FOR KIM WOODS ONLY - Business Law

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Research Memorandum

BACKGROUND To complete this assignment, you should apply the principles presented in your textbook.

Your hypothetical supervisor for this project is a law partner in a small law firm representing a new client. For your proj- ect, you’ll first complete some basic research from suggested websites. Then, you’ll prepare a memorandum to your super- visor, describing which form of business organization you feel would be best for your client. You’ll also make some suggestions about what the client’s independent contractor agreement needs to contain to be legally enforceable. Your client has also raised some potential ethical concerns which will also need to be considered.

PROCEDURE You’re going to prepare a written memorandum to your supervisor to assist him in preparing a presentation for a new business client. In addition to the information provided below, you’ll refer to the general information on business organizations and employer-independent contractor relation- ships in your textbook as well as your understanding of business ethics. You’ll also need to do some Internet research. Then, you’ll write your memorandum.

GOAL Your goal for this project is to complete a well-written memo- randum that addresses two legal issues:

� The appropriate form of business organization for your client’s business

� Requirements for your client’s independent-contractor agreement, to make sure it’s legally enforceable and isn’t viewed as an employment agreement

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Remember not to use too much legalese in your memo. You’re writing it to your supervisor, and you would expect him or her to have some knowledge of the subject matter. However, you must completely explain what the law is for each type of business organization you’re considering and the rea- sons you’ve selected one type of business organization as best for your client. The same complete explanation is required when discussing the issue of your client’s independent contractor agreement.

WRITING GUIDELINES Prepare your answers in well-organized paragraphs.

1. Type your submission, double-spaced, in a standard print font, size 12. Use a standard document format with one-inch margins. (Don’t use any fancy or cursive fonts.) Your paper should be written in Microsoft Word or a Word-compatible program.

2. Include the following information at the top of your submission: Name and address, student number, course title and number, and project number.

3. Read the assignment carefully and address the issues suggested.

4. Be specific. Limit your submission to the topics raised.

5. Include a reference page that lists Web sites, journals, or any other references used in preparing the submission. Remember, if you use someone’s words or ideas, you must cite them directly in your memo.

6. Proofread your work carefully. Check for correct spelling, grammar, punctuation, and capitalization.

For this project, please use the following format for your legal memorandum:

To:

From:

Re:

Date:

Summary of Applicable Facts:

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Issues:

Law:

Analysis:

Grading Criteria The following is a breakdown of how your project will be graded:

Content 70%

Written Communication 25%

Format 5%

Here’s a brief explanation of each of these criteria:

Content

The student

� Provides a clear discussion of the assigned issue

� Supports his or her opinion by citing specific information from the sources used

� Stays focused on the assigned issues

� Writes in his or her own words and uses quotation marks to indicate direct quotations

Written Communication

The student

� Includes an introduction, analysis, and conclusion supporting his or her positions

� Uses correct grammar, spelling, punctuation, and sentence structure

� Uses correct memorandum format as described in the assignment

� Provides clear organization (for example, uses words like first, however, on the other hand, and so on, consequently, since, next, and when)

� Makes sure the paper contains no typographical errors

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Format

The paper is double-spaced and typed in font size 12. It includes the student’s

� Name and complete mailing address

� Student number

� Course title and number (Legal Environment of Business, BUS315)

� Research project number (50040600)

The student has double-spaced and typed the paper in font size 12, used the correct memorandum format provided in the instructions, and included his or her name, address, student number, course title and number, and assignment number.

The Project

MEMORANDUM

To: Student

From: Supervisor

Re: New Client, Career Institute of America, Inc. (CIA)

Date: December 6, 20—

FACTS: We have just met a new client, the CEO of Career Institute of America, Inc. (CIA). Although the business was formed a year ago as a nonprofit corporation, they aren’t sure they are happy being a nonprofit.

