Background To complete this project, you should apply the principles presented in your textbook. For your project, you’ll first complete some basic research from suggested websites. Then you’ll prepare a memorandum to your supervisor 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 supervisor for this project is the law partner in a small law firm representing a new client.
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, refer to the general information on business organizations and employer-independent contractor relationships in your textbook. You’ll also need to do some Internet research. Then write your memorandum.
Goal Your goal for this project is to complete a well-written memorandum to your supervisor to address 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 a legally enforceable independent contractor agreement and not viewed as an employment agreement Remember not to use too much legalese in your memo. 68
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 reasons 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 Use the writing guidelines to 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.) 2. Be specific. Limit your submission to the topics raised. 3.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. 4. 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: 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 topic or issue; addresses the subject in complete sentences; supports his or her opinion by citing specific information from the text, assigned websites, and other sources; 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; provides clear organization; and makes sure the paper contains no typographical errors. Format The student has double-spaced and typed the paper in font size 12, used the correct memorandum format provided in the instructions, and includes 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’re not sure they’re 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, since it is 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’re not construed as employees of the company and are viewed as true independent contractors. 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’re 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 classrooms in which they teach traditional courses. This is why they’re not necessarily opposed to changing their form of business 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 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 corporations, 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 Combine this information with what you know about business organizations and what the client wants, so you can recommend the best form of business organization for CIA at this time. 72
The second issue concerns the contract that CIA has its instructors 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 determine what the contract needs to include to be properly viewed as an independent contractor agreement and not an employment agreement. Research employment and independent contractor agreements online. A general search using these terms in the websites listed above or even on Google, Bing, 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 our client’s instructors located in each state we want to 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 agreement and not an employment agreement, as well as any other suggestions you might have for the client in connection with their instructor contracts. Here are some helpful hints: Remember that the project requires that you use the memo format 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 contrator and not an employee. You should first locate the law for each of the two 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!