Corporate governance has become a popular topic. While it primarily pertains to the governance of public companies, it can be a useful set of policies and procedures to help guide a private company by fostering discipline and informed decision-making.
“Historically, private company boards have been more casual in how they’re organized and how they act, but more recently private company boards and their stockholders are looking for more accountability,” says Christopher Ivey, shareholder and co-chair of the corporate and securities practice at Stradling Yocca Carlson & Rauth.
Smart Business spoke with Ivey about corporate governance for private companies and best practices for its implementation.
How does corporate governance operate in a private company setting?
The primary roles of a company’s board are supervising management, providing strategic direction and approving material actions. These roles are enabled through good corporate governance. A fully functioning, independent board that’s not controlled by the founder is more likely to exercise authority to make difficult decisions, including management changes. Beyond management changes, good corporate governance instills a level of discipline and accountability that the board may not otherwise be inclined to undertake. It also sends a good message to stockholders.
Should the board of a private company have legal or contractual obligations?
Corporate governance is not required in a private context with the exception of some regulated industries. Board members do, however, have fiduciary and legal obligations to stockholders to fulfill their duties of care and loyalty. Good corporate governance facilitates board members adhering to their fiduciary duties.
Corporate governance should be principle-based as opposed to operating by a rigid set of rules. However, codes of conduct and good committee charters can act as a guide.
Generally, what are some best practices for corporate governance?
Establish policies that help create an effective board of directors, such as director independence.
Form an audit committee of independent board members to oversee audits — internal control systems, risk management, detecting and preventing fraud — and meet alone with auditors. Also, if practical, get audited financial statements, as banks and institutional investors may require them. But whether audits are required or not, having accurate financials leads to better-informed business decision-making.
Consider having a compensation committee of independent board members to recommend senior officer compensation and structure, and administer equity incentive plans. Officers on the board shouldn’t be making their own compensation decisions.
Additionally, you may want to have a corporate governance and nominations committee that can identify director candidates, evaluate board performance and establish a code of ethics/conduct. Similarly, other committees can be formed to handle special tasks as appropriate.
How insulated should the board be from the rest of the company?
It’s important to have transparency. At a minimum, transparency ensures clear disclosure of conflicts of interest so everyone understands each individual’s potential personal gain or interest in the matter being deliberated. Beyond that, clear communication among board members and management is important to make good, clear, strategic decisions with the best information available.
Should all private companies establish corporate governance policies?
Avoid having governance policies and committees solely for governance sake. Corporate governance should facilitate allowing the board and management to focus on running the business. You don’t want to consume all of your time just checking the corporate governance boxes.
Private companies should choose elements of corporate governance policies that work best for them. Don’t do it just because everyone else is doing it. Do it to the extent it’s appropriate for your context.
Christopher Ivey is a shareholder and co-chair of the corporate and securities practice at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4121 or email@example.com.
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The late Ed Koch, a recent New York City mayor, always asked, “How am I doing?” Marketers — as well as government leaders — need to know if their “customers” are happy.
Perhaps you head the marketing operations for your company and want to get a better handle on customer metrics. You heard about the idea of a marketing dashboard at a recent trade association meeting and think that may solve your problem. How should you proceed? What should be on your dashboard?
Progressing beyond a single item to monitor the effectiveness of business performance, leading organizations often use a set of key metrics called marketing dashboards to understand their key performance indicators.
Just as an automobile dashboard captures critical driving information such as speed, distance, fuel levels, vehicle and engine temperature, navigation and so on, a marketing dashboard summarizes pertinent information on branding, channels, customer contact, promotion, sales performance, service profitability, the Web and customer value.
Consider the benefits
Some specific benefits of using dashboards include the following: business intelligence, trend tracking, measuring efficiencies or inefficiencies, real-time updates, visuals (charts, graphs, maps and tables), customized reporting of performance and aligning goals and strategies with results. Major downside considerations include the cost, time and the talent needed to administer marketing dashboards.
The main value of the dashboard framework is that it consists of a multitude of practical information that is current, accessible and easy-to-understand. Dashboards can be designed for top C-level executives as well as the managers working in the trenches.
The accompanying figure illustrates an example of an executive marketing dashboard. This dashboard features the following metrics: sales levels and growth targets, the decision-makers, exceptions, key accounts (including revenues), the marketing pipeline (status of marketing activities throughout the buying cycle), and tracks leads and dollars generated over an annual period.
