorney who just started going solo there were times I wish there were resources for me, and there were, but I will continue to try to deliver information to the people who want its and need it. I would like to thank various people and organizations that have given me feedback before I talk about my 2012 features.

First the Thank Yous

Thank you to my friends at Off-Menu Catering, all of you give so much support and thoughtful feed back to carry me through continuing to serve small business.

Thank you to The Greenhouse: Innovation Hub and in particular Doc Rock (@docrock) and John Garcia (@johngarcia) for creativity and inspiration, Jill (@swamwine) of SWAM, Danny (@wangchungs) of Wang Chung’s, and Shawn of Small Business Planning Hawaii (@SBPHawaii) for bouncing ideas off of to deliver services and information to small business owners. Melissa Chang (@Melissa808), Jennifer Lieu (@jlieu), and Capsun Poe (@capsun) always guiding lights for social media use.

Mahalo to the Young Lawyers Division, HSBA, and Leadership Institute for providing guidance to an attorney.  To fellow attorneys Wayne J. Chi and Scott C. Suzuki thank you for doing talks with me, some more planned in the future! To William (@alohastartups) of Alohastartups.com, much thanks as you are providing a great resource for startups in Hawaii and I am excited for the plan in 2012. However, I think I still owe you a post from 2011! Thanks to Rechung (@TheBoxJelly) of The Box Jelly for providing a space for legal talks and helping Hawaii coworkers.

Finally, thank you to Marcus Landsberg, a fellow Hawaii attorney that has helped out and set down this path of being a solo practitioner like me and showing that solo does not mean alone.

. . . Back to New Features of 2012

Ok, enough with the thank yous and let me get to the new features that you readers can look forward to from me in 2012 for this site in particular:

  • PODCASTS – that’s right Hawaii small business owners, no worries if you cannot make it down to one of my talks! I will be providing portions of them for you to watch in your store or at home.
  • One-sheets – simple pdfs talking about one particular issue for you to download, print, and share.
  • Newsletter – I am not sure what the frequency will be, but definitely watch your e-mail inboxes!
  • REVAMP of blog and website – I will be shifting gears and making sure that I deliver to you content in a more user-friendly style!

That’s it for this year! Have fun and be safe this New Year’s Eve and see you in 2012 (Year of the Dragon!).

-RKH

Sharing Some Great Advice: Social Media Usage

I was fortunate enough to be able to attend Hawaii Business Magazine’s SmallBiz Lunch and Learn: Leveraging Technology and Social Media to Grow Your Business.

It was a great event and I was able to learn some great advice and thought of some good ideas.  The experts that had on had were as follows: 1) Roxanne Darling of Bare Feet Studios and the Founder of Social Media Club; 2) Cyrus Driver, VP of Oceanic Time Warner Cable Business Class; and 3) Bernard Uy Co-Founder of Wall-to-Wall Studios.

This is NOT a Social Media and the Law post.  It is a post on some of the nuggets of practical wisdom that I gathered from the lunch and would like to share.  I also feel this gives you some of that business perspective I was mention in my posts as a JD who has his MBA.

They are the following, in no particular order of priority:

  • Thanks to social media EVERY business is a technology business, you will use it some aspect;
  • always thanks to social media your customers OWN your brand – they have become self-publishers;
  • because of the prior two points, LISTEN to your customers;
  • in fact, use them as informal discussion and research group on new marketing plans;
  • ask your customers who they think your competitors are for defining your brand;
  • if you get a negative review on Yelp or the like, it’s good thing – gives you an opportunity to show how you respond and change;
  • use video, there are some great apps on smartphones that you can upload to your Youtube account;
  • be more personal, less cookie-cutter in your usage of social media;
  • if you cannot compete on price, location, and the like – compete on YOU, make sure your customer/clients like working with you;
  • always update and double–check your links, dead links help no one.

As a solopreneur I don’t know if I will get to make use of all these ideas, but I definitely think that any business, great or small should definitely think about these things and it offers a great starting point.

See you on Monday or Tuesday next week when I continue discussing evidentiary matters in the context of Social Media.

Have an awesome weekend!

-RKH

Draw the Law: Buying a Business or into a Franchise

In my previous post I discussed raising capital through governmental loans and programs.  Today’s Draw the Law topic is about deciding to buy a business or its assets and franchise agreements.

