A new U.S. Supreme Court case provides a clear message to employers: Retaliation against employees who allege discrimination will not be tolerated. The new decision established a broad legal standard for Title VII retaliation claims that effectively makes it easier for employees to prevail in court. As a result, it’s more important than ever to establish definitive guidelines for addressing these situations.

Facts of the new case: When a forklift operator at a railroad yard filed a sexual harassment complaint, the company transferred her to a more physically demanding position and subsequently suspended her without pay. Shortly afterwards, the company reinstated the female employee with back pay, but kept her at the tougher job.

The employee then filed a lawsuit on the grounds that the transfer constituted retaliation for her sexual harassment claim. Eventually, the U.S. Supreme Court unanimously decided the case in the employee’s favor. In doing so, it established a new standard in this area.

To be successful in a retaliation claim, an employee must prove that he or she was engaged in a protected activity (such as filing an employment-related charge) and that the employee was subject to an adverse action as a result of the protected activity.

In the past, different federal courts have established varying standards concerning “adverse actions.” Some courts have held that this covers only terminations and demotions. However, the Supreme Court has broadened the definition.

Under the new guidelines, the test will be satisfied if a reasonable person would find that the retaliation was “materially adverse” to the point where it would dissuade an employee from making a discrimination claim. This definition is expected to open up the floodgates for more such lawsuits.

Trial courts will have to evaluate the facts on a case-by-case basis to determine if a reasonable person would have been intimidated under the circumstances. This could lead to a confusing “gray area” in the law.

Although it will take time for the case law to evolve, employers may avoid potential problems by following some basic precautions. For example:

• Alert the management team to the new decision. Educate those in the forefront of such claims.
• Review the timing of actions following claims. An immediate reaction may send up a red flag.
• Be conservative. Take a broad view of what might constitute retaliation.
• Establish a set policy with assistance from legal counsel.

Finally, your company should limit knowledge of claims on a “need-to-know” basis. What a supervisor doesn’t know about can’t be retaliated against.

 Seven Steps to Counteract Identity Theft

It’s bad enough that you have to worry about theft of personal property. Now another type of crime is causing concern:

identity (ID) theft.

If you think you have been victimized by ID theft, here are seven steps to follow. At the very least, this will point you in the right direction.

Check your credit report. If someone has been illegally opening accounts or otherwise accessing your credit information, it should be indicated in the report. You are entitled to a free credit report sent through the mail.
2. Contact the fraud departments of each of the three major credit bureaus (Equifax, Experian and TransUnion). Report that you believe that your ID has been stolen and request that a fraud alert be put on your file.
3. Talk to the security and fraud departments of the appropriate companies. Review your account and follow their procedures for resolving matters (e.g., closing out your account and opening a new one). The Federal Trade Commission (FTC) has created an ID theft affidavit for this purpose.
4. File a report with the local police department. Keep a copy of the report in case it is requested by a merchant, bank or credit card company. Make sure that the crime is reported as an ID theft.
5. Contact the FTC. The FTC acts as a clearinghouse for ID theft complaints. It can provide guidance for resolving problems and refer victims to the proper authorities. The FTC has also set up a toll-free hotline for such complaints: 1-877-ID-THEFT (1-877-438-4338).
6. Get in touch with the major check verification companies if a crook has set up accounts in your name. In particular, if you find out that a specific retailer has received a fraudulent check from you, contact the check verification company used by that retailer.
7. Keep copious records. Document every step you take along the way and include the names of the people you have spoken to, their departments, phone numbers and other vital information. Don’t throw these notes away or treat them carelessly. You may need to rely on them if you pursue any legal action.

 Don’t Get Rattled at Depositions

Will you be called for a deposition in an employment-related lawsuit? No matter what side you are on -- plaintiff or defendant -- this can be a nerve-racking experience. Here are a few helpful tips to get you through it.

• Stay calm. Be aware that body language is meaningful to opposing counsel.
• Don’t hesitate to question information that is inaccurate.
Keep your answers short. The less you offer, the better. Know the basis for the lawsuit. This will help you understand the line of questioning.
• Role-play ahead of time. Don’t just practice the “good” answers to questions. Ask your attorney if there are any potential problems.

Best approach: Don’t volunteer any information that you are not asked about. You could be opening up a whole can of worms.

 Choosing a Form of Business Entity

Which type of business entity best suits your needs? Here is a capsule summary of the main options.

Sole Proprietorships

This business structure may be used for a firm owned and operated by a single person. Since you have no other partners or shareholders to deal with, a sole proprietorship allows you to maintain complete control of the business. Basically, you reap all the rewards of the business, but you also run all the risks.

The major disadvantage of a sole proprietorship is that you have unlimited personal liability. This liability extends to your personal assets. However, you can reduce the risk by purchasing the proper insurance coverage. Drawback: It may be difficult for a sole proprietorship to obtain financing.