Decide what to measure
What should you measure? The spectrum of opinion varies widely from a single metric such as the Net Promoter Score to 50 or more performance indicators. Just as we don’t want to be overwhelmed with our automotive dashboard, keeping the marketing dashboard simple helps measure what matters and aligns with business objectives. That said, here’s a good starting point to consider in choosing five to 10 key performance indicators.
■ Financial measures: revenues, contribution margins, turnover ratios, profitability
■ Competitive measures: market share, advertising/promotional budget, image map
■ Consumer behavior: market penetration, customer loyalty, new customers
■ Consumer intermediate measures: brand recognition, customer satisfaction, purchase intention
■ Direct customer measures: distribution level, intermediary profits, service quality
■ Innovativeness measures: new products launched and the percentage of annual revenue from these new products
■ Customer value measures: process metrics, customer retention rates, customer lifetime value, RFM (recency, frequency, monetary value)
Realize that doing business today requires a new level of accountability for performance. Superior customer value means knowing customers’ behaviors and buying patterns.
Metrics are an important part of the strategic marketing process to understand: 1. How successful the organization is now. 2. What it needs to accomplish to become even more successful in the years ahead.
Smart marketing managers will embrace this challenge and use metrics as a planning tool to improve business strategies.
Art Weinstein, Ph.D., is chair and professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” He may be reached at firstname.lastname@example.org or (954) 262-5097. For more information, visit his website at www.artweinstein.com.
"Business Class" by Randall Kenneth Jones
If you are like the majority of business executives, you prefer communications by email. But is it at any price? What about some ground rules for civility?
A recent Google search of “email etiquette” resulted in a substantial number of entries — the majority with a spotlight on protocol for the sender. Call me naive, but shouldn’t the recipient behave responsibly too?
Let’s face it; responding to most emails has become optional due to the absence of accountability and/or real human emotion. One could even say that email correspondence is the professional world’s high-tech version of hide and seek.
However, many employees still spend an excessive amount of time waiting for mission-critical information to be returned via email — and time equals money.
To all senders, nothing is more important than communicating clearly and succinctly. An email beginning with “let me be brief” followed by five full paragraphs is most likely going to fall victim to the Big D — Delete.
The battle rages
Of course, the war rages on between “buyers” and “sellers” — with email being a primary weapon. However, aren’t we all “selling” something? As all recipients are senders too, practically everyone has a story of woe regarding an unanswered email.
Maybe I’m not as popular as I thought. As a test, I recently sent 25 individual emails requesting time to discuss this specific topic. In my mind, I had a relationship with each person; therefore, I “deserved” their time and attention. Right?
Number of responses received — two.
Now, inbox fear has become so great it’s also safe to assume that some simply didn’t want to risk comment as that could become the technological equivalent of an “Open for Business” sign associated with their email address.
Understandable. However, history has proven that we now live in a business world where, if we can’t put out someone’s fire today, we can’t get him or her fired up about tomorrow. Tragic.
But the real question was, what response did I “deserve” versus what had I “earned?”
First, before you get all hot under the white collar, don’t assume that every email arrives at its destination — so simple yet so oft forgotten.
Second, understand that most executives report receipt of 300-plus emails per day — it is not humanly possible to respond to each one.
Of course, despite the clever gimmicks intended to make some solicitation emails appear personalized, most of us can tell the difference between a customized email and one sent en masse. For one, I can’t think of the last time I crafted a personal email that ended with an opt-out option.
The bottom line: senders should never expect a personal response to an impersonal email. Instead, focus should be paid to those situations where the sender has earned the right to receive a response.
You don’t “deserve,” you “earn”
Recipients, please consider these questions when evaluating a sender’s request:
■ Do you have an established relationship of value?
■ Does the sender’s appeal fit your priorities?
■ Is the sender in a holding pattern waiting for you?
■ Is the sender following an agreed-upon “next step” in communication?
■ Has the sender demonstrated a possible benefit to you or, more importantly, your organization?
■ Is the sender a potential customer?
Lest you forget: the configuration of most email addresses includes your company or organization’s name — your precious brand. Like it or not, when a member of your team chooses to ignore an email, your company’s image may be taking a beating — one blown-off potential customer at a time.
In reality, there is no single solution that will resolve this increasingly unmanageable issue. However, a little thoughtful consideration goes a long way. Simply put, please just think before you strike.
