Picture of a stethoscopeWe recently posted an article discussing Senate Bill 417, which revised Indiana’s statute on noncompete agreements between physicians and their employers, Indiana Code 25-22.5-5.5. A physician in northern Indiana may be the first to attempt to use the statute.  The case is Lankford v. Lutheran Medical Group, filed in Allen County Commercial Court.

Dr. David Lankford was employed by Lutheran Medical Group, LLC to work at Lutheran Hospital in Fort Wayne as a pediatric intensivist treating patients in its pediatric intensive care unit. In addition to pediatric intensivists, Lutheran employed neonatologists to treat patients in the neonatal intensive care unit and pediatric hospitalists to treat patients elsewhere in the hospital.

According to Dr. Lankford’s complaint, in October 2022, Lutheran eliminated the jobs of the hospitalists and required the intensivists to assume their responsibilities, in addition to their previous responsibilities in the pediatric intensive care unit. In December, Dr. Lankford notified Lutheran that he believed the increase in his responsibilities constituted a breach of his employment contract. He resigned in January 2023.

Non Profit. Magnifying glass, stationery on the office desk.The answer to that question is remarkably simple but surprising to many: No one owns a nonprofit corporation. To understand why that is so, let’s compare nonprofit corporations to for-profit or business corporations.

Business Corporations

Imagine you buy 100 shares of common stock in a corporation on the New York Stock Exchange.  Congratulations!  You’re a shareholder.  Your 100 shares of stock give you specific economic and noneconomic rights.

Picture of a stethoscopeA few months ago, we wrote an article about a bill in the Indiana General Assembly, Senate Bill 7, that would essentially ban noncompete agreements[1] between medical doctors and their employers. The General Assembly enacted the bill and Governor Holcomb signed it, but only after considerable revision. The ban was narrowed, but remaining covenants not to compete will be enforceable less often.

Summary

After July 1, 2023:

iStock-1288715721-300x181Generally, an Indiana limited liability company that has no members is dissolved. Ind. Code § 23-18-9-1.1(c). (For an interesting case from Alabama involving the dissolution of an LLC for lack of members, see our Indiana Law Blog article, Family Businesses:  Succession Planning for LLCs.) Although that provision is in the chapter entitled “Voluntary Dissolution,” it is really not voluntary at all. It is really a statutory dissolution that occurs automatically, and it can be triggered by several different events that result in the dissociation of a sole, or last remaining, member.

There are, however, two exceptions to the statutory dissolution of an LLC with no members. First, the LLC will not be dissolved if the operating agreement provides specifically for the admission of a member after the dissociation of a sole or last remaining member, and a member is actually admitted under that provision within 90 days of the first date the LLC had no members. In our experience, very few operating agreements contain such a provision.

The second exception applies if the reason the LLC has no members is the death of the sole or last remaining member.  In that case, the LLC is not dissolved if the operating agreement provides for the member’s personal representative, or the personal representative’s designee, to be admitted as a member and that person is admitted within 90 days of the member’s death.  See Ind. Code 23-18-6-5(a)(4).  Again, it is safe to say that few operating agreements have such provisions.  Moreover, even if one exists, there is a significant possibility that no member will be appointed before the 90 day window closes.

A picture of the Chicago Picasso

The Chicago Picasso in Daley Plaza, copyright 2023 Harshman Ponist Smith & Rayl

Lawyers and others often say that “may” is permissive and “shall” is mandatory.  By that, they mean that when a statute says a person “may” do something, that person has the discretion to do it or not, but when a statute says a person “shall” do something, the person has no choice. Or, as the Drafting Manual for the Indiana General Assembly puts it:

To create a duty, say “shall.”

Update:  Senate Bill 7 dealing with physician noncompete agreements was signed into law by the governor but in a form that differs significantly from the originally introduced version described in this article.  Click here for a discussion of the final version of Senate Bill 7 that goes into effect on July 1, 2023.

