7 Good Reasons for Starting a New Business in Houston

Although Hurricane Harvey took far too many lives and delivered devastating blows to Houston’s economy and infrastructure back in 2017, the city has since rebuilt much of what was lost and is once again helping many entrepreneurs start new companies.

Some outsiders unfamiliar with the Lone Star State’s “can-do” attitude are a bit surprised to hear this good news. After all, Hurricane Harvey flooded 165,000 homes in Harris County — and dumped more rain in the Houston area than any other storm in recorded U.S. history.

Yet despite the $80 billion or more in damages, Houston is busy thriving again. In fact, the city’s growing economy surely played a role in CNBC’s decision to name Texas the best state for business in 2018. The following list sets forth seven key advantages that are enticing various entrepreneurs to start their companies here.

Strong reasons why Houston is fully ready to help “grow” your new business

  1. The city is home to excellent business incubators and accelerators. They include the Houston Technology Center (HTC), once referred to by Forbes as one of “Ten Technology Incubators Changing the World.” In fact, Texas has ranked HTC as its largest technology business incubator and accelerator. Other incubators in the city include Station Houston and Fruition Technology Labs.

Back in 2015, our Texas Governor’s Office created a statewide list of business incubators that may also still prove helpful. Regardless of the type of product or service you’re trying to develop, you should be able to find an incubator in Houston that can help you creatively launch your business. Most of them offer unique resources – and can help you locate venture capitalists and others interested in investing in new companies.

  1. Based upon foreign tonnage, Houston remains the biggest port in the country. Back in 2016, the port handled 68% of all the Gulf Coast’s container traffic. You can ship your goods just about anywhere in the world from this port;
  1. Forbes’ 2018 list of best employers included eight (8) based in Houston. If you start a company here and regularly network with other corporate leaders, you may easily get the chance to learn how these other highly successful businesses are managing to provide the best working environments for their employees;
  1. There’s plenty of highly desirable office space available for businesses of every size. Furthermore, it’s often easy to find “co-working spaces” that can readily meet the needs of smaller companies with limited budgets;
  1. Houston remains a business-friendly city with leading companies representing a wide swath of industries. Depending on which business incubator or accelerator you choose to join, there’s a strong chance you’ll have the chance to network with leaders in the fields of energy, healthcare, aerospace, nanotechnology and information technology – just to name a few;
  1. The cost of living is reasonable – and there are no state taxes in Texas. Many Houston entrepreneurs choose to live in affordable suburbs such as Webster, Stafford, Katy, Deer Park and Brenham. Statistics indicate that many thriving new businesses are also run in those same areas;
  1. Houston has a well-developed and diverse transportation system. METRORail, busses, freeway systems and other options provide reasonable means for everyone to live and work in this large metropolitan city. With careful planning, you should be able to get to meetings across town without delay on most days;

If you have any questions about a business that you’d like to start, please contact one of our Murray Lobb attorneys. It’s been our privilege to provide general business and legal advice to entrepreneurs creating new companies for many years. When you get in touch, we can also help you decide which type of business structure will best serve your needs.

Six Basic Types of Business Insurance You Might Need

Successful companies of all sizes readily address their insurance needs so they won’t later be caught off guard by either a baseless or valid legal claim. No matter how hard you try to provide flawless products and services to the public, there’s always a chance that a defective product or business transaction may render you liable for legal damages.

Although only certain types of companies must carry workers compensation, disability and unemployment insurance to meet federal guidelines, all businesses can benefit from protecting their company assets by purchasing basic and special types of business insurance.

Fortunately, there are only six basic types of business insurance that you and your business partners must carefully review while trying to protect your company against future legal challenges. All six are set forth below with additional information.

Six common types of business insurance

Before reviewing the following types of insurance, be sure to thoroughly discuss the precise nature of all your business transactions with your insurance agent.

