Sunday, 4 November 2018

How to Keep Your Nonprofit Tax Exempt Status

How to Keep Your Nonprofit Tax Exempt Status

When it comes to keeping your nonprofit’s tax exempt status, knowing how to incorporate and operate your organization is crucial. While similar to the processes involved in creating and running a regular corporation, there are key differences which, if not maintained, can strip your organization of its non-profit status. Here you’ll find information about the special rules and requirements that apply to nonprofit corporations.

Make Sure You Comply with All Corporate Formalities

Just like a regular corporation, a nonprofit corporation must have a board of directors in charge of important policy decisions. In addition, there are officers responsible for making decisions regarding the day-to-day running of the corporation. Lastly, depending on the size of the nonprofit corporation, there will be employees that carry out the work.

However, unlike regular corporations, nonprofit corporations do not have shareholders or owners. Because no one person or group owns a nonprofit, it cannot be “sold.” Instead, if the directors of a nonprofit corporation decide that the corporation must be dissolved, they must make arrangements for all of the nonprofit’s assets to be distributed.

Nonprofit corporations can choose to have members with voting rights, although many decide against a membership structure and instead allow their boards to make all decisions. If a nonprofit does have a membership structure, then all of the members participate in major decision making and can, among other things, choose who sits on the board, amend the corporate bylaws, and vote on decisions regarding mergers or dissolutions.

Maintain Corporate Records

Like other corporations, nonprofit corporations must keep detailed and accurate corporate records. If these records are not kept, the limited personal liability status of the directors may be in jeopardy and the organization could lose its tax-exempt status. By definition, good corporate record keeping means maintaining accurate minutes of the meetings of the directors and documenting any important decisions.

After you have all of these records, you should make sure to organize them in an easy-to-manage corporate records book. This book should also contain a copy or the articles of incorporation, bylaws, and tax-exempt status documentation from the Internal Revenue Service (IRS) as well as your state’s tax agency.

Know Your Nonprofit’s Limitations and Restrictions

Equally as important as maintaining detailed and accurate corporate records, your nonprofit corporation must abide by other rules in order to keep and maintain its tax exempt status, some of which are described below.

  • Your Nonprofit Corporation Cannot Make Monetary Contributions to any Political Campaign — Unlike regular corporations, nonprofit corporations that are tax exempt under 501(c)(3) cannot make contributions to, or participate in political campaigns. If so, the IRS can revoke the corporation’s tax exempt status and asses a special excise tax against the corporation as well as its managers.
  • Your Nonprofit Corporation Can Only Engage in Political Lobbying in Limited Amounts — If your nonprofit is shown to have influenced legislation to a “substantial degree,” it could face the loss of its tax exempt status. However, nonprofits can participate in the legislative process in a limited way as the IRS sets limits on the money that can be spent on political activities.
  • Your Nonprofit Cannot Distribute Its Profits to Directors, Officers, or Members — Nonprofit corporations are not allowed to financially benefit their directors, officers, or members. However these individuals are entitled to a reasonable salary and to have their expenses covered.
  • Your Nonprofit Corporation Must Pay Income Taxes on Profits Unrelated to Its State Purpose or Activities — Nonprofit corporations are only exempt from income taxes on profits that are related to the nonprofit corporation’s charitable activities. However, if the corporation receives profits from unrelated activity, it must pay income taxes on that profit. The IRS requires that a nonprofit corporation pay corporate taxes on any unrelated profits in excess of $1,000.
  • Your Nonprofit Cannot Receive “Substantial” Profits from Unrelated Activities — If your nonprofit corporation realizes substantial profits from activities unrelated to its purpose, its status could be revoked. Special attention should be paid to unrelated activities that involve a lot of the corporation’s time or which generate substantial income.
  • Your Nonprofit Corporation Must Distribute All of Its Assets to Another Tax-Exempt Group on Dissolution — Unlike regular corporations, a nonprofit corporation cannot simply be sold. Instead, when the directors decide to dissolve a nonprofit corporation, all of the assets of the corporation must be donated to another tax-exempt group.

Free Consultation with a Utah Non-Profit Lawyer

If you are here, you probably have a business or nonprofit law issue you need help with, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Equality Under the Law in Utah

Equality Under the Law in Utah

The lawsuit filed by the American Civil Liberties Union against the state of Utah for its arguably discriminatory statutes banning same-sex marriage is abuzz across local and national communities. Yet there is another suit that has been filed under the U.S. Constitution’s promise for equal treatment under the law: the age-old Skier v. Snowboarder. The East Valley Tribune gives a detailed report of the commentary surrounding the case, which ultimately hinges on the culture war on the slopes. In a spirited battle between consumers, the suit seems to be heating up in a very small sector of the public sphere and less between attorneys in Utah.