Say you come to the realization that you don’t mind owning a business that someone else has built up.  The culture, the image, the stuff walls and tiles – all of it looks great!  You probably would then explore buying the business or if it is a part of a chain entering into a franchise agreement.

Buying a Business: Why Start from Scratch?

Exchanging Information: Getting to Know Each Other

Let’s say you want to buy the mom and pop store that makes shave ice down the road.  The first thing you will always need, and it remains true of all business transactions, is information.   The information you will need is your credit worthiness, financials, and the like – why?  Because the seller of the business wants to know if you can afford the business and in exchange you will ask for the books from the shave ice store.  Just because the business is always crowded with tourists does not necessarily make it the moneymaker you are expecting.  You want to know if they own the space they are in or leasing, is all the equipment paid up or are there liens on them, what are the terms of the current employees’ contracts, etc . . .  The only way you as the buyer of the business know it is worth it for you is to see if you are getting what you bargained for, and that means you will need to prove to the seller that you can pay them the price you will settle on.

Buy the Business or the Assets?

Do you want the body or the guts?  That is one of the most basic questions you want to know.  Do you just want the stuff that makes up the business, which includes equipment, facilities, and intangible property like trademarks?  Or has the business been successful over the years because of the contracts it has in place (as it is the business entity that signed all those agreements)?

You will have to decide which is more beneficial.  Just buying the assets is like removing the hermit crab from its shell; you leave behind the corporate entity and anything attached to it similar to how an anemone is left on the shell when the crab moves.  Similarly, any contracts, lawsuits, and such liabilities are left with the corporation.

The Process: Start to Close

In general, the process is a lot of review, negotiating, and the finalizing of details.  Are the sellers telling you everything?  Can you get a look at the records and books?  How will you pay for the business?  If it is in monthly installments how will they accept payment?  Operationally, how will the transfer work out?  Like the transfer of accounts, titles, etc. . . .  Finally, when all that is reduced to writing you can sign the contract.  Of course, this does not happen overnight and you will probably need to work with a group of experts, such as a business broker, an accountant, your banker, an attorney, and the seller’s people to get this to all happen.

Non-compete Agreement and Warranties

Non-competes and warranties are things you will agree to before the deal is completed, but care about what happens after the business is in your hands.  The business you just bought or its assets are not worth much if the seller goes and starts the same exact business.   Therefore, you get assurances from the seller that they will not be your competition by placing a non-compete clause in the sales agreement or draft a completely separate document.  Either way, there are some restrictions on how much you can limit or prevent the seller from starting a similar business. Oft times, a buyer will actually retain the seller on as an employee or consultant to ease the transition, and thus is another way to prevent competition from the former business owner.

A warranty gives you, the buyer a right to go after the seller if an undisclosed liability comes up after the transaction is complete.  Let’s say you buy the shave ice store, but the former owners forgot to tell you that some of their customers had gotten stomachaches from food poisoning.  Those customers then sue you, as you have become the new owner of the business.  If you had a proper warranty clause you would be able to go after the former owners for what the customers are suing you for.

Franchising: What Comes with the Name?

When you buy a franchise you are buying a business.  Generally, it is a business with brand recognition and with that recognition comes all the inner workings of that brand from its trademark to its secret recipes you get it all.  It even includes how the storefront will look.  Typically, especially if it is one of the national brands, you will be paying a lot of money, and why not?  You would be paying for a brand name that has a proven track record (but like any business, you should realize that does not always mean success).

Pros

  • Experience – the franchisor (the entity you are buying the franchise from) will help you with all their experience and knowledge get started.  If you are new, this is definitely something that will help you get up to speed.
  • Advertising – you are now apart of the franchises chain of distribution, therefore it is in their interest to coordinate marketing and advertising with you.  National sales campaign?  You will probably be sent all the material and have it all set-up for you.
  • Established – all the time spent creating a name and image has paid off for the company, and you are paying a fee or royalties so you can use that name and everything associated with it.
  • Lower operational costs – because you are getting all your products and supplies from the franchisor it is usually at a reduced cost and therefore, it is less costly for you to operate than if you had to buy all that stuff on your own.