  1. General liability insurance. This will provide you with legal defense support for a variety of alleged wrongs. For example, your company may be sued based on a personal injury claim or the alleged statements of one of your employees. For example, if one of your customers is seriously injured while visiting one of your offices or factories, this policy can help you compensate the injured party for all bodily injuries and medical expenses. In addition, this same type of policy could protect you if a court holds one of your employees liable for business libel or slander — for damages up to the maximum amount of coverage stated in your policy.
  2. Product liability insurance. Even some of the most reliable products on the market will occasionally malfunction and harm a consumer. For this reason, you must secure an ample amount of product liability insurance coverage for this type of claim.
  3. Professional liability insurance. If your company provides any types of services to customers, you must carry this type of policy – often referred to as “E and O” (errors and omissions) coverage. This policy will cover the costs of defending your company in a civil lawsuit that may be based on the alleged grounds of malpractice (often medical or legal). The insurance industry doesn’t view these types of claims as eligible for coverage under either general liability insurance or a homeowner’s insurance policy.
  4. Commercial property insurance. Industrial fires, floods, windy hail storms and other natural disasters can quickly destroy critical manufacturing plants, office buildings and valuable inventory. Always be sure to carry ample coverage under this type of policy — based on recent property value appraisals.
  5. Home-based business insurance. This type of policy is usually offered as a rider to a person’s homeowner’s insurance. It provides limited coverage for such problems as business equipment and inventory damages. This type of policy can also provide funds to cover liability claims brought by injured third parties.
  6. A business owner’s policy. This general type of coverage can let you bundle nearly all (or most) of your insurance needs into one policy. If you pursue this option alone – make sure it adequately protects you regarding all the most unique aspects of your company’s goods and services.

When discussing your insurance needs with your lawyer and insurance agent

Always talk about every reasonable type of harm that your business might suffer. Also, make sure you’ve chosen the best type of partnership or corporate structure to further protect your personal and business assets. Once you fully understand all the risks your company might face, find a highly respected business insurance broker. Always ask trusted business peers for their recommendations for this type of agent.

Finally, speak with your Houston business law attorney about all the specific types of insurance required by the state of Texas for a company like yours. And be sure to address all the federal government’s insurance requirements. Keep in touch with your insurance agent and lawyer throughout each year so they can each readily update you about new legal or policy requirements that may affect your current coverage during the upcoming year.

Please feel free to contact a Murray Lobb lawyer so we can talk with you about the legal aspects of obtaining adequate insurance coverage for all your business needs.

Final Rule on Overtime Released by Department of Labor

May 18, 2016 – The U.S. Department of Labor has released its final rule on overtime under the Fair Labor Standards Act. The Administration estimates that the new rule will extend overtime protections to 4.2 million Americans who are not currently eligible under federal law. Once effective, the rule will raise the salary level from its previous amount of $455 per week (the equivalent of $23,660 a year) to $913 per week (the equivalent of $47,476 per year) in 2016. The rule will also raise the compensation level for highly compensated employees from its previous amount of $100,000 to $134,004 annually. The final rule also establishes a mechanism for automatically updating the salary level every three years, with the first update to take place in 2020. These changes take effect on December 1, 2016. The final rule may be viewed here:  https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-11754.pdf.

The final rule does not make any changes to the duties test for executive, administrative and professional employees, which affects the determination of who is exempt from overtime. Administrative employees who do not meet the special provision for administrative employees will be eligible for overtime if they earn below the salary level set in the final rule and they work more than 40 hours in a week. 

In response to the new overtime rule, employers have the option of:

A. Paying time-and-a-half for overtime work;

B. Raising the workers’ salaries above the new threshold;

C. Limiting worker’s hours to 40 per week; or

D. Some combination of the above.

How Wage Garnishment Laws Affect Many Texans

Although wealthier Texans may build up significant savings and retirement accounts by middle age, most residents must keep working far longer to meet their individual and family needs. And if unexpected family or medical crises occur creating new financial emergencies, some people may face wage garnishments. Fortunately, Texas offers strong protection against many types of creditors.

Here’s a brief review of the most common types of wage garnishments pursued in Texas, basic terms you’ll need to know regarding this field – and references to special concerns you may need to discuss with your Houston business law attorney to fully protect your rights.