Alta Ski Resort Bans Snowboards

The Utah ski resort Alta was founded in 1939 and is one of the last remaining resorts in the nation at which snowboarding is off-limits. Taos in New Mexico was similarly ski-only until it caved to public pressure in 2009 and allowed boards on its mountain. The attorneys in Utah filing the suit claim that discrimination against snowboarders violates equality under the law, especially when much of Alta’s slopes lie on national forest lands, and the U.S. Forest Service has been named as a defendant in the lawsuit. The suit alleges Alta dislikes snowboarders for their supposedly reckless skiing, inconsiderate attitude and their use of slang words in description of terrain. Such discriminatory practices are unethical and violate equality under the law on public land, attorneys in Utah claim.

But much of commentary on the lawsuit is unfolding in the public realm, especially over the internet. News of the lawsuit exploded on Utah newspaper websites, and readers didn’t hesitate to submit innumerable comments, sparking a heated, passionate debate about the issue. Such comments from skiers read: Snowboarders “ruin all the snow” by scraping it down to ice; they “don’t watch where they’re going”; and they “stop in the middle of the hill and sit down! What’s up with that?” Others argue that snowboarders’ sideways stance leaves them with a large blind spot that can make wide, sweeping turns a danger to others on the slopes.

Should Everyone Be Equal?

David Quinney, one minority owner of Alta, asserts his preference for the resort to remain ski-only, and says that as a business, they have a right to refuse anyone. Attorneys in Utah cite the public land in the resort as a potential snag for that argument, but Quinney sees it as a different story. Saying snowboarders see the hill as “forbidden fruit,” making them want what they can’t have and insisting that the mountain’s terrain requiring hiking, climbing and traversing isn’t conducive to snowboarding, Quinney is prepared to stand his ground. It’s not about the culture war, he argues; it’s an issue of safety.

Attorneys in Utah filling suit will appeal to a judge to recognize snowboarders’ claim to equal rights to use Alta’s national forest land under the law, and agree that snowboarders have been “perhaps rightfully” stereotyped as riffraff decades ago by skiers. The debate goes on and probably will go on until at some point, all are considered equal in Utah.

Free Initial Consultation with a Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Saturday, 3 November 2018

Update Your Insurance Policies After a Divorce

Update Your Insurance Policies After a Divorce

One of the first things you’re going to want to do after your divorce is finalized is check all of your insurance policies and make any changes needed to your coverage and your beneficiaries. If you have an agent that assists you with all of your plans, schedule a meeting with them as soon as possible so that you can review all of your coverage.

Some of the items you’ll want to review include the following:

  • Health insurance. If you were covered on your ex-spouse’s health insurance plan, there are some strict time limits in place to allow you to sign up for a new plan. This is something you should aim to get taken care of as quickly as possible because of those time limits.
  • Life or disability insurance. If you own life insurance, you’ll most likely want to change your beneficiary from your ex-spouse to someone else. Even if you don’t necessarily intend to make this change because your ex-spouse would still be raising your children if you were to pass, you’re still going to have to fill out new paperwork, because your original paperwork was likely nullified by your divorce.

In some situations, spouses agree during divorce negotiations to purchase life insurance together with children as beneficiaries. If this is the case for you, you’ll want to follow up with the insurance company to make sure that everything is in order, and inform them that they should notify you if there are any changes to the policy or problems with payments. Make sure that the insurance company has a copy of your divorce order.

  • Car insurance. You should get in touch with your insurance provider to make sure you are the sole owner of your property. Get a copy of your insurance declaration page that lists your coverage, including information about who is covered on your plan.

Does Cohabitation Before Marriage Cause Divorce? Short Answer: No

It is inevitable that people wonder how and why their marriage soured. Couples who lived together prior to marriage can breathe a sigh of relief—it did not cause your divorce.

In recent decades, the rate of cohabitation in the United States has risen approximately 900 percent. A recent study published in the Journal of Marriage and Family looked at the idea that living together prior to marriage is a risk factor for divorce.

