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The Project
MEMORANDUM
To: Supervisor
From: Student
Re: New Client, Career Institute of America, Inc. (CIA)
Date: December 6, 20—
FACTS: We have just met a new client, the CEO of Career
Institute of America, Inc. (CIA). Although the business was
formed a year ago as a nonprofit corporation, they’re not sure they’re happy being a nonprofit.
CIA is a classroom and online education organization that specializes in training students in the United States auto industry, one of this country’s largest industries. Their founder, who also serves as the CEO of CIA, would like to retain most of the ownership and control of the company,
since it is really his enterprise. He also has some concerns about the independent contractor agreement their instructors must sign when they agree to work for the company. He wants to be sure they’re not construed as employees of the company and are viewed as true independent contractors. Note that most of the company’s income is from online training courses. You should also know that they received a U.S.Department of Labor retraining grant for the instruction they’re currently providing and that this type of grant is awarded only to nonprofit educational organizations. Even though CIA was able to obtain this grant as a nonprofit institution, they realize it was a one-time grant. They must make their income from tuition for online courses and in the two small classrooms in which they teach traditional courses. This is why they’re not
necessarily opposed to changing their form of business from a nonprofit organization to a for-profit business.
You should further know that the employment contract they provide to their instructors looks as if it was designed by an amateur and may not comply with the legal requirements for a valid independent contractor agreement.
RESEARCH ASSIGNMENT: Research two areas of law and prepare a memorandum addressing each area, so the client can be properly advised how to proceed. First, determine the
limitations of a nonprofit corporation in the state of Delaware, the state in which CIA was formed and is doing business. You should also review the law for nonprofit and for-profit corporations, as well as limited liability companies, to determine the best form of business for the client.
Consult the listing of Delaware statutes on the Delaware state
Web site at http://www.state.de.us/corp/DElaw.shtml to
assist you in your research. For more general information concerning nonprofit corporations,
for-profit corporations, and limited liability companies, the following are additional Web sites that can assist you:
http://www.law.cornell.edu
http://www.freeadvice.com
http://www.findlaw.com
http://www.nolo.com/lawcenter
http://www.hg.org
Combine this information with what you know about business
organizations and what the client wants, so you can recommend the best form of business organization for CIA at this time.
The second issue concerns the contract that CIA has its instructors sign. (The instructors teach the programs and grade the student’s papers.) You’ll need to review the law dealing with
employment and independent contractor agreements to determine what the contract needs to include to be properly viewed as an independent contractor agreement and not an employment agreement.
Research employment and independent contractor agreements online. A general search using these terms in the Web sites listed above or even on Google, Bing, or any other search
engine should assist you in finding the law dealing with these types of agreements. Since the agreements will be signed by our client’s instructors located in each state we want to use
the general law dealing with such agreements. In your memorandum,
please be sure to identify each of the key elements necessary for the agreement to be viewed as an independent contractor agreement and not an employment agreement, as well as any other suggestions you might have for the client in connection with their instructor contracts.
Here are some helpful hints:
Remember that the project requires that you use the memo
format provided and that you research both issues requested: the most appropriate form of business organization to meet the client’s needs and the requirements for an agent to be deemed an independent contrator and not an employee. You should first locate the law for each of the two issues. Then, you need to analyze the information you found and apply it to the needs of the client. Both your research and your analysis should then be summarized and included in your memo.