Partnerships

Under a general partnership, each general partner faces unlimited personal liability for all partnership debts. All the partners must agree before an interest can be transferred and any one partner can cause a termination.

Note: The death of one of the partners may cause the business to dissolve. This can be a problem if the other partners want to keep the business going. But, the problem can be easily solved by developing a partnership agreement funded through the purchase of life insurance on the lives of all the partners.

The partnership’s entire profits (as well as losses) are reported on each partner’s individual tax return.

C Corporations

A corporation is a legal entity, which has an existence separate and apart from its shareholders. This type of structure generally limits your liability to the amount of your investment in the corporation. The corporation has a guaranteed continuity of life, shares can be freely sold or transferred, and it has the ability to raise capital through the sale of stock.

However, a C corporation may result in double taxation. In other words, income is taxed once at the corporate level and then again when dividends are distributed to the shareholders.

S Corporations

Essentially, S corporation status provides insulation from liability while affording tax benefits. Reason: An S corporation is not subject to double taxation. In brief, the shareholders are taxed like partners in a partnership.

Recent law changes have eased some of the restrictions that apply to S corporation elections. However, be aware that state law may have an impact in this area.

Limited Liability Companies

This relatively new type of business entity is a unique blend of corporate and partnership characteristics. A limited liability company (LLC) is generally taxed like a partnership. At the same time, owners of interests in the company (called “members”) receive the protection of limited liability. LLCs are now recognized in every state, but many other state laws may have ramifications.

The type of business entity that is most appropriate for you depends on your particular needs and circumstances. Each situation should be studied carefully before a structure is selected.

 Making Your Will “Letter-perfect”

If your will can’t be found or the terms are not clear under the prevailing law, your family could wind up in court. To avoid such a result, you may want to have a “letter of instructions” drafted to accompany the will.

Details: A letter of instructions is an informal letter giving your heirs valuable information concerning estate matters. It does not carry the same legal weight as a will, but it is important nonetheless. For instance, the letter may specify requests that should be carried out upon death. Copies of the letter should be attached to the original will and your personal copy. In addition, it’s a good idea to place another copy in an accessible location.

The letter of instructions may cover a number of issues, but here are the areas most likely to be included:

Explanation of assets: The letter may provide a detailed inventory of assets -- especially those that are likely to be overlooked when the estate is settled. This can include checking and savings accounts (with records of passbooks and their locations); safe deposit boxes and their contents; business insurance and accident insurance; retirement plans; Social Security and Veterans Affairs benefits; stocks, bonds and other investments (including the names of brokers and account numbers); information on real estate holdings; and mortgage insurance.

In addition, be sure to list all life insurance policies. Include the insurance company’s name, your policy number, the name of the agent handling the policy and any relevant papers.

Location of documents: Besides those assets already mentioned, also list all of your important personal and financial papers. This may prove helpful in settling your affairs. For example, you should disclose the whereabouts of your past federal and state tax returns and the records required for this year’s returns.

Don’t forget to list all debts, credit cards and other accounts that may need to be paid off, cancelled or transferred to your spouse’s name.

Miscellaneous instructions: Other items of a personal nature may be included in a letter of instructions. Some of these items are funeral, burial or cremation arrangements; fees that have been paid and cemetery plots selected; names, addresses and telephone numbers of people and organizations to be notified upon death; and other specific instructions for handling personal affairs.

A letter of instructions is not a legally binding document and is not a replacement for a will. 

Legal Briefs

The Final Straw -- A worker in a new case tested positive for cocaine three times within a 13-year period. He also threatened a coworker and caused a warehouse accident. Finally, he was fired after he left work because he was supposedly sick and was spotted detailing a car. The Third Circuit Court said the termination was justified based on the totality of the circumstances rather than just one specific act. It didn’t matter that the worker was a member of a racial minority.

Travel and Entertainment (T&E) Records -- In a new case, a taxpayer offered proof of T&E expenses through several documents. But the information was conflicting or incomplete. The Tax Court determined he did not provide reliable evidence for the amount, time and place of his meal expenses. Therefore, the tax deductions were disallowed.
Power of Attorney -- A durable power of attorney can be beneficial if you are ever incapacitated through injury, sickness or old age. If you don’t plan ahead for contingencies, the court might have to appoint someone to manage your affairs and make your health care decisions. This could result in delays, additional expenses and inconvenience for family members at a stressful time.

No Second Chance -- It is important to obtain competent legal representation from the outset. New case: An employee filed a race discrimination claim after he was laid off. But his attorney did little on the employee’s behalf. When the employee lost at trial, he appealed to the Tenth Circuit Court. He asked that the case be retried, this time with competent counsel. Result: The employee can sue his previous attorney for malpractice, but he is not entitled to a second trial.