Using data from the National Survey of Family Growth, the research reviewed data from several thousand women from years, 1995, 2002 and 2006 through 2010. Some key points of the study include:

  • Living together is now common. About 70 percent of women currently aged 30 to 34 have lived with an unmarried male partner.
  • Approximately two-thirds of newly married couples lived together for an average of 31 months prior to marriage.
  • Cohabitation is not a risk factor for divorce. The study found couples who live together, or marry, at younger ages are equally likely to divorce. The presence of a marriage license is not a factor, but age and maturity are.
  • The study suggests couples who wait until after age 23 to marry or live together have a greater likelihood of long-term relational success.

Study author Professor Arielle Kuperberg, of the University of North Carolina, notes younger couples who marry or live together are less emotionally and financial stable.

Couples who settle down younger may be less likely to continue their education. Previous studies suggest lower levels of education are associated with higher rates of divorce.

Everyone questions their reasons for marrying—and for their divorce. While living together may bring a couple closer, it does not ultimately cause their divorce.

Free Consultation with a Divorce Attorney

If you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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How to Register a Trademark with the USPTO

How to Register a Trademark with the USPTO

A registered trademark allows you to promote your brand and image with confidence, protected by force of federal law. The following information is intended to help you learn how to register a trademark. As you are probably aware, you can do these things on your own, but it is strongly reccomended that you speak with an intellectual property lawyer so things are done correctly that don’t cost you and your business thousands, if not millions of dollars in lost revenue due to infringements.

Qualifications for Trademark Protection

In order to register a trademark and receive federal protection through the U.S. Patent and Trademark Office (USPTO), a mark must be used in “interstate commerce.” In other words, the mark must be for a product or service that either does business in more than one state or affects commerce in more than one state. An example of a trademark affecting commerce in more than one state would be a gas station or motel that is located in one state only but services customers from other states. Offering services or products on the Internet also qualifies as affecting interstate commerce, as people in other states and countries can purchase the goods.

Affecting interstate commerce is the first requirement for federal registration. Trademark law’s primary objective is to prevent consumer confusion, so in addition to being used in commerce a trademark cannot be the same as, or too similar to, another trademark for a similar service or product. You should do a search for existing trademarks on the USPTO site as well as searching for the same or similar trademarks through other resources.

Additionally, your trademark cannot be prohibited (more below), generic (e.g., a “Bed” brand of beds would be considered generic because it describes the product itself rather than who manufactures it), or too descriptive (a step above generic, but still not distinctive enough to qualify for protection.)

Trademarks Not Currently Used for Interstate Commerce

You may still apply for federal registration if you have a bona fide intent to use the trademark in interstate commerce, even if you are not currently doing so. The mark must still meet the same requirements as any other submission, but you will need to file an intent to use (ITU) application, along with an additional fee, when submitting to the USPTO (see below for application process). The ITU gives you an 18 month window (extendable to 24 months) to begin using the trademark in commerce.

Marks Not Eligible for Trademark Protection

The USPTO will refuse registration for trademarks which:

  • Contain the U.S. flag
  • Contain the name, likeness or signature of living persons, unless they give consent (this protection is extended to deceased Presidents, whose widows must give consent)
  • Contain government insignias
  • May disparage or falsely suggest a connection with persons (living or dead), institutions, beliefs, or national symbols
  • Are too similar to existing trademarks registered with the USPTO
  • Comprise immoral, deceptive, or scandalous matter (as a practical matter, the USPTO rarely refuses registration on these grounds, but you should be aware that courts have upheld their power to do so)

The Trademark Application Process

As a trademark lawyer in Utah, I think that the application for federal protection is fairly straightforward, though it can take anywhere from a year to several years to be processed (depending on the type of trademark and how much research the USPTO will be required to do).

First, you should confirm, to the best of your knowledge, that your trademark will not be rejected by the USPTO for the reasons outlined above.

To file your application, you may do so on the internet or by mail. For the internet application, go to the USPTO website and use the Trademark Electronic Application System (TEAS) or TEAS PLUS. TEAS costs $325 and has less onerous requirements. TEAS PLUS costs $275 and requires the applicant to submit more detailed information cheaper method for those trademark owners who have more complete information and examples of the trademark’s use. Applications by mail are also accepted and cost $375.

The “minimum requirements” to submit via TEAS are: 1) the name of the applicant; 2) a name and address for correspondence; 3) a clear drawing of the mark (can be by hand); 4) a listing of the goods and/or services on which the mark will be used; 5) a filing fee for at least one class of goods or services (there is assistance regarding this on the USPTO site).

