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Detroit & Chicago Business Organizations Legal Blog

Director seeks compensation for alleged breach

For companies and individuals in the media and entertainment industries, strong contracts are essential. Anyone in Illinois or Michigan who is involved in these industries knows this firsthand. In many cases, a contract between a large corporation and an individual may entail payments for work that could take a long time to produce or complete. In some situations, the work is never completed and this may well happen due to a dispute between the parties that results in the cancellation of the contract.

One example of this can be seen in a case involving a famous director and the online and content giant, Amazon. The two parties apparently worked together on one program and then entered into a contract for a new movie. Since the creation of that contract, however, renewed allegations relating to sexual misconduct against the director surfaced. In addition, some professionals indicated their refusal to work with the director.

CVS Caremark, Wal-Mart contract dispute resolved

Consumers in Illinois and Michigan have concerns about the rising costs of prescription medications. According to the Wall Street Journal, these concerns have put pressure on drug manufacturers, pharmacies, and the middlemen between them known as pharmacy benefit managers to lower the costs.

The heightened tensions erupted in a dispute earlier this month between Caremark, a PBM associated with CVS Health, and Wal-Mart, with the retail giant threatening to rescind its participation in Caremark's prescription drug coverage. This move had to potential to affect participants in Caremark plans as they would have to pay full price to get prescription medications filled at Wal-Mart pharmacies. This would have particularly affected consumers in more rural areas in which Wal-Mart is one of the few, or in some cases the only, pharmacy in the vicinity to participate in Caremark.

New year, new tax laws for businesses

Company owners and shareholders in Michigan and Illinois are often busy at the beginning of the year preparing for the year ahead. This year, they are also likely focused on navigating how the full implementation of the Tax Cuts and Jobs Act will impact them.

As explained by The Motley Fool sole proprietors, LLC members or shareholders in S corporations may be able to deduct 20 percent of their business earnings from their individual tax returns going forward. All of these businesses are referred to as pass-thru entities which means that the companies themselves pay no income taxes. Instead, the tax responsibility rests with these individuals.

Illinois company wants contract review

Companies that do business with local municipal governments might assume that these entities would want to support operations in their cities or states. While certainly this can happen, there may be a variety of factors that go into a city council's decision to award a contract to a vendor from outside the area. In one recent situation involving this type of decision, the local company is pushing to have the contract award reviewed and reconsidered.

At issue is a contract that would allow one company to haul coal for a period of three years. As reported by Transport Topics, the city of East St. Louis opened up bids to the incumbent and one other vendor to bring in coal for the City Water, Light and Power department. The incumbent is a company from Georgia and the other vendor is based in Illinois

What are the pros and cons of a sub S corporation?

A sub S corporation, or subchapter S corporation, is a special type of corporation that provides the security of LLCs but allows profits and losses to flow directly through to shareholders. This means that income and losses accrued by the corporation may pass through to the shareholders so that they may include them on their individual tax returns. This eliminates the need for the company to pay federal taxes. Though this type of business entity is more appealing to small business owners than a standard corporation, you should weigh the pros and cons of this type of entity before structuring your Illinois- or Michigan-based business around it.

According to Entrepreneur, there are a few benefits of electing to form a subchapter S. One is that you can use the cash method of accounting. The cash method is simpler than the standard accrual method as it allows you to tax your income as you receive it and deduct expenses when you pay them. Another benefit is that you assume limited liability for items such as debts and claims against your business, much as you can do with an LLC. 

Are non-compete agreements enforceable in Illinois?

Your company's intellectual property, trade secrets and proprietary content and procedures are vital to its success. Protecting such sensitive information is paramount, even if it means requesting that any new personnel that you bring in to your business in Chicago signs a non-compete agreement. In general, such agreements place certain limitations on what an employee can and cannot do in relation to your business once they have left. The question is whether or not such agreements are enforceable. 

Illinois does indeed have statutes that address non-compete agreements, yet they are limited in scope. According to the American Association of Corporate Counsel, Illinois' Freedom to Work Act on expressly prohibits non-compete agreements when made between an employer and low-wage employees. Specifically, an employer cannot attempt to prohibit a low-wage employee from: 

  • Going to work for another company for any pre-determined time period
  • Securing new employment in a specific geographic area
  • Simultaneously work for another company that operates in the same industry 

Bipartisan bill would expand FHA

Individuals looking to rent property in Michigan for themselves or their families may be denied by landlords if they receive assistance. However, a Senate bill that has the support of both parties would make that illegal. Specifically, it would broaden the Fair Housing Act (FHA) by banning landlords from discriminating based on income or because a person was a veteran. Currently, there is no federal protection against such discrimination.

There are protections in place for those attempting to rent in select cities and states throughout the nation. By allowing low-income individuals to live in better neighborhoods, they would likely have access to better jobs. They may also be able to live in areas that have quality schools for their children. Living in quality areas may also allow people to obtain better medical and other care. There are a couple of key hurdles that may prevent the legislation from passing.

Knowing who can terminate contracts for convenience

Most of those who deal contractually in Detroit and Chicago likely do so assuming that the only way their contractual partners can terminate their agreements is if they have legitimate cause to do so (after all, how valid can an agreement be if one side can walk away from it at any time?). Yet there are scenarios where a contracted partner can indeed end an agreement for its convenience. The trick to avoid getting caught up in such a scenario is knowing what situations the right to terminate for convenience applies to. 

Typically, this privilege is extended automatically to government entities. Indeed, the Code of Federal Regulations shows that the right to terminate all or part of a contract due to it not being in an agency's best interest is inherent. In the event that a government entity does end an agreement in this way, its contracted partner only has the right to collect payment for whatever services it had already rendered, as well as the costs associated with ending its work. 

What to include in an employment contract

As a Michigan or Illinois business owner or someone who otherwise has a hand in company hiring decisions, you may find it beneficial to create an employment contract that protects your business, should you and your employee part ways. At Pentiuk, Couvreur & Kobiljak, P.C., we understand that a solid, carefully worded employment contract can prove to be your best line of defense against litigation, and we have helped many people in your shoes take measures to protect themselves and their lifeblood.

According to Inc., while your employment contract is a good place to include specifics about your decided-upon payment arrangements and your expectations for your employee as far as job duties, you can also accomplish much more with this document. More specifically, many employers choose to include noncompete clauses within their employment contracts, which can help you make sure that your workers do not leave you and take everything they have learned from you to one of your competitors.

How can you obtain and protect a trademark?

As a business owner in Michigan or Illinois, you want your business to stand out from your competitors. One way of accomplishing this is by obtaining a trademark. The terms "trademark" and "brand name" are interchangeable; yet, according to FindLaw, in addition to words or names, a trademark can also be a device, a symbol or any combination of the four, used to indicate the source of goods for sale and to extinguish the goods from a particular seller or manufacturer from the goods sold or manufactured by competitors. 

If you are the owner of a trademark, you have the option of registering it with the U.S. Patent and Trademark Office. Federal registration of your trademark is voluntary, however, and you do not cede your protections under trademark law if you choose not to register it. The actual use of your trademark in commerce grants you common law trademark rights regardless of whether or not you choose to register it. This means that if you are the first to use a trademark, you may seek legal recourse if another company infringes your intellectual property rights by co-opting use of your established trademark. 

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