Speaker, writer and professional storyteller Randall Kenneth Jones is the creator of RediscoverCourtesy.org and the president of MindZoo, a marketing communications firm in Naples, Fla. For more information, visit randallkennethjones.com.
By Roy Lipski
No matter how large or small, no matter its business focus, sooner or later every company is going to need to raise funds. The Oxford Catalysts Group — a science and technology-based company formed by the 2008 merger of the U.K.-based catalyst development company Oxford Catalysts Ltd. and Velocys Inc., a company based in Plain City, Ohio, that specializes in microchannel reactors — is no exception.
With a successful $45.5 million fundraising campaign to support further development and commercialization of smaller-scale gas-to-liquids plants completed, the experience has taught us a lot about how to capture the interest and attention of potential investors.
But although technology is the name of our game, whatever your business focus and funding needs, there are lessons you can learn from such an experience. After all, the process of raising fund is as much a science as an art.
Here are my top tips:
Before you start: consider what you want to aim for and whom you want to attract
You need to develop a good portfolio of investors. Aim for a mix of large and small investors. You also need to think about the types of investors you are seeking. There are two main kinds.
Financial investors are the ones looking for a financial investment. Strategic investors generally have a financial reason and a business reason for wanting your company to succeed. They may be, for example, your customers or potential customers.
And before you start any fundraising program, you need to consider how much money you will aim to raise. There’s a fine line between enough and too much. In my experience the right amount of money is always a little bit more than you think you needed.
Making the pitch: know your audience
Before you make your pitch carefully consider:
■ The background of the people to whom you are talking. Do they have expertise in your sector? Or are they generalists looking to make a good investment?
■ How much time have they got.
Then design your presentation accordingly.
When making your pitch, pay attention to your audience members and observe their reactions. Are they taking in your points? Or do they seem to find them boring or uninteresting? To make the best impression you need to be able to judge what goes down best for each audience on the fly — and be prepared to change your presentation style and content as you go along.
I always go into a presentation with a huge range of different PowerPoint slides and presentation styles to call on so I can adjust my presentation to best interest a particular audience.
After effects: the waiting game
It generally takes time for investors to consider your propositions and decide whether to invest. But sitting back and doing nothing while waiting for investment decisions to be made is never a good idea.
After you’ve made your pitch, be open and welcoming to potential investors who come back for more information, and invite them to ask further questions. Make sure your potential investors understand your vision and strategy, as well as your delivery program and expectations.
Also, work to nurture both existing and potential investors. Set up a communications program in order to build up trust and credibility, and to keep everyone informed about the company’s activities.
And finally, never raise money when you need it — always do it before.
Roy Lipski is CEO of Oxford Catalysts Group who helped found Oxford Catalysts Ltd in 2005, led it through an IPO and subsequent acquisition of Oxford Catalysts Group’s sister company, Velocys Inc., and raised more than $130 million from institutional investors. For more information, visit www.velocys.com.
Business and product names, logos; unique product designs, shapes, utilities, functions; and other proprietary manufacturing methods can comprise a significant portion of a company’s potential revenue and intellectual property (IP).
Protecting IP is a critical component of a sustainable business strategy. However, many companies don’t take the steps necessary to fully guard the ownership of these properties, leaving them vulnerable to encroaching competitors and/or missing out on sources of revenue generation.
Smart Business spoke with Karl W. Hauber, an attorney at Fay Sharpe LLP, about identifying and protecting IP to avoid costly legal lapses.
What do trademarks cover?
Trademarks are used to protect business and product names (i.e. words and phrases), logos, and in some cases shapes and colors that are used to identify a company and its named products or services.
There are common-law protections for using a name or symbol, but a mark not registered with the U.S. Trademark Office can cause issues. For example, a second entity can register the same name or mark. The non-registering first entity may be restricted with respect to future use and prevented from further expansion.
By registering, an entity can become the exclusive user of a trademark in association with particular goods or services, so as to develop source association in that mark. The customer goodwill and market association can become valuable IP, the rights of which may be licensed or sold outright.
How does a copyright work?
Copyrights cover software, website content, schematics, music, photos, literary and artistic works, among other things. Once ‘original works of ownership’ are secured in a fixed medium or recorded in some way, there’s an inherent copyright associated with that material and the manner in which it is expressed. Copyright ownership provides the rights to reproduce the work and to prepare derivative works based upon it.
