Crowd Funding and JOBS Act

I’ve been hearing about this “JOBS” act President Obama signed into law … what does that law do?

The Jumpstart Our Business Startups Act or JOBS Act, is a law intended to encourage funding of United States small businesses by easing various securities regulations.  It passed with bipartisan support, and was signed into law by President Barack Obama on April 5, 2012.  “The JOBS Act” is also sometimes used informally to refer to Titles II and III of the legislation, which are the two most important pieces to much of the equity crowdfunding and startup community.  Title II went into effect on September 23, 2013.  On October 30, 2015, the SEC adopted final rules allowing Title III equity crowdfunding.  The final rules and forms are effective May 16, 2016.  This legislation reduces regulatory burdens that prevent many small and young businesses from raising capital – specifically by allowing crowdfunding, expanding mini-public offerings, and creating an “IPO On-Ramp” consistent with important investor protections.

Does the JOBS act apply to states? 

Federal law preempts state regulations in this area so that funds can be solicited from across the United States.  However, many states have legislation that also provides for equity crowdfunding within your own state.   Illinois, Indiana, D.C. and Florida are just a few of the states that have enacted intrastate crowdfunding exemptions.

I’ve had some dissatisfied customers lately … are there any legal issues I should watch out for there?

One dissatisfied customer is worrisome … but certainly not as troublesome as many of them.  A group of customers who are dissatisfied can file class action lawsuits against your company, in which they gather in large consumer groups and attack your company over faulty products, services or promises. With enough dissatisfied customers, class action lawsuits can do more damage than any individual or corporation and irreparably tarnish your brand’s image.  Be proactive and keep a finger to the pulse of your customers through tech support, online message boards and e-mails.  Promptly issue recalls for flawed products and be prompt to address customer issues.

I’ve received a wage garnishment order from my state’s department of labor … what is it and what should I do?

The most important thing to do is TAKE ACTION – this is a court order.  All states have their own rules and procedures for handling a wage garnishment order.  If you are the employer, it is crucial that you do not ignore the court order, but begin to garnish the required wages from an employee’s paycheck in accordance with your state laws.  Failure to comply can result in hefty fines for a business.