Best of www.BestZips.com (Collector's Edition)/Best of WWW.BESTZIPS.COM Collector's Edition (JCSM Shareware) (JCS Marketing).ISO/legal___/sba964.zip/F131.SBE

Text File | 1996-11-06 | 40KB | 800 lines

@800 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 useless
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
business environment that have already arrived, or that
appear to us to be just over the horizon.

        ┌───────────────────────────────────────────────┐
        │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
competition, 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 continue
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
         permanent shutdown of many large and small U.S.
         manufacturers, who can no longer meet the
         competition from Asia, Mexico and elsewhere, or
         who move their operations overseas to places
         like Indonesia or Thailand, where wages are
         lower.  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.
         manufacturers or whose service operations
         (restaurants, retail shops and the like) will
         be drastically affected as larger companies
         close plants and make massive, and in most cases
         permanent, layoffs of thousands of employees.
         This is a rude fact of modern life of which
         countless thousands of U.S. workers who have
         been permanently laid off from their jobs
         are already painfully aware.

      .  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
         service 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.

      .  Becoming Internet-aware, no matter what kind of
         business you are in, is rapidly changing from
         a curiosity to a necessary fact of life.  While
         few companies are believed to be making money yet
         by selling their goods or services over the
         Internet (other that those who sell equipment or
         services for accessing the Internet), you can be
         certain that your competitors will soon be using
         the Net (if they aren't already) to get an edge,
         whether it be through extending their marketing
         effort, providing additional services to clients
         and customers, such as constantly updated price
         lists and product information, or by using the
         Net as a way of getting useful information.  We
         will very probably all be carried, kicking and
         screaming perhaps, onto the so-called "information
         Superhighway," if only for purposes of self-defense.
         Whether we like it or not, the Internet, or
         whatever global information interchange eventually
         succeeds it, is rapidly becoming a fact of business
         life.

      .  Increasing automation, both here and abroad,
         is also likely to have a dramatic effect on
         employment 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
         dropping 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
         displaced.  With the advent of "expert systems"
         and "artificial intelligence" programs, 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 overnight in the
         new economic environment we are rushing into.

         While the ability to replace workers with
         computers or computer-driven machinery may be
         very attractive to the individual employer from
         a cost-savings standpoint, 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 restaurants
         that have replaced the order-takers with smiling,
         friendly robots with voice-recognition capability,
         machines that take a customer's order over an
         intercom and fill it automatically, without need
         of a teenager.

       . Largely in response to ever-fiercer foreign
         competition, employer "down sizing" continues apace
         in 1996, according to the outplacement firm of
         Challenger, Gray & Christmas, despite the currently
         strong national economy.  (However, the negative
         political reaction in both major parties to the
         huge AT & T layoffs that were announced in early
         1996 suggests to some observers that this trend may
         be blunted somewhat, as corporate managers become
         increasingly wary of public outcry over excessive
         downsizing for the sake of the bottom line, coupled
         with huge increases in pay for top-level executives
         responsible for such hatchet-wielding.

      .  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 "down sizing" 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
         environment by creating a major upsurge in the
         formation of new, small, and flexible business
         entities, 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, one that is
         already 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 computers,
         modems, faxes or multiple phone lines.  Already,
         some employers, like certain government agencies
         in Washington, D.C., are taking an intermediate
         step by setting up satellite telecommuting
         offices in suburban areas.  By going to these
         nearby satellite offices, equipped with computer
         work stations, many workers can avoid long and
         arduous commutes to downtown offices on most days,
         by instead piping their work product electronically
         to the main office.  Obviously, this has serious
         implications for owners of urban office buildings
         as well as for businesses that serve those downtown
         business districts.

         Recent surveys by Link Resources Corporation, a
         research and consulting firm, show that telecommuting
         has become a major factor in the economy, almost
         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
         economic and societal change of enormous 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
restaurants (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 surprising loss of both houses of Congress by the
Democrats in 1994, for the the first time in over four
decades, has returned Washington to gridlock once more,
this time with a Republican Congress and a Democratic
President, and the voters ratified this arrangement in
the November, 1996 elections, by re-electing President
Clinton and the Republican majority in Congress.

