Small Business Resource Center

Employee Laws and Regulations | Data Security / Identity Theft
General Business Resources | Other Resources | Community

They say it's lonely at the top, but no small business owner who succeeds is ever truly alone. We built the virtual Small Business Resource Center with our busy small business clients in mind. Just as our newsletter provides practical legal insights for the time and resource constrained small business owner, our online resource center provides those same small business owners with easy access to answers and solutions to some of the challenges they face on a daily basis. As we discover new useful resources, we will add to the Resource Center on-line library.

Employee Laws and Regulations

Don't forget the immigration I-9 forms when hiring employees.

Nowadays, the documentation of your employees has become even more important with the linking of the nation's immigration services with the U.S. Department of Homeland Security.

While the average small businessperson may not think about immigration services in connection with hiring employees, did you know that there is a Federal form (Form I-9) which all employers, regardless of size, have been required to complete for all new employees since November 6, 1986? [This does not just apply to low tech assembly plants and migrant farm workers… this is an employment requirement for all employers.]

At the time this law was announced, many of us scurried around filling out Form I-9, checking employees' identification, and adding the forms to our employees' personnel files. But, as happens with many new laws which do not require employers to file a form with a state or Federal agency, interest and implementation have waned and, in many instances, employers have forgotten all about Form I-9!

However, employers should be aware that, as a result of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, the U.S. Citizenship and Immigration Services (USCIS) issued a new Form I-9 which has been updated to reflect the revised list of "acceptable documents" for identity and employment eligibility purposes.

If you haven't already begun using the newest version, click to download the approved Form I-9, which will answer your questions including when employers must have these forms complete and how long they must retain them.

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Massachusetts Department of Revenue requires that you report new hires.

So, what's this all about? Well, the Commonwealth of Massachusetts Department of Revenue is on a mission: to protect the economic well-being of children by enforcing the financial responsibilities of parenthood. And that's where the Commonwealth's employers come in, as employers of the parents.

According to Massachusetts General Laws, every employer who is required to deduct and withhold taxes on wages of employees AND every employer who hires an independent contractor is required to report that "new hire" to the Department of Revenue within 14 days of the hire.

What are the basic rules? For the full Monty, check out the Department of Revenue's website for the new hire reporting system form.

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MCAD offers help in documenting sexual harassment requirements.

Sometimes a state government agency can provide help to the chronically harried small business owner in his or her effort to comply with the myriad number of new laws and regulations flowing down from Beacon Hill.

For example, Massachusetts law requires employers with six or more employees to adopt a written policy against sexual harassment.

The Massachusetts Commission Against Discrimination ("MCAD"), which administers this law, has actually published a model sexual harassment policy to assist employers to develop their own policies.

If you haven't had the time or resources to comply with the law on your own, you might find this model helpful. Here is the model sexual harassment policy.

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Massachusetts Attorney General offers workplace rule guidance.

Every once in a while I come across a state website that includes some very useful information for small employers. The Massachusetts State Attorney General's Office is one of these.

The AG's office has the unenviable task of regularly policing the workplace to ensure compliance by all employers — large and small — with the myriad number of laws and regulations which affect employers and their employees.

Visit the Massachusetts Attorney General website, and you'll find a Guide to Workplace Rights and Responsibilities which just might come in handy someday. For instance, did you know that, if you now pay your employees weekly and want to change to biweekly, you must notify your employees 90 days before making the change? You'll find the answer to this and other related questions in a thumbnail synopsis of similar issues when you visit.

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Massachusetts requires personnel record retention.

Did you know that Massachusetts law requires any employer of 20 or more employees to retain the "personnel record" of each employee for three years following the termination of employment?

Did you know that the same law defines that "personnel record" as containing: "the name, address, date of birth, job title and description; rate of pay and any other compensation paid to the employee; starting date of employment; the job application of the employee; resumes or other forms of employment inquiry submitted to the employer in response to his advertisement by the employee; all employee performance evaluations, including but not limited to, employee evaluation documents; written warnings of substandard performance; lists of probationary periods; waivers signed by the employee; copies of dated termination notices; any other documents relating to disciplinary action regarding the employee".

