Establishing some important business resolutions for 2010

January 11, 2010
| By Bill Rohn |
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January is named for Janus, the mythological god of ancient Rome who had two faces. One face looked forward so that Janus could see where he was going. The other face looked backward so that he could see where he had been.

January is always an excellent month to look backward and forward. In looking back at 2009, past performance can be evaluated. In looking ahead, better plans can be made for 2010.

2010 could be a very challenging business year. Some say the coming months — and maybe an interval as short as a number of weeks –- will determine whether U.S. businesses will emerge from a two-year recession.

So this is an especially good time to keep business-related New Year’s resolutions. And nowhere is the combination of hindsight and foresight more important than in meeting the demands of the law.

Render unto Caesar …
Tax planning is always a demanding — and uncertain — challenge. Democrats and Republicans continue to wrestle with tax and tax reform-related matters, and no one knows exactly where the tax system is going, or whether the laws will undergo significant changes.

Prudent executives should resolve to keep in close touch with certified public accountants and tax counsel to make quick changes necessary to take advantage of tax requirements. Informed decision-making depends upon quickly learning of tax changes that may bring about adverse tax consequences.

Ignorance of the fact …
It used to be said that "Ignorance of the law is no excuse." The trend of recent court decisions, especially in the areas of improper termination and employment discrimination, suggests that ignorance of the fact is also no excuse.

Even if an employer is totally unaware that a supervisor is allegedly engaging in aggressive harassment or discriminatory conduct, and even though the harassed employee may never report the conduct to the supervisor’s superior, many courts now ask only whether the employer should have been aware of improper conduct before a complaint was filed.

Prudent executives should thus resolve to get out into the workplace more frequently to see firsthand what is happening there. The executive may be surprised at what he finds — but not nearly as surprised and not nearly at such an expense as when someone else finds out before the company does.

Promises, promises …
Employers naturally want to convince new employees that they are about to start working for the best and most fair company in the state. Danger arises when they become a bit too enthusiastic.

Employers must be careful not to lead new employees to believe that they will have a job for the rest of their working days, whether such expectations arise from statements made during an initial interview or from careless language used in employee handbooks.

Overenthusiastic employers may discover when attempting to terminate an employee at a later date that they are foreclosed from discharging employees at will and must have legally valid reasons for terminations. This problem is particularly burdensome where the reason for termination would seem justifiable to many people and yet does not satisfy a jury.

Prudent executives should resolve, therefore, to neither make — nor appear to make — overenthusiastic promises that can come back to haunt them.

’Tis the season to be jolly …
Many businesses celebrated the recent holidays with office parties. Before deciding whether to host a social event for employees or customers, the executive should consider what may happen if a guest overindulges and has an accident after leaving a party.

There is a trend among some courts to impose liability on the host for the wrongful acts of the guest who causes injury to innocent third parties, where the cause of injuries can be traced to drinking at a company party.

Prudent employers should thus resolve to make gifts rather than hold parties or — when social events are hosted — to serve only nonalcoholic beverages.

Caught in the middle …
Often, executives, such as manufacturers’ representatives, take orders from customers and place them with suppliers who ship product directly to customers. These "middlemen" never see, touch, or otherwise inspect the product that they sell.

What can happen to a distributor if the product is defective and causes injury or damage to the customer, or to the customer’s customer?

The answer is that the distributor may be liable. With increasing concern for the consumer or user of products, the courts are prone to impose liability on everyone involved in the sale of defective products.

Prudent executives should resolve to insist upon indemnification agreements supported by adequate insurance from suppliers, to obtain their own product liability insurance, or to arrange for proper inspection of products before they are sold or distributed.

Many of the resolutions mentioned above may seem difficult to keep or contrary to the spirit of business in the good old days. Nevertheless, a conscious effort to keep all business resolutions should be made.

By doing so, it can be assured that January 2011 will not feature the review of a trail of broken resolutions and a year-long legal headache.

Bill Rohn is a trial partner in the law firm of Varnum LLP.

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