Do you know what a legal land mine is? A legal land mine is one of those things that you don’t even know you need to be aware of—but stepping on one can blow up and destroy your company. You must be aware of the things that can damage your company so that you can be on the lookout. You’ve put your heart and soul into building your business; now it’s time to put in place the proper protection to ensure that it runs smoothly. Let’s examine whether your company could survive a legal land mine.
Karalynn Cromeens’ Personal Horror Story
In this blog, we will walk you through a terrifying personal example from Karalynn Cromeens, one that almost took out her family business in its early stages because they did not know any better. Karalynn recalls:
When I was still in law school, my husband and I had started a masonry material supply business, and the company quickly picked up. Before we knew it, we needed to hire employees. One of the first to be hired was a driver to deliver the materials. Drivers for the size truck we needed required a Commercial Driver’s License, so we put an ad in the paper for this specific type of driver. We hired the third person who showed up for the interview, and he started work immediately.
He never filled out an application, and we had absolutely no process to set up a new hire or start an employee file, and certainly did not have an employee handbook. This employee was a hard worker, showed up to the job early every day, and did great with deliveries. Then one day, we got a phone call that changed the course of our business forever. Our employee had been in an accident with our company delivery truck.
The woman he hit had minor injuries and was taken to the hospital, but the most damaging part was that our new driver did not have the proper license. My heart sank. All I could think was that it was over. We had just started the company, we had no money, and how could we pay for any of this? Then a miracle occurred: our insurance covered the claim! You can bet your ass we immediately spent the money, got an employee handbook, and set up a process to verify all future employees. We were one of the lucky ones.
If insurance had not covered the claim, we would have had to pay more than $100,000 in damages. That large expense would’ve ended our business. They could have easily not approved our claim because our driver didn’t have the proper license to operate that type of vehicle. We were completely unaware of the liability because we didn’t have a proper hiring process or an employee manual laying out our policies, procedures, and a proper safety plan.
Over the years, I have seen plenty of companies that have not been so lucky and have gone out of business because they hit a legal land mine. Don’t learn the hard way; don’t test the waters.
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Legal Land Mine Construction Checklist
Based on our experience in business and Karalynn’s experience as a construction attorney, we have put together a legal land mine checklist of things you need to be protected from as a business in the construction industry.
- You must be incorporated.
- You must know the difference between an employee and a subcontractor.
- If you have employees, you must pay them properly.
- If you have employees, you need a new employee intake process and an up-to-date employee handbook.
- If you have subcontractors, you must have a written subcontract.
- You must have insurance: drafted specifically for your business.
- If your customers are signing your contract, it needs to protect you, be in plain English, be something both you and your customer can understand, and be specific for your state.
- If you are signing someone else’s contract, you need to have a process in place to have that contract reviewed and/or negotiated.
- You must have a consistent collection strategy that incorporates the lien laws of your state.
- Know how to “CYA” (Cover Your Ass!)
The best way to survive a land mine is to never hit one at all. Karalynn was one of the lucky ones. Do you think your company could survive a legal land mine? What are your company’s pain points? Where are you struggling? Contact us today so we can schedule a one-on-one call to talk through all these areas for your specific business and get a plan together to make your company land mine-proof. Be proactive and think preventatively—your company depends on it!