Nasir and Matt discuss the Walmartthat claimed itsemployees were home on Easter but were really working in the store. They also answer the question, “I gave a small ownership interest to a friend. Now he refuses to do any voting in which a shareholder vote is required. I have the majority so do I need to worry about him?”

Full Podcast Transcript

NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.

MATT: And this is Matt Staub.

NASIR: And this is our podcast where we cover business in the news with our legal twist and also answer some of your business legal questions that you, the audience and listener, can submit to our podcast and we can answer.
By the way, are listeners audiences, too? Or does an audience have to be in a studio?

MATT: I would think audience is anyone who’s any of the five senses – listening, visually, smelling.

NASIR: So, if they can just smell us, they could be an audience?

MATT: Yeah, audience is the umbrella and you have everything underneath.

NASIR: According to Meriam Webster, a group of people who gather together to listen to something.

MATT: Ah!

NASIR: Well, I’m sure a lot of people have podcast parties where they gather together and listen to our podcast. I guess that counts.

MATT: Yeah, that’s pretty popular with ours, I know that I get those comments all the time.

NASIR: Yeah. Well, to all the audience out there, submit your business legal questions to ask@legallysoundsmartbusiness.com and that’s our show!

MATT: We look up the definition of one word every week and we tell people what it is and that’s it.

NASIR: Word of the day – audience. Repeat after me – audience.

MATT: Well, let’s get into the story that we have for today. This one deals with Walmart.
By the time this episode comes out, it will be a week past, but it has to do with the Easter Sunday on this Walmart in Maine.
This Walmart in Auburn, Maine, was closed on Easter Sunday. Apparently, once you get to a certain size, the laws in Maine are that you have to be closed. But the thing is, they posted a sign on their store saying that they’re going to be closed so their employees could enjoy the Easter Sunday with their families.
They were closed, yes, but the problem is that some of the employees were working.
Now, there was a question of whether these people came in voluntarily or whether they were required to come in or kind of maybe in the middle – they weren’t required to come in. It’s kind of like when your wife tells you to do something; you might not necessarily be required to do it but, you know, if you don’t, then it’s going to be pretty difficult for you down the road. Maybe it was a situation like that.

NASIR: Well, I think it’s weird that they said that they let them off to be with their families but, if the reason they did that was because it’s a state law, I mean, I don’t think they did that in any other state – well, at least in the other state that doesn’t require it to be closed.

MATT: Right, and I didn’t even know that that was the case. You know, in California, that’s not how the laws are but I guess, in Maine, that’s the case. I’ve actually been to Maine before. I don’t know if I’ve been to Auburn, Maine. I can’t remember, actually, any of the cities I’ve been to. It was a long time ago but it’s pretty spread out in terms of the cities and the population. So, maybe that’s the case on why this is.
But getting back into the actual story here, I kind of see a problem with putting something on your store, saying, “Our employees are enjoying their time with their families on Easter Sunday,” but also having people inside, employees, inside working – whether they want to be there voluntarily or not.

NASIR: Yeah, that’s true. It’s even more ironic that, on one hand, they’re saying they did this because of the families yet they’re required. At the same time, there are people working in there. But I can see people wanting to work. I think they only got regular pay though. But, every holiday, people want as many hours as possible, especially when you’re paying minimum wage or a low-wage job, you’re trying to get as many hours as you can. If you have the option to work – even if it’s the same regular pay – then why not? Easter Sunday is not celebrated by all necessarily and may not necessarily require to be at home the entire time. So, I think there was only, like, twenty employees. I don’t know how many employees at any given time are working inside. But the store was closed, though, right? They were just maybe doing inventory or something?

MATT: Yeah, it was probably just moving around the inventory, getting the shelves stocked. But, yeah, the strange thing too, they didn’t even get time and half pay. Typically, on a holiday, you would get time and a half pay. But I guess that’s not the case, especially if they came in voluntarily. It’s almost like this Walmart is taking advantage of the people that wanted to volunteer and come in.
Obviously, if they didn’t volunteer to come in and they were forced to, especially under Maine law, it’s going to be a problem. I guess, if this is what you want to do, then you can do it but it’s not going to be that fun.

NASIR: Yeah. Well, I bet you it wasn’t a normal day at work. It almost reminds of a school day where maybe a substitute comes in and everything is kind of different that day and – I don’t know – it makes it more fun, I guess.
[MUSIC]

MATT: All right, let’s get into our question of the day.
“I gave a small ownership interest to a friend. Now, he refuses to do any voting in which a shareholder vote is required. I have the majority. Do I need to worry about him?”
This comes from a car shop in Houston.

NASIR: That’s interesting. Basically, you have someone that’s part of your business that doesn’t want to do anything. B the way, it’s not like voting in your local election where you have to drive somewhere and make sure you’re registered to vote. I mean, this is a very informal process when it comes to – especially in your case – when you have two shareholders – one being a majority and one a minority.
I think the answer is pretty straightforward. Well, maybe not because you say you have a majority. It depends how much a majority you have because, in any vote, there is a quorum required. Usually, in your bylaws – that hopefully was setup by an attorney – usually, the quorum is for a majority of the shareholders to be present. And so, assuming you gave all the notices that are required for any kind of shareholder vote, since you own the majority, then in theory, you don’t have to have them vote to actually conduct a vote itself.
The question is what if the quorum is more than just a majority? What if it’s two-thirds and that person has 40 percent of your business?