Copyright registration with the U.S. Copyright Office provides additional benefits. Mainly it’s a public record of the copyright claim, enabling the applicant to seek legal remedies and initiate a lawsuit against someone who has copied material or is using it without authorization.
What can be patented?
The most common patent type is a utility patent, which protects unique devices and apparatuses, methods of manufacture, chemical compounds, formulas and drugs — collectively referred to as inventions. Generally, an invention is a solution to a technological problem and may be an apparatus or a method. Having patent protection provides the owner the right to exclude others from using, making, selling or importing devices protected by the patent for 20 years from the application filing date. Patent rights can be licensed, assigned and sold, which may provide monetary gains and revenue for the patent owner.
A company can be barred from patenting an invention. If the invention is on the market, or publicly known, for more than one year it’s barred from patent protection and deemed a contribution to the public.
In addition, design patents cover the shape of or pattern applied to a product — how it looks through ornamental design only. Design patents have a 14-year lifespan and different protection. The bulk of the design patent application is drawings and figures that accurately depict a product. Enforcing a design patent involves infringers trying to market a substantially similar design.
What are the pros and cons of trade secrets?
Sometimes companies have a unique manufacturing method, for example, so they protect it by keeping it secret. In contrast to patents, where a detailed description submitted to the patent office eventually becomes known to all, trade secrets must be shielded from the public. The lifespan of a trade secret is based on its secrecy and will last as long as it remains unknown to others.
Once a company has something it believes is secret, it must take active, detailed internal steps to maintain the secrecy. But if someone can reverse engineer a product, there’s nothing to stop him or her from doing so. Manufacturing methods, for example, sometimes can’t easily be reverse engineered, so are better candidates for trade secrets.
Who can help companies protect their IP?
Working with counsel knowledgeable in this area of the law can help parties get through matters concerning the best way to protect IP. It is beneficial for interested parties to be proactive with their IP counsel and openly discuss plans and future initiatives so one can avoid costly disputes with others’ intellectual property rights.
Karl W. Hauber is an attorney at Fay Sharpe LLP. Reach him at (216) 363-9212 or email@example.com.
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Cease and desist letters can be used for more than stopping trademark
infringements — they can be invaluable marketing opportunities.
“There are a lot of ways to turn a possible negative into a real business positive,” says Tom Speiss, shareholder and trademark attorney at Stradling Yocca Carlson & Rauth. The letter could be used to initiate a conversation about a potential acquisition or licensing opportunity.
“You want all CEOs and key decision makers to read your letter and say, ‘This is a company we need to meet,’” says Speiss.
Smart Business spoke with Speiss about how to capitalize on cease and desist letters.
What is a trademark cease and desist letter?
Simply put, if a company owns a trademark and sees another using it in the same space, the letter is intended to get your competitor to ‘cease’ using your mark. Rather than filing suit, which should be a last resort, a well-crafted letter with your position statement and a clear articulation of your rights to the mark may be all you need.
Are certain elements necessary for the letter to hold legal significance?
The best offense is a well-planned defense. First, you must be able to confirm receipt of the letter. If you later file suit, you will have proof that your competitor received the letter, giving you a better opportunity to claim damages, especially if willful infringement can be proven.
Second, the message in the letter needs to be clear. It should state that you have superior rights to the mark, what those specific rights are, and it should include the trademark registration number. Specific is terrific here — there should be no doubt about what you are claiming and how you’d like to remedy the situation.
How can you ensure the letter has the intended effect?
Do your research. Make sure you are well within your rights before asserting a claim. Once the alleged infringer
receives the letter they will likely conduct their own investigation about your company, so be prepared.
Then order a trademark search report. The report will give you a more complete picture including: a list of applications and registrations at the U.S. Patent and Trademark Office, a list of abandoned and pending marks, state registered marks, business and domain names, and Web use. You will want to have a solid case for your claims before you draft the letter.
How could it be used as a marketing opportunity?
We all have one chance to make a first impression. This is a terrific opportunity to demonstrate your industry prowess and position your company as a viable suitor or partner. Perhaps you are a prime acquisition target. Or, maybe your strategy includes growth by strategic acquisition. Maybe there’s a licensing deal in your future. Whatever the case may be, if the recipient of your letter sees you as a clean and professional organization, this could be one way to start the conversation toward something much greater.
