 By Attorney Edward Jesson
In the employer/employee relationship, non-compete agreements get a lot of attention, but non-solicitation agreements should not be ignored. Non-solicitation agreements are agreements either to not to solicit a business’s customers or its employees. Employees could be asked to sign these agreements as well as other businesses. If the latter, courts will generally allow businesses to contract with one another how they see fit. However, courts closely scrutinize non-solicitation agreements that a business asks an employee to sign. The purpose of a non-solicitation agreement is to ensure that a former employee cannot steal the employer’s customers or poach the employer’s current employees to go and work for a competitor. In order for a non-solicitation agreement to be enforceable, it must be: (1) in writing; (2) part of an employment contract; (3) based on valuable consideration; (4) reasonable as to time and territory; and, (5) designed to protect a legitimate business interest. These factors are very similar to what courts look at when evaluating non-compete agreements, but, generally in North Carolina, non-solicitation agreements are easier to enforce. The “in writing” and “part of an employment contract” prongs are easy to satisfy. Furthermore, courts in North Carolina have routinely held that non-solicitation agreements protect a legitimate business interest. The “valuable consideration” and “reasonable as to time and territory” prongs are where people often get tripped up. Valuable consideration is generally the job itself (meaning the non-solicitation provision is included in the employment contract at the very beginning as a condition of taking the job) or it can be in the form of a raise after the fact. Courts look at the time and geographic scope limitations in conjunction with each other. For example, a longer period may be permissible if the geographic coverage is small. Two years is generally held to be enforceable, though longer periods have been held enforceable under unique circumstances. As to geographic scope, courts will usually look to: (1) the area of restriction; (2) the area assigned to the employee; (3) the area where the employee actually worked; (4) the area in which the employer operated; (5) the nature of the business involved; and (6) the nature of the employee’s work duties and knowledge of the employer’s business operation. Additionally, courts in this state will only prohibit the former employee from soliciting customers with whom the employee had contact with or had intimate knowledge of during their former employment. If a former employee violates the agreement, the business can seek an injunction (a court order prohibiting the employee from further breaches); compensatory damages (such as lost profits); and, in egregious situations, treble damages (three times the compensatory damages). Businesses may also write liquidated damages clauses into the contract that sets the amount of damages up front. However, these are also carefully scrutinized by the court so it is important to make sure that any liquidated damages provisions are properly drafted. If you need assistance in drafting, reviewing, or enforcing a non-solicitation agreement that you believe an employee has breached, the attorneys at Jesson & Rains are available to assist.
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 By Tony Cline
Data privacy is a hot topic in the worlds of business and government. Around the world, more and more governments are developing data privacy laws that apply to those who conduct online business within their borders, even if the business is located outside those borders. The European Union has one of the most well-known and strictest data privacy laws known as GDPR. China, Canada, and Brazil, among others, have their own versions of a data privacy law. Some laws require specific information to be included in the website’s privacy policy, limits on what data the company may collect, with whom it may be shared and under what circumstances, and the consumer’s right to know, access, and correct or erase that data. Failure to adhere to these laws can result in very large fines. In the United States, the only federal statute on the topic is the Children’s Online Privacy Protection Act (“COPPA”). COPPA is targeted at protecting children younger than 13-years-old from having their information collected, their activities tracked, and from being targeted in online advertising without parental consent. California was the first state to create its own data privacy law when the California Consumer Protection Act took effect in 2020. Colorado, Connecticut, Utah, and Virginia all have their own data privacy laws taking effect in 2023. These state statutes go beyond COPPA’s focus on children’s online data and extends protections to the data of all adults. These statutes variously enact restrictions on the collection of sensitive data, sharing of consumer data, and use of such data to profile consumers for advertising purposes. The laws also enshrine several shareholder rights, including the right to correct or erase the information collected, and they institute requirements on websites’ privacy policies. Because it is likely that states will continue to legislate in this area, businesses can expect a complex regulatory environment if their websites collect consumer data. Consumer data includes information as simple as email or addresses. Violating the laws can lead to very high fines and other penalties. In order to make sure that your company is following all of the applicable laws on data privacy, contact Jesson & Rains PLLC and put our legal team to work for you.  By Tony Cline
