@650 CHAP 9 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� � EMERGING ECONOMIC TRENDS AND LEGAL ISSUES � 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� All businesses today, of every size and type, are being buffeted by the ever-accelerating rate of change in the business, economic, social and political environment in which they must operate. Part of the reason, of course, is a hyperthyroid Congress, along with 50 equally overzealous state legislatures and countless government agencies who spew out reams of new laws and regulations all year long, in ever greater volume....Which you, as a business person, are expected to understand and apply, not to mention simply knowing about the new laws' existence. While we update this program regularly, four times a year, in order to keep our users as much abreast of the constant ebb and flow of tax, legal and other changes as possible, we still find each time we revise it that large portions of the material have already been rendered obsolete and use- less by rapidly unfolding law changes and other events that have transpired since our last update three months earlier. But we can't blame all of the disorienting changes that are occurring on our lawmakers, because it seems that life in general on this small planet is becoming more complex and unpredictable by the day. Accordingly, while we possess no crystal ball, the following section is provided to give you, as a business owner, a brief overview of some of the developing trends in the bus- iness environment that have already arrived, or that appear to us to be just over the horizon. (We have already cov- ered in this edition the sweeping new rules that have been enacted under the Americans with Disabilities Act -- rules that phase in over a number of dates in 1992, 1993 and 1994, so we refer you to the appropriate portions of this program, or, for a deeper discussion of those rapidly approaching deadlines, to Chapter 5 (Sec. 5.11) of our companion book STARTING AND OPERATING A BUSINESS IN @STATE.) 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� 쿟HE CHANGING ECONOMIC ENVIRONMENT--AS WE SEE IT� 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� Changes in the global economic structure, in the wake of the collapse of communism and the Soviet Union and the shift toward more efficient, free-market oriented economies in places as far apart as Poland and Argentina (not to mention the vast changes going on in Mexico and many of the other developing countries) are creating a world that will soon look very different from the one we have gotten accustomed to since 1945. While most of us may applaud many of the changes going on abroad, the net result seems to be the creation of a far more competitive (and chaotic) world, one where U.S. businesses, even relatively small ones, are running up against increasingly intense international com- petition, and where many firms that never gave a thought to export markets before will find that they have to get involved in doing business overseas if they wish to con- tinue as viable operations in the globalized economy. Furthermore, even if your business is of a type or size that seems to make foreign competition seem irrelevant, you are still unlikely to completely elude its indirect effects, such as: . Low labor rates abroad that are causing the per- manent shutdown of many large and small U.S. manufacturers, who can no longer meet the com- petition from Japan, Mexico and elsewhere, or who move their operations overseas to places like Indonesia or Thailand, where wages are still low. This trend seems likely to continue, with a rippling effect throughout our economy, adversely affecting many of the small firms that either are suppliers to large U.S. manu- facturers or whose service operations (restaur- ants, retail shops and the like) will be dras- tically affected as larger companies close plants and make massive, and in most cases per- manent, layoffs of thousands of employees. This is a rude fact of modern life of which almost anyone doing business in the so-called "Rust Belt" is already acutely aware, and which the recession that began in 1991 is rapidly introducing to the parts of the country that have heretofore escaped the brunt of the effects of increased foreign competition. . To survive in the coming decade, small firms will increasingly need to streamline their operations, increase their flexibility (such as by using part- time and temporary personnel more, or outside contractors), become more efficient than ever, and, above all, increase the quality of the ser- vice they provide or the goods they produce. Firms that continue to do "business as usual" in the 'Nineties are likely to go the way of the dinosaurs, passenger pigeons, and American VCR manufacturers. . Increasing automation, both here and abroad, is also likely to have a dramatic effect on employ- ment and competitiveness in this country and throughout the world, spearheaded, as usual, by Japan, where whole factories already operate all night long in virtual darkness, with no one there to run them but a lone night watchman and hordes of whirring robots quietly running up and down the aisles, picking up finished items and drop- ping off parts for other robots to assemble. Automation has been a factor in replacing blue