Ch. 16 Legal Guidelines and Business Considerations Flashcards
(38 cards)
1
Q
Typically, what structures do for-profit businesses operate under?
A
- Sole Proprietorship (majority)
- Partnership
- Corporation
2
Q
What is a sole proprietorship?
A
- Business owned and operated by one person
- Does not require any formal paperwork and minimal ongoing paperwork is necessary (comparatively) to sustain the business
- Profits of business belong to owner, but financial losses and liabilities are also the sole responsibility of the owner
- Does not have a corporate veil (can wreck business and personal finances)
3
Q
What is a corporate veil?
A
- Shields the actions of the business from the personal responsibility of the owner, even if the owner conducts business under a different company name
4
Q
What is a partnership?
A
- 2 or more people who agree to operate a business and share profits and losses
5
Q
What is a general partnership?
A
- Joining of 2 or more individuals to own and operate a business
6
Q
What is an implied partnership?
A
- Individuals act as partners (such as by sharing a company checking account or jointly signing for a business loan)
7
Q
What is a limited partner?
A
- An individual who retains no legal liability beyond his or her initial investment and does not have any formal input regarding partnership operations
8
Q
What does flow-through taxation refer to?
A
- Financial profits and losses flow from the business directly to the investors. The business does not pay any taxes; rather, business profits are taxed on the investors’ individual tax return and losses can be utilized by the investors to offset other personal liability
9
Q
What is a corporation?
A
- A legal entity, independent of its owners and regulated by state laws; any number of people may own a corporation through shares issued by the business
10
Q
What does the corporate veil protect investors from?
A
- Personal liability
11
Q
What are the main corporation types?
A
- Subchapter S-corporations
- Limited liability companies (LLCs)
- Limited Liability partnerships (LLPs)
- Franchise operations
12
Q
What is a subchapter S-corporartion?
A
- A corporation that does not pay any income taxes. Instead, the corporation’s income or losses are divided among and passed through to its share holders
13
Q
What are some pros and cons of S-corps?
A
Pros
- Profits flow through the business to the shareholders and are taxed as ordinary income
- Shareholders are shielded from personal liability (beyond their investments)
Cons
- Must be based in the US and can only have up to 100 total investors
- Can only issue one form of stock, meaning that every share must have the same voting rights and divided allotments
- Extensive paperwork
14
Q
What is a C-Corporation?
A
- A corporation that is designed to operate in multiple countries and with various types of investors
15
Q
What is the difference between an employee and an independent contractor?
A
- Employees “regularly” work for their employer
- Independent contractors typically are hired on a short-term basis to perform a specific or series of tasks
16
Q
What elements are necessary to form a binding contract?
A
- An offer and acceptance with a mutual agreement of terms
- Consideration (an exchange of valuable items, such as money for services)
- Legality (acceptable under the law)
- Ability of the parties to enter into a contract with respect to legal age and mental capacity
17
Q
What does the statute of frauds refer to?
A
- A contact that must be in writing in order to be enforceable
18
Q
What is negligence?
A
- Failing to perform as a reasonable and prudent person would under similar circumstance
- For PTs, a reasonable and prudent person is someone who adheres to the established standard of care, or expected behavior for a professional faced with similar circumstances
19
Q
What are two acts that result as negligence as a PT?
A
- PT failing to act (act of omission)
- PT acting inappropriately (act of commission)
20
Q
What are the 4 elements that a plaintiff must establish to substantiate a charge of negligence in court?
A
- The defendant had a duty to protect the plaintiff from injury
- The defendant failed to uphold the standard of care necessary to perform that duty
- Damage or injury to the plaintiff occurred
- The damage or injury was caused by the defendant’s breach of duty (proximate causation)
21
Q
What is an agreement to participate?
A
- Designed to protect the PT from a client claiming to be unaware of the potential risks of physical activity
- Should detail the nature of the activity, the potential risks to be encountered, and the expected behaviors of the participant
22
Q
What is an informed consent form?
A
- Demonstrates that a client acknowledges that he or she has been specifically informed about the risks associated with the activity in which he or she is about to engage
- Primarily intended to communicate the potential benefits and dangers of the program or exercise-testing procedures, as wells as possible discomforts involved and potential alternatives
23
Q
What is vicarious liability?
A
- Legal term meaning that employers are responsible for the workplace conduct of their employees
24
Q
What is a waiver?
A
- Voluntary abandonment of a right to file suit; not always legally binding
25
What is gross negligence?
- An action that demonstrates recklessness or a willful disregard for the safety of others
- Occurs when someone deliberately acts in a manner that extends beyond the scope of employment or fails to meet the accepted standard of care
26
What is contributory negligence?
- Laws preventing a plaintiff in a lawsuit who has played some role in the injury from receiving any remuneration
- Not used in majority of states
27
What is comparative negligence?
- A system used in legal defenses to distribute fault between an injured party and any defendant
28
What is the statute of limitations?
- A formal regulation limiting the period within which a specific legal action may be taken
29
Why is it important to keep current and accurate records for every client?
- Information that is not written down did not occur or exist according to the court system
30
What is the Health Insurance Portability and Accountability Act?
- Prevents professionals from printing, emailing, or discussing a client's health information unless the client has granted written permission to do so
31
What is one of the most important things a PT can do to ensure safety for their clients?
- Regularly inspect facilities and equipment and review protocols regarding supervision and instruction
32
What is the difference between general supervision and specific supervision?
- General supervision: involves overseeing a group of people, such as when a group fitness instructor leads a large class
- Specific supervision: occurs when an individual is supervised while performing a specific activity such as what typically occurs during a personal-training session
33
What is an umbrella liability policy?
- Insurance that provides additional coverage beyond other insurance such as professional liability, home, automobile
34
What do the best PT insurance policies cover?
- Cost of a legal defense
| - Any claims awarded
35
What liabilities are often excluded in exercise professional policies?
- Abuse
- Molestation
- Cancer (resulting from tanning)
- Libel
- Slander
36
What is the general 5 step risk management protocol?
- Risk identification (specification of all risks that may be encountered
- Risk evaluation (review risk for probability of risk and severity)
- Selection of an approach for managing each risk
- Implementation (institute the plan)
- Evaluation (continually assess the outcome of risk-management endeavors)
37
What are the selection of an approach for managing risk consist of?
- Avoidance (remove possibility of danger and injury by eliminating activity)
- Transfer (move the risk to others through waivers, insurance policies, etc.)
- Reduction (modify the risks by removing or altering part of the activity)
- Retention (there are risks that will be retained, especially if the removal of the risk would eliminate a potential benefit)
38
When an incident occurs, how should a PT respond?
1. ) Ensure the safety of all individuals involved
2. ) Complete an incident report (note any facts related to the incident and solicit information from any witnesses)
3. ) Retain information in a secure location for future reference
