The False Perception of a Company's Profitability

 

The Profit of a Company: Expectations vs Reality

What do you think is the average profit of a company? A management advisory company conducted a survey by asking people in the streets this same question. The people surveyed believe that the profit of a company is 22.8%. In other words, if your company makes $100 in revenue, taking away all of the expenses, your profit is $22.8.

In Germany, the reality is 3.4%. The global standard is approximately in the 7% area, so a company that has a 10% profit is rare, almost. Why is there a misconception? Could it be culturally? People just think that businesses must be profitable because why would someone be an entrepreneur otherwise? Or is it that the lack of information plays a role? Or could it be that the PR of companies speak a different language? Companies are very happy about their sales. Volkswagen vs Toyota, who is able to sell more cars? That’s a big discussion, but profit seems to be secondary. If you are the largest selling company, then you must be doing good.

Profit For German Companies

Why is profit in Germany so bad compared to other countries? 3.4% compared to something in the neighborhood of 7% globally. I believe a lot of it has to do with the German desire to provide top quality. The made in Germany sticker has a price, not only to you as a customer who pays more, but also to the company who loses some of their profit to ensure the quality. So, it is no surprise that Toyota’s revenue is double the amount of Volkswagen’s revenue. What does this mean for you? If you look for quality, buy quality, but if you look for buying shares, but a different one, probably one with higher profitability.

This video was transcribed from a Morning Musing from our YouTube Channel. To see the video, click here.

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What can the $20 Million Lowe's Lawsuit Teach Other Businesses

 

What can the $20 million Lowe's Lawsuit Teach Other Businesses

A lawsuit was filed recently against Lowes seeking $20 million USD in damages. This case shows how easily even a high-level corporation can run into trouble in these difficult times.

So, what happened?

At a Lowe's store in California, a customer encountered a man on the same aisle but not wearing a face mask. Out of concern for his health and the health of others, the customer asked the man to put on a mask. Since the customer had underlying health conditions, it is understandable that he was taking the executive order seriously and wanting others to do so as well.

According to the lawsuit, the customer asked the man multiple times to wear a mask. When those requests failed, the customer went to a Lowe's employee and asked him to do address the unmasked man. The Lowe's employee did nothing. Upon the Lowe’s employee’s failure to intervene, as the customer was calling the police, the maskless man spat in the customer’s face four times in rapid succession. As such, the customer is now suing Lowe's for not properly protecting its customers by allowing a maskless man into its store.

What can you as a company do to protect yourself from liability in lawsuits?

The lawsuit demonstrates that whatever steps Lowe’s had taken previously regarding in-store safety and mask-wearing, those procedures appear to have broken down to the point that the lawsuit states that, effectively, Lowe’s had NO policy. If Lowe’s had such policies and protocols in place, a relevant question is whether the employee followed such policies and protocols.

The takeaway is that businesses must have rules and procedures in place for a myriad of difficult situations in these trying and stressful times. Specific to mask-wearing, it is critical to have a coherent policy in place. Once you have those procedures in place, you must clearly communicate them to every employee and train for and practice them. Doing this is an excellent way to limit conflicts and the potential for future liability.

With COVID-19 still very prevalent, the last thing that any business needs a lawsuit. Be sure to have rules and procedures in place for COVID-19, as well as any other situation that could possibly result in a lawsuit.

In conclusion 

An unmasked man went into Lowe's and spat on a customer attempting to protect himself and others. The customer alleges that Lowe's failed to have proper protocols in place to stop unmasked individuals from entering the store and then to protect other customers upon entering the store. It is critical for businesses to document the policies and procedurals put into place, and also critical to ensure that employees are equipped to implement and execute on such policies and procedures. If you have any further questions, contact BridgehouseLaw.

This article was inspired by a Morning Musings video. To watch it, click here.