collar labor for decades now, but with the recent and continual explosion in computing power and sophistication, vast numbers of middle managers and other white collar workers are being dis- placed. With the advent of "expert systems" and "artificial intelligence" (such as this computer program) which are still in their infancy, but rapidly coming into their own, it is difficult to say whose job, if anyone's, will be safe in a few years. Or whose business, for that matter. Anyone or anything may become obsolescent over- night in the new economic environment we are rushing into. While the ability to replace workers with compu- ters or computer-driven machinery may be very attractive, from a cost-savings standpoint, to the individual employer, its societal effects are hard to predict, and may prove to be very adverse to the overall business environment, or at least to large segments of business that fail to adapt rapidly enough. Things are moving so fast right now in the field of information processing, that it is difficult to visualize how the world and our own economy may look even 5 or 6 years from now. However, it seems clear that not everyone who is laid off can go to work flipping hamburgers at McDonald's -- and in Japan there are already drive-in fast food res- taurants that have replaced the order-takers with smiling, friendly robots with voice-recognition capability, machines that take a customer's order over the intercom and fill it automatically, with- out need of a teenager. . Largely in response to ever-fiercer foreign compe- tition, employer "downsizing" continued apace in 1991, up sharply from 1990. According to an American Management Association survey for the year ending in June, 1991, 55.5% of the organiza- tions polled engaged in downsizing and 60% of those firms had also made significant staff cut- backs in the previous year, suggesting that firms are now cutting even deeper and deeper. The sur- vey revealed that the cuts were heaviest on the Pacific Coast, averaging 12.6% of the workforce among firms reporting downsizing. Middle manage- ment jobs, which are estimated to make up some- thing like 5% to 8% of the total work force, accounted for over 16% of the jobs cut in the 1991 survey period. Even with the economy seeming to pick up a bit near the end of 1992, massive corporate layoffs continue unabated. . While much of this change seems frightening to business people, as well as to their employees, the hundreds of thousands, perhaps even millions, of skilled management and white collar workers who will be given their pink slips and severance packages by "downsizing" corporations over the next few years may also give rise to fantastic opportunities, as many of these people are likely to start their own, smaller businesses, due to the permanent disappearance of so many middle management or automatable jobs. Many of them may even keep on working for their old firms, but as independent contractors, or outside consultants. In addition to enriching the overall business en- vironment by creating a major upsurge in the for- mation of new, small, and flexible business enti- ties, firms that cater to the needs of other small businesses may find the coming decade to be one of explosive growth and unparalleled opportunity. @IF174xx] This should create considerable opportunities for @IF174xx] almost every kind of firm that provides services @IF174xx] to businesses, such as @NAME. @IF174xx] One of the most predictable trends, which is al- ready well under way, is the explosive growth in "telecommuting," where more and more people work out of their homes, communicating with their clients or employers by use of personal compu- ters, modems, faxes or multiple phone lines. Al- ready, some employers, like certain government agencies in Washington, D.C., are taking an inter- mediate step by setting up satellite telecommuting offices in suburban areas. By going to these nearby satellite offices, equipped with computer workstations, many workers can avoid long and ar- duous commutes to downtown offices on most days, by instead piping their work product electronical- ly to the main office. Obviously, this has serious implications for owners of urban office buildings as well as for businesses that serve those areas. A 1991 survey by Link Resources Corporation, a research and consulting firm, showed telecommuting has become a major factor in the economy, almost overnight. The survey estimated that company em- ployees who work at home part- or full-time in- creased by 38% in 1991, over 1989, to 38.4 million individuals, most of whom are believed to be "telecommuting." If accurate, this indicates that an economic and societal change of astounding pro- portions is under way. The survey apparently did not even take into account home-based businesses, which are also believed to be proliferating at truly startling rates. But there's an old saying that, "It's an ill wind that blows no one some good." The monumental changes in the marketplace that are already taking place will surely create tremendous new business opportunities, as well as problems, in the coming years. These should include the more obvious ones such as sales of more fax machines and other equipment and supplies for home office use, as well as less obvious opportunities like res- taurants (other than pizza parlors) that deliver meals to busy home workers, and doubtless many other novel kinds of services and products -- things that no one has even dreamed of yet. 