Cons

  • Lost of control – the strength of a brand name and image comes from consistency.  When you enter a famous fast food chain in another state or even country you expect the same products and services you would expect locally.  To accomplish this feat, the franchisor restricts what you can do with the storefront.
  • Favoring the Franchisor – the franchisor is in the business of making money, naturally, the agreement they are going to have you sign favors them.  Some factors that favor them are the following:
    • Royalty fees – usually, paid on monthly gross sales and not profit, therefore you pay even if you aren’t making money
    • Restriction on transfer – you may not be able to sell the franchise and it may only be back to the franchisor
    • Termination at their discretion – the franchisor may end the agreement when they feel you are not cooperating leaving you high and dry
    • Competition – the franchisor can sell as many franchises as they wish, which includes your neighbor who also wants to buy into the franchise
    • Trapped – you might be forced to only buy supplies and products from the franchisor and be unable to go to outside supplies
    • Paperwork – the franchise wants to see you are making the most of your relationship with them, and thus would like to see reports from you, on a monthly, even weekly basis.

Just as a heads up the next several draw the posts will concern itself selecting a location for your business and the people involved with your business (employees, vendors, and customers).  Don’t forget if you enjoy this series or any of the other series on my blawg feel free to subscribe in the right-hand corner of this page to receive e-mail updates on posts.  If you are on Facebook be sure to “Like” “Ryan K. Hew” to get updates there as well.

See you on the next draw!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.   No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.   Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Social Media and the Workplace: Hiring

This post and the next several posts will be about social media and its use in the workplace and the various laws that govern that interaction.  Today’s post discusses using social media during the job application process from the employer and potential employee’s perspectives.

Hiring the Right Person for the Job Requires Information

Accurate information about potential hires is valuable and social media businesses know that fact.  Just look at LinkedIn’s S-1 Filing with the SEC, in which they state that the limiting of access to their website and updating of users’ information would negatively impact their business model. (Source: LinkedIn’s S-1 Filing, See pg. 24)  They realize that up-to-date information is a must for the hiring of skilled workers.

The reality is that information about potential and current employees is valuable to any small business whether it is in Honolulu or somewhere else, but there are legal boundaries that both employers and employees should know of.

Employers using Social Media to Check Backgrounds of Potential Hires

Let’s say you just graduated.  You are applying to some business or firm in downtown Honolulu.  You submit your resume.  What happens?  Well, the person responsible for the hiring will likely peruse it and if interested do a precursory Internet search on your name to determine if they want to interview you.  Why?

Employers want to hire the best people to meet their goals.  Legally, employers are also responsible for their employees, so they want to know they are hiring someone they can trust and act responsibly.  Like it or not your social media is a representation of you, especially considering you are the one that updates it.

Employment-At-Will

Hawaii is an employment-at-will state, what that basically means so long as a business does not violate a specific law, that downtown Honolulu firm you are applying to can choose not to hire you for any list of reasons or no reason at all.  So posting that you are getting drunk every night of the week might give an employer pause and ask themselves would you behave the same when employed?  It will probably affect the businesses hiring decision.

Discrimination

Discrimination is one of those specific laws that a business cannot violate. In regard to today’s topic, employment discrimination includes hiring practices, such as application forms, interviews, and selection.  In general, Hawaii and federal law, specifically protect the following statuses:

  • Sex
  • Race
  • Ancestry/national origin
  • Religion
  • Color
  • Disability
  • Age
  • Marital status
  • Income for child support obligations
  • Arrest and court record
  • National Guard participation
  • Sexual Orientation
  • Breast Feeding

Finally, do not forget that Hawaii recently added gender expression as a protected status in regards to employment matters. If you want to know more read my earlier post.

An example of violating discrimination laws would be if you, as a business owner, only checked Facebook or the Internet on applicants of a certain race or gender.  Another type of discrimination is if you as the employer searched social media accounts on all applicants, but you used the same information differently against one particular type of applicants.  For example, if all your applicants had pictures of themselves of drinking alcohol in public, but you viewed that fact more negatively against the female, or White, or gay applicants against the rest of the group that would be considered discrimination.

Privacy

Besides discrimination an employer should also be concerned with an invasion of privacy claim by a potential employee.  Generally, the potential employee has a tough time asserting this claim because you need a “reasonable expectation of privacy” and a lot of people keep their social media profiles open and to the public.  However, it is clear that if the applicant is using the highest privacy settings and the employer somehow gets pass all these barriers the claim is stronger.

