CD ROM Paradise Collection 4/CD ROM Paradise Collection 4 1995 Nov.iso/business/sba952.zip/F131.SBE

Text File | 1995-05-31 | 40KB | 810 lines

@650 CHAP 9

        ┌───────────────────────────────────────────────┐
        │   EMERGING ECONOMIC TRENDS AND LEGAL ISSUES   │
        └───────────────────────────────────────────────┘

All businesses today, of every size and type, are being
buffeted by the ever-accelerating rate of change in the
business, economic, social and political environment in
which they must operate.  Part of the reason, of course, is
a hyperthyroid Congress, along with 50 equally overzealous
state legislatures and countless government agencies who
spew out reams of new laws and regulations all year long,
in ever greater volume....Which you, as a business person,
are expected to understand and apply--not to mention simply
knowing about the new laws' EXISTENCE.

While we update this program regularly, four times a year,
in order to keep our users as much abreast of the constant
ebb and flow of tax, legal and other changes as possible,
we still find each time we revise it that large portions of
the material have already been rendered obsolete and use-
less by rapidly unfolding law changes and other events that
have transpired since our last update three months earlier.

But we can't blame all of the disorienting changes that are
occurring on our lawmakers, because it seems that life in
general on this small planet is becoming more complex and
unpredictable by the day.

Accordingly, while we possess no crystal ball, the following
section is provided to give you, as a business owner, a
brief overview of some of the developing trends in the bus-
iness environment that have already arrived, or that appear
to us to be just over the horizon.  (We have already cov-
ered in this edition the sweeping new rules that have been
enacted under the Americans with Disabilities Act -- rules
that phased in over a number of dates in 1992, 1993 and
1994, so we refer you to the appropriate portions of this
program, or, for a deeper discussion of those rules, to
Chapter 5 (Sec. 5.11) of our companion book STARTING AND
OPERATING A BUSINESS IN @STATE.)

        ┌───────────────────────────────────────────────┐
        │THE CHANGING ECONOMIC ENVIRONMENT--AS WE SEE IT│
        └───────────────────────────────────────────────┘

Changes in the global economic structure, in the wake of the
collapse of communism and the Soviet Union and the shift
toward more efficient, free-market oriented economies in
places as far apart as Poland and Argentina (not to mention
the vast changes going on in China, Mexico and many other
developing countries) are creating a world that will soon
look very different from the one we have gotten accustomed
to since 1945.  While most of us may applaud many of the
changes going on abroad, the net result seems to be the
creation of a far more competitive (and chaotic) world, one
where U.S. businesses, even relatively small ones, are
running up against increasingly intense international com-
petition, and where many firms that never gave a thought to
export markets before will find that they have to get
involved in doing business overseas if they wish to con-
tinue as viable operations in the globalized economy.

Furthermore, even if your business is of a type or size
that seems to make foreign competition seem irrelevant,
you are still unlikely to completely elude its indirect
effects, such as:

      .  Low labor rates abroad that are causing the per-
         manent shutdown of many large and small U.S.
         manufacturers, who can no longer meet the com-
         petition from Japan, Mexico and elsewhere, or
         who move their operations overseas to places
         like Indonesia or Thailand, where wages are
         still low. This trend seems likely to continue,
         with a rippling effect throughout our economy,
         adversely affecting many of the small firms
         that either are suppliers to large U.S. manu-
         facturers or whose service operations (restaur-
         ants, retail shops and the like) will be dras-
         tically affected as larger companies close
         plants and make massive, and in most cases per-
         manent, layoffs of thousands of employees.
         This is a rude fact of modern life of which
         almost anyone doing business in the so-called
         "Rust Belt" is already acutely aware, and
         which the recession that began in 1991 also in-
         troduced to most parts of the country that had
         theretofore escaped the brunt of the effects of
         increased foreign competition.

      .  To survive in the coming years, small firms will
         increasingly need to streamline their operations,
         increase their flexibility (such as by using part-
         time and temporary personnel more, or outside
         contractors), become more efficient than ever,
         and, above all, increase the quality of the ser-
         vice they provide or the goods they produce.
         Firms that continue to do "business as usual" in
         the late 'Nineties are likely to go the way of
         the dinosaurs, passenger pigeons, and American
         VCR manufacturers.

