June 16, 2021

Small-Business Guide: Tips for Small-Business Owners to Avoid Employee Lawsuits

Jeffrey Herold, who owns West Coast Trends in Huntington Beach, Calif., does not subscribe to this belief. His company, which makes golf bags, luggage and related accessories, and averages $10 million to $15 million in annual sales, has faced three employee lawsuits alleging wrongful termination since Mr. Herold founded it in 1990. Confidentiality agreements preclude him from discussing the first two.

When the third suit was filed in 2010, he said, he was wiser. He vowed to fight all the way to trial, if necessary. “It didn’t make good business sense to settle,” he said. “We did nothing wrong.”

The litigation followed a period in 2008 when West Coast, like many small businesses, was forced to downsize as the recession deepened. Mr. Herold said annual sales had dipped 35 to 40 percent. To keep the company afloat, he laid off 14 people, about 30 percent of his staff, including one of two national sales managers, John Keller.

In court documents, West Coast stated that Mr. Keller’s performance had declined before his termination. As a result, Mr. Herold said, he reduced Mr. Keller’s sales commission by 25 percent the month before his termination. Before that, Mr. Herold said, Mr. Keller was warned about his productivity and Internet use.

Two years after his termination, and following unsuccessful attempts to obtain a settlement from Mr. Herold, Mr. Keller filed a lawsuit against West Coast and three of its employees.

Mr. Keller’s complaint included an allegation that, in terminating him, West Coast had breached an “implied” employment contract providing that he could be terminated only for “good cause.” But most of his case rested on “a mere convenient coincidence,” West Coast said in court papers.

Days before his scheduled termination, West Coast said, Mr. Keller had placed a call, an apparent “pocket dial,” from his cellphone to West Coast’s other sales manager, Josh Miller. In his complaint, Mr. Keller asserted that Mr. Miller had initiated the call and that it had been connected accidentally by Mr. Keller’s phone. In either case, once the line was open, Mr. Miller heard Mr. Keller in mid-tirade against West Coast and its employees. As Mr. Keller went on, Mr. Miller pulled West Coast’s chief operating officer into the room. He, in turn, had an assistant join them to take notes.

In his complaint, Mr. Keller claimed that his overheard comments, not his performance or the economy, had led to his termination. He asserted that West Coast and its employees had invaded his privacy by eavesdropping on his conversation and used what they heard improperly. He sought damages of more than $1.2 million, including compensation for lost earnings and statutory violations regarding the eavesdropping counts, as well as an unspecified amount in punitive damages.

After depositions revealed the nature of Mr. Keller’s eavesdropping claims, which Mr. Herold called “comical,” Mr. Herold remained determined not to settle. Having employment practices liability insurance that covered his legal expenses strengthened his resolve.

The case went to trial in early 2012 and got as far as jury selection. Eventually, however, Mr. Keller indicated a willingness to accept a statutory settlement offer of $25,000 that West Coast had extended before the trial began, even though the settlement’s 30-day expiration date had passed. After Mr. Herold responded that the offer had indeed expired, Mr. Keller began to drop his settlement demands incrementally until they reached $10,000. At that point, the judge urged the parties to settle, for efficiency’s sake.

Article source: http://www.nytimes.com/2013/02/21/business/smallbusiness/tips-for-small-business-owners-to-avoid-employee-lawsuits.html?partner=rss&emc=rss

With No Amazon as a Rival, FlipKart Moves Fast in India

Mr. Kumar, a software programmer, said he would not be doing that again. He now shops on India’s answer to Amazon — FlipKart.com — which delivers books, phones and other items in as little as 24 hours at no extra cost. Mr. Kumar doesn’t have to pay FlipKart a single rupee until a courier bearing his books arrives at his door. He can then hand over cash or a credit card.

“I think it perfectly fits the Indian mentality,” Mr. Kumar said.

While dozens of electronic commerce firms have recently sprung up to capitalize on India’s growing Internet use, they have a problem. Indians are not yet comfortable with shopping on the Web. Many of them remain unwilling to use credit cards online. So the Indian retailers have gone to great lengths to gain customers. Customers may pay in cash on delivery, and the company fields delivery squads to ensure shipments get to customers quickly.

One recent afternoon, four FlipKart delivery men loitered at a bungalow in the Koramangala section of Bangalore where the company started. When a small delivery van arrived from the company’s warehouse, the men rushed to take out two large duffel bags filled with packages that they put onto two tables in the house.

After scanning the packages with hand-held computers, they put the boxes into large backpacks, which they carried on their backs as they rode off on motorcycles to deliver them.

Online sales still make up a small portion of overall retail spending — one estimate pegs it at $10 billion, a tiny fraction of India’s $500 billion retail market — but they are growing fast.

FlipKart says it had revenue of 500 million rupees ($11 million) in its last fiscal year, and is now clocking sales of about 10 million rupees a day. SnapDeal.com, a coupon and deals site similar to Groupon, expects sales of 1.5 billion rupees this year, up from almost nothing the year before. The top executives of the Future Group, India’s largest retail company, says its daily online sales are on pace to triple between now and March.