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Updated US Travel Restrictions

 

State by state and International Travel Restrictions

The United States Department of State (DOS) recently lifted it's global “do not travel” advisory. Since travel restrictions have been decreased, this means that US non-essential workers can travel internationally to locations that are deemed “safe”. Naturally, not every country is deemed “safe”, and DOS is now ranking countries individually by levels 1-4 based on how each country is addressing COVID-19.

International Travel

If you do plan on traveling internationally, also remember that many places have a ban on American travelers, including the EU. Returning US travelers and others authorized to enter the US will be limited to certain airports for arrival from overseas. Those airports include:

• Hartsfield-Jackson Atlanta International Airport - Georgia

• Boston-Logan International Airport - Massachusetts
• Chicago O’Hare International Airport - Illinois
• Dallas/Fort Worth International Airport - Texas
• Detroit Metropolitan Airport - Michigan
• Daniel K. Inouye International Airport - Hawaii
• Fort Lauderdale-Hollywood International Airport - Florida
• George Bush Intercontinental Airport - Texas
• John F. Kennedy International Airport - New York
• Los Angeles International Airport - California
• Miami International Airport - Florida
• Newark Liberty International Airport - New Jersey
• San Francisco International Airport - California
• Seattle-Tacoma International Airport - Washington
• Washington-Dulles International Airport - Virginia

State by State Travel

When traveling domestically, remember to recognize and adhere to each state’s rules. States have tried their best to balance controlling the outbreak of COVID-19 and reopening their economy, all to different degrees of success. Each state has its own ways of handling out-of-state travelers when screening for COVID-19. Some states, like New York, have very strict restrictions when traveling into the state from outside the state; others, like California, have no statewide travel restrictions. New York, for example, has created a list of several dozen “hot spot” US states – any travelers from or passing through those states may be subject to a mandatory quarantine period before being allowed to enter New York.

Strict States for outside travelers

Of the states listed with airports open for returning US travelers, many states require a similar 14-day self-quarantine period upon arriving in the state if from a state or country deemed “high risk”. Many of those states also have severe fines and even jail time for those who do not self-quarantine. Those places that require a 14-day quarantine include:

• Washington D.C.
• Hawaii
• Massachusetts (or show proof of a negative test taken within 72 hours)
• New Jersey (also travelers must fill out a survey)
• New York (police have checkpoints to make sure people are obeying the self-quarantine rules)

Lenient States for outside travelers

The remainder of the states with designated screening airports open for returning US travelers do not have statewide restrictions, though it may vary per city or county. For example, Illinois does not have any statewide quarantine rules for travelers, but in Chicago, travelers from “high-risk” states must self-quarantine for 14-days if they stay in the city for more than 24 hours.

For any additional information about travel restrictions or legal counseling, reach out to us via social media or at charlotte@bridgehouse.law

Read more of our blogs by clicking here.

Also, check out the full list of all state by state restrictions here.

                 

How to Protect Your Business From Voice Phishing

 

How to Protect Your Business From Voice Phishing

Voice phishing, or vishing, incidents have risen significantly in the United States since July 2020. On August 20, 2020, the Federal Bureau of Investigation (“FBI”) and the Cybersecurity and Infrastructure Security Agency (“CISA”) released a Joint Cybersecurity Advisory, describing cybercriminals’ attempts to extract sensitive information from employees as a targeted “campaign.”

 

According to the FBI and CISA, cybercriminals increasingly engage in vishing by contacting employees on their personal cellphones and directing them to clarify their login information. The rise in teleworking since the emergence of the COVID-19 pandemic increased the widespread use of virtual private networks (“VPN”), which allow remote employees to log in to the same system. Businesses benefit from using VPNs to supervise and direct access to their databases. However, once a cybercriminal has obtained an employee’s login information via vishing, this login information can then be used by cybercriminals to access the VPN. Once cybercriminals have access to the VPN, they can mine the targeted business’ databases for customers’ personal information, as well as other valuable information, and then monetize the data breach through blackmail, for instance.