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� � PENDING TAX LAW CHANGES � 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� The abrupt plunge in the U.S. economy in late 1991 and through most of 1992 is likely to lead to significant tax law changes this year, particularly with a new Democratic president in the White House and a Democratic majority con- trolling both Houses of Congress, as the new political team to jump start a flagging economy, or at least do something, harmful or otherwise, to give voters the impression that they are working to get us out of the economic doldrums. Some of the major possible tax changes you should be looking out for, which may have already passed by the time you read this, would include the following: . MANDATORY HEALTH CARE COVERAGE. This is likely to be the biggest item on the entire legislative agenda in Congress in 1993, as the battle over what to do about the increasing inaccessibility of medical care to large segments of the population gets fought out on Capitol Hill. Most of the legislative proposals that have been floating around Congress for the last year or two would involve a combination of: (1) Requiring that most, or all employers, provide some level of medical coverage for their full-time employees; and (2) Additional payroll taxes to finance the cost of government-provided health care for individuals outside of the work force. In some of the proposals, the employer would be given a choice of paying a hefty tax for national health insurance, or else providing coverage for employees; other proposals would require both, which could be a very difficult financial burden for many small businesses, even those that already provide medical insurance for their employees. In a related issue, close to the hearts of all self- employed individuals, some of the proposals would also (finally!) put self-employed persons and S cor- poration shareholder-employees on the same footing as incorporated business owners, by increasing the deductible amount of medical insurance for such business owners from 25% of the amount incurred, to 100%. However, this is still iffy, since such fairness would cost the government considerable tax revenue. Latest proposals seem likely to con- tinue to restrict this deduction to 25%, but to at least reinstate it retroactively, back to July 1, 1992. @IF120xx] PLANNING POINT FOR @NAME: @IF120xx] 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴커 @IF120xx] 쿞ince your firm is not now incorporated, you are very� @IF120xx] 쿹ikely to be a self-employed person who was unable to� @IF120xx] 쿭educt any of your medical insurance premiums for the� @IF120xx] 쿹ast half of 1992. If so, and the deduction is retro-� @IF120xx] 쿪ctively reinstated by the Clinton Administration, you� @IF120xx] 퀂hould file an amended tax return for 1992 and claim� @IF120xx] 쿪 refund attributable to the additional medical insur-� @IF120xx] 쿪nce deduction, for payments made in the last 6 months� @IF120xx] 쿽f calendar year 1992.) � @IF120xx] 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴켸 @IF120xx] . CAPITAL GAINS TAX RELIEF. The U.S. is one of the few countries that taxes capital gains at nearly the same rate as other income. Many of the fastest growing economies in the world don't tax capital gains at all, and much of the available evidence indicates that reducing capital gains rates in the late 'Seventies and early 'Eighties had a remarkable effect on stimulating capital investment and boosting economic growth in this country (and that raising the capital gains rate in the late 'Eighties had the op- posite effect). Perhaps the message will finally seep through to Congress this year, and we may well see capital gains cuts if the recession gets severe enough to induce an adequate level of panic among our courageous elected representatives. After all, their job security will be at stake in the next election, too. . OTHER INCENTIVES. Look for various other business tax incentives to be resurrected, such as restoring the investment tax credit, accelerated depreciation or new jobs credits. Since the government has a history of taking such tax "gifts" back after a year or two, you may want to act fairly quickly to find out more about and take quick advantage of any such capital investment incentives as may be enac- ted, before they are taken away again. 