Memorandum

You'll respond to the memorandum received from your supervisor.

To:Student

From:Supervisor

Re:New Client, Career Institute of America, Inc. (CIA)

Date:December 6, 20

Facts

We've just met a new client, the founder and 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 U.S. auto industry, one of this country's largest industries. The client 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, which instructors must sign when they agree to work for the company. He wants to be sure they're viewed as true independent contractors, and not construed as employees of the company.

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, a type of grant awarded only to nonprofit educational organizations. Since this was a one-time grant, they must now make their income from tuition for online courses and in the two small classrooms where 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.

1. 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.
2. 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.