CIA is a classroom and online education organization that specializes in training students in the United States auto industry, one of this country’s largest industries. Their founder, who also serves as the CEO of CIA, would like to retain most of the ownership and control of the company, because it’s really his enterprise. He also has some concerns about the independent contractor agreement their instructors must sign when they agree to work for the company. He wants to be sure they aren’t construed as employees of the company and are viewed as true independent contractors. He had been told that it’s typical in the industry that instructors such as his are viewed by the IRS as employees. He has

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indicated that he doesn’t care what he has to do but he wants them to be independent contractors, and if later on they are deemed to be employees, he’ll just file for bankruptcy.

Note that most of the company’s income is from online training courses. You should also know that they received a U.S. Department of Labor retraining grant for the instruction they are currently providing and that this type of grant is awarded only to nonprofit educational organizations. Even though CIA was able to obtain this grant as a nonprofit institution, they realize it was a one-time grant. They must make their income from tuition for online courses and in the two small class- rooms in which they teach traditional courses. This is why they aren’t necessarily opposed to changing their form of busi- ness from a nonprofit organization to a for-profit business.

You should further know that the employment contract they provide to their instructors looks as if it was designed by an amateur and may not comply with the legal requirements for a valid independent-contractor agreement.

RESEARCH ASSIGNMENT: Research two areas of law and prepare a memorandum addressing each area, so the client can be properly advised on how to proceed. First, determine the limitations of a nonprofit corporation in the state of Delaware, the state in which CIA was formed and is doing business. You should also review the law for nonprofit and for-profit corporations, as well as limited liability companies, to determine the best form of business for the client.

Consult the listing of Delaware statutes on the Delaware state website at http://www.corp.delaware.gov/DElaw.shtml to assist you in your research.

For more general information concerning nonprofit corpora- tions, for-profit corporations, and limited liability companies, the following are additional websites that can assist you:

http://www.law.cornell.edu

http://www.freeadvice.com

http://www.findlaw.com

http://www.nolo.com/legal-encyclopedia

http://www.hg.org

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Combine this information with what you know about busi- ness organizations and what the client wants, so you can make a recommendation for the best form of business organization for CIA at this time.

The second issue concerns the contract that CIA has its instruc- tors sign. (The instructors teach the programs and grade the student’s papers.) You’ll need to review the law dealing with employment and independent-contractor agreements to deter- mine what the contract needs to include to be properly viewed as an independent contractor agreement and not an employ- ment agreement.

Research employment and independent contractor agreements online. A general search using these terms in the websites listed above or Google, Yahoo!, or any other search engine should assist you in finding the law dealing with these types of agreements. Since the agreements will be signed by the client’s instructors located in each state, use the general law dealing with such agreements. In your memorandum, please be sure to identify each of the key elements necessary for the agreement to be viewed as an independent-contractor agree- ment and not an employment agreement, as well as any other suggestions you might have for the client in connection with their instructor contracts. An ethical issue may also need to be addressed here. If you determine that the instruc- tors are really employees but he wants you to prepare independent-contractor agreements, knowing he will just file for bankruptcy later on if he is audited and owes back taxes and penalties, what are the ethical implications for you and for the CEO of CIA?

Helpful Hints

Remember, the project requires that you use the memo for- mat provided and that you research both issues requested: the most appropriate form of business organization to meet the client’s needs and the requirements for an agent to be deemed an independent contractor and not an employee. It’s suggested that you first locate the law for each of the two

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issues. Then, you need to analyze the information you found and apply it to the needs of the client. Both your research and your analysis should then be summarized and included in your memo.

Good luck with your project!

SUBMITTING YOUR FILES

Use the following instructions to submit your project online:

1. Go to http://www.pennfoster.edu, and log in as a student.

2. Go to your My Courses page.

3. Click on Take Exam next to the graded project number 50040600.

4. Enter your e-mail address in the box provided. (Note: This information is required for online submission.)

5. Attach your file or files as follows:

a. Click on the Browse box.

b. Locate the file you wish to attach.

c. Double-click on the file.

d. Click on Upload File.

6. Click on Submit Files.