Violations of the law carry fines of $500 to $2,500 and are enforced by the Attorney General. Just a tidbit to keep you up at night!

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Don't forget to hand that terminated employee the unemployment information before they leave.

Did you know that employers are required to provide the Labor and Workforce Development unemployment insurance package to a terminated employee in the exit interview? Click to download and print a copy of Notification Pamphlet: How to File for Unemployment Insurance Benefits, and be prepared.

It's not enough that you start the employee hiring process with government forms — you start the employee termination process with government forms as well!

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Employee or independent contractor? It's an important question in Massachusetts.

Remember the Microsoft case back in the late 1990s when a Federal court determined that "independent contractors" providing services to the company were actually "employees," entitled to all of the benefits which Microsoft had paid to its own employees? Remember the almost $100 million it supposedly cost Microsoft to settle?!

Well, in Massachusetts, as part of a law dealing with public construction, the test to determine the status of independent contractors (as opposed to employees) became a lot more complicated. For those businesses which employ independent contractors for a variety of services, this could have major implications.

The Attorney General's Advisory (which advises employers that the AG will enforce the law based upon the new Massachusetts 3-factor test) and the Department of Revenue's Advisory (which advises employers that DOR will continue to rely on the existing IRS 20- factor test) are not necessarily consistent. This simply means that this very important question is still being tested by our Courts and is, therefore, a looming risk for employers.

My suggestion? Unless and until someone brings some clarity to this issue, time to review those independent contractor arrangements!

Employers need to review that "part-time person" who really only works for the employer, does not have a legitimate business of his/her own, is directed only by the employer and works under the employer's control… but does not have withholding, unemployment tax, etc. taken out of his/her compensation. Although that person is currently being 1099d as independent contractors, that person would probably cause a problem for the small business under current IRS law, never mind the tougher Massachusetts law.

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Data Security and Identity Theft Protection
Laws and Regulations in Massachusetts

Did you know that Massachusetts passed three new initiatives within a year regulating how the business community addresses the twin issues of protecting data and preventing identity theft? Did you know that each initiative has a slightly different focus and a different effective date? Do you know what those initiatives are, how they interact and what your responsibilities are under each? Visit the Data Privacy and Security page for forms, information, and guidance.

Breach notification law — effective October 31, 2007

Massachusetts became the 39th state to adopt a law intended to protect the personal information of its residents from security breaches — the new law requires notification of any security breach to the Commonwealth of Massachusetts Office of Consumer Affairs and the Attorney General's office, as well as the affected Massachusetts residents. This law then spawned (1) another law outlining the need for safely destroying personal information discovered as part of a business owner's assessment under the breach notification law and (2) regulations intended to implement the requirements of the breach notification law.

Data destruction/disposal law — effective February 3, 2008

As part of the emphasis in Massachusetts on protecting its residents' personal information, an additional portion of the law regulates how to dispose of personal information which is no longer necessary to keep (for example, personnel records of former employees). Paper documents cannot simply be bagged and tossed in your office building's dumpster with the usual trash or even in the recycle container, without protection. They must be "redacted, burned, pulverized or shredded" such that the information cannot be read or reconstructed. Electronic documents must be "destroyed or erased" such that they cannot be read or reconstructed.

This law needs to be joined with the work you will do to create your written information security program (below) and simply provides guidance on how to safely and legally dispose of unneeded records discovered during your assessment phase.

Data security regulations [Regulation 17] — effective March 1, 2010

There is no small business exemption from the data security laws, so each and every small business (including a sole proprietorship) which "owns, licenses, maintains or stores" Personal Information must comply with these requirements.

"Personal information" is defined as a Massachusetts resident's first name and last name (or first initial and last name) in combination with any one of the following: (1) Social Security number; (2) driver's license number or other state-issued identification card number; or (3) a financial account number, or credit or debit card number, with or without any required security code, access code, or PIN that would allow account access.

