For your project, you’ll first complete some basic researchfrom suggested websites. Then you’ll prepare a memorandumto your supervisor describing which form of business organizationyou feel would be best for your client. You’ll also makesome suggestions about what the client’s independent contractoragreement needs to contain to be legally enforceable. Yoursupervisor for this project is the law partner in a small lawfirm representing a new client.
ProcedureYou’re going to prepare a written memorandum to yoursupervisor to assist him in preparing a presentation for anew business client. In addition to the information providedbelow, refer to the general information on business organizationsand employer-independent contractor relationships inyour textbook. You’ll also need to do some Internet research.Then write your memorandum.
GoalYour goal for this project is to complete a well-written memorandumto your supervisor to address two legal issues:■ The appropriate form of business organization for yourclient’s business■ Requirements for your client’s independent contractoragreement, to make sure it’s a legally enforceable independentcontractor agreement and not viewed as anemployment agreementRemember not to use too much legalese in your memo.
You’re writing it to your supervisor, and you would expecthim or her to have some knowledge of the subject matter.However, you must completely explain what the law is foreach type of business organization you’re considering and thereasons you’ve selected one type of business organization asbest for your client. The same complete explanation is requiredwhen discussing the issue of your client’s independentcontractor agreement.For this project, please use the following format for your legalmemorandum:To:From:Re:Date:Summary of Applicable Facts:Issues:
Re: New Client, Career Institute of America, Inc. (CIA)
Date: December 6, 20—
FACTS: We have just met a new client, the CEO of CareerInstitute of America, Inc. (CIA). Although the business wasformed a year ago as a nonprofit corporation, they’re notsure they’re happy being a nonprofit.CIA is a classroom and online education organization thatspecializes in training students in the United States autoindustry, one of this country’s largest industries. Theirfounder, who also serves as the CEO of CIA, would like toretain most of the ownership and control of the company,since it is really his enterprise. He also has some concernsabout the independent contractor agreement their instructorsmust sign when they agree to work for the company. Hewants to be sure they’re not construed as employees of thecompany and are viewed as true independent contractors.
Note that most of the company’s income is from online trainingcourses. You should also know that they received a U.S.Department of Labor retraining grant for the instruction they’recurrently providing and that this type of grant is awarded onlyto nonprofit educational organizations. Even though CIA wasable to obtain this grant as a nonprofit institution, they realizeit was a one-time grant. They must make their income fromtuition for online courses and in the two small classrooms inwhich they teach traditional courses. This is why they’re notnecessarily opposed to changing their form of business from anonprofit organization to a for-profit business.You should further know that the employment contract theyprovide to their instructors looks as if it was designed by anamateur and may not comply with the legal requirementsfor a valid independent contractor agreement.
RESEARCH ASSIGNMENT: Research two areas of law andprepare a memorandum addressing each area, so the clientcan be properly advised how to proceed. First, determine thelimitations of a nonprofit corporation in the state ofDelaware, the state in which CIA was formed and is doingbusiness. You should also review the law for nonprofit andfor-profit corporations, as well as limited liability companies,to determine the best form of business for the client.Consult the listing of Delaware statutes on the Delaware statewebsite at http://www.corp.delaware.gov/DElaw.shtml toassist you in your research.
For more general information concerning nonprofit corporations,for-profit corporations, and limited liability companies,the following are additional websites that can assist you:http://www.law.cornell.eduhttp://www.freeadvice.comhttp://www.findlaw.comhttp://www.nolo.com/legal-encyclopediahttp://www.hg.org
Combine this information with what you know about businessorganizations and what the client wants, so you canrecommend the best form of business organization for CIAat this time.
The second issue concerns the contract that CIA has its instructorssign. (The instructors teach the programs and grade thestudent’s papers.) You’ll need to review the law dealing withemployment and independent contractor agreements todetermine what the contract needs to include to be properlyviewed as an independent contractor agreement and notan employment agreement.Research employment and independent contractor agreementsonline. A general search using these terms in the websiteslisted above or even on Google, Bing, or any other searchengine should assist you in finding the law dealing with thesetypes of agreements. Since the agreements will be signed byour client’s instructors located in each state we want to usethe general law dealing with such agreements. In your memorandum,please be sure to identify each of the key elementsnecessary for the agreement to be viewed as an independentcontractor agreement and not an employment agreement, aswell as any other suggestions you might have for the clientin connection with their instructor contracts.Here are some helpful hints:Remember that the project requires that you use the memoformat provided and that you research both issues requested:the most appropriate form of business organization to meetthe client’s needs and the requirements for an agent to bedeemed an independent contrator and not an employee. Youshould first locate the law for each of the two issues. Then,you need to analyze the information you found and apply itto the needs of the client. Both your research and youranalysis should then be summarized and included in yourmemo.
Has my question been posted for others, for Jane T originally....