Obviously, the more detailed your application, the better. Other elements such as a description of the mark, samples of how the mark is or will be used, etc., may be included, but if you meet the “minimum requirements” your application can at least be processed (though likely delayed until you submit more information) and not returned as “informal”.

Mandatory Steps After Filing Your Trademark Application

Depending on the thoroughness of your application, you will have to wait several months for a response. The application is reviewed by attorneys in the Trademark Office and they will communicate with you regarding your application. Once you receive a filing receipt containing the serial number of your application, you can check on the status of your application on the USPTO site or by phone at 800-786-9199.

Assuming your trademark passes each phase of scrutiny, the USPTO will publish your trademark as a candidate for registration. This gives existing trademark owners (most likely ones in your class of service or goods, or anyone with a similar mark) the chance to object to the registration. If no one objects, you should receive a response from the USPTO within a year. If another trademark owner does object, the USTPO will schedule a hearing to hear the dispute.

Once you receive a notice that your trademark is federally registered, you will have to file an “Affidavit of Use” (simply a statement with evidence that the trademark is being used in commerce) between the fifth and sixth year after registration. You will also have to file another Affidavit of Use every 10 years before the renewal period expires (between years nine and 10, 19 and 20, etc.).

Some Advantages of Getting Your Trademark Registered

Federal protection is not required and many businesses do not take advantage of federal registration. If your trademark is used in commerce, and you aren’t infringing upon another trademark by doing so, the mark enjoys common law trademark protection. However, there are several distinct advantages to federally registering your trademark.

Advantages of federal registration include:

  • Nationwide trademark protection (even if your mark is not in use nationwide)
  • Use of the ® symbol to put people on notice and denote a certain level of quality
  • Help of U.S. Customs to prevent potential infringing products from entering the United States
  • Constructive notice of ownership of the mark (this means that by virtue of registration, anyone who uses the mark after you is expected to know that it is your trademark, they will be labeled “willful” infringers if they misuse it, and you will be able to collect damages and attorney’s fees)
  • After five years, if no one contests your right to the mark, you can file for incontestable status, meaning that no one can ever contest your right to using the mark.

Constructive notice is a major advantage when your business expands and a defense against the expansion of another party’s similar trademark. If your use date (the date noted by the USPTO as the date you began using your mark in commerce) pre-dates another party’s use date in another geographic area, your federal registration trumps their common law rights and they must discontinue its use. Alternatively, if the other party’s use pre-dates your use date, the other party will be frozen to their territory and you will have the rest of the country by way of your federal registration.

For example, if your federally registered trademark is dated 2008 and you do business in New York, and another party begins using the trademark in Arizona in 2009, they must cease using the trademark and depending on the circumstances will be liable for damages and your attorney’s fees. If the dates of the above example were reversed, then the other party may continue using the trademark, but their use would be frozen to their current territory. You would be granted use in every other part of the country.

Utah State Protection for Trademarks

Each state offers differing levels of trademark protection for businesses which operate in their state. If your trademark only operates in one state, it’s a good idea to register with that state. If there is any impact on interstate commerce as outlined above, however, it’s a better idea to seek federal protection. State registration doesn’t offer the same protection as federal registration, and if you register with the USPTO, you don’t need to register with the state because federal protection encompasses all state protections.

Free Consultation with a Trademark Lawyer

If you are here, you probably have a trademark issue you need help with, call Ascent Law for your free intellectual property law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Friday, 2 November 2018

Stock Markets and Listing Requirements

Stock Markets and Listing Requirements

There are numerous national and regional markets where securities are bought and sold. The three major markets in the U.S. are the NASDAQ National Market, the New York Stock Exchange and the American Stock Exchange.

In order to have shares of your company bought and sold in these markets, your company must meet their listing requirements. The general listing requirements for each of these markets are as follows:

NASDAQ National Market (NASDAQ)

The NASDAQ National Market imposes minimum bid price, quantitative and other criteria in determining whether a company will be permitted to list its stock on the NASDAQ.