Important terminology related to attaching employee wages

  • Wage garnishments. In Texas, this term is often used interchangeably with “wage attachments” and refers to court orders directing employers to withhold certain amounts of money from employee paychecks to satisfy certain debts;
  • Administrative garnishments. These usually refer to federal government back taxes or student loans now in default – and they do not require a court order to be activated. Once debtors have student loans in default, they’ll normally be contacted by the U. S. Department of Education and told which collection agencies will be collecting their debts. (Note: Students loans can almost never be discharged by a bankruptcy filing);
  • Disposable earnings. This refers to the amount of money you have left in your paycheck after all mandatory deductions have been made for federal taxes, disability insurance, union dues, unemployment insurance, nondiscretionary retirement deductions, workers compensation and health insurance.

Types of debts often leading to wage garnishment

Texans are very fortunate compared to citizens of other states since Texas only honors a very limited number of garnishable debts.

  1. Unpaid child support and alimony (in arrears)
  2. Current court-ordered child support and alimony
  3. Government debts owed to the IRS (back taxes) — and all related fines and penalties
  4. Unpaid student loans (in arrears)

Note:  In light of Article IV of the U. S. Constitution, Section I (requiring each state to honor the “public acts . . .  and judicial proceedings of every other state,” certain other limited creditor debts referenced in judgments obtained outside of Texas may also be garnishable.

Be sure to speak with your Houston business law attorney whenever you receive any notice of an order to garnish your wages.

Fixed garnishment limitations that benefit Texas debtors

  • Total amount that can be garnished (based on all court orders). This is equal to 50% of your disposable earnings;
  • Percentage allowed for tax debt. This varies, based on your current deduction rate, the number of your dependents and other factors;
  • Student loans. The Department of Education can normally only garnish up to 15% of your disposable income from each paycheck;
  • Spousal support. The most your wages can be attached for this obligation is either $5,000 or 20% of your average monthly gross income – whichever is less.

Priority of wage garnishment orders

Although unusual factors might be able to change the list below, employers must normally prioritize their payment of garnishment orders in the following manner.

  • Unpaid child-support
  • Spousal support
  • Back taxes
  • Student loans

Texas employers are not allowed to discriminate against employees with wage garnishments

This has long been a concern of many employees since handling wage garnishments can take up a considerable amount of an employer’s time. Texas doesn’t allow those with wage attachments to be treated unfairly when it comes to hiring, promoting, demoting, reprimanding and firing (among other actions).

How creditors can still reach your money – apart from using wage garnishment

Even if your wages cannot be reached, regular creditors can still gain access to your money by obtaining court orders to freeze one or more of your financial accounts – and place liens on certain types of real property you own.

Please contact our law firm with any questions you may have about the proper handling of court orders to garnish wages — or any other types of administrate tasks regarding employees.

Electronic Notary Services Will Soon Be Available in Texas

HB 1217, passed during the 85th legislative session and effective January 1, 2018, provides amendments to the Texas Government Code and the Civil Practice and Remedies Code so that Texas can soon begin offering electronic notarization services. In general, online notaries will need to meet the same qualifications as all traditional notaries and must offer their services in accordance with all applicable laws.

Prior to these amendments becoming effective, the Texas Secretary of State’s Office must adopt rules that will govern how audio conferencing and two-way radio will be used to facilitate online notarizations. This same office is also finalizing the requirements for properly applying to become an online notary — or to expand one’s current services to include online access to them.

HB 1217 Amendments Provide Certain Online Notary Service Limitations

In general, online notaries will be allowed to provide online notarizations for paperwork that falls into the following categories;

  • Documents related to real estate here in Texas;
  • Instruments or agreements that secure a debt payable somewhere in Texas;
  • Agreements or documents pertaining to a transaction involving at least one party who is a Texas resident – or at least legally authorized to handle business in Texas;
  • A document that is being notarized so it can be filed in Texas public records;
  • An instrument containing an affirmation or acknowledgment issued by a person while that individual is here in Texas;
  • An instrument signed by a Texas resident, as documented by a current, valid Texas-issued government ID or credential that includes the person’s photograph and current address within this state.

