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ASK Priority: Sexual Harassment Policy

Posted on Wednesday, January 11th, 2006 by

QSexual Harassment Policy
I run a small home cleaning business with seven employees aside from
myself. My staff gets along well, and I’ve never had any problems, but I
keep reading about sexual harassment litigation in the newspapers and
worry. Do I need a formal sexual harassment policy? And how should I
go about creating one? —SJ, Manteca, CA

Sexual harassment complaints can cause severe difficulties for companies of any size. Even small businesses, where the employees are on good personal terms can see their staffs become fractured by tension and disagreement should an incident, real or merely perceived, occur between workers.

The matter can turn litigious if the complaining worker feels that you as the owner haven’t taken the appropriate steps to deal with the problem, or have created a “hostile” working environment by failing to prevent such an incident. This can lead to expensive court or arbitration proceedings. But even if an incident doesn’t result in a court battle, it can still poison the office environment. It pays, therefore, to take a proactive approach and put a clearly enunciated policy in place. This offers you, as owner, some legal protection by making it clear that you consider sexual harassment unacceptable in your business and will take action to deal with it should it happen.

You should create a written policy that clearly defines sexual harassment, identifies conduct that qualifies under that definition, sets out the steps that employees who feel they have been harassed should take, and clearly states the penalties and consequences of such behavior. The policy should also outline the procedure for investigating and adjudicating a claim of sexual harassment. It may help to have a lawyer assist with drafting the policy. Once a policy has been created, it is important to make sure that your employees are aware of it, and that it will be enforced.

The policy should be posted in a common area and copies should be handed out to each employee, each of whom should read the policy and sign a declaration that they have read and understood its terms. Should a claim later arise, this allows you to demonstrate that you take sexual harassment seriously and that all employees were familiar with your firm’s policies..

QNew Numbers?

When my business partner died, I purchased his share in the plumbing repair business we started together from his wife. It’s still the same business, with the same name. Do I need a new employer identification number from the IRS?
—MK, Kingstree, SC

A. In general, businesses do not need to
obtain a new federal Employer Identification Numbers (EIN) even if the business changes its name or relocates to a new address. However, if your company was structured as a partnership and was reorganized as a sole proprietorship after your partner’s death, then the original partnership—the business entity—was in fact dissolved by the change and a new EIN will have to be obtained for your business.

The rules determining whether a firm requires a new EIN differ somewhat depending on the sort of business and what changes it experiences. For a sole proprietorship, a new EIN is required if the business incorporates, changes to a partnership with the addition of partners, or goes through a bankruptcy. A new EIN number will be required if the ownership of a sole proprietorship changes, either through inheritance or purchase. If, for example, you inherit your family member’s small business, assuming full ownership, then a new EIN number will be required.

Incorporated businesses will require a new EIN number if they receive a new charter from the secretary of state, if the corporation becomes a subsidiary of another corporation, or if the company is merged with another to create a new, combined entity. Corporations do not need new EIN numbers in the event of bankruptcy, change of name or location, or reorganization into an S corporation.

Partnerships must seek a new EIN if one partner assumes full ownership and operates the business as a sole proprietorship or incorporates the business, or if a partnership is terminated. Partnerships must also seek a new EIN number if ownership of the business’s capital and profits changes by more than 50% within the period of a year. Like corporations and sole proprietorships, partnerships do not need to obtain a new EIN in case of bankruptcy, or name or location

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