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� 쿚THER LEGAL TRENDS AND NEW OR PENDING LEGISLATION� 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� SHARED WORK PROGRAMS A program that has been adopted in a number of states, and which appears to be growing in acceptance, is the "shared work" program under state unemployment insurance laws. Es- sentially, what the shared work programs do is allow em- ployees to collect full unemployment benefits while still working a minimal number of hours per week. This not only benefits the employee, but can also be very helpful in the case of an employer who, due to the recession or other bus- iness difficulties, has to temporarily cut back the hours it can employ workers for a period of time, until business conditions improve. In states where there is no such prog- ram, it is often necessary to lay a worker off entirely for him or her to collect unemployment benefits, which will usually be more palatable to the worker than just working a few hours a week and being ineligible for benefits. Under the shared work programs, the employer can often re- tain a good employee during a temporary slow period, while the employee supplements his or her unemployment benefits with a modest amount of wages from working part-time, which together may be sufficient to keep the individual in ques- tion from taking a permanent position elsewhere. Then, if things improve in a few months, you may be able to restore the cut-back employee to full-time status again, rather than lose a good and already trained worker to another company because of the temporary layoff. @IF202xx]PLANNING POINT FOR @NAME: @IF202xx]旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� @IF202xx]쿟hese shared work programs make a lot of sense for every-� @IF202xx]쿽ne, so if your firm is getting to a point where you are� @IF202xx]쿬onsidering having to lay off good employees whom you do� @IF202xx]쿻ot want to lose, be sure to contact your local state un-� @IF202xx]쿮mployment office to find out if your state has adopted� @IF202xx]퀂uch a program. If so, you may be able to keep the people� @IF202xx]쿽n part-time until business picks up again. Good people� @IF202xx]쿪re hard to find, and you don't want to lose them. � @IF202xx]읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� @IF000xx]Since you do not currently have any employees, these shared @IF000xx]work programs may not be of immediate interest to you, but @IF000xx]could be in the future, if or when you have built up a work @IF000xx]force at @NAME. @IF000xx] NEW CIVIL RIGHTS LAWS The new federal Civil Rights Act of 1991 (CRA91), which immediately became effective upon enactment on November 29, 1991, is making life a lot more complicated for all covered employers in the area of employment practices. The new law's most controversial aspect will be in the "disparate impact" cases, where a company's employment practices, although not shown to be intentionally discrim- inatory, have a "disparate" (unequal) impact on employment of protected groups. For example, if a company is located in an area where 80% of the population consists of Native Americans, but only 5% of its employees are Native Americans, there may be grounds for a "disparate impact" discrimination claim against the employer, under prior civil rights law as well as these new CRA91 provisions, regardless of employer intent. The huge difference that CRA91 will make in these "disparate impact" cases is that under prior law, the Supreme Court has held that the burden of proof is upon the employees who allege discrimination, to identify a particular business practice of the employer that resulted in the disparity. Under the new law, by contrast, the employees are relieved of this burden of proof if they can simply show that the employer failed to select an alternative employment prac- tice (such as hiring quotas) that would not have had a "dis- parate impact" -- that is, that would not have had a nega- tive impact on the minority or other protected group. In- stead, the burden of proof in these cases is now shifted to the employer to show that the challenged employment prac- tice (regarding hiring, promotions, pay, or other aspects of employment) is "job-related for the position in question and consistent with business necessity" (whatever the courts ultimately decide that means). It is the vagueness of this part of the new civil rights law that President Bush initially expressed concerns over, arguing that many firms would find it easier to simply adopt minority hiring quotas than to attempt to prove the "business necessity" defense in court. There are no easy answers as to what policy a company should adopt in this regard, but it does seem reasonably clear that the only safe way to avoid discrimination suits under the new law may be to adopt some sort of quota system, despite the issues of unfairness and possible employee morale problems that the use of hiring quotas sometimes entails. CRA91 also considerably expands the monetary damages that can be awarded in cases of intentional discrimination. Be- fore, an employer who lost such a discrimination suit was usually liable only for back pay, front pay, lost benefits, attorney's fees and court costs. Now, under CRA91 (which may even be retroactive in effect), compensatory damages may also be allowed in addition to other monetary damages. CRA91 also overrides a Supreme Court case that had limited fees recoverable by a claimant for expert witness fees to the flat $40 limit for "fact" witnesses. In light of the foregoing changes in the Civil Rights Act of 1991, the odds, as well as the costs, of losing a discrimi- nation action have been increased significantly for employ- ers, and the new rules will make it much more attractive for plaintiffs to file such suits, both for claims of inten- tional discrimination and in "disparate impact" cases. Em- ployers can now expect a great many more such claims to be filed, as a result. @IF015xx]Thus, however fair you may feel your firm's employment prac- @IF015xx]tices are, your firm is large enough to