At present, some individuals and businesses remain concerned about privacy and security issues involved with notarizing sensitive documents online. However, the fact remains that the federal government and other states have been successfully using advanced photo ID technologies online while handling important business transactions for many years.

We will keep you advised about when these online notary services have become fully viable. We can also share our professional advice with you about how and when to include these types of services in your daily workflow.

Voters To Determine Whether Texas Changes Home Equity Lending Laws

Now that the Texas House and Senate have approved SJR 60 and its companion bill HJR 99, Texans must decide in November whether we should amend our state constitution’s home equity law provisions. Any changes to the state constitution require a voter-approved amendment. The proposed changes may benefit many borrowers and they would remove a prohibition that currently prevents agricultural homestead owners from seeking home equity loans.

Additional Changes Addressed by SJR 60/HJR 99

This joint bill is designed to accomplish several goals. One key objective is to lower the current three percent cap on fees that can be charged to borrowers initiating a home equity loan down to only a two percent cap. To achieve this change, the bill separates out from the cap such fees as property surveys, appraisals, title exam reports and state base premiums. This change is designed to help low-income borrowers and those needing loans in more rural areas.

This means that borrowers seeking home equity loans under $50,000 might currently see those added fees go over the three percent cap. However, if the cap is lowered and the other changes noted above are made, those same borrowers could probably avoid that problem. This proposed amendment would also increase the present loan-to-value ratio up to 80 percent (from its current level of 50%) on home equity lines of credit.

Consumers may also benefit from a new provision allowing them to refinance home equity loans that have already existed for at least one year. They could turn such loans into traditional mortgages if all required conditions are met. Those who wish to make these types of changes would be owed new disclosures clearly outlining the potential benefits that might be lost by making this change. Special time deadlines would also have to be met, making sure that each consumer clearly understands the full impact of converting the loan into a traditional mortgage well before the refinance closing date.

Recent Legislative History Regarding This Joint Bill

Back in 2015, Representative Richard Raymond of Laredo proposed a bill that addressed the three percent fee cap issue by removing specific third-party expenses from the cap. Although that bill failed to pass, it did raise awareness of these important issues.

Meeting Constitutional Change Requirements and Putting Matters to a Vote

The passage of these joint bills required a two-thirds majority vote in both the Texas House and Senate. Now that requirement has been met, it’s time to put this matter on the ballot so voters can make the final decision on November 7, 2017. Should Texas voters approve this amendment, the changes to our state constitution will take effect on January 1, 2018.

Should you have any questions about how you should initiate financing for your home or other purchases, please contact our office and allow us the privilege of helping you. We can also answer any other questions you might have about various contracts and lending practices.

Texas Flood Insurance –The Basics

Texas Flood Claim Appeals:  Obtaining a Fair Settlement

The overall losses imposed by Hurricane Harvey and the other storms still forming will almost certainly set new records. At present, at least one data analytics firm that forecasts natural disaster losses has issued a preliminary estimate indicating that Houston area homeowners may suffer losses equaling $30 billion. However, only about 40 percent of that amount will be covered by insurance — with the federal government picking up the tab for most of it.

How Most Flood Insurance is Handled in Texas

While a small number of private insurance companies are underwriting flood insurance today (often providing an optional rider to your homeowner’s coverage), most stopped doing so long ago since they could not charge high enough premiums to make it a profitable endeavor. Instead, most Texas homeowners are only able to obtain a flood insurance policy through the National Flood Insurance Program (NFIP) that’s run by the Federal Emergency Management Agency (FEMA).

Since homeowner policies don’t cover windstorm and hail damage for those living in this state’s major flood zones like the Houston area, some people also purchase Texas Windstorm Insurance Association (TWIA) coverage to help with those types of losses. However, a Washington Post study indicates that as few as 17% of Houston homeowners may have any flood insurance.

Should you be among the small percentage of homeowners with an NFIP policy or hold one that covers your business property, it’s critical to move forward now and get your NFIP claim filed. However, you need to know that it’s fairly common for these types of claim to be denied – or to be offered a very small amount for your actual losses. Once your claim has been turned down, you’ll then need to work closely with the local insurance representative who sold you the policy on behalf of FEMA to be sure it was processed properly.