We say this over and over again: everyone needs a will to direct who gets their property when they die and avoid the default inheritance laws of this state. But the truth is, for some people, dying without a will and having their assets go to their “intestate heirs” is okay by them. However, in a country where families are having fewer children, and people are making the decision to cohabitate without getting married, the number of people who will leave behind no intestate heirs will only increase in the future. If you die without a will and with no intestate heirs, your assets will “escheat” to the state, meaning that all of your property, real, personal, and intangible, will become the property of the state of North Carolina. If you have no intestate heirs and do not want the state to take your assets, you must have a will. Even a simple will can prevent escheat by naming the desired recipients for your property. Oftentimes, people without intestate heirs will choose a charity, which they prefer over the government. Even if you currently have intestate heirs, there is no guarantee they will survive you, so naming backup beneficiaries can help prevent escheat. If you need assistance with drafting a will, call Jesson & Rains PLLC for assistance.  By Attorney Edward Jesson
Copyright and trademark are two different areas of the law that often intersect with each other. A trademark can be any word, phrase, design, or combination of these things that identifies a business’s goods or services. A copyright is an original work by an author with at least a minimum level of creativity, such as a book, painting, photograph, or song. A recent lawsuit involving SweetWater Brewing Company brings some of the nuances and risks involved in these areas of the law to light. SweetWater Brewing has been using a trout image in its trademarked logo since 1996 after it paid a friend of the founders, Mr. Fuss, $500 to draw the trout in question. Mr. Fuss is now claiming he owns a copyright to the drawing of the trout, and that there was an “understanding” between himself and SweetWater that the value of his rights to the copyright would grow as the value of SweetWater and its intellectual property grew. When SweetWater was recently bought by another company, Fuss sued SweetWater, claiming that he was owed $31 million dollars for the value of the trout drawing. SweetWater has, in turn, sued Mr. Fuss in federal court requesting a declaration from the court that SweetWater can continue to use its trademarks moving forwards without interference from Mr. Fuss. Had Mr. Fuss been an employee of SweetWater when he drew the trout, or had a comprehensive agreement been entered into between Mr. Fuss and SweetWater at the beginning, the current litigation could have been avoided, saving all the parties lots of money and time. Generally speaking, under copyright law, the author of the original work owns the copyright. An exception to this general rule is where the work is made for hire. Thus, if the work was made by an employee in his or her scope of employment, the employer holds the copyright to the work. However, if the individual creating the work is an independent contractor instead, that independent contractor will own the copyright to the work. Therefore, it is very important that companies dealing with independent contractors have them sign agreements whereby the independent contractor assigns the copyrights to the company who is paying them. The trout image was created long before SweetWater grew into the company it is today, and that spotlights a reason why planning for these eventualities before they become bigger issues is so important, even when a business is in its startup phase. Should you need assistance with navigating the sometimes complex law surrounding copyright and trademarks, the attorney at Jesson & Rains will be happy to assist.  By Meg Abney
Cryptocurrencies like Bitcoin have gained popularity with investors for years, and around 16% of Americans now report that they have invested in or traded cryptocurrency (crypto). Most of these cryptocurrencies use decentralized networks based on blockchain technology—essentially a ledger that is enforced by a large network of computers. However, the decentralization that makes crypto so popular also means that failure to plan for death or incapacity can prevent your loved ones from accessing your digital assets. Taking advantage of the blockchain now shouldn’t mean blocking loved ones from inheritance in the future. Read on for some estate-planning tips to help protect your assets. What happens to my crypto when I die or become incapacitated? Like funds in a bank account, cryptocurrency remains wherever it was stored, usually in a digital wallet or with a