 In order to protect your business from vishing, the FBI and CISA advise the following:

• Restrict access to VPN during certain hours
• Train employees to be suspicious of unsolicited phone calls
• Advise employees to limit the amount of personal information posted on social media
• Verify web links do not have misspellings or contain the wrong domain
• Bookmark the correct VPN URL and do not visit other URLs on the sole basis of an inbound phone call

 

Caitlin Becker | Law Clerk - BridgehouseLaw

 

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What is a Class Action? What You Need to Know About Class Actions

What You Need to Know About Class Action Lawsuits

What is a class action?

A class action lawsuit is a type of lawsuit that allows a large group of people who were wronged by an individual or company to come together as one to sue them. A situation that may cause a class action lawsuit includes fraud, injuries, discrimination, deceitful advertising, and more.

How do class actions work?

Class action lawsuits are filed because many times, individual cases aren’t strong enough to support an independent lawsuit. But, when numerous people come together who were wronged in the same way by the same person or company, a weak case sometimes becomes much stronger.

Class action lawsuits can be filed by one or more plaintiffs, and others who wish to join can choose to become a class member. If the plaintiffs win the lawsuit, compensation may be awarded, and the court creates a distribution plan to give each class member a percentage. With that said, most class action lawsuits, like many civil lawsuits, are resolved outside of court. Usually, both parties negotiate to reach a resolution before the case reaches the trial phase.

What are the benefits of class actions?

Benefits of a class action lawsuit include combining resources to hire legal counsel, as well as gaining a larger pool of evidence and witnesses, both in quantity, quality, and scope. It also allows all wronged parties to participate in one, aggregated action, rather than many separate lawsuits.

What are the disadvantages of class actions?

There are drawbacks to class action lawsuits. If the plaintiffs win, awards can be quite small in value or be of a non-monetary character. Compensation can sometimes result in just a coupon, replacement products, rebates, or something else of little value. Also, if a plaintiff had plans to sue independently, that right may be automatically forfeited once he or she elects to become a class member.
You should carefully consider the pros and cons when considering either filing or opting-into a class action lawsuit.

Notable class action lawsuits include:

• The BP oil spill in the Gulf of Mexico for $20 billion in 2016.
• The Volkswagen emission scandal for $14.7 billion in 2016.
• The Enron fraud scandal for $7.2 billion in 2008.
• Red Bull false advertising settlement for $13 million in 2014.

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This article was inspired by our Tidbit Tuesday series on our YouTube channel. Check it out here!
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Germany Now Holds the Position of Presidency of the Council of the EU

Germany now holds the presidency of the council of the EU

What does this mean for Europe?

On July 1st, 2020, Germany took over the position as the presidency of the council of the EU. That statement may confuse some people at first. No, Germany is not the president of Europe, and no, they did not take the position over by force. What happens is that every 6 months in the European Union, a new country takes over the presidency of Europe to ensure that each country has the opportunity to be represented. There’s not one president of the council, but rather it is run by the national government of the current country in power. The presidency works very closely with the two countries that succeed them. In this case, the two succeeding countries are Portugal and Slovenia. They work together as a trio to put forth an agenda with long term goals outside of their individual agendas.

So, now that Germany holds the presidency position, what is their plan for Europe? Obviously with the current climate of what’s going on in today’s world, overcoming and bouncing back from COVID-19 was at the top of their list. Highlights of their goals include:

• overcoming the COVID-19 pandemic permanently, as well as the economic recovery
• a stronger and more innovative Europe
• a fair Europe
• a sustainable Europe
• a Europe of security and common values
• a strong Europe in the world

What’s great for business owners

What is great for business owners is the fact that they are placing a large emphasis on protecting and strengthening small and medium-sized enterprises (SMEs). SMEs are the backbone of the European economy and Germany recognizes that. Germany plans on hosting a conference in November where SME owners can come together and discuss ideas on how to make life better for their businesses. This will be very beneficial to business owners in Europe. They also plan on increasing competitiveness for SMEs which will lead to further innovation. This comes around the same time the United States signed the USMCA, which places a large emphasis on uplifting SMEs as well. We wrote an article on that recently, that article can be found here.

