Hinch Law

Update - just the day after I posted this, on 2/19/19, the governor signed this bill into law. Much has been written on both sides as to the pros and cons of the new $15 minimum wage and how it is phased in under the  Illinois Senate Bill 1 , which is currently pending signature by the governor and will soon be law. I’m not writing this post to chime in one way or the other about that. The reason for this post is to alert business owners about other provisions of the bill that have been less publicized but are very important. The current Illinois Minimum Wage Act  is codified at 820 ILCS 105. Section 7 of the Act now expressly authorizes the State to randomly audit employers for compliance. Section 10 authorizes the Department of Labor  to make emergency rules under the Administrative Procedures Act to implement the new law as appropriate for enforcement. Section 11 of the Act already provided for potential criminal charges against an employer (or ...

I previously wrote about the law of hold harmless or legal release contracts in Illinois, but an update of recent court cases is timely. The general rule has not changed. Illinois views such agreements as valid and legally binding, under the public policy of allowing freedom of contract.  But because Illinois also has a strong policy that a person should be liable for their own negligence, courts strictly construe such contracts against the benefitting party, and carve out some exceptions to enforceability. Generally a release is enforceable if (1) its terms are clear, explicit, and precise; (2) the release language (sometimes called the "exculpatory clause") encompasses the activity, circumstance, or situation contemplated by the parties to relieve the defendant from a duty of care; (3) it is not against settled public policy; and (4) nothing in the "social relationship of the parties militates against upholding the agreement." Regarding the final factor, co...

What does "cause" mean?  In McManus v. Richards , an orthodontist was buying into a practice group, but four years into the buy-in contract, when she had paid for a 45% interest and was nearing equal partner status with the other orthodontist, she was fired for "cause."  The two doctors had apparently fallen out and the one buying in informed the other of her intent to dissociate from the practice, so she was fired preemptively.  She showed up to the office one morning, and the locks had been changed, computer passwords changed, and she was excluded access to patient records. As we often see with such ownership buy-in arrangements, there was a buy-in contract, but no separate employment contract.  The buy-in contract identified party rights to dissociate, voluntarily or in event of "cause," but "cause" was not defined.  The existing practice owner argued that in this case the word "cause" was merely as defined by the dictionary - ...

If you own an interest in an Illinois Limited Liability Company (LLC), good news!  Effective yesterday, certain filing fees have been significantly reduced.  See this press release from Secretary of State Jesse White's office for details as to the fee changes. If you have a current LLC, you are required to file Annual Reports with the State, and pay the annual filing fee associated with that.  This fee is being reduced from $250 to $75.  The fee is generally due on the anniversary of forming your LLC, which means the payment due date is different for each LLC.  The Secretary of State typically mails the Annual Report form out a few months in advance of the due date.   If your LLC annual report is due soon, you should doublecheck to ensure that you do not accidentally overpay the fee. For those who may have been holding off on forming a corporation or LLC due to cost concerns, this fee reduction is also great news! To file "Articles of Organizatio...

Get ready for changes to the Illinois LLC Act .  Last year a bill to amend the statute was signed into law, but with its effective date deferred to July 1, 2017, and is now less than a month away.  This is a significant update to the statute and may potentially affect existing LLCs; it is worth taking a look at an LLC's current Operating Agreement in light of the changes, to see if any updates are in order.  For a complete review of all the changes, see the text/markup of the statute here . There are many changes to the statute, but I'd like to focus on one, particularly significant change.  LLCs will now be able to designate certain members having authority to act for the company.  This is a very significant change; existing LLCs may wish to revisit their management structure and operating agreements to see whether they could benefit by utilizing this new process. As part of the application to file Articles of Organization, Illinois LLCs are required to de...

Ok, after a brief interlude, I'm back to complete the third and final part of my answer to the latest question in the "Ask a Lawyer" series.  The question is, "Why should I hire a lawyer to incorporate my business?"  We have broken this question down into three parts, as follows: How do I know what form of business entity is right for me?  Should every business incorporate? What's the difference between a corporation and a limited liability company?  Which is right for me? Why should I hire a lawyer to help form my corporation/LLC?  Why not do it myself?   Having addressed 1 and 2 in previous posts, this post will answer 3 and complete our response to the overall question.   Allow me to call out the elephant in the room implied in question 3 -- lawyers cost money, perhaps a lot of money. That's money that could be spent investing in the business.  On the other hand, forming a corporation is "easy."  To satisfy the State of Il...

In our last post, we provided the first in a three part response to the question, "Why Should I Hire a Lawyer to Help Incorporate My Business?"  The first part of our answer was to first consider whether every business ought to "incorporate," and what are the options available for small business owners to consider. This post provides part two of our answer - once a business owner makes the decision to form a limited liability entity, which form of entity should she choose?  For the majority of business owners, this comes down to a choice between a corporation, often an "S-corporation", and a limited liability company.  What's the difference? First, note that State law is essential to understanding how corporations and LLCs are formed, operated, dissolved, etc.  Each State is different, and some States are considered to have business statutes and supporting court opinions that are more favorable to business owners than other States.  Delawar...

Having just finished a three-part answer to the last question in the "Ask a Lawyer" series, about why to consider hiring a lawyer to help with your will and estate plan , the next question in line also requires a multi-part answer.  The question is "why should I hire a lawyer to help incorporate my business?"  To help provide a thorough answer, we will break the question down as follows: How do I know what type of entity is appropriate for me and my business?  Should every business incorporate? What's the difference between a corporation and a limited liability company?  Which should I choose? Why should I hire a lawyer to help form my corporation/limited liability company?  Why not do it myself? I will address question 1. above in this post.  To decide which type of entity is best for you, it's important to understand what are your options.  I will list the most common choices here with a very brief description of each. Sole Proprietorshi...