 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 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!  By Attorney Kelly Jesson
We hope everyone has had a wonderful holiday so far. People frequently make new year’s resolutions to stop bad habits or improve their lifestyle, but what about a new year’s resolution for your business? Make 2022 the year that you start running your business and stop the business from running you. One key to making this switch is delegating tasks to others, and Jesson & Rains is happy to take a few things off your plate. Last year, we started offering annual plans that include some of the administrative annual tasks with which businesses (i.e. YOU) have to comply, such as filing annual reports and keeping meeting minutes, and offer cost-effective peace of mind with discounted legal services, registered agent services, and quarterly or unlimited calls. There’s never a reason not to consult your lawyer if we make it easy for you. Not running your business properly can result in a loss of asset protection, which is one of the whole points of formalizing your business. We wrote about this in a past blog HERE, and this LINKS to our annual plan packages. Give us a call if you would like more information! Start 2022 off right!  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!  By Attorney Edward Jesson
Last December, Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020—better referred to as the CASE Act. The CASE Act instructed the U.S. Copyright Office to create the Copyright Claims Board (“CCB”) as an efficient and user-friendly option to resolve copyright disputes where the amount disputed is less than $30,000.00. Generally speaking, before the CASE Act, a copyright holder would have had to file a lawsuit in federal district court in order to enforce his or her copyright. The problem with this is that federal litigation is both expensive and time consuming. Many professional content creators and small businesses simply could not afford to enforce their rights under copyright law. Moreover, the people who were infringing on those rights knew that in all likelihood nothing would be done as a result of their copyright infringement. The CCB will be permitted to hear three different types of claims: (1) Creators bringing infringement claims against people infringing on their copyrights; (2) Users can request that the CCB issue a statement ruling that their use of something does not infringe on the copyright owner’s rights; and (3) Users who receive a Digital Millennium Copyright Act (“DCMA”) takedown notice (similar to a cease and desist) are able to challenge that notice if they feel it is inaccurate. It is important to note that, if the copyright holder prefers, they can still bring the claim in federal district court (assuming all other jurisdictional factors are satisfied) or move forwards with mediation and arbitration. Also, the Respondent can “opt-out” of the CCB proceeding, requiring the copyright holder to move forward with a federal lawsuit. However, there are several incentives for those named as respondents in CCB proceedings to opt-in to the proceeding. For example, on top of the cost of litigation in federal court, a successful plaintiff in a federal proceeding can be awarded up to $150,000.00 per work infringed whereas, in the CCB setting, that amount is limited to $15,000.00 per work infringed. The CASE Act also caps the damages that can be awarded by the CCB at $30,000.00 whereas, in federal court, those damages are unlimited. Once the CCB is fully established (as of writing, it is currently still in the rule making stage), it will provide small businesses and individual creators a cost and time effective way of enforcing their copyrights under federal law. If you believe that your copyright has been infringed or that you have been wrongly accused of infringing on a copyright, please call the attorneys at Jesson & Rains for a consultation on the matter today. |
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