Deciding Whether to Appeal FEMA’s Decision About Your NFIP Coverage

Once you’re certain that all pertinent paperwork was fully examined by FEMA when it denied all or part of your NFIP claim, you’ll need to decide whether to file a formal appeal or pursue other possible remedies. Since making the right decision requires a clear understanding of each option – and because you only have 12 months to appeal the decision, it’s often best to speak with your Houston business law attorney who can help you weigh all of your options before moving forward.

In some cases, perhaps to minimize the time involved in obtaining the maximum recovery available, flood insurance policy holders may want to simply obtain a formal appraisal of their covered loss. This option is often chosen when your insurer is agreeing that a covered loss occurred – but is disagreeing with you about the correct amount that should be paid for your loss.

Keep in mind that if you choose this path, FEMA’s website states that you cannot then appeal the FEMA decision if you still don’t like the results. As you can see, you need to fully understand what you’re risking, regardless of the path you choose.

What is Covered (and Not Covered) Under A Flood Policy

The NFIP covers “direct physical damage by flood to your building and/or personal property, also known as contents.” The Standard Flood Insurance Policy (SFIP) is a single-peril (flood) policy that pays only for flood damage to your insured property, up to the policy limit which is $250,000 for a residential policy.

Covered Building Property:

-The electrical and plumbing systems

-Furnaces, water heaters, heat pumps, and sump pumps

-Refrigerators, cooking stoves, and built-in appliances such as dishwashers

-Permanently installed carpeting over an unfinished floor

-Permanently installed paneling, wallboard, bookcases, and cabinets. The damage must be directly caused by flood water. Cabinets that were not damaged by flood water are not covered, even if they match cabinets that were damaged by flood water.

-Window blinds

-Foundation walls, anchorage systems, and staircases attached to the building. There is an exclusion for “loss caused directly by earth movement even if the earth movement is caused by flood.”

-A detached garage, used for limited storage or parking. Up to 10 percent of the building coverage limit can be used, but will reduce the total amount of building coverage available.

-Solar energy equipment, and well water tanks and pumps

Covered Personal Property – Contents:

-Personal belongings such as clothing, furniture, and electronic equipment

– Curtains

-Portable and window air conditioners (easily moved or relocated)

-Portable microwave ovens and portable dishwashers

-Carpets not included in building coverage (carpet installed over wood floors, etc.)

-Clothes washers and dryers

-Certain valuable items such as original artwork and furs (up to $2,500)

-Food freezers and the food in them (but not refrigerators)

Not Covered for Building or Personal Property:

-Damage caused by moisture, mildew, or mold that could have been avoided by the property owner or which are not attributable to the flood

-Damage caused by earth movement, even if the earth movement is caused by flood

-Additional living expenses, such as temporary housing, while the building is being repaired or is unable to be occupied

-Property and belongings outside of an insured building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools

 

Obtaining Timely Advice After a Flood is Critical

Please remember that our firm is here to help you as you try to obtain a fair settlement for your flood losses so you can quickly repair or rebuild your damaged property. (Should you be among those without any insurance coverage, you may want to visit this government website provided for this needing emergency assistance.)

Hurricane Harvey: Avoiding Fraudulent Repair Contractors

Fortunately, many first responders and volunteers nobly rushed out to help residents of Houston and surrounding areas after this catastrophic hurricane unleashed torrential rainfall and flooding. However, too many people lost their lives during the lengthy onslaught and far more suffered extensive property damage. As survivors try to reclaim their lives, they must exercise great caution when hiring repair contractors so they can properly repair and rebuild their homes.

Based on Texas Attorney General website information, and on our country’s recent storm history, we now know that many dishonest “scam artists” tend to show up (often from out of town) right after natural disasters like Hurricane Harvey. They eagerly try to convince desperate homeowners that they alone know how to repair their homes quickly and for far less money than their competitors.

Our general advice to you is to do your homework and carefully check out each contractor’s business reputation before signing on any dotted line. As we stated in our Labor Day email, we will review any contracts from contractors who want to perform work on your property.  We will do this free of charge limited to contracts that are presented to you by the contractor. Please call us for assistance.