      .  Increasing automation, both here and abroad, is
         also likely to have a dramatic effect on employ-
         ment and competitiveness in this country and
         throughout the world, spearheaded, as usual, by
         Japan, where whole factories already operate all
         night long in virtual darkness, with no one there
         to run them but a lone night watchman and hordes
         of whirring robots quietly running up and down
         the aisles, picking up finished items and drop-
         ping off parts for other robots to assemble.

         Automation has been a factor in replacing blue
         collar labor for decades now, but with the recent
         and continual explosion in computing power and
         sophistication, vast numbers of middle managers
         and other white collar workers are being dis-
         placed.  With the advent of "expert systems" and
         "artificial intelligence" (such as this computer
         program) which are still in their infancy, but
         rapidly coming into their own, it is difficult
         to say whose job, if anyone's, will be safe in a
         few years.  Or whose business, for that matter.
         Anyone or anything may become obsolescent over-
         night in the new economic environment we are
         rushing into.

         While the ability to replace workers with compu-
         ters or computer-driven machinery may be very
         attractive, from a cost-savings standpoint, to
         the individual employer, its societal effects
         are hard to predict, and may prove to be very
         adverse to the overall business environment,
         or at least to large segments of business that
         fail to adapt rapidly enough.  Things are moving
         so fast right now in the field of information
         processing, that it is difficult to visualize
         how the world and our own economy may look even
         5 or 6 years from now.  However, it seems clear
         that not everyone who is laid off can go to work
         flipping hamburgers at McDonald's -- and in
         Japan there are already drive-in fast food res-
         taurants that have replaced the order-takers with
         smiling, friendly robots with voice-recognition
         capability, machines that take a customer's order
         over the intercom and fill it automatically, with-
         out need of a teenager.

       . Largely in response to ever-fiercer foreign compe-
         tition, employer "downsizing" continued apace in
         1994, up sharply from 1993, despite the economy's
         strong emergence from recession.  According to an
         American Management Association survey for the
         year ending in June, 1991, 55.5% of the organiza-
         tions polled engaged in downsizing and 60% of
         those firms had also made significant staff cut-
         backs in the previous year, suggesting that firms
         are now cutting even deeper and deeper.  The sur-
         vey revealed that the cuts were heaviest on the
         Pacific Coast, averaging 12.6% of the workforce
         among firms reporting downsizing.  Middle manage-
         ment jobs, which are estimated to make up some-
         thing like 5% to 8% of the total work force,
         accounted for over 16% of the jobs cut in the
         1991 survey period.

         Even with the economy picking up in 1993 through
         1995, massive corporate layoffs continued unabated.
         According to recent studies by the placement firm
         Challenger, Gray & Christmas, the pace of layoffs
         among large companies in 1993 ran well ahead of
         1991, which was supposedly the bottom of the recent
         recession.

      .  While much of this change seems frightening to
         business people, as well as to their employees,
         the hundreds of thousands, perhaps even millions,
         of skilled management and white collar workers
         who will be given their pink slips and severance
         packages by "downsizing" corporations over the
         next few years may also give rise to enormous
         opportunities, as many of these people are likely
         to start their own, smaller businesses, due to
         the permanent disappearance of so many middle
         management or automatable jobs.  Many of them may
         even keep on working for their old firms, but as
         independent contractors, or outside consultants.
         In addition to enriching the overall business en-
         vironment by creating a major upsurge in the for-
         mation of new, small, and flexible business enti-
         ties, firms that cater to the needs of other
         small businesses may find the coming decade to
         be one of explosive growth and unparalleled
         opportunity.