Fair Credit Reporting Act

In addition, to revealing protected statuses like race or religion, intruding on their privacy, an employer’s simple act of searching social media may run them afoul with the Fair Credit Reporting Act (FCRA).  This federal law does not just cover credit reports, but cover the simple act of surfing the net for information on the potential employee.  Essentially, this compiled information is considered a “consumer report” and an employer cannot use this information unless it was obtained from a credit reporting agency, consented to by the applicant, or that applicant has been provided written notice of such a search.  Oft times a small business utilizes a third-party to its hiring because it is more cost effective, but what they do not realize that the background checks (which includes social media searches) need to be authorized by the applicant unless it violates the FCRA.

Violating Terms of Use

I want to make a quick mention of violating terms of use on a social media site.  Those conditions that Twitter, Facebook, LinkedIn, etc . . . dictate how users, including people just stopping by to search someone out may use their sites.  You may run into trouble with those rules when you conduct searches and use that information incorrectly.  This in turn may expose you to other various lawsuits by the potential employee or even by the social media company itself.

Some Quick Tips and Last Words

For Potential Employees:

  1. Use the Privacy Settings on Facebook;
  2. Watch what you say on Twitter;
  3. Get a LinkedIn account;
  4. Search yourself on Google and make note what pops up; and
  5. Take steps to clear up negative impressions on the Web.

Basically, assume that any business you are applying to will search for information on you.  It is helps them evaluate you for the job.  If the information that you make public casts a negative light on you chances are they will not consider you for the job.  I suggest getting a LinkedIn Profile, as it can act as a professional resume and is readily accessible online, and it can easily be the first thing that pops up in a Google search on your name.  Also it can give more details in your profile than in your paper resume.  It also gets you in the habit of updating information about yourself for business purposes regularly.

*This one is for law students.  In recent years, the Florida Board of Bar Examiners filed their recommendation to search a bar applicant’s social media profile for the character and fitness investigation part of the application.  While Hawaii Bar does not consider that part of its application process yet, you all should be aware that a lawyer’s reputation is a key element to the practice of law.  With social media becoming part of our daily lives it is likely that many other bars will follow the FBBE’s recommendation.

For Employers:

  1. Review employment/hiring laws;
  2. Review hiring practices and polices, if you do not have any, now is the time to create some;
  3. Review the terms of use on any social media site you use for hiring;
  4. Implement/update a hiring policy so that is consistent with the law and terms of use agreements.

The bottom line is do not consider factors that have no relevancy to job performance, such as race, age, and sexual orientation.  They all are protected statuses by the law and using them as your criteria for hiring is discriminatory.  In addition, you should realize that a lot of social media information, but up my individual users is not always reliable.  In fact, people like to put up jokes, stories, and other forms of untrue information.  Finally, if you are unsure about the hiring policies or decisions that you are making have an attorney review them.

As a measure of practicality remember to take into account business factors too.  You should think about things like employee morale and public when you consider your hiring practices.  You may consider using social media as a beneficial recruitment tool rather than trying to search out every flawed characteristics of a candidate, especially with how LinkedIn is formatted.

Next time on Social Media I’ll discuss using social media use on the job.  Admit it.  You have checked your Facebook at work today!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.   No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.   Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Social Media and the Law Series

New Series of Posts: Social Media and the Law

Later today I will be posting the first in a series of posts detailing Social Media and its interaction with the law.  Generally, it is geared toward small businesses, law students, and social media users.  In particular, for those groups of people living, working, and playing in Hawaii. However, everyone is welcome to read for their own education.

Let me give you a quick overview of the five major topic areas that I will be covering in posts over the next couple of months. They are as follows:

  1. Social Media and the Workplace
  2. Creating and Implementing a Social Media Policy
  3. Using Social Media as Evidence
  4. Social Media and Legal Miscellany

Today’s post will be under Social Media and the Workplace, specifically the hiring and background checks of potential employees by employers.  Please note that I will be switching the schedule of my postings.  The Social Media and the Law posts will come out Mondays or Tuesdays of the week and Draw the Law will be on Fridays or Saturdays of the week.

In the mean time, look below and check out some interesting facts on social media.

Just Some Facts about Social Media

Social media is quickly becoming a part of our everyday lives.  Many of us check our social media accounts at least once during the day.  Here are a few interesting facts:  (1) Facebook has more than 500 million active users and 50% of their active users log on Facebook in any given day (Source: Facebook) and (2) Twitter users send out about 55 million Tweets per day.  All of that adds up to an avalanche of information. (Source: DigitalBuzzBlog)

For some more interesting facts, information, and graphics from other sources on social media check out the following links: