Commercial Lease Information

Commercial Lease Entering into a commercial lease is one of the first steps entrepreneurs take when opening a new business or a new location. The lease process involves many important decisions, not only assessing the viability of the physical location, but also the provisions contained in the lease document. It is important to remember that not all leases are created equal. In fact, many provisions in a lease may appear harmless, but can have significant ramifications to your business and its operations.

Term and Renewal Periods

For a new business, a shorter initial term with several optional periods for renewal provides the most flexibility. Not only does a shorter initial term limit the exposure if the new business does not do as well as planned, but it can also provide flexibility to the new business if it is so successful that the premises is no longer functional for its operations. Further, renewal terms should always establish a future lease rate. Failure to establish a method to calculate future increases can result in disagreements when the initial term expires.

Use and Exclusivity

The use provision should clearly identify all of the expected business activities, while at the same time, not limit future expansion. This provision does not ensure that zoning and other laws allow for the businesses use. It is the tenant’s responsibility to check into these items before the lease is executed. In addition, the Landlord should provide an exclusivity clause which protects against the leasing of space to another tenant who would directly compete against the business. This provides protection of the customer base and also protects your Landlord against vacancies from business failures that such direct competition may cause.

Personal Guarantees

Personal guarantees are generally standard for new business leases. These guarantees make the guarantor personally liable for the lease in the event that the business is not able to meet the obligations of the lease.

Maintenance and Repair

The lease should always clearly identify the parties responsible for maintenance and repairs. Generally in multi-tenant locations, the tenant is responsible for the maintenance and repair of the interior of the premises and the landlord is responsible for the outside and common areas, including all structural components. Additionally, the tenant generally has to return the premises to the condition it was in at the beginning of the lease term, excluding normal wear and tear.

These are only a few of the items to be aware of in any lease. The most important thing to remember is that nothing is a substitute to having an experienced attorney review your lease.

New Procedures For Nevada Business Registration

NV Secratary of StateIf you are in business or thinking about starting a business in Nevada, there has been a change in the way that your business should obtain its Nevada Business Registration (the “License”). With a few minor exceptions, this License is required of every person or entity doing business in Nevada. This means anyone who performs services or engages in a trade for profit or if you have a legal entity with the State.

Effective October 1, 2009, State Licenses began to be issued out of the Nevada Secretary of State Office rather than the Department of Taxation where you previously filed for the License. As part of this change, the Secretary of State’s office will require that all businesses file for their annual State License in conjunction with the filing of the Annual List.

What if you should have a License, but never got one?

If your initial list is due soon (before the end of the year), you can simply apply for the License when you file your initial list with the Secretary of State. However, if your list is not due soon (say before the end of the year), you should submit a Gap Business License Application as soon as possible to avoid late penalties for failure to obtain a License. Thereafter, your License will be due when your annual list is due.

What if you have a License but it expires before your annual list is due?

You should submit a Gap Business License Application as soon as possible (preferably before the expiration date) to avoid late penalties for failure to obtain a License. Thereafter, your License will be renewed when you file your annual list.

What if you have a License, but it expires after your list is due?

Simply file your list when it is due and submit for your License renewal at the same time (even though it has not expired). You will pay a prorated fee for the balance of the year and, next year, your License will expire at the same time that your annual list is due.

To find more information and the appropriate forms, visit the Nevada Secretary of State’s website at http://nvsos.gov.

COBRA Subsidy Extension

COBRA subsidyBy Tracy McKenzie, Esq.

On December 19, 2009, President Obama signed a new law amending the COBRA subsidy provisions of the American Recovery and Reinvestment Act of 2009 (“ARRA”). Under the ARRA, individuals who were involuntarily terminated during the coverage period from September 1, 2008 through December 31, 2009, and were eligible for continuation of health care benefits pursuant to COBRA, could have 65% of their COBRA premium subsidized by the federal government for up to nine months. The Department of Defense Appropriations Act 2010 amends the ARRA to extend the coverage period during which a termination occurs by two months, through February 28, 2010. In addition, the new law also extends the maximum period for receiving the subsidy by an additional six months, for a total of fifteen months. Eligible individuals who had reached the end of the initial nine month COBRA subsidy period before amendment of the law will now have an extension of their grace period to pay the reduced COBRA premium. To continue their coverage, the eligible individual would have to pay 35% of the premium by February 17, 2010, or, if later, within thirty days after notice of the extension is provided by the plan administrator. Similarly, individuals who lost the COBRA subsidy and paid 100% of the premium in December 2009 can contact their plan administrator or employer to seek a credit applied against future months of COBRA payments or a reimbursement of the overpayment.

Plan administrators or employers sponsoring health plans will be required to provide the COBRA subsidy notices required by the ARRA. Employers should determine whether the administrator of their health insurance plan or the employer is responsible for providing notices under the COBRA subsidy extension. More information regarding the COBRA subsidy extension may be found at www.dol.gov/ebsa/cobra.html.

Data Collectors Safe Harbor

Data CollectorsA SAFE HARBOR FOR “DATA COLLECTORS” IF A DATA BREACH OCCURS

On the heels of ineffective data breach notification laws, Senate bill 227, a more proactive approach, offers a safe harbor to businesses that collect personal information if a data breach occurs. Some important definitions apply:

Are you a “data collector?”

A “data collector” is defined in Nevada Revised Statute 603A as “any governmental agency, institution of higher education, corporation, financial institution or retail operator or any other type of business entity or association that, for any purpose, whether by automated collection or otherwise, handles, collects, disseminates or otherwise deals with nonpublic personal information.”

If you collect data, what constitutes “personal information?”

Personal Information is defined as a natural person’s first name or first initial and last name in combination with a (i) social security number (ii) driver’s license number or identification card number, or (iii) account number, credit card number or debit card number, in combination with any required security code, access code or password that would permit access to the person’s financial account.

So, if I am a data collector, what do I need to do to get the safe harbor?

Effective January 1, 2010, you will need to encrypt personal information that is either transmitted electronically or contained in a data storage device that has moved beyond the data collector’s control (e.g. on a laptop computer). There are specific requirements contained in the statute! If you do encrypt the data, you, as a business owner, will avoid liability if that encrypted data is lost or improperly accessed! In addition, it is possible that courts will take the encryption requirement into account in determining what constitutes negligent conduct associated with data breaches. Companies that follow the statutes may even be eligible for reductions on their insurance. All of these are good reasons to check out SB 227 in the 2009 session information on the Nevada Legislature website at www.leg.state.nv.us or at http://www.leg.state.nv.us/75th2009/Bills/SB/SB227_EN.pdf

Levels Of Trademark Protection

Trademark Protection Blog PostA trademark is a word, symbol or phrase used to identify a company or individual’s products or services and to distinguish them from the products or services of another. There are different levels of trademark protection, and rights can be acquired in one of three ways: (1) common law trademark rights, which require that the user be the first to use the mark in commerce; (2) state trademark rights, which require registration with a specific state; and (3) federal trademark rights, which require registration with the U.S. Patent & Trademark Office.

Common Law Trademark Rights

This is the lowest level of protection and simply requires the use of your trademark in commerce. Once a business uses a trademark in connection with its goods or services, the business acquires priority to use that mark in connection with those specific goods and services assuming no other trademark owner has superior rights. However, the priority to use that mark is limited to the geographic area the mark is actually used in and a limited zone of expansion. This right would provide the business the right to stop any infringing use of the mark within the business’ geographic area, but would not give the business the right to stop someone from using the trademark anywhere else and also would not prevent someone else from filing a federal registration for that same mark, effectively limiting the first users’ expansion into any new areas.

State Trademark Rights

The second way to obtain protection is to file for a trademark registration within the state in which the business is using the mark. This registration would provide protection only within the state of registration assuming no other trademark owner has superior rights. This registration would not limit another business’ ability to obtain a federal registration, again, effectively limiting the ability to expand into new markets outside of the state of registration.

Federal Trademark Rights

This is the highest level of protection for trademarks in the United States. These rights require registration with the U.S. Patent & Trademark Office. Once registered, the business would have the right to use the mark nationwide, except to the extent that the mark is utilized by a third party with previously established rights. In addition to the right to use the mark nationwide, federal registration provides several other benefits, including: (i) the right to bring an infringement lawsuit in federal court; (ii) the mark becoming “incontestable” after five years of use after registration; and (iii) potential recovery of treble damages, attorneys’ fees and other remedies for infringement.

There is no way to fully protect a business’ trademark and its future expansion without obtaining a federal trademark registration. Businesses that rely on common law rights often find that the expansion into other geographic areas is limited by later in time trademark use and/or registrations. Registering your trademark federally ensures that all the costs and expense of building a business’ trademark is not wasted and helps you to build a valuable asset for your business.

What Is The Nevada Domestic Partnership Act And What Do I Need To Do As A Business Owner?

Nevada Domestic PartnershipEffective October 1, 2009 (It’s coming up fast!), the State of Nevada will recognize a new civil contract between unmarried individuals who meet the requirements of the Nevada Domestic Partnership Act and who properly file registration documents with the Nevada Secretary of State. Domestic partners may be the same sex or opposite sex. The new law grants registered domestic partners the same rights, protections, benefits, responsibilities, obligations and duties as those granted to married couples under the law whether imposed by statute, regulation, rule, government policy, common law, or any other source of law. These rights and responsibilities extended to registered domestic partners include those provided under testamentary/probate law, employment and discrimination law, and all family law statutes including community property, spousal and child support, and adoption. Although distinct from marriage under Nevada’s Constitution, domestic partners should, in most cases, be treated as the legal equivalent of spouses with the exception listed below.

OK, Fine! So what are you supposed to do???

To comply with the Nevada Domestic Partnership Act, you should review your policies and procedures to determine if revisions need to be made to account for registered domestic partners. Generally, any reference an employee’s spouse in your employee handbook or policies should be revised to refer to “spouse and/or domestic partner.” In doing these revisions, however, you should be aware that certain benefits for spouses mandated by federal law, such as COBRA continuation health coverage and Family and Medical Leave Act leave, may not be available to domestic partners.

Also, think about your company’s forms. If you have a new hire packet that includes information about a spouse, change that to say “Spouse/Domestic Partner.”

YOU HAVE A CHOICE REGARDING HEALTH CARE BENEFITS!

The major exception to the rights extended to registered domestic partners is required employer health care benefits. Public and private employers in Nevada are not required to provide health care benefits under their applicable plan to registered domestic partners, but they may choose to do so. If you wish to extend insurance benefits to domestic partners, we suggest that you call your insurance provider to discuss whether you can and/or will offer benefits to domestic partners of your employees. Under this new law, employers who offer benefits to their employees and spouses will need to carefully evaluate each benefit and determine if they are required, or if they elect, to include domestic partners. Please keep in mind that under federal law, neither same-sex spouses nor domestic partners are generally recognized as spouses for whom favorable tax benefits apply. This would usually mean that certain tax-favored benefits (like pretax cafeteria plan or flexible spending account benefits) cannot be provided to employees who add domestic partners to group health plan coverage.

The conditions that must be met to register a domestic partnership can be found in Senate Bill 283 in the 2009 session information on the Nevada Legislature’s website: www.leg.state.nv.us. For more information on how to register a domestic partnership with the Nevada Secretary of State, go to: www.nvsos.gov/licensing/securities/domesticpartnership.asp.

What Is Parental Leave And Do I Have To Offer It To My Employees?

Employee LawEffective August 15, 2009 in the State of Nevada, if you are an employer with fifty (50) or more employees (for each working day in each of twenty (20) or more calendar weeks in the current calendar year), you must comply with the new parental leave for school activities law. This law requires you to provide an employee who is a parent, guardian, or custodian of a child enrolled in a public or private school four (4) hours of unpaid leave per school year per child to:

  • Attend parent-teacher conferences;
  • Attend school-related activities during regular school hours;
  • Volunteer or otherwise be involved at the school in which the child is enrolled during regular school hours; and
  • Attend school-sponsored events.

You may place the following restrictions on an employee’s use of the parental leave:

  • The leave must be taken in increments of at least one (1) hour;
  • The leave must be taken at a time mutually agreeable to both the employer and the employee;
  • The employer may require the employee to request the leave in writing at least five (5) school days in advance of the leave; and
  • The employer may require an employee to provide documentation indicating that the employee attended or participated in the school-related function for which the leave was granted.

What changes should I make to my employee handbook?

You should prepare and distribute a new (or updated) policy which sets forth who is eligible for the leave, the amount of leave, the activities for which leave will be granted, and the procedure an employee must follow to request the leave. The policy should also contain a provision indicating that the company will not terminate, demote, suspend or otherwise discriminate against an employee, or threaten to take such action against an employee, who utilizes the leave benefits provided by the new law.

Do I need to do training?

The employer should also train their supervisors and managers regarding the provisions of the new law to avoid discrimination against employees who take parental leave. There are provisions in the law itself that make it an unlawful employment practice for an employer to terminate, demote, suspend, discriminate against, or to otherwise threaten to assert such action against an employee who: (1) takes the parental leave granted by the statute; (2) attends a conference requested by an administrator of the child’s school; or (3) is notified during work hours by a school employee of an emergency regarding the employee’s child.

What happens if I don’t comply?

The provisions of the new statute provide specific remedies for a violation. If you terminate, demote, suspend, discriminate against, or threaten to take such action against an employee in violation of the new law, you may be guilty of a misdemeanor. There is a procedure for an aggrieved employee to file a complaint with the Labor Commissioner. You then have an affirmative duty to provide the employee “who is discharged from employment or who is demoted, suspended or otherwise discriminated against with all the forms necessary” to file a complaint with the Labor Commissioner. If the Labor Commissioner finds in favor of the employee, the Labor Commissioner may award, in addition to any remedies provided in NRS Chapters 607 and 608, the following: (1) lost wages and benefits as a result of the violation; (2) an order reinstating the employee to their position without loss of seniority, pay or benefits; and (3) damages in the amount of the lost wages and benefits.