How would you advise companies considering this strategy?
Think with the end in mind. Before you write the letter, think about your desired outcome and talk about it internally.
You will want to make sure the letter is accurate and viable so you can continue to pursue your desired opportunities in the marketplace. Then, put your best foot forward. Keep in mind, your letter may be read by unintended recipients such as news media or your main customers.
If you write a strident and aggressive letter, your competitor may find a way to use it against you in the marketplace. Don’t let them do that. Make sure you give your recipient a reasonable ‘out’ by not forcing them to mount an aggressive defense out the gate. When done right, you could turn your competitor into an ally.
Tom Speiss is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (424) 214-7042 or firstname.lastname@example.org.
WEBSITE: Find Tom Speiss’ profile at www.sycr.com/thomas-j-speiss-iii.
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With the IPO market heating up, now may be a good time to seriously consider taking your company public. Determining whether your company is a good IPO candidate requires careful thought and professional planning.
“It is important to start planning now because it could take a year or two before your company is ready,” says Ryan C. Wilkins, shareholder in the corporate and securities practice at Stradling Yocca Carlson & Rauth.
Smart Business spoke with Wilkins about the steps companies should take before going public.
What do companies need to consider when deciding whether to go public?
Give careful thought to whether the upside of going public outweighs the downside. Potential benefits include: better access to the capital markets, the ability to use equity for acquisitions and the cachet associated with being a public company, which can help attract top talent and open doors to new customers or suppliers.
The drawbacks can include: increased scrutiny on your short-term operational results, the public disclosure of sensitive information that may be used by your competitors and the significant ongoing costs associated with being a public company. These costs principally relate to the audit of financial statements, the preparation and filing of reports with the SEC, and compliance with numerous SEC and exchange listing requirements (and extra personnel you may need to hire to manage these requirements).
What comes after the decision to go public?
The first thing you’ll need to do is engage reputable bankers. Retaining the right team is critical because bankers with an outstanding reputation for leading successful IPOs within your industry can send a strong signal about your company to the market.
Next you’ll want to retain reputable accountants and attorneys. These advisers are also key because of the advice they provide during the offering process, as well as the signals they can send to the market.
What happens after the team is selected?
Once your deal team has been selected, the bankers will set an ‘all hands’ organizational meeting to discuss the proposed deal timeline and allocate responsibilities for key action items.
Next, your advisers will focus on preparing the registration statement, which is the main offering document filed with the SEC. The registration statement provides a detailed discussion of many elements of the company, including its business, management and historical financial information. While recent rule changes under the JOBS Act have made compliance with some of these requirements less burdensome for companies, the preparation of this document is still a major undertaking that will take a period of several months.
The registration statement serves two main purposes. First, it is a marketing document designed to entice investors to make an investment in your company. As a result, the deal team will want to draft the document to position your company in the best possible light. However, it is also a legal document, and misstatements in (or omissions from) the document can result in liability against your company and management team. Because of these competing interests, preparation of the registration statement is a difficult and time-consuming process.
What happens after the registration statement is ready?
Once the registration statement is ready, it is filed with the SEC. It usually takes approximately 30 days for the SEC to review and respond with comments. Depending on the scope of the comments, this comment process can involve multiple iterations over a period of several months.
While awaiting comments from the SEC, it is important to continue to work diligently on completing other elements of the offering. For example, the company and its advisers will need to prepare a stock exchange listing application, adopt corporate governance policies and negotiate an underwriting agreement with the bankers. At the same time, the executive team needs to continue running the business and meeting projections. This will strengthen your case to potential investors — that your company represents a strong investment.
Ryan C. Wilkins is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4115 or email@example.com.
Website: Find Ryan Wilkins’ profile at www.sycr.com/Ryan-C-Wilkins.
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Patent trolls can be huge, single-minded licensing companies. These nonpracticing entities purchase patents from small inventors who don’t have the desire or funding to create what they’ve patented and threaten potential infringers to get money through licensing fees or lawsuits. Business owners of small and midsize companies can be caught off guard when they receive the letter claiming their product infringes an existing patent, and often don’t know what to do.
“Fighting the alleged infringement usually costs more than the licensing fee the troll is seeking,” says Christian Drago, a patent attorney at Fay Sharpe LLP.