@IF174xx]         This should create considerable opportunities for
@IF174xx]         almost every kind of firm that provides services
@IF174xx]         to businesses, such as @NAME.
@IF174xx]
         One of the most predictable trends, which is al-
         ready well under way, is the explosive growth in
         "telecommuting," where more and more people work
         out of their homes, communicating with their
         clients or employers by use of personal compu-
         ters, modems, faxes or multiple phone lines.  Al-
         ready, some employers, like certain government
         agencies in Washington, D.C., are taking an inter-
         mediate step by setting up satellite telecommuting
         offices in suburban areas.  By going to these
         nearby satellite offices, equipped with computer
         workstations, many workers can avoid long and ar-
         duous commutes to downtown offices on most days,
         by instead piping their work product electronical-
         ly to the main office.  Obviously, this has
         serious implications for owners of urban office
         buildings as well as for businesses that serve
         those areas.

         Recent surveys by Link Resources Corporation, a
         research and consulting firm, show that telecommut-
         ing has become a major factor in the economy, al-
         most overnight.  The survey estimated that company
         employees who work at home part- or full-time will
         have increased from 43 million individuals in 1994
         (about 20% of whom are "telecommuting"), to 60
         million by 1998, out of a U.S. work force of 125
         million.  If accurate, this indicates that an econ-
         omic and societal change of astounding proportions
         is under way.

But there's an old saying that, "It's an ill wind that
blows no one some good."

The monumental changes in the marketplace that are already
taking place will surely create tremendous new business
opportunities, as well as problems, in the coming years.
These should include the more obvious ones such as sales of
more fax machines and other equipment and supplies for home
office use, as well as less obvious opportunities like res-
taurants (other than pizza parlors) that deliver meals to
busy home workers, and doubtless many other novel kinds of
services and products -- things that no one has even
dreamed of yet.

               ┌─────────────────────────────────┐
               │     PENDING TAX LAW CHANGES     │
               └─────────────────────────────────┘

The abrupt upturn in the U.S. economy in 1994 and the sur-
prising loss of both houses of Congress by the Democrats,
for the the first time in over four decades, may have re-
turned Washington to gridlock once more, this time with a
Republican Congress and a Democratic President.

In early 1995, it remains unclear what kind of tax changes,
if any, this political shift will engender.  While the new
Republican majority is ideologically committed to tax cuts,
their promise to reduce the federal deficit (and the threat
of vetoes from President Clinton) makes it unlikely that any
major tax cuts for business can be effected in the current
budget-balancing climate.

Some of the major possible tax changes you should be look-
ing out for, which may have already passed by the time you
read this, would include the following:

   .  MANDATORY HEALTH CARE COVERAGE.  This was the big-
      gest item on the entire legislative agenda in
      Congress in 1994, as the battle over what to do
      about the increasing inaccessibility of medical
      care to large segments of the population was fought
      out on Capitol Hill.  While nothing passed in the
      1994 legislative session, don't expect this issue to
      die.  It may be dead with the current Republican
      majority in both houses of Congress, but could be
      very much alive after 1996 if the political pendulum
      swings back in the other direction in the 1996 elec-
      tions, which is quite possible.

      There were a number of other legislative proposals that
      floated around Congress during 1993 and 1994, other
      than the dead-on-arrival Clinton health care plan.
      Most of these proposals, like the Clinton plan, would
      have involved a combination of:

         (1)  Requiring that most, or all employers,
              provide some level of medical coverage
              for their full-time employees; and

         (2)  Additional payroll taxes to finance the
              cost of government-provided health care
              for individuals outside of the work force.
              In some of the proposals, the employer would
              be given a choice of paying a hefty tax for
              national health insurance, or else providing
              coverage for employees; other proposals
              would require both, which could be a very
              difficult financial burden for many small
              businesses, even those that already provide
              medical insurance for their employees.

   .  SELF-EMPLOYED TAX DEDUCTION FOR HEALTH INSURANCE.  Un-
      til December 31, 1993, the tax law provided a deduction
      for self-employed individuals for up to 25% of the cost
      of their health insurance.  Until April, 1995, it was
      still not certain that this deduction was going to be
      retroactively reinstated for 1994 (or 1995), but, as we
      correctly predicted, legislation was enacted in April
      that reinstated this deduction for 1994, and which also
      provided for an increase in the deduction to 30% of the
      cost of health premiums in 1995 and subsequent years.