“This time it is for real,” said Kishore Biyani, the founder and chief executive of the Future Group, referring to an earlier wave of e-commerce euphoria in the early 2000s. “This is the biggest thing to happen in India.”

That rapid growth has drawn the attention of venture capitalists who poured $183 million into 20 e-commerce firms in the last 12 months, up from $61 million for 13 firms in the previous 12 months, according to Venture Intelligence, a research firm.

The rapid growth has also attracted the notice of American online retailers. Amazon, which has a software development office in Bangalore, is now building a warehouse and hiring employees for an Indian site, according to two industry officials. And earlier this year, Groupon bought an Indian Web site, SoSasta.com.

But, like in frothy Silicon Valley, some Indian analysts and investors are starting to question the frenzied deal-making. These skeptics find it difficult to justify the high prices venture capitalists are paying to invest in unprofitable Indian e-commerce firms. For instance, VCCircle, a news site, recently reported that FlipKart may soon raise $150 million, which would give it a $1 billion valuation. (Executives at the company declined to discuss its financial plans.)

India has 50 million to 100 million Internet users, according to various analysts, and the number is growing by about 30 percent a year. JuxtConsult, a New Delhi-based research firm, estimates that 17 million people bought something online this year, up from 10 million last year. The Indian government estimates that household consumption has increased by more than two-thirds in the last five years, and most of that increase has come in the purchase of nonfood items.

“It seems to be more for real than a flash in the pan,” said Kanwaljit Singh, who is a senior managing director at Helion Advisors, which has invested in about a half-dozen Indian e-commerce sites, including MakeMyTrip.

But capitalizing on India’s growth online will not be easy. Sachin Bansal and Binny Bansal (who are not related), the founders of FlipKart, have had to do things that their American or European counterparts would never have. They have set up delivery operations in 13 big Indian cities like Bangalore, Mumbai and New Delhi because Indian shippers do not have the delivery and package-tracking abilities that FedEx and U.P.S. provide for its American customers. They plan to expand FlipKart’s delivery network to 25 cities within a year.

Sachin Bansal, the company’s chief executive, said that by having its own staff, FlipKart avoids paying courier services’ commissions of more than 2 percent to accept cash on delivery, which make up about 60 percent of its orders. It can also track packages more accurately. And because labor costs are relatively low in India, its delivery cost is a modest $1 a package.

“More than 90 percent of retail transactions in India are in cash,” Mr. Bansal said. “People like my dad and my uncle, they are much more comfortable with cash. If we have to increase our customer base, we have to accept cash.”

FlipKart is not alone in tweaking its model to suit Indian conditions. Myntra, an online retailer of clothes, has a delivery staff in Bangalore and plans to hire couriers in other cities. SnapDeal offers customers the option of making partial payments online and paying the balance to merchants whose products and services it sells, said Kunal Bahl, a co-founder of the service.

Consumers and suppliers laud FlipKart’s service and execution. But they expect the company to soon face greater competition, especially if Amazon starts an Indian operation. “Today they are the best,” said Ananth Padmanabhan, vice president for sales at Penguin India. But, he asked, “if Amazon comes here next month, and they might, what will FlipKart do?”

An Amazon spokesman, Craig Berman, declined to comment on the company’s plans for India, but Mr. Padmanabhan said Amazon officials have been holding talks with publishers, and another industry official said the retailer has begun hiring employees for an Indian site.

The Bansals say they are prepared for competition from Amazon. Sachin Bansal, who worked with Binny Bansal as a software developer at Amazon before starting FlipKart, brushed aside a suggestion that the firm would make for an easy acquisition by Amazon.

“We are very keen on going our own way,” he said. “The opportunity is so large that we would want to grow it to a much bigger level before we think of anything.”

Article source: http://www.nytimes.com/2011/09/15/business/with-no-amazon-as-a-rival-flipkart-moves-fast-in-india.html?partner=rss&emc=rss

DealBook: Start-Ups Vie for Attention at the Venture Capital Table

The recent initial public offerings by Internet companies including LinkedIn and Yandex are grabbing the attention of investors and making headlines, but small technology start-ups are expecting more than just scraps from the venture capital table.

Instantly recognizable companies like Facebook, LinkedIn and Groupon have no problem getting financing, but these smaller companies are hoping to prove they have what it takes to become essential services. At TechCrunch’s Disrupt conference in Manhattan, DealBook spoke to executives from three start-ups about their plans for raising capital.

Guillaume Balas, chief marketing officer of 3Scale, described his company’s “unique architecture” for managing application programming interfaces, or A.P.I.’s, which allow different software programs and applications to talk to each other. He said that with the growth of mobile Internet use and connected applications, A.P.I.’s were moving into the mainstream and making his company’s services essential for businesses with an online presence.

Andy Leff is the founder of Meporter, a company that has developed a mobile application that he described as taking “local citizen newsgathering to the extreme.” It allows users to post photos, video and articles to a local map — posts that can then be added to by other users.

Finally, Jaafer Haidar is a co-founder of Socialseek, an aggregation site that allows people to create sites following unique topics. He said the site has the potential to allow brands to “connect with users directly.”

Article source: http://feeds.nytimes.com/click.phdo?i=4c0202459b2df8e972e8f08e5b7ab751