In late 1996, it remains unclear what kind of tax changes,
if any, this political shift will engender.  While the
Republican majority is ideologically committed to tax cuts,
their promises to reduce the federal deficit (and the veto
powers of President Clinton) make it very unlikely that any
further significant tax cuts for business can be effected
in the current budget-balancing climate, following the
August, 1996 small business tax cuts that were agreed to
by President Clinton and the Republican Congress.

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

   .  MANDATORY HEALTH CARE COVERAGE.  This was the
      biggest 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, many provisions of the
      1994 proposals were included in recent "portability"
      legislation passed in August, 1996, so don't expect
      this issue to die.  It will probably remain dormant,
      since the Republican majority in both houses of
      Congress survived the 1996 elections, but could be
      very much alive again after 1998 if the political
      pendulum swings back in the other direction in the
      1998 elections.

      However, with the growing insolvency of Medicare,
      look for some type of bi-partisan commission to
      be set up to try to deal with the growing cost of
      entitlements, which far exceeds growth in government
      tax revenues.  Likely result:  Since cutting Medicare
      or Social Security is a political taboo, watch out
      for further increases in already very high payroll
      taxes, which are now greater than income taxes for
      most Americans.

   .  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
      opposite 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 face a certain Clinton veto,
      except possibly for some limited relief for sales of
      personal residences.

   .  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 operated
      as a partnership or a limited liability company.
      Congress is very aware of this "loophole," and it seems
      likely that the next major tax bill will "plug" it.

   .  "CHECK-THE-BOX" ELECTION OF CORPORATE OR NON-CORPORATE
      TAXATION.  On March 29, 1995, the IRS announced, in
      Notice 95-14, that it plans to propose regulations that,
      for the first time, would allow taxpayers to choose for
      themselves how an unincorporated business entity would
      be treated for tax purposes, as a corporation or not,
      simply by electing ("checking the box") the tax
      treatment they desire.  This would end many years of
      tax litigation and complex planning and disputation
      over whether certain unincorporated entities had more
      of the characteristic of a corporation or not, for
      income tax purposes.  Proposed regulations were issued
      and public hearings on them were held in August, 1996.
      The final regulations should be released almost any
      day now, and are expected to closely resemble the very
      favorable proposed regulations.  [CAUTION:  While this
      new approach, if adopted, will simplify tax planning
      considerably, taxpayers will have to be cautious, if
      operating an unincorporated entity under corporate
      tax rules, if they change this status by electing
      noncorporate tax treatment under the new rules, since
      such a change would be considered at taxable
      "liquidation" of a corporation, with potentially
      severe tax consequences.]


       ┌─────────────────────────────────────────────────┐
       │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.
Essentially, what the shared work programs do is allow
employees 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
business 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 program, 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
retain 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 question
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  all│
@IF202xx]│concerned, so if your firm gets  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│
@IF202xx]│unemployment 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 federal Civil Rights Act of 1991 (CRA91), which 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 1991 Act's most controversial aspect is in the "disparate
impact" cases, where a company's employment practices,
although not shown to be intentionally discriminatory, 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 practice
(such as hiring quotas) that would not have had a "disparate
impact" -- that is, that would not have had a negative
impact on the minority or other protected group.  Instead,
the burden of proof in these cases is now shifted to the
employer to show that the challenged employment practice
(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 many business groups have 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.
Before, 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 addition, prior to the 1991 amendments, attorneys fees
for successful claimants under the civil rights laws were
allowed only in cases of racial discrimination.  This has
been widened to all Title VII discrimination cases.  Thus,
if an employee sues you and wins, you are required to pay
his or her attorneys' fees; but if you, as employer, win
in court, you are NOT entitled to recover your attorneys'
fees, so you lose either way, if you are sued.  Needless
to say, this puts huge pressure on defendant employers to
settle cases out of court, even when the claims are
clearly frivolous.

In light of the foregoing changes in the Civil Rights
Act of 1991, the odds, as well as the costs, of losing a
discrimination action have been increased significantly for
employers, and the new rules make it much more attractive
for plaintiffs to file such suits, both for claims of
intentional discrimination and in "disparate impact" cases.
Not surprisingly, there has been an explosion in the number
of such claims since the 1991 changes were enacted.

