Corporate Lawyer Spanish Fork Utah
As a business that employees others in Spanish Fork, Utah, you have certain legal obligations. Consult with an experienced corporate lawyer to know your legal obligations. A business has an obligation to prevent improper circulation of employee information within its organization, and to prevent unauthorized disclosure to outside parties. Under the federal Privacy Act, state statutes, and collective bargaining agreements, employees have a right to know what records are created and maintained about them, who has access to those records, and how the information is used. The employee’s right to inspect the information and to submit corrections should be clearly communicated on a regular basis. Record-keeping requirements usually specify guidelines for access to personal information. A current or former employee, as well as a job applicant, usually submits a written request to ensure proper identification and provision of the matching file.
Other access within an organization is normally restricted to those with a legitimate need to know, such as human resources personnel and the employee’s supervisor. Procedures established for routine use of employee information should be documented so that a record of such disclosures may be reconstructed without the necessity for a separate, formal procedure for each disclosure. Specific regulations or collective bargaining agreements specify the types of records open to access by an employee. These records normally are those used to determine the employee’s qualifications for employment, promotion, transfer, termination, compensation, and disciplinary action. Some states allow exclusion of certain documents from disclosure to an employee, such as letters of reference, medical records, or records of any criminal investigation. Authorization to release information to an outside party normally is required from current or former employees and from job applicants. Employee information also may be disclosed in the following circumstances:
• in response to requests to verify directory-type information, such as the fact of employment, dates of employment, job title, and job site location
• to a proper law enforcement authority when the company believes an employee is engaged in illegal or other threatening activities
• pursuant to a federal, state, or local compulsory reporting statute or regulation
• in response to an administrative summons or judicial order, including search warrant or subpoena
• to a collective bargaining unit pursuant to the contract
• to a company’s agent or contractor when the information is necessary to perform its contracted function
• to a physician for the purpose of informing an employee of a medical problem
Suppliers, Manufacturers, and Other Businesses
A business typically discloses sensitive or valuable information to another business in a request for proposal, a proposal, a joint project, and when contracting with another party for a product or service. Such information sharing occurs when it is to the mutual benefit of both parties.
When developing a request for proposal or a proposal, consideration should be given to the extent to which it may become necessary to furnish valuable information to the other party in order to complete the project. Any such situation should include the appropriate nondisclosure agreements, and assurances may also be needed that the company retains certain rights to any work products as a result of the contract.
Common today among vendors of hardware, software, and communications are requests for information from other manufacturers or suppliers to assess interface capabilities or feasibility of their own developments. Many of these requests are driven by competitive intentions, but some are not. Occasionally, industry regulations obligate a company to furnish certain information. For example, telecommunications companies must furnish information about voice and data transmission services under certain circumstances. However, a company may apply protective agreements or may take steps to avoid disclosure of information that will aid the competition or make it more difficult for the company to compete. Information requests from potential competitors should be handled with caution, protecting valuable information while remaining in compliance with applicable laws and regulations.
There are a number of situations in which business information is disclosed in such a way that it becomes part of the public domain. A business needs to be aware of what information is provided to such sources–voluntarily or as a legal obligation–and must take the precautions necessary to prevent disclosure of inappropriate information wherever possible. Plans for trade shows, articles, research papers, speeches, books, and other activities proposed by technical people and management should be reviewed by a proprietary information coordinator or other appropriate management personnel. Business and financial news media reporters should be referred to public relations.
Government investigations and legal proceedings also put sensitive and valuable information at risk. Congressional hearings on a product, service, or practice are subject to the Freedom of Information Act. The discovery process of legal proceedings can place records directly into the hands of a competitor, and court records generally are a matter of public record. A company may appeal to the court for special consideration in the handling of proprietary information and the sealing of court proceedings and records, but a movement is on today to make that more difficult.
Every business must file records with federal, state, and local governments. A large number of businesses also must submit information to state and federal government agencies, such as OSHA and the EPA. Government contractors also have information that is subject to public disclosure requirements, and regulated businesses must file documents with regulatory commissions. Even the very attempt to protect one’s property through patent and copyright registrations may result in government records that are open to the public.
A business needs to tailor its government filings to minimize release of sensitive information. The Freedom of Information Act, a law requiring public disclosure of federal agencies’ records and information, allows certain exceptions for government-classified, trade secret or private information. Protective agreements should be used when valuable information is provided. A business may have to defend its desire for confidentiality when the parties involved move to have the information declared nonproprietary in order to copy it or release it to others. If the business fails to justify confidentiality, a document will probably need to remain nonproprietary in all other business and legal situations.
