October 2019: Ask A Lawyer: Timothy Mortimer
In our seventeenth installment of “Ask a Lawyer” we featured questions from Tim Mortimer.
Read it here
QUESTION: I had an employee come to me about witnessing unethical behavior on the part of a co-worker involving a client’s personal information. Long story short, as bad as it sounds, since the client wasn’t harmed and the employee in question is a darn good sales person, I did nothing. My failure to reprimand the “bad” employee soured the work experience for the “good” employee who brought the bad behavior to my attention. Just the other day, the “good” employee gave me notice that she is quitting. She stated the reason for her leaving is my failure to do something about the “bad” employee’s unethical behavior. You know what? She is 100% right. I should have done something, but I was thinking about my bottom line and it cost me my other equally great and successful employee. I cannot salvage the relationship with the “good” employee who quit. I tried. She wants nothing to do with my business or me anymore. Since she is leaving bitter, I am worried that she will tell others, (strangers, clients and competitors) about the “bad” employee’s dishonesty and how, essentially, I did nothing about it… perhaps even encouraged it with my silence? It would make me, and my business look bad…. Real bad. As a business owner I am in damage control mode. What are my options to persuade this, now former employee, to zip it? Would I be out of line or breaking any laws to offer her some money if she promises to not speak of what took place…ever again… to anybody? I can just picture her adding bribery to the list of wrong doings she already has compiled against me and my business. I don’t want to make this bad situation worse.
ANSWER:First, SHAME ON YOU! I don’t care how good a salesperson you think someone is. If he/she is making sales by telling lies, misleading clients or forging documents, that person is a lousy salesperson. In fact, he/she is not a salesperson at all, but instead, a conman. I know you’re in damage control mode – but it’s not because of the ethical salesperson who left – it’s because you’ve been alerted to the fact that your salesperson has been mis-representing your goods or services. You are going to have much bigger problems on the horizon than the one you’re asking about today if you don’t start making some changes in how you run your business.
First, let’s talk about mitigating your damages with the “good and ethical” employee who is leaving you. You have an employee who has justifiably left your company. It’s a loss, but it shouldn’t be a continuing loss. Employers let employees go, and employees leave their bosses, for any number of reasons. In many cases, both parties just want to move on. Help your former “good employee” to move on. Offering a severance package is not offering a bribe. What does your former “good employee” need to transition to a place that is more of a “fit” for her? If you had a valuable long-time employee that wanted to retire to spend time with her family, what would you give her? Severance agreements allow an employee to leave with a little extra money to do whatever they feel they need to do in order to move forward with the next phase of their life. For some people, they may need a well-deserved vacation. For others, they might want to pay off a bill. Severance agreements also often contain a non-disparagement clause. This means that, in exchange for the monetary gift, the departing employee agrees not to bad-mouth you or your company in the future. Both severance packages and non-disparagement clauses are common in business. However, these are still considered an important employer-employee agreement and the drafting of them should not be taken lightly. I would recommend seeking the counsel of a qualified business attorney for guidance when creating these documents. It is important that the documents are written in a manner that they protect both the business owner and business alike. In other words, they need to be well thought out enough that you can legally enforce them should your “good employee” decide to discuss exactly what she witnessed while employed at your business.
In the immediate future, I would recommend re-evaluating your corporate values. While it may seem easier to let “good” sales people leave your organization quietly than to deal with the corrupt sales people who don’t want to go in the first place, your assumption could not be more incorrect. “Toxic” employees are the employees who by their own actions and attitudes drive good employees out of organizations. Letting “toxic” employees get away with their shenanigans may be easier in the short-term but in the long run, they will cost your business more than you will ever recoup from them in revenue. Costs associated with having to replace, recruit and train, as well as the associated costs tied to interruption in service for your clients and lost revenues simply don’t offset keeping a toxic person employed. Also, don’t underestimate your clients. While some clients may lend themselves to being manipulated by your toxic employee’s schemes, many are not fooled. They will know that you are employing unsavory sales people and I promise, they will tell their friends. It takes a strong business owner or manager to deal with toxic employees. Dealing with them effectively often takes training. Consult with your corporate HR advisor about this and all employee related concerns. If your business doesn’t have an HR person, you can always outsource your HR needs. Now is the time to ask yourself some honest questions: “What kind of business am I running?” and more importantly, “Am I the kind of person that stands up for what’s right? Or, do I sit down and look the other way when people do wrong?”