MATT: Right – or even worse. What if it’s unanimous? They have to have 100 percent of the shareholders. Then you’re actually going to run into some trouble. I mean, based on how this question is worded, I can’t see the friend having a big piece. I would expect probably 5 percent at the most, I would think.
But I guess I would also question why you even gave the friend ownership interest in the first place. Hopefully they gave you some money or something. I don’t know why else you would just go on the street and start handing out equity in your company to people.

NASIR: Another thing is maybe it’s time to get this person out of your business. If you can arrange a buyback of his shares, or maybe there’s already a provision in there that allows you the option to buy back the shares if the shareholder is not being cooperative and so forth, but that’s an option.
To me, I think there’s a bigger problem. Like you mentioned, what if it’s unanimous? What if three-fourths is the quorum and they have 26 percent? Then, it’s pretty much the same thing if you have a deadlock between a 50-50 partner. The only way to resolve it without the parties themselves agreeing to it is going into litigation. Sometimes, when it’s a small business, that’s not going to make sense because the cost of litigation is prohibitive so, a lot of times, these businesses just kind of go defunct and just dissolve. Sometimes, that happens where you may have a dying business but then someone wants to acquire it and, for whatever reason, some shareholders are trying to block it and because, for whatever reason, it may not be worth to litigate it then the business just dies, unfortunately.

MATT: Do you think he needs to be worried about the hostile minority shareholder?

NASIR: Every minority shareholder has certain minority rights, so to speak. But the more important ones are making sure that they’re given adequate notice to vote. It usually has to do with voting, frankly, when it comes to minority rights and basically not doing certain things with the assets without properly going through the procedures. It’s more procedural but, if that shareholder is not participating, it’s similar to, look, a lot of owned stock and we don’t necessarily show up to the shareholders’ meeting and put our votes in. Now, are we going to, because we’re not participating in that, are we going to hold up a public company to that? No. Same thing if you have this small business for which a small ownership is given to a minority shareholder. There’s only so much that that person can do to throw a wrench in the wheel. Or quit your business.

MATT: I think the takeaway here is just, if you want to question anything, it might be the decision-making to give this person a small interest. But we don’t know all the facts; maybe, at the time, it made sense and things had changed or what-have-you. But that’s your answer.

NASIR: Yeah. Well, this person did mention, “I gave a small ownership interest to a friend.” It wasn’t like a person loaned me money or a friend that loaned me money or a friend that invested or a friend that contributed to my business. It just seems like a friend. Maybe you’re right; maybe there’s something there that should not have been given. I don’t know.

MATT: Yeah, and you raise a good point. Why make friends in the first place? You could just be by yourself.

NASIR: That’s exactly my point. It’s amazing how you can just translate what I’m saying so clearly.

MATT: All right. Well, I think that’s it for this episode.

NASIR: All right. Well, thank you for joining us!
Again, this is Legally Sound Smart Business.
Have a good day

MATT: And keep it sound and keep it smart!

By

The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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Latest Episodes

November 21, 2023

In this episode, Nasir Pasha and Matt Staub explore the legal implications of Artificial Intelligence in the business world. They delve into the most talked-about issue of 2023: AI and its impact on the legal landscape. Although AI isn’t necessarily a new topic, it has many unanswered questions in the legal world. Nasir and Matt…

July 12, 2023

In this episode, Attorney Nasir Pasha and Attorney Matt Staub delve deep into the complexities of mass layoffs and offer valuable insights, real-life examples, and practical advice to employers grappling with the aftermath of such challenging situations. Nasir and Matt emphasize the critical importance of effective communication when executing mass layoffs. They stress the need…

January 9, 2023

As the COVID-19 pandemic swept across the globe, businesses scrambled to adapt to the new reality it presented. In this blog post, we dive into the case of Goldman Sachs, a financial services giant, to examine their response to the crisis and the lessons other businesses can learn from their return-to-office strategy. From prioritizing employee…

October 28, 2022

Full Podcast Transcript NASIR: Finally, my two favorite worlds have collided – both the law and the chess – right here at Memorial Park in Houston, Texas. Windy day. We have some background noise – ambient noise. What are the two worlds that collided? Well, Hans Neimann has sued Magnus Carlsen for defamation in one…

September 26, 2022

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

July 7, 2022

Whether you are buying or selling a business, the transaction goes through the same steps. However, they are viewed from different perspectives. Sellers may not want to fully disclose all the blind spots while Buyers will want otherwise. Nasir and Matt battle it out in this Buyer vs. Seller to determine who has the advantage!…

May 12, 2022

When it comes to Restrictive Covenants, employers are fighting to keep their company safe while employees may use them to their advantage. Keep listening to find out if the Employer or the Employee wins this battle. Round 1: Trade Secrets A company’s trade secrets encompass a whole range of information and are one of the…

February 14, 2022

The Supreme Court rejected the nation’s vaccine mandate. Businesses with 100 or more employees are NOT required to have their employees vaccinated or go through weekly testings. However, this policy remains in effect for health care facilities. In this episode of Legally Sound | Smart Business, the team sat down to discuss their thoughts on this ruling.

December 1, 2021

In this episode of Legally Sound | Smart Business by Pasha Law PC, Nasir and Matt cover the Business of Healthcare. There is more to the healthcare industry than just doctors and nurses. Many Americans have health insurance to cover their yearly needs, but most Americans are not aware of what really goes on behind…

October 12, 2021

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image….

September 28, 2021

What is a Non-Disclosure Agreement, and when do I need one? In this episode, Nasir and Matt shares why you need to use Non-Disclosure Agreements, basic facts about NDA’s, and discuss about the infamous Jenner-Woods story. Having the right Non-Disclosure Agreement in place not only protects you and your business, but it also makes the…

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

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