Newco Project Company Legal Due Diligence Checklist & Recommendation to Venture Capital

Topics: Occupational safety and health, Occupational Safety and Health Administration, Law Pages: 5 (1425 words) Published: July 1, 2006
Newco Project Company Due Diligence Checklist
Five primary legal issues need to be analyzed before investing in the Newco Project Company. The following legal due diligence checklist will help assess the viability of the company: Chemical, fertilizer, and pesticide poisoning and damage Liabilities of accidents towards employees, renters, and bystanders Potential for illegal workers

OSHA-related litigation
Meditation and arbitration conflict resolution

The lawn care industry uses pesticides and fertilizers to make lawns look great. Unfortunately, these chemicals are poisonous which can potentially harm people, pets, and animals. The lawn could be unintentionally damaged causing the property owner to sue. A windy day could blow these harmful substances onto neighbor's lawns killing or damaging their plants. A local law in Erie County required lawn care services to notify neighbors at least two days in advance before spraying or using pesticides. Communities could sue the lawn care company if Joe does not take these requests seriously. The company needs to respect the client's neighbors. Poisoning due to pesticides is possible, but less likely to happen frequently. Joe could try to avoid the dangerous chemicals issues by using organic fertilizers. The company also operates and rents heavy machinery that can cause accidents, injuries, and death. The employees need to experience and trained. The company could be liable when renting the equipment if the renter hurts herself or himself or any bystanders. Negligent torts could occur when the company failed to use reasonable care. The machinery needs to be checked for safety and maintained before lending out to clients. Dangerous lawn equipment kills 75 people per year along with injuring another 20,000 people. Children account for 20% of deaths due to moving lawnmowers. This is a very real threat. The risk is for liability is high. Since employees are seasonal and turnover is high, Joe has the potential risk of hiring illegal immigrants. The company must request proper identification such as driver's license, passport, or working visa. No photocopies are allowed. The company needs to keep employee records. Therefore, an immigration officer or local state office could have access to payroll records if required. The company has exposure to the local, state, and federal tax offices for reporting wages. The liabilities from arising hiring illegal immigrants can be high. The Occupational Safety and Health Administration (OSHA) will inspect any business based on accidents, employee complaints, or for general compliance. For example, it will review the company for the liability of accidents towards employees, renters, and bystanders due to dangerous lawn care equipment. The lawn care business was targeted in 1997 and Joe's business needs to be legally compliant. Pest control companies are required to have written safety programs in place for hazard control, bloodborne pathogens, and respiratory protection (Pinto, 1999). Grounds care safety also extends to basic safety rules, accident reporting, first aid, equipment safety, and general guidelines (Camplin, 2001). While this risk is also possible that the OSHA will review the company, these risks can be mitigated with proper and reasonable precautions such as safety programs. Mediation and arbitration are the preferred methods of conflict resolution being utilized by the company. These methods require a mediator with expertise in the lawn care profession. If these legal proceedings do occur, the legal costs and expenses will be much lower than if the company goes to court. Another benefit is the reduced time the two parties can resolve their differences. Sometimes, the relationship can be salvaged which will help the company to do future business contracts with the client. The company could also avoid negative publicity with these private legal proceedings....

References: Camplin, J., (2001, October). Safety on the Grounds. Maintenance Solutions, 9(10), 20-21.
Pinto, L., (1999, March). Company Safety Programs that must be in Writing. Pest Control, 67(3),
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