   .  CAPITAL GAINS TAX RELIEF.  The U.S. is one of the
      few countries that taxes capital gains at nearly the
      same rate as other income.  Many of the fastest
      growing economies in the world don't tax capital
      gains at all, and much of the available evidence
      indicates that reducing capital gains rates in the
      late 'Seventies and early 'Eighties had a remarkable
      effect on stimulating capital investment and boosting
      economic growth in this country (and that raising the
      capital gains rate in the late 'Eighties had the op-
      posite effect).  Perhaps the message will finally
      seep through to Congress in this session.  Republican
      Congressional leaders seem to be in favor of a capital
      gains tax reduction, but may face a Clinton veto.

   .  SELF-EMPLOYMENT TAX ON S CORPORATION EARNINGS.  At
      present, the taxable earnings of a shareholder of an
      S corporation are not subject to self-employment tax,
      even though they would be if the business were opera-
      ted as a partnership or limited liability company.
      Congress is very aware of this "loophole," and it seems
      likely that the next major tax bill will "plug" it.


       ┌─────────────────────────────────────────────────┐
       │OTHER LEGAL TRENDS AND NEW OR PENDING LEGISLATION│
       └─────────────────────────────────────────────────┘

SHARED WORK PROGRAMS

A program that has been adopted in a number of states, and
which appears to be growing in acceptance, is the "shared
work" program under state unemployment insurance laws.  Es-
sentially, what the shared work programs do is allow em-
ployees to collect full unemployment benefits while still
working a minimal number of hours per week.  This not only
benefits the employee, but can also be very helpful in the
case of an employer who, due to the recession or other bus-
iness difficulties, has to temporarily cut back the hours
it can employ workers for a period of time, until business
conditions improve.  In states where there is no such prog-
ram, it is often necessary to lay a worker off entirely
for him or her to collect unemployment benefits, which will
usually be more palatable to the worker than just working
a few hours a week and being ineligible for benefits.

Under the shared work programs, the employer can often re-
tain a good employee during a temporary slow period, while
the employee supplements his or her unemployment benefits
with a modest amount of wages from working part-time, which
together may be sufficient to keep the individual in ques-
tion from taking a permanent position elsewhere.  Then, if
things improve in a few months, you may be able to restore
the cut-back employee to full-time status again, rather
than lose a good and already trained worker to another
company because of the temporary layoff.

@IF202xx]PLANNING POINT FOR @NAME:
@IF202xx]┌─────────────────────────────────────────────────────────┐
@IF202xx]│These shared work programs make a lot of sense for every-│
@IF202xx]│one,  so if your firm is getting to a point where you are│
@IF202xx]│considering having to lay  off good employees whom you do│
@IF202xx]│not want to lose, be sure to contact your local state un-│
@IF202xx]│employment  office to find  out if your state has adopted│
@IF202xx]│such a program. If so, you may be able to keep the people│
@IF202xx]│on part-time until business picks up again.   Good people│
@IF202xx]│are hard to find, and you don't want to lose them.       │
@IF202xx]└─────────────────────────────────────────────────────────┘
@IF000xx]Since you do not currently have any employees, these shared
@IF000xx]work programs may not be of immediate interest to you, but
@IF000xx]could be in the future, if or when you have built up a work
@IF000xx]force at @NAME.
@IF000xx]

RECENT CIVIL RIGHTS LAW CHANGES

The new federal Civil Rights Act of 1991 (CRA91), which
immediately became effective upon enactment on November 29,
1991, is making life a lot more complicated for all covered
employers in the area of employment practices.

The new law's most controversial aspect will be in the
"disparate impact" cases, where a company's employment
practices, although not shown to be intentionally discrim-
inatory, have a "disparate" (unequal) impact on employment
of protected groups.

For example, if a company is located in an area where 80%
of the population consists of Native Americans, but only 5%
of its employees are Native Americans, there may be grounds
for a "disparate impact" discrimination claim against the
employer, under prior civil rights law as well as these new
CRA91 provisions, regardless of employer intent.