  • Initial Minimum Bid Price for Stock: The stock must have a minimum initial bid price of $5.00, and must later remain at or above $1.00. This requirement serves as a safeguard against certain market activities associated with low-priced securities, and protects the credibility of the NASDAQ market.
  • Quantitative Requirements: To be listed on the NASDAQ National Market, a company must have net tangible assets of $6 million and net income in the latest fiscal year or two of the past three fiscal years of $1 million. In addition, these companies must have a public float of $1.1 million, a market value of the public float of $8 million, a minimum of 400 shareholders, and at least three market makers.
  • Capitalization Alternative: Companies that do not meet the quantitative requirements may nevertheless be listed on NASDAQ if they have a market capitalization of $75 million or total assets of $75 million and total revenues of $75 million, an initial minimum bid price of $5.00, and meet certain other requirements.
  • Peer Review Requirement: The practices of all independent auditors for companies listed on the NASDAQ are subject to monitoring under a peer review system. Also, the quality control systems of accounting firms of NASDAQ-listed companies are reviewed by peers every three years.

NASDAQ SmallCap Market Listing Requirements

Small capitalization companies can be listed on the NASDAQ SmallCap Market if they have either:

  1. Net tangible assets of $4 million,
  2. $50 million market capitalization, or
  3. Net income in the latest fiscal year or two of the past three fiscal years of $750,000.

In addition, these companies must have a public float of $1 million, a market value of the public float of $5 million, a minimum of 300 shareholders, and at least three market makers. Also, these companies must have an operating history of at least one year or $50 million market capitalization. The initial minimum bid price is $4.00 and the same ongoing minimum bid price and peer review requirements as are set forth above apply.

New York Stock Exchange (NYSE)

The New York Stock Exchange imposes minimum quantitative standards relating to distribution and size criteria and financial criteria.

  • Distribution and Size Criteria: To be traded on the NYSExchange, a company must meet certain requirements as to the number of shareholders, must have a market value of public shares of $100 million or an IPO market value of $60 million.
  • Financial Criteria: The company must have pretax earnings of $4.5 million in the most recent year or $6.5 over the past three years, operating cash flow of $25 million aggregate over the past three years or revenues of $250 million for the most recent year. Other factors are considered as well, and the NYSE has broad discretion regarding the listing of a company.

American Stock Exchange (AMEX)

  • Regular Financial Guidelines: The American Stock Exchange requires pre-tax income of $750,000 for most recent fiscal year or two out of the most three recent fiscal years, a market value of public float of $3 million, an initial minimum bid price of $3 and stockholder’s equity of $4 million. There are no operating history requirements under the regular financial guidelines.
  • Alternate Financial Guidelines: The American Stock Exchange also permits listing under its Alternate Financial Guidelines, provided a company has a market value of public float of $15 million, an initial minimum bid price of $3 and stockholder’s equity of $4 million. The company must have a three-year operating history under this guideline, but there are no pre-tax income requirements.

Note: Under either the Regular Financial Guidelines or under the Alternate Financial Guidelines, there are alternative additional requirements as to public float, number of stockholders, and average daily trading volume.

Free Initial Consultation with a Stock Market Lawyer

When your company needs help with securities issues or the stock market, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Thursday, 1 November 2018

Qualities You Should Look for in a Divorce Lawyer

Qualities You Should Look for in a Divorce Lawyer

Once you have decided to end your marriage, you should begin the search for a divorce attorney who can help you through all the legal steps associated with the process. But how can you choose a divorce lawyer who is right for you?

Below are some qualities you should prioritize in any attorney you choose to consult:

  • Experience: You’ll want to work with an attorney who has a wealth of experience in divorce cases, along with a track record for success in getting positive results for clients in the past.
  • Compassion: The divorce process is never easy for the people going through it. It is important that your attorney is empathetic and compassionate so he or she can help you navigate what is likely to be one of the more difficult periods of your life.
  • Track record in mediation: You want to avoid having to go to court, if at all possible, that so you can maintain control over the results of your case. To that end, seek an attorney who has a strong track record in mediation and is trained in collaborative divorce practices.
  • Communication: Any lawyers you work with should make themselves available to speak with you on a regular basis. When issues arise in your case, it should not be difficult to get in touch with your attorney. Your legal counsel should make you feel that your case truly matters.

Allowing Children to Travel Internationally with a Former Spouse

What used to be a rare occurrence is now quite common: children frequently travel to international and exotic locales. But what if you are divorced and your ex-spouse who wants to take your child beyond U.S. borders?

While such trips may not present a risk to many divorced couples, other individuals may worry that once a child is on foreign soil with a former spouse, all bets will be off in terms of support agreements or other court-ordered arrangements. Worse, some fear that the other parent will abduct the child.