be subject to the @IF015xx]Civil Rights Act, so this may be a good time to consult an @IF015xx]attorney who is familiar with employment discrimination mat- @IF015xx]ters to find out what, if any, steps you may need to take to @IF015xx]protect your business from liability in this area, since the @IF015xx]amount of such litigation is going to expand significantly. @IF015xx]Because your company has over 14 employees, almost all of the @IF015xx]Civil Rights laws apply to @NAME. @IF015xx] @IF100xx]This includes EEO reporting requirements, since you have 100 @IF100xx]or more employees. @IF100xx] @IF014xx]NOTE: Most of the foregoing problems don't apply to your @IF014xx]business at present, since most of the Civil Rights laws do @IF014xx]not apply to firms that have fewer than 15 employees, such @IF014xx]as @NAME. @IF014xx] @IF001xx]You have only one employee, so with very limited exceptions, @IF001xx](such as being a company with federal contracts), you don't @IF001xx]have to worry much about Civil Rights regulations impacting @IF001xx]your business. @IF000xx]You have no employees, so the above discussion will only be- @IF000xx]come relevant to you when your business expands and begins @IF000xx]hiring employees. @IF201xx]NOTE: Any firm which has more than one employee (you have @IF201xx]@EMP) is subject to the provisions of the Equal Pay Act. SEXUAL HARASSMENT IN THE WORKPLACE The Clarence Thomas-Anita Hill drama, which replaced after- noon soap operas and kept millions of glassy-eyed Americans glued to the television tubes in their living rooms for several days in the fall of 1991, has brought the issue of sexual harassment to a new and heightened level of aware- ness among the public. While sexual harassment as such is not mentioned anywhere in Title VII of the federal Civil Rights Act, the Equal Employment Opportunity Commission (EEOC) and the courts have long accepted such harassment as being illegal and discriminatory. In addition, many states have adopted specific laws banning sexual harassment. Because this is now such a highly topical issue, many em- ployment law experts expect an upsurge in litigation invol- ving sexual harassment claims, so it behooves you to take a fresh look at your firm's policies regarding this subject. For a discussion of the federal sexual harassment law and steps you can take to protect your firm from being sued for failing to take proper steps to prevent such acts from oc- curring, see the index item (using the "INDX" Main Menu selection in this program) on "SEXUAL HARASSMENT," or refer to Chapter 5.8 of our companion book, STARTING & OPERATING A BUSINESS IN @STATE. WRONGFUL TERMINATION OF EMPLOYEES This is another area of growing importance in the area of the relationship between employers and employees. For a great many years, it was generally the rule that an employ- er was free to fire employees "at will," without needing any good reason to do so, unless there was some sort of formal contractual arrangement or collective bargaining agreement. This situation has begun to change in recent years, mainly as a result of a number of revolutionary court decisions in California, holding employers liable for damages for "wrongfully" discharging employees. Ini- tially, such cases tended to involve extreme and egregious situations, where employers fired "whistle-blowing" employ- ees who threatened to report fraudulent activities of their employers, secret dumping of toxic wastes, or the like. However, as the legal concept of wrongful termination has grown to be more accepted, and begun to spread to courts in states other than California, the scope of what constitutes "wrongful termination" has begun to expand, and at this point it is difficult to say how far this new "right" will be extended in the future. One indicator that this idea is spreading is the recent ap- proval, by the National Conference of Commissioners on Uniform State Laws, of a Model Employment Termination Act. Under the Model Act, which is intended to set up guidelines for state legislatures to adopt, an employer would not be able to terminate an employee without good cause if the employee has worked for the employer for at least one year and for at least 20 hours a week during the 26 weeks prior to termination. "Good cause" would mean: . a reasonable basis for termination, in light of such factors as the employee's duties, responsibilities, conduct and job performance, or . an employer's good faith exercise of a business judgment relation to economic or institutional goals. While it is unclear, as yet, to what extent the states will rush to adopt such legislation, or to what extent courts will expand the concept of wrongful termination, but it seems fairly certain that, in the future, employers are go- ing to have to become increasingly careful about document- ing their reasons for firing any employee. The days when you, as an employer, could choose to fire an employee just because you got up on the wrong side of the bed in the mor- ning may be coming to an end soon, at least in a number of states. PROPOSED STRIKER REPLACEMENT LAW Another piece of legislation that was introduced in Con- gress in 1991 but which didn't pass was the Worker Replace- ment Act. Since it has strong AFL-CIO backing, it is by no means dead, and its passage could be