The huge difference that CRA91 will make in these "disparate
impact" cases is that under prior law, the Supreme Court has
held that the burden of proof is upon the employees who
allege discrimination, to identify a particular business
practice of the employer that resulted in the disparity.
Under the new law, by contrast, the employees are relieved
of this burden of proof if they can simply show that the
employer failed to select an alternative employment prac-
tice (such as hiring quotas) that would not have had a "dis-
parate impact" -- that is, that would not have had a nega-
tive impact on the minority or other protected group.  In-
stead, the burden of proof in these cases is now shifted
to the employer to show that the challenged employment prac-
tice (regarding hiring, promotions, pay, or other aspects
of employment) is "job-related for the position in question
and consistent with business necessity" (whatever the
courts ultimately decide that means).

It is the vagueness of this part of the new civil rights
law that President Bush initially expressed concerns over,
arguing that many firms would find it easier to simply
adopt minority hiring quotas than to attempt to prove the
"business necessity" defense in court.  There are no easy
answers as to what policy a company should adopt in this
regard, but it does seem reasonably clear that the only
safe way to avoid discrimination suits under the new law
may be to adopt some sort of quota system, despite the
issues of unfairness and possible employee morale problems
that the use of hiring quotas sometimes entails.

CRA91 also considerably expands the monetary damages that
can be awarded in cases of intentional discrimination.  Be-
fore, an employer who lost such a discrimination suit was
usually liable only for back pay, front pay, lost benefits,
attorney's fees and court costs.  Now, under CRA91 (which
may even be retroactive in effect), compensatory damages
may also be allowed in addition to other monetary damages.
CRA91 also overrides a Supreme Court case that had limited
fees recoverable by a claimant for expert witness fees to
the flat $40 limit for "fact" witnesses.

In light of the foregoing changes in the Civil Rights Act of
1991, the odds, as well as the costs, of losing a discrimi-
nation action have been increased significantly for employ-
ers, and the new rules will make it much more attractive
for plaintiffs to file such suits, both for claims of inten-
tional discrimination and in "disparate impact" cases.  Em-
ployers can now expect a great many more such claims to be
filed, as a result.

@IF015xx]Thus, however fair you may feel your firm's employment prac-
@IF015xx]tices are, your firm is large enough to be subject to the
@IF015xx]Civil Rights Act, so this may be a good time to consult an
@IF015xx]attorney who is familiar with employment discrimination mat-
@IF015xx]ters to find out what, if any, steps you may need to take to
@IF015xx]protect your business from liability in this area, since the
@IF015xx]amount of such litigation is going to expand significantly.
@IF015xx]Because your company has over 14 employees, almost all of the
@IF015xx]Civil Rights laws apply to @NAME.
@IF015xx]
@IF100xx]This includes EEO reporting requirements, since you have 100
@IF100xx]or more employees.
@IF100xx]
@IF014xx]NOTE:  Most of the foregoing problems don't apply to your
@IF014xx]business at present, since most of the Civil Rights laws do
@IF014xx]not apply to firms that have fewer than 15 employees, such
@IF014xx]as @NAME.
@IF014xx]
@IF001xx]You have only one employee, so with very limited exceptions,
@IF001xx](such as being a company with federal contracts), you don't
@IF001xx]have to worry much about Civil Rights regulations impacting
@IF001xx]your business.
@IF000xx]You have no employees, so the above discussion will only be-
@IF000xx]come relevant to you when your business expands and begins
@IF000xx]hiring employees.
@IF201xx]NOTE:  Any firm which has more than one employee (you have
@IF201xx]@EMP) is subject to the provisions of the Equal Pay Act.


SEXUAL HARASSMENT IN THE WORKPLACE

The Clarence Thomas-Anita Hill drama, which replaced after-
noon soap operas and kept millions of glassy-eyed Americans
glued to the television tubes in their living rooms for
several days in the fall of 1991, has brought the issue of
sexual harassment to a new and heightened level of aware-
ness among the public.  While sexual harassment as such is
not mentioned anywhere in Title VII of the federal Civil
Rights Act, the Equal Employment Opportunity Commission
(EEOC) and the courts have long accepted such harassment
as being illegal and discriminatory.  In addition, many
states have adopted specific laws banning sexual harassment.