To prevent that sort of nightmare from occurring, parents should take precautions before their child leaves home, or when they themselves are travelling alone with their children:

  • Know the law. First off, parents should consult an experienced attorney to ensure that they are clear on any applicable laws in the country where the child is travelling and how that might affect arrangements already in force.
  • Require a bond. Some divorced parents also require the other party to secure a surety bond and post it to the court before leaving the country. This bond, typically in the amount to pay for pursuing international legal action, is intended to guarantee that the travelling parent will adhere to custody agreements while abroad.
  • Set up an alert. Parents can also contact the U.S. Department of State’s Passport Issuance Alert Program to ensure that the other parent meets the requirements for parental consent before obtaining a passport.

Along with these steps, parents should ensure that they have a clear plan for communicating with their child — perhaps through Skype or other device — to allay their fears and ensure that the trip is going as planned.

Free Consultation with a Divorce Lawyer

If you have a question about divorce, family law, child custody or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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Workplace Retaliation

Workplace Retaliation

Workplace retaliation lawsuits have become increasingly more common and more expensive for employers. When employees file a complaint about discrimination or harassment in the workplace, it’s imperative that you, as an employer, take it very seriously and handle the complaint with special care. I’m telling you, not just as a Business Lawyer, but someone who’s seen these things happen over and over that, if the course of action you take is viewed as punishing the person for filing the complaint in any way, you may wind up facing a very expensive lawsuit.

What Qualifies as Retaliation

Retaliation is any adverse action that a company takes against an employee because he or she filed a complaint about harassment or discrimination. Adverse action can include actions such as firing the employee, giving them negative evaluations, disciplining or demoting them, reassigning them or reducing their pay.

Protection against retaliation doesn’t just apply to the person who filed the complaint, it also applies to anyone who participates in the investigation that arose from the complaint. This means that employees who are interviewed regarding a complaint cannot be retaliated against because they participated in the investigation.

The Truth of the Complaint Doesn’t Matter

What can be galling for many employers is that even if the original complaint of harassment or discrimination turns out to be baseless or even fabricated, the employer is still on the hook if they take any action that can be deemed retaliatory. Never take action that punishes someone for bringing a complaint because you think the claim is bogus or because you think the employee is simply lying — it doesn’t matter.

Unintentional Retaliation

Many employers fall into the trap of unintentionally retaliating against an employee. For example, suppose an employee complains to you that a supervisor constantly makes derogatory and sexist comments. Trying to be helpful, you think that it would be a good idea to move the employee to a different office while the claim is investigated. Even though you may have had good intentions – separating the employee from the alleged harasser, – if the reassignment is seen as retaliatory, then you would be liable for workplace retaliation.

The problem in the above example is that the complaining employee, not the alleged harasser, had his or her employment affected as a result of filing a complaint. If you want to take action to remedy the situation, then the focus needs to be on the wrongdoer, not the employee complaining. The problem isn’t fixed by removing the complainer; instead, the problem should be fixed by removing the cause.

How to Handle an Employee who has Complained

Although employers are allowed to discipline their employees, regardless of whether they’ve filed a complaint or not, it pays to be especially careful in how you discipline an employee who has filed a complaint. For example, suppose an employee filed a complaint about sexual harassment. When the employee receives a negative review two months later, even if the review had nothing to do with the sexual harassment complaint, the employee will often construe the review as retaliation.

Accordingly, if you are going to discipline or otherwise negatively affect the employee after he or she has filed a complaint, take special care to document your basis for disciplining the employee. Otherwise, in the absence of proof to the contrary, a court might be suspicious of the timing between the complaint and the subsequent disciplining of the employee.

Preventing Retaliation in Your Business

Preventing claims of retaliation in the workplace is surprisingly easy and doesn’t take much effort or time:

  • Create a Policy: Make sure you have a policy against retaliation already in place. The policy should specify what retaliation is, state that retaliation won’t be tolerated and set forth a process for reporting and investigating complaints.
  • Take Complaints Seriously: Take all complaints seriously and perform a thorough investigation. If the complaint has any basis, remedy the situation immediately. Remember to focus on the wrongdoer, not the employee who complained.
  • Keep Complaints Confidential: Make it clear to your employees that any complaints they file will be kept confidential and information will only be shared with members of the organization to assist in investigating the matter. Also, let employees know that filing a complaint will not in any way affect their career opportunities.
  • Keep Records: Have a process in place that records and documents everything, from the initial complaint, through the investigation and all the way to the conclusion. It is imperative that you document the process for any future legal proceedings.

Free Consultation with a Business Lawyer

If you are here, you probably have a business or employment law issue you need help with, call Ascent Law for your free workplace retaliation consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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