extremely damaging to small employers, so this is a hot issue you may want to write or call your Congressman about before it is too late. The legislation, as it was proposed in 1991, would prohibit employers from permanently replacing workers who go on strike, and thus would fundamentally alter the balance between unions and employers that has been in effect since New Deal days, tilting the balance strongly in favor of unions. The law, if passed, would require that an employer refrain from hiring permanent replacement employees during a strike, and the employer would have to give the strikers their jobs back when they are ready to return to work after the strike is over. At present, companies can fire workers who go on strike over economic issues, such as wages, but not if the company re- fuses to bargain in good faith with the union, or if the walkout stems from other acts of the employer. The pro- posed law would extend the firing ban to strikes over eco- nomic issues, which are usually the reasons for labor walk- outs. By extending this protection only to unionized wor- kers (as the House version of the bill, H.R. 55, would do), such a law would give unions tremendous clout in organizing the workers of small companies, since they would be able to offer a major advantage that is not available to non-union workers. Finally, the proposed legislation would permit any two wor- kers of a non-unionized small business to walk off a job in protest of working conditions, in effect giving them the benefits of a union without having to go through the pro- cess of a certification election to establish a collective bargaining unit. This provision could also prove to be a major burden on small, non-union employers. Although this worrisome bill didn't get enacted in 1991 or 1992, it is almost certain to be on the front burner in 1993, with the threat of a presidential veto by President Bush no longer a factor. If it passes, it will be a major blow against business in general, and against small businesses, in particular, who have usually been able to maintain good enough relationships with their workers to avoid becoming unionized. If you are not already a member of the National Federation of Independent Businesses ("NFIB"), which con- sists of some 600,000 mostly very small businesses, this may be a good time to do so and support their efforts to block this crippling legislation, which would shift tremen- dous power to the large labor unions, disturbing the rela- tive balance between labor and management that has existed since the 1930s. INCREASING IMPACT OF ENVIRONMENTAL LEGISLATION ON SMALL BUSINESS A recent article in a legal publication, The California Lawyer, reported that, despite hard economic times in the legal profession lately, the demand for lawyers in the field of environmental law is expanding beyond the capacity of many law firms and companies to fill such legal posi- tions. While this may be wonderful news for the legal profession, at a time when even law firms have been forced to make significant layoffs, it is most assuredly NOT good news for the typical small business. The reason for all the new demand for environmental lawyers is that this is an area of the law that is already begin- ning to have a huge impact on the way many companies do business, and seems clearly destined to exert an even greater impact in coming years. The Clean Air Act of 1991, for example, will have a dispro- portionately large effect on small businesses, particularly because they are small, and because their economies of scale are not as great; thus, they will tend to be hit much harder by the costs of the new environmental restrictions. All sorts of small firms, such as bakers, dry cleaners, body shops, painters, service stations, and printers are going to be required to purchase expensive new technology and machinery to reduce emissions of air pollutants, if they wish to remain in business, once the Clean Air Act amendments go into full effect. For example, gas stations will have to install expensive vapor-recovery devices on each gas pump, which can cost about $30,000 for a typical gas station, plus incur sig- nificant ongoing maintenance costs. Some states, partic- ularly California, which have already required technology such as vapor-recovery devices for a number of years, will be less impacted by many of the new federal Clean Air Act provisions, but businesses operating in extremely smoggy areas such as some parts of California, Houston, Texas and elsewhere, will soon be subject to draconian environmental rules, imposed by local government, if those areas are to achieve compliance with federal clean air standards in the next few years, as federal law requires they must. While it is beyond the scope of this program to go into great detail on increasing environmental restrictions, readers should be aware that almost every business in urban areas of America may need to consult an environmental law specialist at some time in the next few years. Penalties for violations tend to start at levels like $25,000 a day under many of the environmental statutes, so this is an area where you can't afford even a brief slip-up. For a general overview of some of the major federal envir- onmental laws your business may be subject to already, in addition to the latest