This can make a business owner feel trapped. However, he says patent trolls often cast a wide net, sending letters to companies that may not be infringing. That’s why it’s important to know how to respond.
Smart Business spoke with Drago about how to deal with patent trolls.
Who is most at risk of being the victim of a patent troll?
Generally, infringement claims are a lot more successful when made against small to midsize businesses because they don’t have the capital to fight an infringement suit, so they often opt to pay the license fee.
A patent troll is not going to pick a company out of the clear, blue sky. It will buy a company’s products and reverse engineer them, or scrutinize its marketing collateral for product descriptions. It’s important for companies with patents to be careful what they post on their website. Market your company, but don’t give too much away because you could be giving ammunition to a troll.
If you receive a letter from a nonpracticing entity, what do you do?
First, don’t panic. The entity is soliciting a licensing fee and its track record in litigation is not great. Contact a patent attorney and have him or her review the claim and your product to find out if you’re actually infringing. Don’t use your in-house or general practice attorney; courts want outside independent review.
If it’s discovered that you’re not infringing, get a non-infringement opinion by outside counsel. That can be used to offset damages and show you acted in good faith by procuring the assistance of an attorney.
The attorney will compose a letter that says your company had outside counsel review the claim and determined you are not infringing. Now the troll has to do its cost/benefit analysis and decide whether it wants to pursue this any further. The troll may just move on.
However, if willful infringement is discovered, meaning you continue to infringe after you’re made aware of the infringement, the penalty can be upped by a judge. That’s why it’s important to show you acted on the well-reasoned opinion of counsel as soon as possible.
How can you protect yourself?
If you’re going to file for a patent, you want to file as soon as is practical. Bring an attorney onboard while the product is in development, not when you join the market. Have a patent attorney conduct a patentability search and get a freedom to operate opinion. This gives you the best idea of what patents are out there.
If the attorney finds similar, existing patents, he or she can show them to your engineers, and the engineers can innovate around current designs. This could give you a competitive edge and allow you to go after competitors when they infringe on you. The process also focuses the company on what it’s doing in the market.
If you have to backpedal because you failed to do your due diligence, your R&D costs could double because of scrapping a project and going back to the drawing board.
However, keep in mind patent searches aren’t exhaustive because, at the time of the search, there may be applications that are being reviewed but have not published. Patents issue from three to five years after they’re filed and they’re published 18 months after filing. That leaves a gap.
That’s why, it’s important to take these letters seriously and get counsel involved right away. You need to quickly determine the best course of action based on the facts, not the claims.
Christian Drago is a patent attorney at Fay Sharpe LLP. Reach him at (216) 363-9000 or firstname.lastname@example.org.
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There are very few written policies that are required by law to be provided to employees, but there are certain policies companies can adopt to protect themselves and reduce their liability exposures. This can either be done though a company handbook or by distributing individual policies to employees.
“Courts have said that by advising employees of certain information, the burden shifts from the employer proving something didn’t happen to the employee proving something did. That can be a significant difference in an employer’s ability to defend itself both in terms of success and cost,” says Jeffrey Dinkin, a shareholder at Stradling Yocca Carlson & Rauth.
Smart Business spoke with Dinkin about key policies that should be included in employee handbooks and what other options exist.
What are some required policies suitable for an employee handbook?
All employers are required to have sexual harassment policies that clearly state to whom employees should report complaints. More than one person should be designated, but if that’s not possible, there are outside resources to which you could direct them.
For companies with five or more employees, if the company has leave policies, policies regarding pregnancy disability leave must be included. As a note, under recently enacted legislation there must be continued employer health insurance contributions during the period of pregnancy disability leave for up to four months. The California Family Rights Act also allows 12 weeks of baby bonding leave, with continued employer health insurance contributions now also being required.
Employers with 50 or more employees are covered by the Family and Medical Leave Act, which must be honored when you learn an employee is eligible for family medical leave, and requires a related employer policy.
Also, a new law dictates that employees paid in commissions need to be provided a clearly written commission agreement that describes how commission is calculated, earned and paid. It needs to be signed by, and a copy given to, the employee.
What else could an employer include in an employee handbook?
Employers should have a policy that requires employees to accurately record all time worked (the start and stop times), as well as the start and stop time for meal periods. The policy should clearly prohibit off-the-clock work. It is important to also address meals and rest periods provided by the company.