third-party holder. But unlike a bank account, your executor or agent under a Power of Attorney cannot simply request access to these funds upon your death or incapacity. Instead, you will need a method to provide your executor or agent with your keys and seed phrases. Failure to do so could mean that your loved ones never see these funds. Can I just leave my crypto in a will? Yes, but your executor will still need to gain access to it, and remember that your will becomes public record, so you should not include any sensitive information regarding your cryptocurrency. A simple way to communicate this information is by drafting a separate “access plan” that you keep with your will that describes your digital wallets, passwords, keys, and seed phrases. What is the best way to plan for the future of my crypto? While everyone’s situation is different, establishing a living trust is one of the best ways to ensure that your digital assets are not lost after your death. Some distinct advantages of establishing a trust for your cryptocurrency include:
With a living trust, you continue to maintain control over your cryptocurrency during your lifetime. After death, your successor trustee administers your trust according to your instructions. Setting up a trust involving cryptocurrency can be complicated, so it is best to consult with an experienced estate planning attorney. Please call Jesson & Rains if you have questions.  By Attorney Edward Jesson
In January of this year, the North Carolina legislature passed some significant changes to North Carolina’s mechanics lien laws that went into effect on March 1, 2022. The main changes to the law make void and unenforceable contractual provisions requiring lien waivers as a condition for progress payments, modify the attorneys’ fee provisions contained in the lien statutes, and affect the design-build contracting process. Chapter 22B of the North Carolina General Statutes, titled “Contracts Against Public Policy,” has been amended to include a new Section 22B-5, which provides that requiring someone to submit a waiver or release of lien as a condition to receiving progress payments under a construction agreement or design professional agreement are void and unenforceable unless limited to the progress payments actually received in exchange for the lien waiver. In other words, broad blanket lien waivers in exchange for progress payments are now unenforceable unless the lien waiver is specifically drafted and narrow enough in scope to only apply to the money actually being received by the party applying for payment. The attorneys’ fee section of the mechanics lien statutes has been updated to specify the method that the court or arbitrator must use to determine which party is the “prevailing party” in circumstances where attorneys’ fees may be at issue. Instead of the Plaintiff in a lawsuit having to obtain a judgment of at least 50% of the amount it claimed, which was the case prior to March 1, the court or arbitrator will look to the party whose monetary position at the beginning of the trial is closest to the amount of the final judgment or arbitration award. The new statute also specifically allows the court or arbitrator to look at several factors, including the economic circumstances of the parties or whether one party unreasonably exercised its superior bargaining power (e.g., a very wealthy general contractor working with a relatively small subcontractor). This process, while a big change to the existing law, should have the effect of giving much more certainty when evaluating whether the court or arbitrator is likely to grant attorney’s fees when it comes time to try a case. The changes to the design-build process only appear, at this time, to affect the design-build process as it applies to State funded projects. The changes include adding statutory definitions for “design builder,” “design professional,” “first-tier subcontractor,” “licensed contractor,” “licensed subcontractor,” “unlicensed subcontractor,” “costs of the subcontractor work,” “general conditions,” and “key personnel.” The changes also now require design builders responding to requests for proposals from the government to select their project team by one of two methods that are outlined in the new law. Furthermore, the law makes some changes specific to the bidding process for publicly funded bridging contracts and makes it clear that the requests for proposals public notice provisions require the owner to provide a list of general conditions for which the design builder needs to provide a fixed fee in its response to the proposal. This is not an exhaustive list of the changes that have been made, but given the nature and number of changes to the public design-build process, it is important to carefully review these new requirements prior to bidding on publicly funded design build projects. These new laws will have a significant impact on many contracts used in North Carolina, litigation over attorneys’ fees in lien claims, and those design-builders engaged in the public bidding process. Should you require assistance with any of these changes, please do not hesitate to call Jesson & Rains. |
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