@IF015xx]Thus, however fair you may feel your employment practices
@IF015xx]are, your firm is large enough to be subject to the Civil
@IF015xx]Rights Act, so this may be a good time to consult a lawyer
@IF015xx]who is familiar with employment discrimination matters
@IF015xx]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
@IF000xx]become 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
afternoon 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 public awareness.  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 a huge upsurge in
litigation, as more employees come forward to file sexual
harassment 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
occurring, see the index item in this program on "SEXUAL
HARASSMENT."


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 employer
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.  Initially, such cases
tended to involve extreme and egregious situations, where
employers fired "whistle-blowing" employees 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 Catch-22 for many employers
is the situation where some employees are engaged in a mode
of behavior that, if not halted, could cause the employer
to be subject to federal sexual harassment charges by the
offended employees; yet, if the employer discharges the
offending employees, they may be able to successfully sue
the employer in state court for "wrongful termination."  In
other words, complying with one set of laws may create
exposure for the employer under another set of laws.

One indicator that the "wrongful termination" concept is
spreading is the recent approval, 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 going
to have to become increasingly careful about documenting
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
morning may be coming to an end soon, at least in most parts
of the country.


PROPOSED STRIKER REPLACEMENT LAW

A major piece of legislation that was introduced in Congress
in both 1993 and 1994 but which didn't pass was the Worker
Replacement 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
replacing workers who go on strike, and thus it would
fundamentally 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
refuses to bargain in good faith with the union, or if
the walkout stems from other acts of the employer.  The
proposed law would extend the firing ban to strikes over
economic issues, which are usually the reasons for labor
walk-outs.  By extending this protection only to unionized
workers (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 form
of job security -- major advantage that is not available to
non-union workers.

Finally, the proposed legislation would permit any two
workers 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 process
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, if abused.

Although this worrisome bill failed to be enacted in either
1993 or 1994, and is almost certain not to be enacted by
the present Congress with the Republicans in the majority,
it will likely be back on the front burner again if the
political pendulum swings back in the other direction in
the 1998 elections.

If the Striker Replacement Act passes, it will be a major
blow against business in general, and against small
businesses, in particular, who have usually been able to
maintain good enough relationships with their workers to
avoid becoming unionized.

OTHER DEVELOPMENTS:  In 1995, President Clinton, apparently
realizing that there was little chance of getting striker
replacement legislation through a Republican Congress, did
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
contractors.  The presidential decree was challenged in
the courts and, in early 1996, a U.S. Court of Appeals
held that the Executive Order was invalid under the National
Labor Relations Act.  Presumably, this decision will be
appealed to the Supreme Court.  Stay tuned....


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 positions.
While this may be wonderful news for the legal profession,
at a time when even big-name law firms have recently 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 beginning
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 currently having
a disproportionately 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, many gas stations have to install expensive
vapor-recovery devices on each gas pump, which can cost
about $30,000 for a typical gas station, plus incur
significant ongoing maintenance costs.  Some states,
particularly 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
governments, 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,
except in cases of extreme danger or hazard to life or
limb).


VIDEO DISPLAY TERMINALS

Until recent years, "white collar" workplaces, or offices,
generally created very little liability exposure for
employers, 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
regulatory safeguards for workers using video display
terminals (VDTs) for four or more hours per shift.
A number of other city and state governments around the
nation are now considering similar laws or ordinances,
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
debilitating 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 work stations that allegedly
caused the injury to an employee, or if new state legislation
removes such claims from the workers' compensation system
and places financial responsibility directly upon employers.

New OSHA regulations were proposed  in 1994 that would have
required 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.  Due to a loud outcry from
large and small businesses alike, those regulations have
been tabled.  For now.

@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 safeguards
designed to see that workers using VDT's are provided
adjustable work stations, routine breaks and education and
training on safe of usage of VDT's.  It applies to employers
located or doing business in San Francisco who have at least
15 employees 20 weeks a year, and to those employees expected
to use a VDT four hours or more per shift.  A number of other
municipalities in California are said to be considering
similar ordinances.

@CODE:OF