Purchasing or Investing in a another existing business
If you are planning on purchasing or investing in an existing business, speak to an experienced Spanish Fork, Utah Corporate lawyer. One source of potential liability that probably causes the most concern today for purchasers, lenders, officers and directors, professionals and other business persons is environmental liability. For a purchaser, one serious concern is potential successor liability for environmental problems of the seller. A purchaser of a business can incur environmental liability in a number of ways, including:
1. The purchaser may be held strictly liable, jointly and severally with others, under federal and state environmental laws for any cleanup costs, damages or other environmental response costs with respect to any real property it acquires in a transaction. In light of the fact that the average cost of cleaning up a site deemed contaminated by the Environmental Protection Agency (EPA) is estimated to be in millions of dollars, this liability is of grave concern to purchasers of real property.
2. In addition to being liable for cleanup costs, the property acquired may decline substantially in value or become worthless as a result of the environmental problems.
3. The business acquired may be liable to the government or third parties for its wrongful actions in disposing of or transporting hazardous waste, or it may have toxic tort liability for injuries to persons or damage to property caused by elements in the seller’s building or under the real property.
The types of environmental hazards that cause concern for purchasers are numerous. For example, a seller’s building may contain asbestos, and if the asbestos is “friable” and inhaled by the seller’s employees over a period of time, it can cause various fatal diseases, such as lung cancer, gastrointestinal cancer and mesothelioma, a cancer of the lining of the chest. Friable asbestos can be enormously expensive to remove, and obviously reduces the value of any building.
The primary federal statutes that impose liabilities on owners and operators of real property are the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), also known as “Superfund”; the Resource Conservation and Recovery Act (RCRA); the Clean Water Act; the Clean Air Act; and the Toxic Substances Control Act (TOSCA). CERCLA imposes strict joint and several liability for: (1) all costs of remedial or removal action by the United States or a state; (2) all response costs incurred by private parties; (3) damages for destruction to natural resources; and (4) the cost of studies to evaluate the effects of contamination. CERCLA imposes strict liability on “owners” or “operators” of real property contaminated by hazardous substances. Owners and operators who will be found liable include not only owners or operators who owned the property at the time the hazardous substances were released or disposed, but any current owner or operator of contaminated property. Thus, purchasers of businesses must be acutely sensitive to environmental liability whenever the seller’s business has any real property or has operated on third-party premises. Similarly, even if the purchaser leases real property from the seller or from some third party, the purchaser may still be liable for cleanup responsibilities as an “owner.”
In addition to the federal regulations, the states have also adopted extensive environmental regulations. Although most state environmental laws are fairly uniform and similar to federal environmental laws, the law of the particular state where the property is located should be reviewed in connection with the due diligence process.
By understanding the importance of due diligence and by conducting proper due diligence at the early stages of the acquisition process, the purchaser may be able to structure the transaction to avoid potential environmental problems. For example, if the seller’s business has violated environmental laws (such as on-site or off-site disposal of hazardous substances), or if the seller’s properties contain potentially hazardous substances subjecting it to toxic tort claims (such as asbestos in the seller’s building), any remaining liability for those violations would flow to the surviving corporation in a merger, or would remain intact in the purchase of stock. In contrast, a purchaser may be able to avoid certain liabilities for past environmental violations if it purchases only certain assets of the business. For example, a purchaser of contaminated property may be able to raise as a defense to any liability that it was an “innocent purchaser” of the property. Also, if possible, any contaminated property could be excluded from the acquisition. By focusing at the early stages of the due diligence process on whether there are any potential environmental problems, the purchaser may be able to take other actions to ameliorate its risk, including obtaining appropriate indemnification from the seller.
Employee Benefit Plan Liability
Another type of liability a purchaser may unknowingly assume arises from unfunded employee benefit plans. If the seller has any employee benefit plans, the purchaser will need to review each to quantify any potential unwanted liability. For example, the purchaser would want to ascertain that any defined benefit pension plan of the seller is fully funded. If the seller has been unable to pay the benefits under a defined benefit pension plan, or if the funding available for the plan does not meet certain statutory requirements, the plan may be terminated by the Pension Benefit Guaranty Corporation (PBGC). Whenever a defined benefit pension plan is terminated, if the assets of the employer are insufficient to pay guaranteed benefits, the PBGC will make such payments, but the employer, and each member of the employer’s “controlled group,” will be liable to the PBGC for the amount necessary to pay the guaranteed benefits.
The purchaser should also be concerned about potential successor liability for any product liability claims arising from the business prior to acquisition. If the seller is a manufacturing concern or otherwise makes products for which there may be potential product liability, the purchaser may want to consider structuring the transaction as an asset sale. Even if the transaction is structured as an asset sale, the attorney for the purchaser will want to ensure that the purchaser will not be subject to the laws of certain states that impose successor liability, even in asset sales.
An experienced Spanish Fork Utah Corporate lawyer can conduct the due diligence before you purchase or invest in an existing business and help you understand the liabilities that you may have to take over.
Free Consultation with a Spanish Fork Utah Corporate Attorney
When you need business legal help in Spanish Fork Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506