Covenants not to compete, or noncompete agreements, between employers and employees prohibit an employee from competing with the employer after the employment relationship ends. Noncompete agreements are common in some industries or professions, particularly those that rely heavily on proprietary information or ongoing relationships with clients or customers.

Noncompete agreements are are part of a larger category of contracts, those that restrain the freedom of trade in one way or another. For covenants not to compete, the restraint is the restriction of a person’s right to make a living. If the restrictions are too severe, they can run afoul of public policy or federal or state antitrust statutes, in which case they are unenforceable.

istockphoto-477779010-170x170-2-150x113From a legal perspective, auctions are interesting transactions.

Offer and acceptance in most sales

Let’s start by discussing an ordinary contract for the sale of goods, one not created at auction. Law students learn in their first year that the formation of a contract requires, among other things, offer and acceptance. Generally speaking, an offer must include all the essential elements of a contract and may include other terms. An acceptance must be the “mirror image” of the offer. That means, to form a contract from the offer, the person to whom the offer is made must accept it exactly as presented, without changing any of the terms or introducing new ones. A purported acceptance that changes, removes, or adds terms is not an acceptance at all. It is a rejection of the offer and the extension of a counteroffer.

The limited liability company is a relatively new form of business entity, with most state statutes adopted in the 1990s. In just a few years, they overtook the corporation as the most common structure for new businesses.  A reason for the LLC’s popularity is that the it combines some of the most desirable aspects of corporations with some of the most desirable aspects of partnerships, but that blending of characteristics can also be a source of confusion.  For example, LLCs work much like partnerships when it comes to ownership rights, but people often incorrectly assume ownership that LLC interest is analogous to corporate stock and that LLC membership is analogous to being a corporate shareholder.

The owners of corporations are called shareholders and their ownership rights are embodied in shares of stock, a form of intangible personal property comprising a bundle of rights, some economic and some non-economic.  The principal economic right is the right to receive dividends (usually cash) from the corporation, and the principal non-economic right is the right to vote in an election of directors and other matters that may be submitted to a vote of the shareholders. Although there can be restrictions (typically set out in the company’s articles of incorporation or bylaws, or a contract among shareholders or between a shareholder and the corporation), stock is generally transferable from one person to another. A person who acquires stock (thus becoming a shareholder) receives both sets of rights, economic (dividends) and non-economic (voting). It makes no difference how the person acquires the stock –by purchase, by gift, by inheritance, as compensation to an employee, or by court order (in a divorce or otherwise); a person who owns stock holds both economic and non-economic rights.

Limited liability companies also have economic and non-economic rights.  The principal economic right is the right to receive distributions (usually cash) from the company, and the principal non-economic right is the right to participate in the management of the company’s business and affairs. A crucial distinction between LLCs and corporations is that the economic and non-economic rights associated with LLCs are not bundled together in a single package the way those rights in a corporation are bundled together in stock.

Coronavirus paid sick leaveAs we discussed in a recent post, the Families First Coronavirus Response Act (“FFCRA”) requires small businesses to paid employees for time away from work for various reasons related to the coronavirus epidemic.

The FFRCA provides two types of benefits.

  • Employers must pay an employee at his or her regular rate of pay if the employee is unable to work or telework because of a federal, state, or local order related to COVID-19, or because the employee has been advised by a health care provider to self-quarantine because of COVID-19 concerns, or because the employee has symptoms of a coronavirus infection and is seeking a diagnosis.

Coronavirus paid sick leave[For an update based on agency guidance please see Small Businesses Receive Help with Coronavirus Paid Leave.]

On March 18, Congress passed, and the President signed on the same day, the Families First Coronavirus Response Act (FFCRA) that, among other things, requires employers to give employees paid time off for certain absences that result from the COVID-19 coronavirus pandemic. This article summarizes the obligations of employers and the rights of employees under the FFCRA. This article is only a summary and does not address all the details and nuances of the statute. In addition, because the FFCRA was enacted and signed so quickly, there may be questions without obvious answers. You may contact our office to inquire about obtaining advice regarding your specific situation as either an employee or employer.

What Employers Are Covered?

Contact Information