In the unlikely event that your business does not have access to any Personal Information, you can stop here. However, if you have only one employee, you most likely do have Personal Information. If you have clients or customers who do business as individuals (rather than entities), you most likely do have Personal Information. Therefore, you must have a written information security program [WISP], albeit a simple one which addresses the very small amount of Personal Information to which you have access.

The above information is made available for educational purposes only, as well as for a general understanding of some of the Massachusetts laws and regulations, not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from your own lawyer.

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General Business Resources

Be sure you stay in good standing with the Massachusetts Secretary of State on an annual basis.

During the first quarter of each year, lawyers and accountants can be found reminding their business clients who operate as corporations to be sure they have filed their Annual Report with the Secretary of State for the Commonwealth of Massachusetts (hint: it is due March 15).

If you are not sure whether you filed, visit the Massachusetts Corporations Division website, click on "Search the Corporate Database" and follow the instructions. If you have forgotten to file, go back to the main page where you started and file on-line.

Not sure how to do that? Ask your attorney or accountant to do it for you since failure to file might result in a dissolved corporation! Once filed, your corporation is in compliance with the Secretary of State's requirements for another year. By the way, for those of you who operate as limited liability companies, your Annual Reports are due once a year, thirty (30) days from the date of formation.

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Here's the way to find your SIC Code.

Have you ever been asked for your SIC code (translation: Standard Industrial Classification) on a form? My manufacturing clients are used to this kind of classification, but my service business clients scratch their heads and ask "huh?" Naturally, there is a website with an answer to that question. Visit the U.S. Department of Labor Occupational Safety & Health Administration (OSHA) and enter your product or service. Voila, your SIC Code!

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Here's a tip on saving money for the smallest of small businesses.

Did you know that qualifying small businesses in Massachusetts are entitled to a Small Business Energy Exemption from the five (5%) percent sales tax on energy purchases? With the rising costs of energy these days, any savings is worth the effort!

Simply visit the Commonwealth of Massachusetts Department of Revenue website, click on Form ST-13 (Small Business Energy Exemption Certificate for Purchases On or After April 1, 2006) and, if you qualify with annual gross income of under $1 million and have five (5) or fewer employees, be sure to take advantage of it.

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Prepared for a disaster? If not, read on.

The U.S. Small Business Administration is also worried about business preparedness in the event of a disaster and wants to help you identify and plan for the areas of vulnerability. I have discovered (and actually used) a simple approach to this which includes a sample Business Continuity and Preparedness Plan, with easy-to-use checklists to walk you through the "who, what, when and where" of preparing an emergency plan.

I highly recommend that you visit the Ready Business website and take some time to put this together for your peace of mind (and that of your employees).

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Protecting your most important personal asset by filing a Declaration of Homestead.

In 1682, Sir Edward Coke, one of the most eminent English jurists of his time, wrote that "a man's house is his castle," and never has a quote quite so well embodied the heart and soul of the modern-day Homestead Act.

But we didn't leap directly from 1682 to the present. Rather, offering motivation to the pioneers upon whose passion and hard work our country was founded, President Abraham Lincoln signed into law in 1862 the first Homestead Act, offering any citizen the opportunity to claim 160 acres of surveyed government land for building a house and growing crops.

And thus the first declaration of homestead was born.

A Declaration of Homestead offers protection of up to $500,000 per family for your Massachusetts home (i.e. your "homestead"). For your primary residence (not a vacation home), you can protect that much equity from someone who sues you and tries to attach your home to recover a judgment against you. There are certain exceptions of course, with federal and state taxes, as well as your home mortgage topping the list … however in general it's a solid form of protection.

All it takes is the filling out of a simple form at your local Registry of Deeds. Just follow these simple steps:

Visit your Registry of Deeds on-line. Don't know which Registry your home is in? Make your first cyber-visit the Massachusetts Registry of Deeds website, read all about the protections of a Declaration and then click "City/Town to Registry Guide" and find out what Registry of Deeds you are in. It's simple, inexpensive self-help.

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Other Resources

Smaller Business Association of New England [SBANE] Dialog Program.

For more than 30 years, the Smaller Business Association of New England (SBANE) has offered member-CEOs a confidential, peer-to-peer, facilitated forum to meet and exchange views with other business owners.

