That’s when Paul Nicolai got a call from Kathleen Bailer, creator of Magic Mud™, a natural, educational modeling clay intended for preschool and early elementary children. After American Art Clay Company sent an eight-bullet agreement to buy her company, K-Play, she contacted Volunteer Lawyers for the Arts of Massachusetts to see what advice might be available. They recommended Nicolai Law Group based on the firm’s previous experience.

The initial contract language would have meant “giving away my creativity,” Bailer says. In the space of two weeks, Paul Nicolai produced the comprehensive documents she needed to protect her rights as artist and creator of the product. She conducted the negotiations herself.

“He drafted the licensing agreement with what I wanted to receive for the sale of my business. We submitted it, but I was in charge,” she explains. “Paul was helpful, open to what I wanted and willing to give me the legal take on what I asked.”

Once the papers were signed, Nicolai kept in touch. He recommended she file for more trademarks on her label, including the Magic Mud™ logo and the tag line, “Can I Clay With You?” Bailer now serves as a classroom educational consultant and is publishing a book to complement her Magic Mud™ product line.

• Fee Arbitration Board Names Nicolai
• TeleCounsel™ Featured in Press

A Letter from Paul Nicolai
Removing Barriers to Service
For many business owners, using a lawyer means facing barriers. The meter starts running the minute you call the office. It's hard to judge whether the question or concern deserves the attention -- and hourly billing rate -- of a lawyer. And if you find out that it’s not that serious, you still have to foot the bill. Worse still, you may find out that if only you had called earlier, you could have avoided both headaches and expenses.

There's a way to eliminate these barriers. We call it TeleCounsel.™ One flat fee covers a year of unlimited legal advice by telephone or email. It’s cost-effective. Questions are almost always answered the same day. And those answers head off problems before they start.

Businesses need to maximize their legal rights while minimizing their legal risks. That’s where preventive law comes in. Using TeleCounsel™ is like having an in-house lawyer right down the hall. We’re only a phone call away. That timing could make all the difference to your company’s success.

To find out more, call Pamela Chesbro at 413-272-2000, extension 5. This may well be the way you want to do business.

~ Paul Nicolai, President

CORP. NO TAX DODGE
A professional basketball player formed a personal service corporation and signed a contract with the team as an officer of the corporation. He also signed a personal guarantee that he would personally provide the basketball services the contract called for. An employee agreement existed between the player and his personal service corporation as well. The Court held the player owed taxes on the amounts paid by the team instead of the corporation, because of the control the team exercised over the player. It found the taxpayer was an employee of the team, not the corporation, destroying all the tax advantages of the arrangement.
Why This Is Important. . . It was easy to see the control the team had, but not the corporation. Arrangements like this must be carefully constructed to have the desired tax effect.

DON’T RETALIATE AGAINST FORMER EMPLOYEES
After being fired, a man filed a discrimination charge against his employer. While the charge was pending, the former employer gave the employee a negative reference for another job. The employee claimed the negative reference was retaliation for filing the charge and another violation of the law. The court held the retaliation provision of Title VII covers former, as well as, current employees.
Why This Is Important . . . Employers can be liable for retaliation even if, at the time the action is taken, the employee no longer works for the employer.

BAD ADVICE TRIGGERS TREBLE DAMAGES
Defendants used three opinion letters from patent counsel to show their infringement of a patent was not wilful. The Federal Circuit ruled the opinions were inadequate and reliance on that advice was not reasonably justified, opening the door to an award of triple damages and attorney fees.
Why This Is Important . . . Businesses can be liable for wilful violations of patent law despite reliance on attorney advice if the advice is insufficient or unsound.

EXTRA LEAVE GETS ADA OK
An employer granted an employee a one-month leave of absence. She suffered from attention deficit disorder and needed time to get the necessary treatment to return to work. Before the end of her absence, the employee, following her doctor’s advice, said she needed more time to develop a treatment plan. The employer denied the request and terminated her. Company policy permitted a leave of up to 52 weeks. The court held the employer liable for failing to reasonably accommodate under the Americans with Disabilities Act (ADA). The court felt the leave was reason- able since it was not expected to be prolonged or perpetual.
Why This Is Important . . . Granting a leave of absence may be a necessary and reasonable accommodation under the ADA. Denying a request, including an extension to that leave, may expose the business to liability unless the leave can be proven unreasonable.

HARASSING OTHERS NETS AWARD
A court upheld a $60,000 jury award to an employee who sued because other women in her office were sexually harassed. She wasn’t. The employee suffered depression and anxiety when she learned that other female employees were being sexually harassed. The court found it did not matter whether the woman herself was harassed if there was a hostile work environment that altered the terms and conditions of her employment.
Why This Is Important . . . ALL employees who suffer from a hostile environment have rights even if the harassment is not directed against them.

VERDICT REVERSED WITHOUT JURY INSTRUCTION
Because a trial judge failed to instruct the jury on business judgment in an age discrimination case, the Court of Appeals for the First Circuit reversed a jury's verdict in favor of an employee. The Court said it must be clear to the jury that the issue is the employer's motivation (whether discriminatory or nondiscriminatory); not the reasonableness of the employer's business judgment. The trial judge should have explained that an employer can make its own subjective business judgments, however misguided they appear, and fire an employee for any reason that is not discriminatory.
Why This Is Important . . . The decision reinforces the rule that for an employer to be liable for employment discrimination, it is not enough to show that a decision to fire was misguided or ill-advised. The employee must show a discriminatory motive.

