Business Expansion
Posted: 14 August 2008 10:25 AM   [ Ignore ]
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[Good Morning,

If a company is considering expanding its current business into various states in which it has not previously had facilities and/or sales, what legal issues would arise?

Thanks much,

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Posted: 14 August 2008 10:46 AM   [ Ignore ]   [ # 1 ]
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That’s a pretty broad question, implicating all sorts of legal issues.  At minimum, I would want to ensure that the company is complying with any applicable corporations and tax laws regarding doing business in the state.  The same would hold true for local codes and ordinances.  Employment laws also vary from state to state, so you want to make sure that your HR policies, practices and forms are in compliance.

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Posted: 14 August 2008 10:59 AM   [ Ignore ]   [ # 2 ]
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You need to consult with a knowledgable business law attorney in each state where you will expand.  As mentioned in the previous post, each state has its own unique requirements.  While many are similar, one size does not fit all.

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Posted: 14 August 2008 11:05 AM   [ Ignore ]   [ # 3 ]
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Much will depend on the extent of your business plans and presence in each state.  You should check each state’s Secretary of State for “doing business” filing requirements, including those regarding service of process, state taxes and regulations applicable to your business.  Employment/Labor laws, including wage/hour, employment at will issues, non-competition agreements, etc… will vary, however the right attorney should be able to provide a comprehensive policy manual which should work nationwide with some variation state by state.  Even basics such as contract law provisions should be evaluated state by state.  For your company’s protection you should ask your present counsel if they have looked into each state’s law, if they have local contacts, etc.  Good luck.

[ Edited: 18 August 2008 09:49 AM by Patrick Della Valle ]
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Posted: 14 August 2008 11:10 AM   [ Ignore ]   [ # 4 ]
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Most states require that you register as a foreign corporation (foreign as in ‘out of state’ not as in ‘out of country’).  You may have to pay taxes in the new state for income generated in that state (there are likely offsets for your home state).  You will have to review your employment agreements, especially with regard to noncompetition/nonsolicitation agreements, as many states have different laws that apply.  Furthermore, your contracts for vendors/suppliers/customers in that state need to be reviewed; again, certain provisions in your documents that are effective in your home state may not be effective in the new state.

Of course, there are basic employment issues to consider, such as what the wage/hour/benefits laws are in the new state (i.e. what happens to vacation pay upon termination of an employee? - some states have different laws).  Reviewing these matters will ensure that you don’t create liability by continuing your home state practices in the new state in violation of the new state’s laws.

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Posted: 14 August 2008 11:21 AM   [ Ignore ]   [ # 5 ]
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One item to look at is the drug testing regulations on a state by state basis.

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Posted: 15 August 2008 05:18 PM   [ Ignore ]   [ # 6 ]
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If you belong to an employer association, check to see if they have a central clearinghouse of information on state laws and regulations. One thing to do is contact the state Department of Labor to get a set of posters and notices that are required to be posted in the workplace—they are different in each state.

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