Perhaps because of the Thomas-Hill publicity, this is now
an area of the law that is experiencing an upsurge in liti-
gation, as more employees come forward to file sexual har-
assment claims.  Thus, it behooves you to take a fresh look
at your firm's policies regarding this subject.

For a discussion of the federal sexual harassment law and
steps you can take to protect your firm from being sued for
failing to take proper steps to prevent such acts from oc-
curring, see the index item (using the "INDX" Main Menu
selection in this program) on "SEXUAL HARASSMENT," or refer
to Chapter 5.8 of our companion book, STARTING & OPERATING
A BUSINESS IN @STATE.


WRONGFUL TERMINATION OF EMPLOYEES

This is another area of growing importance in the area of
the relationship between employers and employees.  For a
great many years, it was generally the rule that an employ-
er was free to fire employees "at will," without needing
any good reason to do so, unless there was some sort of
formal contractual arrangement or collective bargaining
agreement.  This situation has begun to change in recent
years, mainly as a result of a number of revolutionary
court decisions in California, holding employers liable
for damages for "wrongfully" discharging employees.  Ini-
tially, such cases tended to involve extreme and egregious
situations, where employers fired "whistle-blowing" employ-
ees who threatened to report fraudulent activities of their
employers, secret dumping of toxic wastes, or the like.

However, as the legal concept of wrongful termination has
grown to be more accepted, and begun to spread to courts in
states other than California, the scope of what constitutes
"wrongful termination" has begun to expand, and at this
point it is difficult to say how far this new "right" will
be extended in the future.

One indicator that this idea is spreading is the recent ap-
proval, by the National Conference of Commissioners on
Uniform State Laws, of a Model Employment Termination Act.
Under the Model Act, which is intended to set up guidelines
for state legislatures to adopt, an employer would not be
able to terminate an employee without good cause if the
employee has worked for the employer for at least one year
and for at least 20 hours a week during the 26 weeks prior
to termination.  "Good cause" would mean:

   .  a reasonable basis for termination, in light of such
      factors as the employee's duties, responsibilities,
      conduct and job performance, or

   .  an employer's good faith exercise of a business
      judgment relation to economic or institutional goals.

While it is unclear, as yet, to what extent the states will
rush to adopt such legislation, or to what extent courts
will expand the concept of wrongful termination, but it
seems fairly certain that, in the future, employers are go-
ing to have to become increasingly careful about document-
ing their reasons for firing any employee.  The days when
you, as an employer, could choose to fire an employee just
because you got up on the wrong side of the bed in the mor-
ning may be coming to an end soon, at least in a number of
states.


PROPOSED STRIKER REPLACEMENT LAW

Another piece of legislation that was introduced again in
Congress in 1994 but which didn't pass was the Worker Re-
placement Act.  Since it has strong AFL-CIO backing, it is
by no means dead, and its passage could be extremely damaging
to small employers, so this is a hot issue you may want to
write or call your Congressman about before it is too late.
The legislation, as it has been proposed in recent sessions
of Congress, would prohibit employers from permanently re-
placing workers who go on strike, and thus would fundament-
ally alter the balance between unions and employers that
has been in effect since New Deal days, tilting the balance
strongly in favor of unions.

The law, if passed, would require that an employer refrain
from hiring permanent replacement employees during a
strike, and the employer would have to give the strikers
their jobs back when they are ready to return to work after
the strike is over.

At present, companies can fire workers who go on strike over
economic issues, such as wages, but not if the company re-
fuses to bargain in good faith with the union, or if the
walkout stems from other acts of the employer.  The pro-
posed law would extend the firing ban to strikes over eco-
nomic issues, which are usually the reasons for labor walk-
outs.  By extending this protection only to unionized wor-
kers (as one version of the bill would do), such a law would
give unions tremendous clout in organizing the workers of
small companies, since they would be able to offer a major
advantage that is not available to non-union workers.