Even though Germany has taken over during a stressful time, they seem well prepared for these next 6 months. Good luck to the German presidency!

This article was inspired by our Morning Musing video on this same topic, to watch it, click here!

The entire program for the German presidency can be found here.

Picture credit: euractiv.com

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New Fine Print on Airline Tickets

Do you always read the fine print? Nowadays, the fine print is just thrown into the terms and conditions agreement of a contract and will go unnoticed by most people. If you’ve flown with American Airlines recently, you probably didn’t notice the new fine print on the terms and conditions that you agreed to when you bought your ticket. The new clause is put into the agreement that you automatically make with American Airlines when you buy your ticket. The clause takes away your ability to file a class-action lawsuit against them.

Airline companies like American Airlines are still flying despite COVID-19 still spreading rampantly. With so many people close together on an airplane, it is an easy place for the virus to spread. Knowing this, American Airlines decided to reduce the liability of potentially getting sued by inserting a clause stating “You agree and understand that you will not bring against American Airlines Group, Inc., American Airlines, Inc., or any of its affiliated entities, agents, directors, employees, and/or officers any class action lawsuit related to your access to, dealings with, or use of the Site.”

Airline contracts are known as “take it or leave it” contracts. This means that there is no ability to negotiate your contract with American Airlines. As a customer, you are either all in or all out.

With the potential of hundreds of people on their plane getting COVID-19, the lawsuit that could come from that would be extraordinarily costly.

Your Legal Options

This clause does nothing to reduce the risk of a COVID-19 outbreak on one of their planes, so, what if there is a large outbreak on American Airlines? What are your legal options? You could try to resolve things directly with American Airlines and they may be willing to help you. If not, you can also file a traditional lawsuit against them.

Another legal option that someone could take if they received COVID-19 on an airline flight would be to go to the FAA. Their regulatory body can help you with your customer rights.

If you do decide to fly during this time, make sure you stay safe. Take the proper precautions to protect yourself and those around you.

Read more of the BridgehouseLaw blog here!

Read the American Airlines terms and conditions here.

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This article was inspired by one of our Morning Musings. To watch it, go check out our YouTube channel!

    

How Small to Medium-Sized Enterprises will Benefit from the USMCA

How the USMCA will help Small and Medium-Sized Enterprises (SMEs)

The USMCA is a new trade agreement between the United States, Canada, and Mexico that replaced NAFTA on July 1st of this year. The agreement places a large emphasis on supporting small and medium-sized enterprises (SMEs) in North America, including a new feature: a chapter dedicated to SMEs

SMEs in the U.S. exports more goods to Mexico and Canada, respectively than any other country, exporting over $125 billion combined in goods to the two countries in 2016.

The USMCA also establishes new mechanisms designed to help SMEs with cross-border trade and related issues, as well as new opportunities for more trade and investment opportunities for SMEs.

SME owners who are in underrepresented groups will also be given a larger platform to engage with governmental bodies in North America,  with new and better opportunities to voice their opinions on how to adapt the agreement to help their businesses. This means that the USMCA will be more fluid in order to corroborate with SMEs.

More Benefits

The USMCA also provides other benefits for SMEs, including:

• Not requiring SMEs to open a foreign office in order to do business across borders.
• Reducing costs of transactions across the borders of the U.S., Canada, and Mexico.
• Protecting the intellectual property of SMEs.
• New mechanisms for ensuring regulatory action related to the USMCA are transparent, effective, and do not hinder SME cross-border operation.

Check out our full website here!

This article is a transcript from one of BridgehouseLaw’s series: Tidbit Tuesday. To watch the original video, click here.

