Iowa Law Blog : Iowa Lawyer & Attorney : Sullivan & Ward Law Firm : Iowa Law Blog

We've previously posted on the subject of the danger of personal guarantees when entering into contracts through a business entity. Normally, the officer/agent of the company needs to sign such an agreement in his or her capacity in the company, and not in their individual capacity in order to avoid personal liability. A recent case out of the Iowa Court of Appeals clarifies that signing in your corporate capacity isn't enough on its own to limit your personal liability.

In this case, which was handled by our own Lou Hockenberg, the defendant had signed an application for credit and signed the application as "Pres."  Right above that signature line, however, was a provision that provided the applicant was also personally liable for the debt. The Iowa Court of Appeals affirmed the judgment by stating that the the provisions of the binding agreement should not be negated by simply signing such an agreement in one's corporate capacity.

Moral of the story: Read what you sign.

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Former NFL football player Steve McNair is just another too-common of an example of someone who failed to plan their estate with so much at risk.  As Todd Ratner on the Estate Planning Bits blog noted in his post, there are several legal issues associated to the unfortunate demise of Steve McNair that will likely result in significant cost and struggle to his family.  Fame and fortune alone won't guarantee you a structured estate plan.  And you don't have to be a Steve McNair to have the same issues and risks that he did.

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Sullivan & Ward's own attorneys, Larry McLellan and Mark Landa, have been selected for inclusion in the 2010 edition of Best Lawyers in America in environmental law.  Larry McLellan was also included in the 2009 Great Plains Super Lawyers listing under environmental law.  Congratulations to Mark and Larry for these honors!

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One of the reasons that individuals form business entities, such as corporations and limited liability companies, is to protect their own personal assets from the debts and liabilities of the business. The law does provide some protection, but in order to get that protection, the company owners need to follow certain requirements. Fail to follow those requirements opens the individual owners up to liability of the company through a process called "piercing the corporate veil".

The Iowa Court of Appeals recently affirmed a basic case permitting the piercing of the corporate veil. In this particular instance, the individual defendants claimed they were not sufficiently aware that the Plaintiff was pursuing the defendants individually (attempting to pierce the corporate veil) in the lawsuit, rather than suing just the corporation. In the court's ruling, the court found sufficient evidence to put the plaintiff's on notice before the trial that the Plaintiffs intended to pursue them individually.  The defendant's claim of "trial by ambush" was rejected.

This case serves as a reminder to all business owners that the liability protection that can be provided by an entity, such as a corporation or a limited liability company, is only valid if you follow the proper formalities. Failing to keep corporate minutes and records, separate corporate finances, routine government filings and separate books of the business entity can expose the individual owners of the company to the company's liability. Setting up the corporation is only the first step and that step alone does not necessarily provide the corporate liability protection.

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Employers need to be aware of the effect the H1N1 flu virus may have on its workforce this winter and be prepared to deal with issues that arise. According to the CDC the H1N1 flu virus attacks young children and young adults. This means many employees will either contract the H1N1 virus themselves or have a child that contracts the virus. The CDC is recommending that those that contract the virus stay home and away from the public for at least 24 hours after their fever is gone.

For employees with sick leave or paid-time-off (PTO), staying home to take care of a sick child or themselves does not present a problem. But there are employees who either have no available time off or have exhausted all their available time off. What can or should an employer do in that case? 

Employers are under no obligation to provide those infected with the H1N1 virus any additional time off. Providing sick leave or PTO is not required, at this time, under any Iowa or federal law. There have been no requirements from Iowa or the federal government mandating that employers allow persons infected with the H1N1 virus time off from work (either paid or unpaid). However, persons infected with the virus may potentially spread it to others, thus resulting in a “pandemic” in your workplace. It may be possible for you to adopt policies which allow sick workers to stay at home. Examples of such policies include granting more PTO; allowing sick workers to “borrow” time from a future allotment; allow employees to work from home.

Even if none of the above options are appropriate for your work site, it is still important to stress preventative health options to your workers—washing hands, using antibacterial hand gels etc.

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