What is a Bylaw Anyway?
If a company’s articles operate as its constitution, then its bylaws are its statutes. Articles give the big picture of the company – identifying the company’s purpose and decision makers. Bylaws, on the other hand, provide rules on the smaller details – like the number of directors, when officers will be elected, and when annual meetings will be held.
In Minnesota, you do not need bylaws to run a company; Minnesota statutes provide a default rule in most cases. However, bylaws are a very useful tool for establishing rules of conduct that meet the unique personality of your company. Unlike articles, bylaws do not need to be filed with the Secretary of State; meaning the company’s rules can generally remain private.
Bylaws can regulate a wide range of corporate activities. Examples of the kind of information that might be contained in bylaws are i) a method for electing or removing members of the board of directors ii) the duties of corporate officers iii) minimum notice periods before certain actions may be taken by the board of directors and iv) who has the power to determine the compensation of the board.
It is important to note that some corporate rules can only be modified by amending the articles. A discrepancy between the language in the articles and the bylaws will always be resolved in favor of the articles. It is important to understand the statutory limitations placed on the effectiveness of bylaws as well as the content requirements of the articles. An attorney can assist you in understanding these limitations, and in ensuring that your company’s bylaws are valid and enforceable.
One of the first steps to forming your business entity is to file a formation document with the Secretary of State. When forming a limited liability company (LLC) this document is known as the articles of organization; when forming a corporation it is known as the articles of incorporation. The articles operate as the corporate “constitution.” They identify the company’s purpose, establish who has the power to make decisions for the company, and may set forth the process for modifying the company’s rules. Understanding what the articles say and how they affect your rights is just basic business sense.
In Minnesota, articles of organization for limited liability companies must contain:
1. The name of the company;
2. The registered address, as well as the name of any registered agent at that address; and
3. The name and address of each organizer.
Articles of incorporation for a corporation are required to have the same information as the articles of organization for a LLC, but must also contain the number of shares that the corporation has the authority to issue. Unless the organizers/incorporators of a new business set forth different rules in the articles, the remainder of the corporate rules will be governed by bylaws or statutes.
You have a great idea for a new business. . . now what? One of the first decisions for someone in your position is whether to formally organize your business, and, if so, what type of entity to select. There are several to choose from, each with unique legal and tax consequences. The most common entity types are the Sole Proprietorship, Partnership, Corporation and Limited Liability Company.
In Minnesota, your company automatically becomes a Sole Proprietorship if you are the only owner and do not select another entity type, or a Partnership if there are two or more persons associated to carry on a business for profit. There are no statutory requirements to forming a Sole Proprietorship, but the owner should register the business name as an assumed name with the Secretary of State. Similarly, there are no formal requirements for Partnerships, but Minnesota statutes do provide alternative forms of partnerships with greater levels of liability protection. Typically, however, sole proprietors and partners are personally liable for business debts, and therefore not always the best structure for your business.
The most common entity types in Minnesota are Corporations and Limited Liability Companies. A Corporation may be formed for any lawful purpose, but requires filing articles of incorporation with the Secretary of State. Perhaps the greatest benefit of forming as a corporation is limitation on personal liability for its owners (called “shareholders”). However, unlike partnerships or limited liability companies, corporations are treated as separately from their owners for tax purposes. The profits of a corporation are taxed to the corporation when earned. Shareholders are then separately taxed when profits are distributed as dividends.
A Limited Liability Company (“LLC”) is a flexible corporate form that combines elements of a partnership and corporation. Like corporations, an LLC offers owners limited personal liability for debts and acts of the business. However, like a partnership, an LLC offers the benefit of pass-through taxation, if properly elected. An LLC must have one or more owners (called “members”), and must file articles of organization with the Secretary of State to be recognized
Deciding which entity is right for your business depends on many factors including the needs of the owner(s), characteristics of the business, and the needs (or often, requirements) of other stakeholders such as banks, vendors, customers or client. That’s why it is important to have a trusted advisor to guide you through the decision making process.
Welcome to the SeilerSchindel, PLLC Business and Corporate Law Blog Series. In this series, we will discuss topics relevant to businesses and their owners. Whether you are an entrepreneur thinking about starting your first business, or a seasoned CEO looking for clarification on your fiduciary duties, this blog is meant for you. We encourage you to post comments, share our blog with your business partners, colleagues, board members and friends.
In 2009, the US Department of Labor released revised regulations clarifying the rules for substitution of leave under the FMLA. These regulations allowed employers to require that employees use their paid time off (PTO) concurrently with FMLA leave. The regulations call this “substitution of paid leave.” The new regulations also limit how employers may require employees to use any workers’ compensation time or disability leave concurrently with FMLA leave.
Substitution of leave does not apply to either workers’ compensation or leave under a disability plan. 29 C.F.R. § 825.207. If permitted by state law, employer and employee may agree to use PTO as a supplement to the employee’s workers’ compensation or disability benefits. In no circumstance, however, may either the employee or the employer force this arrangement. The supplement is capped at the difference between the employee’s regular salary and the amount of the benefit.