Finally, the proposed legislation would permit any two wor-
kers of a non-unionized small business to walk off a job in
protest of working conditions, in effect giving them the
benefits of a union without having to go through the pro-
cess of a certification election to establish a collective
bargaining unit.  This provision could also prove to be a
major burden on small, non-union employers.

Although this worrisome bill hasn't yet been enacted in
1993 or 1994, even with a Democratic Congress and a Democrat
in the White House, and is almost certain not to be enacted
by Congress with the Republicans in the majority in 1995 and
1996, it will definitely be back on the front burner again
if the Democrats regain control of Congress in 1996 elections.

If the Striker Replacement Act passes, it will be a major
blow against business in general, and against small busi-
nesses, in particular, who have usually been able to main-
tain good enough relationships with their workers to avoid
becoming unionized.  If you are not already a member of the
National Federation of Independent Businesses ("NFIB"),
which consists of some 600,000 mostly very small businesses,
this may be a good time to do join the NFIB and support
their efforts to block this crippling legislation, which
would shift tremendous power to the large labor unions,
disturbing the relative balance between labor and manage-
ment that has existed since the enactment of the National
Labor Relations Act in the 1930s.

LATE-BREAKING DEVELOPMENT:  In early March, 1995, the Clinton
Administration, realizing that there was no hope of getting
striker replacement legislation through a Republican Congress,
has done an end run around Congress, by issuing an Executive
Order putting a limited striker replacement ban in effect, by
prohibiting use of striker replacements by federal contrac-
tors.  The presidential decree is almost certain to be chal-
lenged in the courts, with uncertain results.


INCREASING IMPACT OF ENVIRONMENTAL LEGISLATION
ON SMALL BUSINESS

A recent article in a legal publication, The California
Lawyer, reported that, despite hard economic times in the
legal profession lately, the demand for lawyers in the
field of environmental law is expanding beyond the capacity
of many law firms and companies to fill such legal posi-
tions.  While this may be wonderful news for the legal
profession, at a time when even law firms have been forced
to make significant layoffs, it is most assuredly NOT good
news for the typical small business.

The reason for all the new demand for environmental lawyers
is that this is an area of the law that is already begin-
ning to have a huge impact on the way many companies do
business, and seems clearly destined to exert an even
greater impact in coming years.

The Clean Air Act of 1991, for example, is having a dispro-
portionately large effect on small businesses, particularly
because they are small, and because their economies of scale
are not as great; thus, they will tend to be hit much harder
by the costs of the new environmental restrictions.

All sorts of small firms, such as bakers, dry cleaners, body
shops, painters, service stations, and printers are being
required to purchase expensive new technology and machinery
to reduce emissions of air pollutants, if they wish to remain
in business, as the Clean Air Act amendments gradually go
into full effect around different parts of the country.

For example, gas stations will have to install expensive
vapor-recovery devices on each gas pump, which can cost
about $30,000 for a typical gas station, plus incur sig-
nificant ongoing maintenance costs.  Some states, partic-
ularly California, which have already required technology
such as vapor-recovery devices for a number of years, will
be less impacted by many of the new federal Clean Air Act
provisions, but businesses operating in extremely smoggy
areas such as some parts of California, Houston, Texas, and
elsewhere, will soon be subject to draconian environmental
rules, imposed by local government, if those areas are to
achieve compliance with federal clean air standards in the
next few years, as federal law requires they must.

While it is beyond the scope of this program to go into
great detail on increasing environmental restrictions,
readers should be aware that almost every business in urban
areas of America may need to consult an environmental law
specialist at some time in the next few years.  Penalties
for violations tend to start at levels like $25,000 a day
under many of the environmental statutes, so this is an
area where you can't afford even a brief slip-up.

Note that the new clean air laws provide that each state
must appoint an "ombudsman" to provide consultation and
assistance to small businesses that need guidance as to
how they can reduce their emission levels (without being
reported to enforcement authorities for infractions, ex-
cept in cases of extreme danger or hazard to life or limb).