There are many more benefits to SMEs that the USMCA provides that can be found here.

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New Restrictions in North Carolina

New Restrictions in North Carolina

Starting on Friday, June 26 at 5:00 PM, North Carolina Governor Roy Cooper’s Executive Order No. 147 goes into effect, extending Phase 2 until July 17, 2020 and imposing further restrictions. Specifically, beginning Friday June 26, people in North Carolina are required to wear a mask in any public area where a six-foot social distance is unachievable. This face mask requirement applies to all employees of retail stores, restaurants, personal care businesses, and others. However, you are not required to wear a face mask if you’re exercising, actively eating or drinking, under 11 years old, in a personal vehicle, and more. Law enforcement is authorized to write citations only to business or organizations that fail to enforce the face mask requirement. Law enforcement cannot criminally enforce the face mask requirement on any individual workers, customers, or patrons. 

If you want to learn more, click here for the full text of Executive Order No. 147. 

Employee or Independent Contractor?

What is the Difference Between an Employee and an Independent Contractor?

Knowing the difference between an employee and an independent contractor is not always easy. But employers must know the difference in order to have appropriate liability protection and to be compliant with labor and tax laws.

Employers sometimes try to classify their employees as independent contractors to avoid paying payroll taxes. They might think the IRS won’t notice, but in reality the employer’s classification is irrelevant to how the IRS determines if a worker is an employee or independent contractor. The IRS has a long list of factors to consider when they evaluate the relationship to see if your independent contractor is truly an independent contractor.

Some of those factors include:

•   How much control does the employer have over the worker’s behavior? Is the worker trained by the employer? Does the employer control how and when the worker does his/her work? Does the worker have to follow the rules that the employer sets for employees?

•   What kind of payment does the worker receive? Is the worker paid a flat rate? Is the worker paid hourly/have a salary? Is the worker reimbursed on expenses?

•   What is the relationship like between the employer and the worker? What type of relationship is described in the contract? Does the worker receive benefits from the employer?

All of these things are considered when looking into the relationship between a worker and an employer. If you think designating a worker as an independent contractor will allow you to avoid paying payroll taxes, you may want to think again. The IRS is extremely rigorous when it comes to this topic and there are financial and legal repercussions if an employee is misclassified.

Millions of employees in the United States are misclassified as independent contractors. If an employee feels that he/she is being misclassified as an independent contractor, they can submit a Form 8919 to the IRS. 

Not all employers misclassify their employees on purpose, but the mistake can be costly. In order for employers to avoid this, they can use a Form SS-8 to help evaluate the type of relationship they have with their workers. The Form 8919 and Form SS-8 can both be found on the IRS website.

Since the IRS makes resources available to better understand how to classify the relationship between employers and workers, there is low tolerance for misclassification.  Make sure that you understand the difference because the penalties, which can include prison time, are not worth it.

References: 

understanding-employee-vs-contractor-designation

consequences-misclassifying-workers-independent-contractors

*This blog is for informational purposes only and not for the purpose of providing legal advice.

Warren Buffett Gets Conned

Warren Buffet Gets Conned

Do you know Berkshire Hathaway? If you know them, then you know that they are owned by the legendary investor Warren Buffett, who is trying to collect companies like a regular person would collect stamps or coins.

Berkshire Hathaway was on a shopping tour around 2016/2017 and they identified a pipe manufacturing company named Wilhelm Schulz. The company was based in Krefeld, which happens to be the sister city of Charlotte, North Carolina. Schulz was interested in selling but was close to insolvency. A few days before they started to negotiate with Berkshire Hathaway, a local advisor concluded that Schulz should go the insolvency route. 

However, when Berkshire Hathaway was interested in the company, they received data that may have been photoshopped which showed purchase contracts which pushed the company’s value up significantly. Berkshire Hathaway bought the company for $800 million and now want to be awarded an arbitration to reclaim the funds lost in the purchase.