Learn more about Employee Agreements by visiting:
Learn more about Employee Agreements by visiting:
QUESTION: I am looking to move to another state. I would like to move my business with me. It is an LLC. Is the process for relocating a business to another state overly complicated? Perhaps I would be better off simply starting over in my new location?
ANSWER: My first question is why would you ever want to leave the Land of Enchantment? But, that’s probably none of my beeswax. The good news is that moving the operations of your business, or your entire business, to another state is not all that complicated. You have several options, and which option is best for you depends on your objectives. I will assume that your business is, if not thriving, at least chugging along, and that you don’t simply want to close the doors and start from scratch. The options are:
(1)You could leave your company as is, registered in New Mexico. You will still need to maintain a registered agent in New Mexico, but that does not mean you have to operate out of New Mexico. With this approach, you would simply register your business as a foreign entity in the state to which you are relocating.
(2)You could also set up a new entity in the state to which you are relocating and merge the New Mexico entity into the new entity. After the two entities merge, the New Mexico entity would cease to exist, and the new entity would survive as the same business. This requires some more paperwork in each state but is not overly complicated.
(3)You can establish a new entity in the state to which you are relocating and then transfer all the assets of your New Mexico entity to your new entity.
(4)You could keep your New Mexico entity and form a new entity in the state to where you are relocating, with the New Mexico entity being the owner of the new entity. Assuming your current entity is a limited liability company (LLC), you can maintain the anonymity offered to New Mexico LLCs and still have a business in another state that may not offer the same anonymity. You still may need to transfer all your business’ assets to the new entity, but that is not very complicated.
These are just four options you have for moving your business out of state. There are more. Determining which one is right for you depends on your objectives, which includes considering convenience, business strategy, and of course, tax implications. Also, its important to be aware the processes and fees associated with moving your business are different from state to state. Due diligence on the matter is a must! I can tell that you, as a savvy business person, you need to have your team (legal, accounting, consulting, etc.) in place. This would be a good time to get them together to assist you in your relocation plan.
You can learn more about Moving an LLC by visiting:
Who is Timothy Mortimer?
Timothy R. Mortimer has expertise in several practice areas, including business litigation, probate work on wills and estates, and managing business transactions including real estate contracts and business-to-business contracts for contractors and subcontractors. Mr. Mortimer has a depth of experience helping small businesses optimize their start up process and in related litigation. He has counseled individuals and companies on a wide range of business issues including: formation of, and disputes regarding, employment and independent contractor agreements, stock and asset purchases and sales, real estate agreements and disputes, and the creation, enforcement and breach of all types of contracts. A significant portion of his practice involves disputes between shareholders, members and partners of small business and counseling individuals at the start-up of their companies to minimize the risk of those disputes in the future.
In his probate practice, Mr. Mortimer represents personal representatives and administrators of estates in litigation and in navigating the probate process from start to finish. He represents trustees in disputes and in performing their duties for the trust and its beneficiaries. He also represents beneficiaries under wills and trusts in litigation involving will contests, breaches of duty, undue influence, and other claims they may have against an estate or trust.
In addition to Tim, Slingshot has an awesome team of legal professionals who can provide legal services across the United States including Larry Donahue, Donald Kochersberger, Alicia McConnell, Ian Alden, Joe Turner, David Richter, Kallie Dixon, Ross Perkal, Kameron Kramer, and many more. Our team is ready to answer questions that are important to you.
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