BOTTOM LINE: EMPLOYER'S PLAN PAYS
Where workers are covered by two different health plans, both with an "escape clause" that says the other must pay, the employer's plan must always pay, ruled a Federal Court of Appeals. Supermarket workers were covered under their company's self-funded health plan. They were also covered as dependents under relatives' plans. Each plan withdrew coverage whenever other coverage was available. The Court held that the employer's policy was the primary policy and was, therefore, solely responsible for paying the claims.
Why This Is Important . . . The decision helps to create a uniform employer-first rule under ERISA.

TELL ALL, SAYS ERISA
An employer has a fiduciary duty under ERISA to communicate complete information about all eligible insurance options, ruled four Federal Courts of Appeal. Employers who do not tell their employees about their eligibility for benefits may be held liable. Employers must inform employees about any material facts they may need for their protection. If the employer simply waits for employees to ask about what benefits they may be eligible for, the employer has not met its fiduciary duty under ERISA and may be liable for its breach.
Why This Is Important . . . These rulings signal a continued expansion of an employer's obligations to employees. The employer must not simply have its ERISA benefit information available but must actually communicate that information to its employees or risk liability for failure to do so.

BOSS' ASIDE NOT PRIVACY VIOLATION
A former supervisor commented to a vendor that an employee resigned because of her child's medical needs. The former employee claimed a violation of the Massachusetts Privacy statute. Although the court agreed that a privacy claim could rest on disclosure of information about a former employee's family member, the court re- fused to impose liability in this case. The supervisor did not provide any details. The supervisor made the statement to maintain good relations with the vendor.
Why This Is Important . . . The law gives individuals a right against unreasonable, substantial or serious interference with privacy. As many state laws do, this statute applies to disclosing medical information on a former employee's family member. With new HIPAA regulations coming into effect, employers must be careful about how they use personal information on current and former employees and their families.

ILL WORKER NO THREAT
Continued exposure to a refinery's sol- vents aggravated an employee’s liver disorder. The employer wanted to discharge the employee using the direct threat defense in the ADA which allows employers to require their employees not pose a significant risk to the health or safety of others in the workplace. The court ruled this defense does not permit employers to shut disabled persons out of jobs because they may put their own health or safety at risk.
Why This Is Important . . . This reflects the judgment of the ADA that the individual is the primary focus. As long as others are not at risk, the question remains whether this person can do the job with reason- able accommodation.

FITNESS TESTS NOT ADA TRIGGER
After an employee exhibited potentially dangerous behavior, the employer asked him to take a mental and physical fitness-for-duty test. When he refused, he was fired. The employee, who was not disabled, alleged the employer regarded him as disabled and terminated his employment in violation of the ADA. The Court ruled that simply requiring an employee to undergo such a test does not establish the employer regards the individual as disabled under the ADA.
Why This Is Important . . . Merely requiring a fitness-for-duty test will not trigger ADA compliance considerations.

MERGER NIXES NONCOMPETE
A company created after a merger could not enforce noncompete agreements between former employees and the original company without employee consent or a new agreement. The agreements did not contain language binding the employer's successors or assigns and could not be enforced by the new company.
Why This Is Important . . . More than ten states now say that noncompete agreements may not survive a business sale. Many "standard form" agreements will not pass these court-imposed tests. The value of a business could be adversely affected if agreements are not reviewed and revised.

INVESTIGATE OR PAY
An employer failed to adequately respond to a guard’s complaint that his supervisor once called him a "nigger." The court found the context the supervisor used the word in was extremely offensive, insulting and was meant to belittle and diminish the employee. Because the employer failed to conduct an investigation and take effective re- medial action, the employee won $10,000.
Why This Is Important . . . Courts are putting more emphasis on how an employer responds to internal complaints. Failing to take all complaints seriously and investigate them is more likely to lead to liability.

LLC LIABILITY LINGERS
A state supreme court has ruled a plaintiff may hold LLC members personally liable. Generally, officers, directors and shareholders are not personally liable for the acts of a corporation because courts treat them all as separate legal entities. In limited circumstances, a plaintiff may "pierce the veil” and impose personal liability on them even if they were acting in the name of the corporation. The court saw no reason to treat LLCs differently.
Why This Is Important . . . The laws creating LLCs are generally silent on this nationwide trend of courts applying the same liability rules for LLC members as for corporate officers.

EMPLOYEE LOSES CLAIM, WINS $32K
A former employee lost her sexual harassment claim because she never reported the incident. Firing the employee the day after she complained about the incident to a customer service manager, however, made the company liable for retaliation. She won more than $32,000.
Why This Is Important . . . The rules for retaliation liability can make a company or its people liable even if it is found that no actionable harassment or discrimination took place.

Newsworthy

“Smart Business” Series Features Nicolai
Three seminars focusing on the needs and concerns of small businesses were hosted by Banknorth Massachusetts in Springfield, MA in May, June & July. Designed to arm small business owners with the tools to compete in tight economic times, the seminars included materials prepared by Nicolai Law Group and presentations by Paul Nicolai. Topics were “Managing in Tight Times,” “Hiring and Keeping Employees,” and “Keeping Your Profits.”

Nicolai Admitted to Practice in Connecticut
Attorney Paul Nicolai has been admitted to practice in the State of Connecticut. He is now licensed in Connecticut, New York, Massachusetts and Washington, D.C.