For example, if Emily Employee is diagnosed with chronic migraines which qualify her for FMLA leave and disability plan benefits, she would be able to take both and may be able to supplement her unpaid time with PTO. If she usually makes $4,000 per month and disability plan benefits pay her $2,660, she may use PTO time for the remaining $1,340.
Any time substitution of paid leave is used, however, the FMLA requires certain notifications to employees. It is important to speak with an attorney to be sure you are compliant with the FMLA rules.
For more information about FMLA compliance, see the US Department of Labor’s website at www.dol.gov/whd/fmla.
While an employee handbook may seem like another unnecessary document in your files, it is an extremely important part of the employment relationship. An employee handbook creates something of a contract between the employer and its employees. It also provides a platform for communicating employment policies and procedures, preventing an employee from later claiming ignorance of a specific policy.
When drafting a handbook, employers should consider the following provisions:
- Statement that employment is at-will.
- Harassment policy stating that harassment will not be tolerated and explaining how to report any harassment, as well as laying out any investigatory procedures.
- Statement that employer is an equal opportunity employment policy.
- Procedures and bases for vacation and sick leave, and absenteeism policies and procedures.
- Drug and alcohol policy, including no smoking policy.
- Policies for overtime work.
- Confidentiality policy, if applicable.
- Any computer or telephone policies, including limitation of privacy, and monitoring if applicable.
- Employee benefits policies and descriptions.
- No solicitation policy.
- Acknowledgment for the employee to sign accepting the terms of the handbook.
Some employers choose to include policies regarding mediation or arbitration, but it is important to note that not all claims must be resolved this way, despite what the handbook states.
Hiring an employee may seem like a simple process. But when the desire to know everything about a prospective employee intersects with Minnesota law, things become a bit more complicated. Here are a few things to remember when evaluating someone for employment.
1. Interview Questions.
Some topics are completely prohibited, including:
- The applicant’s exact age
- Questions regarding religious affiliation, such as the name of the applicant’s church or any club memberships
- Questions related to the applicant’s marital status or whether the applicant has children or plans to have children
- National Guard or Reserve status
- Whether the applicant has ever been arrested
- Questions regarding the applicant’s credit rating
- The lowest salary the applicant would accept
- Questions related to the applicant’s mental health or mental health history
Other topics are permissible, and may be relevant to your hiring decisions:
- Why the applicant left a previous position
- Job duties at a previous position
- Gaps in the applicant’s employment history
- Reasons the applicant was fired in the past
- Work availability
- What references a previous employer would give
2. Background checks - In Minnesota, a background check is permissible so long as it relates to the position. For example, background checks are required for security guards, teachers, certain counselors, and employees and volunteers at home health care facilities. Other employers may want to conduct a background check depending on the position, like someone handle cash or accounting on a daily basis may require a
3. Drug Testing - In Minnesota, a drug test may only be completed if the employee has been offered the position, and the same tests are given to all prospective employees. Employers must also have a written drug and alcohol testing policy including specific information required by Minnesota law, and potential employees must sign an acknowledgment of this policy before they may be tested.
Welcome to the SeilerSchindel Employment and Labor Law Blog Series. This blog series will discuss a wide range of topics impacting the employment relationship, including hiring, firing and everything in between. While this series is primarily intended for employers, we hope that practitioners may benefit as well. We encourage you to post comments and share our blog with your friends, family members and colleagues.
In Minnesota, the requirements for making a will are quite simple. For a will to be effective:
• You must be 18 and of sound mind at the time of formation;
• The will must be in writing;
• The will must be signed, either by (i) you, (ii) another person in your presence and at your direction, or (iii) your conservator acting under court order;
• The will must be signed by two witnesses who are generally competent to be a witness; and
• You must intend for the document to operate as a will.
To help individuals satisfy the intent requirement, the legislature adopted law allowing for a “self-proved will.” A will is “self-proved” when you, and your witnesses, sign a sworn statement that the document you signed was intended to be your will and that you were 18 years of age or older, of sound mind, and no under constraint or undue influence at the time of execution. To ensure that you are satisfying the requirements of a valid will, seek the help of a licensed attorney.
For many of our clients, preparing a will can be intimidating. Confronting their own mortality isn’t the most pleasant thing to think about. Thankfully, our clients have trained advisors to assist them in preparing for and drafting the documents necessary to carry out their wishes after death.
If you are thinking about your estate plan, we recommend that you work with a licensed attorney. An attorney can guide you through the planning process to ensure that your wishes are documented in a form that will be enforceable after your death. At SeilerSchindel, our estate planning clients complete a simple questionnaire. They are asked to identify individuals to serve in key roles, such as guardians of minor children, trustees of trusts for the benefit of minor children, personal representative, etc.
To assist your attorney, you should think about your objectives, inventory your assets and prepare a list of beneficiaries. Some important things to consider include (i) who do I want to inherit my “stuff” (ii) who do I want to raise my minor children, (iii) who do I trust to ensure that the wishes articulated in my will are respected and (iv) is it important to me to pass property in the most tax-efficient manner? While ruminating on the implications of your death isn’t pleasant, it is essential for the proper administration of your estate. By planning now, you can worry less about what will happen in the future, and more about what you are doing to enjoy today.
Connect With Us