Technology and communications policies are increasingly necessary. It’s important that an employer indicate that the materials stored and communicated on devices owned by the employer belong to the employer, and it has the right to review and monitor those communications at its discretion.
There’s a lot of attention on bring-your-own-device workplaces. Employers need to communicate that work-related mobile activity is not private and information can be retrieved from a personal device including when the employee exits the company.
Is an employee handbook required?
Companies don’t need to have a handbook, but having one allows them to set forth some essential policies and employee rights and obligations that should be observed. Handbooks enable everyone to have a reference to their rights and obligations.
What will suffice as notice in place of a handbook?
You can provide individual policies. Employers often provide new hires with the policy regarding sexual harassment, or there can be a separate meal and rest period policy. There is other information that must be provided to employees through permanent postings at the workplace or handouts.
Who should assemble the handbook?
An employment attorney is a good resource. He or she will typically have a model handbook that can provide a starting point that’s then customized to suit the employer’s needs. The chamber of commerce or an HR consultant have similar resources.
However, a big part of employers preparing a handbook is for them to become aware of their obligations and rights so they might better order their employment policies to protect themselves. It’s a good education tool and a chance for an employer to order its thoughts on how it wants to treat its workforce. ?
Jeffrey Dinkin is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4000 or email@example.com.
Website: Find Jeffrey Dinkin’s profile at www.sycr.com/Jeffrey-Dinkin.
Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth
The executive order released Feb. 12, 2013, by the White House on improving critical infrastructure in many ways confirms cyberattacks have become a serious threat to national security.
While the order’s focus is on protecting critical infrastructure, such as power grids and hospitals, private sector companies also should take cyberattacks seriously.
“Business owners will lock their cars and protect their homes in sophisticated ways but won’t protect the most critical area, which is where their data sits,” says Pervez Delawalla, president and CEO of Net2EZ. “Because it’s not happening in front of us, but in the cyberworld, many tend to not pay attention.”
Smart Business spoke with Delawalla about cybersecurity, the threats that exist and how companies can protect themselves.
What are the threats?
The biggest threat facing our digital information is foreign governments trying to penetrate our systems for intelligence from which economic value can be gained. A great deal of proprietary information, such as designs and ideas for new products, is being stored on company servers. If that information were extracted, it could offer a competitive advantage.
The common thought used to be that a cyberattack would result in a company’s website going down. A hacker looking to make a name for him or herself would attack a site by bombarding it with bogus traffic, and it would cease to function. Now, hackers are looking to stay behind the scenes because the data they gain can be a lot more valuable than shutting down a site.
What could be the extent of the damage?
In extreme cases, a data breach could trigger the complete downfall of a company. Depending on the nature of the attack, a breach could cause customers to lose trust in the company and its brands. That’s in extreme cases. In other instances, valuable intellectual property could be lost and the associated R&D investment would be hard to recoup.
How can a company recognize its exposure to cyberthreats?
Many times exposures come from within the company, so it’s important to understand what employees are working on and who has access to what data.
Also, consider the risk when an executive travels overseas. When using his or her smartphone, it’s possible software can be downloaded on the phone without his or her knowledge. When that person comes back and connects to his or her office network, the software that was downloaded could penetrate into his or her network.
What are some critical components of good cybersecurity?
It’s important to establish layers of protection. For example, set criteria for employees to access certain company information on its servers. Similarly, companies should employ hardware in layers in order to protect critical data. There are hardware devices designed specifically to stop distributed denial-of-service attacks.
Intrusion protection systems can detect when someone penetrates a company’s network and identify who, where and how. Firewalls also are useful to block unwanted traffic, but have them periodically audited to ensure their effectiveness.
It’s important to have all of these systems audited. Too often companies set up these systems and forget about them until something bad happens.
Regarding mobile security, executives traveling overseas should take a conventional cellphone. Another option would be to back up the data on your smartphone before the trip, use the phone overseas, and then wipe the entire phone before connecting to any of your home networks again.
Who can help put a solid cybersecurity plan in place?
There are professionals who have expertise specifically in cybersecurity. Companies in some cases are adding chief security officers to work alongside chief technology officers. However, if a company is not large enough to appoint someone to such a position, then the best option is to work with a consultant who is focused on the security side or a company that provides cybersecurity services on an ongoing basis.
Pervez Delawalla is president and CEO at Net2EZ. Reach him at (310) 426-6700 or firstname.lastname@example.org.
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