Clean Air Act amendments mentioned here (some of which won't go into effect for up to 20 years), refer to Chapter 9 of our book, which is the com- panion to this software, STARTING AND OPERATING A BUSINESS IN @STATE.) PROPOSED PATENT LAW CHANGES In the U.S., for over two centuries, it has been the law that the person who could prove that he or she was the first in time to INVENT something was the person entitled to patent it, even if someone else filed for the patent first. However, this well-established rule of law may be about to change, it appears, as we are under pressure from most foreign countries to conform to their patent rules, which protect the first person to FILE for the patent. Bills have been introduced recently in both the House and Senate that would make this revolutionary change in U.S. patent law if enacted, so that we, too, may soon be on a "first to file" basis of granting patents. If this new rule on patents becomes law, it will make it much more important for legally unsophisticated inventors to be aware of the "first to file" requirement, since they may no longer be able to protect their patent rights simply by documenting evidence of when they came up with their in- vention. The ground rules may be about to change, and if they do, inventors will have to learn that the only safe way to protect their patent rights will be to file for a patent as soon as legally and practically possible. Ig- norance of the basic rule of the patent law will no longer be a luxury an inventor can afford if this legislation passes. For more information on patents, and on the pending legis- lation, use the "INDX" or "KEY" menu selections on the Main Menu, under the item listing for "PATENTS" or "COPYRIGHTS" or "TRADEMARKS". STATE UNITARY TAXATION OF WORLDWIDE INCOME If your firm does business overseas as well as in certain states (particularly in California), you are undoubtedly already well aware of the worldwide "unitary" method of tax- ing your firm's worldwide profits in those states. What you may not be aware of, is that legislation is pending in Congress that would ban such worldwide "unitary" taxation by the states. If such legislation passes, it may reduce state income and franchise taxes on a number of interna- tional companies doing business in the states with such laws. If yours is such a company, doing business overseas as well as in any such state, keep an eye out for news of any such legislation passing, because it is possible that you may be able to file for refunds of state taxes paid in prior years, if the statutes of limitations for those years have not yet expired. In short, you may need to move quickly if such legislation is enacted in the Congress, to take full benefit of it. VIDEO DISPLAY TERMINALS Until recent years, "white collar" workplaces, or offices, generally created very little liability exposure for em- ployers, with regard to hazardous working conditions. This, too, is beginning to change. In recent years, there have been an increasing number of lawsuits filed by employees in connection with hazards of working long hours on computers; and in late 1990, the city of San Francisco adopted an ordinance that provides regu- latory safeguards for workers using video display terminals (VDTs) for four or more hours per shift. Apparently, Los Angeles and a number of other city and state governments around the nation are now considering similar laws or ordi- nances, since use of computers in the workplace is now a universal phenomenon, and because a number of threats to employees' health have arisen in connection with the heavy use of computers. These range from excessive exposure to radiation emitted by VDTs to "carpal tunnel syndrome," a now common and debili- tating nerve entrapment disorder that can cause severe pain and weakness in the wrist, as a result of too many hours spent repetitively plunking away on a computer keyboard. Laws regulating VDTs are likely to begin popping up all over the country in the near future, and offices that don't pay attention to ergonomics, the study of equipment design to reduce workplace injuries, may well become sitting ducks for lawsuits or fines in the near future. While most legal claims by employees regarding VDT usage have been imposed on workers' compensation insurers thus far, employers may become directly liable if they participate actively in the design of computer systems or workstations that allegedly caused the injury to an employee, or if new state legisla- tion removes such claims from the workers' compensation system and places financial responsibility directly upon employers. @CODE: CA Employers in San Francisco should be aware of the San Francisco ordinance (Ordinance #4-5-90) that was passed in December of 1990, regulating use of video display terminals (VDT's) in the workplace. The ordinance contains safe- guards designed to see that workers using VDT's are provid- ed adjustable workstations, routine breaks and education and training on safe of usage of VDT's. It applies to em- ployers located or doing business in San Francisco who have at least 15 employees 20 weeks a year, and to those employ- ees expected to use a VDT four hours or more per shift. A number of municipalities in California and elswhere are said to be considering similar ordinances. @CODE:OF