Basic Considerations When Planning to Repair Your Home

To help you obtain the quality repairs you need, we’ve summarized some key steps below that can help you hire a competent repair contractor. Specific warnings have also been added so you can spot some of the many “red flags” indicating that someone either isn’t properly skilled or licensed as required under Texas law. Hopefully, you can avoid being swept up in what “60 Minutes” has called “The Storm after the Storm” when disreputable contractors sweep in to make a fast buck while you’re still grieving various losses.

Key Steps to Take While Getting Your Home Repaired

1. Only hire a contractor who has a fixed, local business address (or one nearby) and who offers fair terms of service. You need to hire someone who has lengthy experience doing the type of work you require and who can provide you with local references. This person must be willing to accept partial payments as the job progresses, while regularly paying all subcontractors for their labor and materials as the project moves forward;

2. Search for a contractor who has worked for someone you know and quotes reasonable fees. Whenever possible, only hire someone who has worked for a family member, close friend or business associate. If you cannot find someone that way, then at least call the Houston Better Business Bureau to check on the company’s reputation. Don’t let anyone pressure you into quickly signing a contract so you won’t lose a special price break.

3. Take the time to solicit several bids before choosing the best one (which may not be the lowest). Those who bid too low are often hoping to trap you into later adding other fees that aren’t properly covered in your repair contract.

4. Check online websites to see if you can learn more about each contractor. When you contact the Houston Better Business Bureau, ask if there are any recent negative or unresolved complaints on file. Remember, no listing at all is not necessarily a positive sign. You might also consider visiting such websites as HomeAdvisor.com and the Angie’s List website. The latter one now allows everyone access to most general information for free. Also check the name of the owner(s) of the company. Many times, unscrupulous contractors form new companies to hide their real reputation. Check with the Secretary of State in the state in which the company is incorporated and get the names of individuals shown as officers and directors;

5. Get every contract term in writing – never agree to a mere oral contract for this type of work. Also, avoid signing a contract that’s missing key terms, due dates, or estimated amounts for materials. You can be sure that if you let any lines remain blank, they’ll often be filled in later with terms that greatly benefit the contractor at your expense. Also, keep in mind that if the main contractor fails to pay all subcontractors, they can place liens on your home until you pay them. If the contractor disappears, most courts will hold you liable for the unpaid wages and materials;

6. Find out if the contractor is fully licensed to do the type of work you want, based on Texas law. If you’re unfamiliar with the laws in this area, call your Houston business law attorney here at Murray Lobb for timely advice. Also, make sure the contractor will be securing all required permits before the two of you sign a contract and let the work begin. Keep in mind that it can be a a negative “red flag” if the company says it’s your responsibility to obtain the permits;

7. Inquire about the type of insurance the contractor carries. The company should normally be carrying worker’s compensation, personal liability, and property damage coverage. Don’t just take the company’s word – ask to see proof (insurance certificates) clearly indicating that all such policies are currently in force;

8. Request the inclusion in your contract of a “sign-off checklist” tied to all payments. This will help you hold on to your property and hopefully avoid the placement of any liens upon it because your general contractor left the area, without paying all subcontractors.

9. Obtain your own financing if you can’t pay with a check or credit card. Never sign up for financing through a lender suggested by the contractor. It’s never wise to go through a lender who is a close associate of your contractor since critical terms may be hidden from you. If you can’t pay “cash” – and many people cannot – carefully review the interest rates and fees various banks or credit unions are offering before hiring a contractor

10. Move forward cautiously if you still have a mortgage on your home. Be sure to contact the bank holding the mortgage and obtain its written approval of the contractor you are hiring. (It’s always possible that the bank may already have a short list of reputable contractors that you can choose from when making repairs).

The attorneys here at Murray | Lobb, PLLC would like to help you sort through this daunting task by offering to review any contracts from contractors who want to perform work on your house. 

Please remember that our firm is here to help you as you try to rebuild your home and your life. (If you’re in need of immediate financial or other emergency assistance due to the hurricane, please visit this federal government website.) We look forward to helping you when you call.