It's called the SBANE Dialog Program and is based upon the premise that, "it's lonely at the top". No one understands the challenges facing small business CEOs better than other small business CEOs.

SBANE's Dialog will enhance your company's profitability by:

  • Testing new business ideas and concepts without risk
  • Exploring how your marketing plan could be more effective
  • Developing new ways to manage key personnel issues
  • Maximizing business opportunities by hearing other ideas and perspectives
  • Gaining an impartial and objective sounding board
  • Giving you access to the expertise of others with different skills and experiences

Visit the SBANE website for more information about this and SBANE's wide curriculum of helpful small business programs.

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The Wall Street Journal Small Business Center and The Kaufman Foundation.

Two entrepreneur-focused websites immediately come to mind when I am asked by clients for a quick, on-line resource for reading about other entrepreneurs.

  • The Wall Street Journal Small Business Center. Most of us are familiar with the black and white (and occasionally colored) print version of The Wall Street Journal and many more are subscribers to the on-line edition. But if you don't have time to scan either print or on-line editions for small business-centered resources and articles, check in with The Wall Street Journal Small Business Center.
  • The Kaufman Foundation. Ewing Kaufman was the entrepreneur's entrepreneur and founded a non-profit foundation in the mid-1960s for the sole purpose of assisting other entrepreneurs. At Entrepreneurship, the Kaufman Foundation has compiled what they call a "world of resources for entrepreneurs". The Kaufman Foundation Bookstore alone is worth the visit.

Nobody wants to believe that their particular challenge is isolated and, indeed, it generally isn't. And sometimes it helps to check in with others who have faced those same challenges and try out someone else's solutions for a change. Have 30 minutes before your next appointment? Take a quick peek at these sites and pick up a few tips.

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Solo practitioners… don't miss this guide written just for you.

My friend Michael Katz wrote a book (how's that for a conversation starter?). It Sure Beats Working bills itself as "29 Quirky Stories and Practical Business Lessons for the First-Time, Mid-Life, Solo Professional". (By the way, don't let the subtitle scare you away if you are not a member of its stated target audience. Read it anyway… you'll be glad you did).

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And remember, it's not all about us.

We all have our favorite charities… those community organizations, whether local or national, to which we write checks every year.

Every once in a while, however, I find myself wanting to be a bit more involved in supporting those community efforts than just writing a check to the charity.

Most of us are so fortunate with family and friends in our lives. We are, indeed, blessed. But out there in the world, just beyond our warm and comfortable circle, are people who too often get forgotten because it's too easy for us to do so.


I wanted to share with my readers who are also looking for just a little bit more feel-good involvement at the holidays an easy way to get to that. Join the "Adopt A Vet" program from the New England Shelter for Homeless Veterans ("NESHV"), buy a few presents from your vet's Wish List and bring a little cheer to a homeless vet's holiday.

E-mail the Director of Community Affairs ( and ask to be added to the list. NESHV will be absolutely thrilled to have you join this effort. They make it very easy and will send you a "Wish List" from "your vet" — complete with sizes — and off you go on a shopping trip!

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For so many years, I have simply written checks to worthy non-profits, never having a say in how or where the contributions are spent. It's not that I doubted the value of the organizational missions, it's just that I often wished I had more of an opportunity to actively support a smaller, more personal mission, and in the process, have more of an impact.

Then one night on the national news, TV anchor Charlie Gibson visited Donors Choose and I was hooked! The mission is simple… Donors Choose is an online charity connecting you to classrooms in need. It's a simple way to give students the resources that our public schools often lack.

At this not-for-profit website, teachers submit project proposals for materials or experiences their students need to learn. These ideas become classroom reality when concerned individuals, whom they call Citizen Philanthropists, choose projects to fund.

Amounts as small as a few hundred dollars can help complete a teacher's school proposal and the personal response to each donor from the teacher AND students is rewarding and humbling. Your first donation will have you hooked… I find myself visiting Donors Choose again and again, feeling a personal sense of accomplishment.

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