 By Attorney Kelly Jesson
October is National Women’s Small Business Month. Jesson & Rains is proud to represent and work for numerous women-owned businesses. Charlotte is an exciting place for women entrepreneurs. As we previously reported, in 2018, it was named the “#1 City in America for Female-Owned Business Growth.” Women-owned business growth continued across the country in 2019. Unfortunately, due to the pandemic, Barbara Weltman reports that the number of women-owned businesses fell by 25% from February to April 2020. However, there are plenty of indications that women entrepreneurship is back on the rise. Participation in women’s networking groups and trade associations is key. Attorneys Kelly Jesson and Danielle Nodar are members of the following groups: National Association of Women Business Owners (NAWBO), Women Lawyers of Charlotte, National Association of Women in Construction (NAWIC), and Women in Networking. Please reach out to Kelly or Danielle if you’d like to drop in on a meeting one day!
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 By Associate Attorney Danielle Nodar
When a business is formed and registered with the North Carolina Secretary of State’s Office, the business must comply with certain filings in order to remain in good standing and able to do business in the state. Scammers are aware of these requirements and target North Carolina business owners through the mail. These mailings may look like official government documents, and they quote statutes, cite scary penalties, and prompt the business to pay a fee for a certain “required” form. One misleading mailing comes from C.F.S., a Michigan company that sends a solicitation for preparation and filing of 2022 annual reports for a fee of $295. The solicitation indicates that the company is not affiliated with the NC Secretary of State and that the annual report may be filed directly by the business owner with the NC Secretary of State’s Office. However, if you are not careful, you may pay a company for a service that you can complete yourself. Businesses can file their annual report themselves and pay a fee of $200 directly to the NC Secretary of State. Another scheme targeting new business owners is from a company called NC Certificate Service, which mails out a form requesting businesses to order an NC Secretary of State Certificate of Existence for $82. However, there is no state requirement that each registered business entity obtain an annual Certificate of Existence. A Certificate of Existence is only required if a business does business in another state and can be ordered by the business directly from the NC Secretary of State for $15.00 or less. Finally, another mailing scheme comes from Annual Minutes Filing Services, LLC, also based out of North Carolina, offering to prepare annual minutes to business entities in North Carolina for a fee of $159. The mailing indicates that the company is not affiliated with any government agency in North Carolina but fails to mention that meeting minutes for a company are internal documents that are not required to be filed with the Secretary of State. There are ways you can protect yourself when receiving a document requesting additional filings or fees for your business. First, always read the fine print. These mailers often come from private companies that have no affiliation with the North Carolina Secretary of State or other government agency, and many are from out of state. Also, some mailings may indicate that you are not obligated to obtain the services to meet North Carolina’s requirements for your business. Do not blindly mail in a check when you receive mail like this. Read it carefully. Contact your attorney or the Secretary of State’s office if you are concerned about a required form your business receives in the mail.  By Attorney Edward Jesson
A Sheriff’s deputy has just showed up at your door and handed you a summons. Or you received a summons via FedEx or Certified Mail. Do you need to hire a lawyer to move forward with things? This is highly dependent on a lot of things, but often most importantly, whether the Defendant that has been sued is an individual or a business entity. In North Carolina, an individual has the right to represent his or herself. So, if you have been sued in your individual capacity you have the right to represent yourself in court. This is known as proceeding pro se. Sometimes we even recommend our clients proceed pro se. For example, if an individual has been sued in small claims court for a small amount of money, often times the legal fees that might be incurred in defending that small claims action would exceed the damages that were being claimed. Moreover, small claims court is fairly well designed for those who wish to proceed pro se with a lot of the formalities that are present in District and Superior Court being relaxed. However, if the summons is for District or Superior Court, while an individual is still permitted to represent themselves in those proceedings, generally we would advise against that. In District and Superior Court the North Carolina Rules of Civil Procedure, the North Carolina Rules of Evidence, and applicable Local Rules, and various other rules and regulations apply. The majority of the time we find that individuals proceeding pro se end up getting tripped up by these rules—often with serious long lasting financial consequences. However, things are much different if the Defendant being sued is a business entity such as a corporation or a limited liability company. In North Carolina a business entity cannot represent itself nor can a member or owner of the business represent the business in court unless that individual is an attorney licensed to practice law in North Carolina (or has been admitted to practice in North Carolina on another basis). If a business owner (that is not permitted to practice law in North Carolina) files a response on behalf of the business that they own, they are engaging in the unlicensed practice of law which is a Class 1 Misdemeanor in North Carolina. Any documents filed by an unlicensed attorney could be stricken by the Court which could result in a judgment being entered against the Defendant, even though the Defendant may have thought that they properly responded. Repeated violations of the law could result in financial sanctions being awarded by the Court or injunctions being sought by the local district attorney. Generally speaking, if you receive a summons, regardless of what it is, it is in your best interest to at least consult with an attorney to see what your options are. Depending on the situation, it may be advisable to move forward and represent yourself. However, in a lot of circumstances the litigation can be a mine field for those who are not used to appearing in court on a regular basis. If you receive a summons, or have any other questions about the litigation process, the attorneys at Jesson & Rains are ready to help.  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.  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 Associate Attorney Danielle Nodar
Marketing your business has extended beyond websites and social media, with many businesses choosing to reach their customers directly via text messages. While this form of marketing is a great way to communicate promotions, offers, or new products to your customers, businesses must adhere to text message privacy laws or risk incurring hefty penalties. For example, a violation of the Telephone Consumer Protection Act (TCPA) can result in a fine of $500 to $1,500 per violation, which can add up quickly if multiple messages are being sent to multiple consumers. Electronic communications, including phone calls, e-mails, and text messages, are regulated in the United States under two federal privacy laws: The TCPA and the CAN-SPAM Act. The TCPA is the primary telemarketing law in the US and prohibits calls and text messages to cell phones unless the consumer has provided express written consent. Express written consent must be related to receiving promotional text messages--not just being contacted by the company. For example, having a customer provide their phone number to set up an account or as part of a transaction does not constitute consent to receiving future promotional messages. To comply with TCPA’s consent requirement, businesses should provide a consumer with a clear, conspicuous disclosure of the kinds of text messages they will receive before sending them promotional messages, the approximate number of messages they will receive in a certain time frame, and how to get more information about the subscription program and opt-out of future messages. Many times, this constitutes an introductory text message that provides information about the promotional program, message and data rates, and a prompt that allows a consumer to enter “STOP” to unsubscribe or “HELP” to receive further information about the texting program, including links to the company’s privacy policy or terms and conditions. Another law businesses must comply with when engaging in text message marketing is the CAN-SPAM Act. This is the primary text messaging spam prevention law in the US. Just like TCPA, a business needs a customer’s consent before sending commercial text messages. The commercial text messages must clearly disclose that it is an advertisement and provide an easy, clear way to opt-out of receiving future messages. When a consumer opts-out of a text message campaign, the business must honor the request within 10 days. CAN-SPAM Act does not apply to existing relationships or transactions, such as order or delivery confirmation texts. However, if the main content of a message is commercial, the CAN-SPAM Act will apply, even the message also includes other transactional information. In order to comply with these two laws, businesses must ensure that they have a compliant procedure for obtaining written consent from a consumer prior to them receiving promotional text messages. Some options include keyword texting, where a customer will text a keyword from their phone to join, an online form or website pop up that allows a visitor to opt into the program, or a paper form. Businesses should also keep records of a customer’s consent, including when they consented and if they opted out. If you are thinking of using text message marketing for your business, please call Jesson & Rains to learn more about how to properly start a texting campaign and best practices for protecting your business! |
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