For a general overview of some of the major federal envir-
onmental laws your business may be subject to already, in
addition to the latest Clean Air Act amendments mentioned
here (some of which won't go into effect for up to 20
years), refer to Chapter 9 of the book, STARTING AND
OPERATING A BUSINESS IN @STATE.)


PROPOSED PATENT LAW CHANGES

In the U.S., for over two centuries, it has been the law
that the person who could prove that he or she was the
first in time to INVENT something was the person entitled
to patent it, even if someone else filed for the patent
first.  However, this well-established rule of law may be
about to change, it appears, as we are under pressure from
most foreign countries to conform to their patent rules,
which protect the first person to FILE for the patent.
Bills have been introduced recently in both the House and
Senate that would make this revolutionary change in U.S.
patent law if enacted, so that we, too, may soon be on a
"first to file" basis of granting patents.

If this new rule on patents becomes law, it will make it
much more important for legally unsophisticated inventors
to be aware of the "first to file" requirement, since they
may no longer be able to protect their patent rights simply
by documenting evidence of when they came up with their in-
vention.  The ground rules may be about to change, and if
they do, inventors will have to learn that the only safe
way to protect their patent rights will be to file for a
patent as soon as legally and practically possible.  Ig-
norance of the basic rule of the patent law will no longer
be a luxury an inventor can afford if this legislation
passes.

For more information on patents, and on the pending legis-
lation, use the "INDX" or "KEY" menu selections on the Main
Menu, under the item listing for "PATENTS" or "COPYRIGHTS"
or "TRADEMARKS".


VIDEO DISPLAY TERMINALS

Until recent years, "white collar" workplaces, or offices,
generally created very little liability exposure for em-
ployers, with regard to hazardous working conditions.  This,
too, is beginning to change.

In recent years, there have been an increasing number of
lawsuits filed by employees in connection with hazards of
working long hours on computers; and in late 1990, the city
of San Francisco adopted an ordinance that provides regu-
latory safeguards for workers using video display terminals
(VDTs) for four or more hours per shift.  Apparently, Los
Angeles and a number of other city and state governments
around the nation are now considering similar laws or ordi-
nances, since use of computers in the workplace is now a
universal phenomenon, and because a number of threats to
employees' health have arisen in connection with the heavy
use of computers.

These range from excessive exposure to radiation emitted by
VDTs to "carpal tunnel syndrome," a now common and debili-
tating nerve entrapment disorder that can cause severe pain
and weakness in the wrist, as a result of too many hours
spent repetitively plunking away on a computer keyboard.

Laws regulating VDTs are likely to begin popping up all
over the country in the near future, and offices that don't
pay attention to ergonomics, the study of equipment design
to reduce workplace injuries, may well become sitting ducks
for lawsuits or fines in the near future.  While most legal
claims by employees regarding VDT usage have been imposed
on workers' compensation insurers thus far, employers may
become directly liable if they participate actively in the
design of computer systems or workstations that allegedly
caused the injury to an employee, or if new state legisla-
tion removes such claims from the workers' compensation
system and places financial responsibility directly upon
employers.

New OSHA regulations have been proposed (1994) that would
require virtually all employers to upgrade their office
furniture and other business equipment to "ergonomically
correct" standards if it appears that employees are at
some degree of risk of injury from carpal tunnel or other
repetitive motion syndromes.

@CODE: CA
Employers in San Francisco should be aware of the San
Francisco ordinance (Ordinance #4-5-90) that was passed in
December of 1990, regulating use of video display terminals
(VDT's) in the workplace.  The ordinance contains safe-
guards designed to see that workers using VDT's are provid-
ed adjustable workstations, routine breaks and education
and training on safe of usage of VDT's.  It applies to em-
ployers located or doing business in San Francisco who have
at least 15 employees 20 weeks a year, and to those employ-
ees expected to use a VDT four hours or more per shift.  A
number of municipalities in California and elswhere are
said to be considering similar ordinances.

@CODE:OF