Two interesting concepts came from this. First, in parallel, Berkshire Hathaway filed a lawsuit in Germany for $800 million. This means that the court fees alone would cost them $380 thousand. This shows that Berkshire Hathaway is really out for the grabs. The second interesting concept is that Berkshire Hathaway won in arbitration but Shulz decided to file in the United States in accord against the arbitration award. 

Traditionally, we lawyers say that if you win an arbitration you cannot have this matter heard in court again. But, what we have now is that both parties, plaintiff and defendant filed parallel actions in court, so arbitration may be negotiated in a contract, but in reality, the courts may decide, or the courts may decide not to hear the case because they have a binding arbitration agreement. 

However it develops, it remains an interesting matter, and for those who are just interested in the very quick top view, maybe it is best not to mess with Berkshire Hathaway.

From: Morning Musing 206 

By: Reinhard von Hennigs, Chairman and Founder of BridgehouseLaw LLP

Published: June 9th, 2020

The Regulation of Discrimination in Germany, France, and United States

Celebrating 200 Morning Musings

German Federal Supreme Court grants damages for breach of choice-of-cour...

What is space law?

Back to Work and e-scoters

Amazon - French legal action with Unions

Should you burn a flag? Or is burning a flag illegal?

OFAC and Hand Sanitizers

What is your thought on Artificial Intelligence or AI?

Who is Liable?

What is sovereign immunity?

Who is X AE A-12?

Boering and Embrear - dead deal?

Victoria Secret

Can Airbnb Survive Coronavirus?

Soccer - equal pay for males and female players?

What is Project Cupid?

Sanitizers and CDC

Sanitizers and CDC

Cleaning and Disinfectant Chemical Exposures and Temporal Associations with COVID-19 — National Poison Data System, United States, January 1, 2020–March 31, 2020 

On January 19, 2020, the state of Washington reported the first U.S. laboratory-confirmed case of coronavirus disease 2019 (COVID-19) caused by infection with SARS-CoV-2 (1). As of April 19, a total of 720,630 COVID-19 cases and 37,202 associated deaths* had been reported to CDC from all 50 states, the District of Columbia, and four U.S. territories (2). CDC recommends, with precautions, the proper cleaning and disinfection of high-touch surfaces to help mitigate the transmission 

Read more 

https://www.cdc.gov/mmwr/volumes/69/wr/mm6916e1.htm

https://www.cdc.gov/handwashing/hand-sanitizer-use.html

https://aapcc.org/track/hand-sanitizer

Corona and Brexit

Corona and Brexit 

Brexit Consequences for the U.K., the EU, and the United States 

Consequences of Brexit for the U.K. 

The U.K. has already suffered from Brexit. The economy has slowed, and many businesses have moved their headquarters to the EU. Here are some of the impacts on growth, trade, and jobs. There would also be consequences specific to Ireland, London, and Scotland. 

Growth 

Brexit's biggest disadvantage is its damage to the U.K.'s economic growth. Most of this has been due to the uncertainty surrounding the final outcome. 

Uncertainty over Brexit slowed the U.K.'s growth from 2.4% in 2015 to 1.5% in 2018.9 The U.K. government estimated that Brexit would lower the U.K.’s growth by 6.7% over 15 years. That’s if there is a trade agreement but restrictions on immigration.10 

The British pound fell from $1.48 on the day of the referendum to $1.36 the next day. That helps exports but increases the prices of imports. The pound may strengthen once a deal is approved, depending on the trade terms.11 

Trade 

Brexit would eliminate Britain's tariff-free trade status with the other EU members. Tariffs would raise the cost of exports. That would hurt U.K. exporters as their goods become more expensive in Europe. Some of that pain would be offset by a weaker pound.

Read more

https://www.thebalance.com/brexit-consequences-4062999

The SBA may review finances before Forgiving PPP Loans: did you meet the...