Business Law

The recent trend in employment pre-testing

Posted by on Oct 18, 2017 in Business Law | 0 comments

There is an increasing trend in American business to pre-test potential employees. You may have experienced this yourself. Tests can run from something like a short questionnaire to some medical testing like that done by WorkSteps.

The rise of such tests was perhaps inevitable. As technology improves and becomes better able to calculate and predict, one use would always be to better sort people for employment. Just as computers already use algorithms online to decide which ads are right for you, and just as music players can now make recommendations based on your previous listening choices, computers are able to predict how well someone would do in a particular working environment.

There is an uncomfortable element to this, just as there always is with technology. Something feels wrong about having a computer sort through people or having a test sort through people instead of having some face-to-face contact. After all, couldn’t the company’s next CEO, some out of the box thinker, be skipped just because she answers the multiple choice quiz wrong?

That is certainly a possibility, although the popular tests employed today all claim to make work safer and more efficient, and there is no reason as yet to doubt their claims. The tests also claim to keep turnover down, which suggests the computers sorting people are finding those who will not just work well and work safely but who will stay on the job longest. That potential CEO may miss out, but had she not, she may have only worked at your company for a few years before really moving up somewhere else. In theory, the middle step can now be skipped, and she can go to that more fitting job first.

A more sustained complained, and one more backed up by the recent past is that these tests, just like all standardized tests end up with biases that work against certain potential employees. This has long been a problem of testing from elementary schools on up, and there is yet to be a completely satisfying response to such criticisms.

There is also a potential problem in companies choosing the wrong tests for what they need. While the computer analyzing the tests is unlikely to be wrong, a person can easily make a major error and end up testing in such a way that the best clients are eliminated.

No matter the shortcomings, employment pre-testing is most likely here to stay. The tests are relatively well run; they are quick and efficient. Many have proven to be very accurate and to have lowered some key statistics for their companies. They are also, and this is perhaps the most crucial point, very cheap. Instead of wasting a manager’s week interviewing sixty potential employees, the tests can limit that down to a few hours interviewing five.

With so much upside, and so little cost, it’s likely we’ll see more of these tests in the future, not less.

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Why many Shareholders Prefer the C Corp Status over the S Corp Status

Posted by on May 29, 2017 in Business Law | 0 comments

A Corporation is a type or business entity wherein a group of shareholders assumes an existence that is independent of the individual shareholders, making this group’s powers and liabilities, therefore, distinct from those of its members.

A corporation limits the liability of shareholders; thus, even if is held liable for damages in a civil suit, the most shareholders can lose would be their investment in the stock. Personal properties and assets of shareholder are not on the line for corporate liabilities.

All corporations, as stipulated in subchapter “C” of the U.S. tax code, are C corporations unless their owners file for S status (this happens when all shareholders make a timely filing of Form 2553 with the IRS after they agree in writing to the S corporation election). Taking no action, however, will mean that a corporation is a C corp.

C corp and S corp are types of corporate business entities. Their difference is based on payment of taxes and ownership. With regard to ownership, S corporations cannot have more than 100 shareholders, all of whom must be U.S. citizens or residents. C corporations, on the other hand, can have an unlimited number of shareholders who may also be non-U.S. citizens or residents.

On the issue of taxation, S corporations are pass-through tax entities, thus, no tax is paid at the corporate level. All corporate profits and losses are reported on the tax return of shareholders. Under the C corp status, however, because corporate profits are taxed at the corporate level, there will be the disadvantage of double taxation. This is because the amount of tax paid by a C corporation is based on the amount of its corporate income; this same income, which is distributed to shareholders as dividends, is also the basis of the amount of personal income tax that shareholders should pay.

However, though the pass-through taxation enjoyed under the S corp status means huge savings for shareholders, many corporations choose the C corp status instead due to the absence of restrictions, such as having multiple classes of stock.

An article posted in states, “establishing a new company is an exciting move, however all decisions can have a substantial impact on the future of the business. From a legal standpoint, there are a range of different choices that must be made which can profoundly influence the course of a company’s development and progress. Advice from a qualified legal professional can prove invaluable, especially for entrepreneurs.”

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