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Business Law

Early Law Intervention Equivalent to Insurance for your Business

One of the most common, and potentially disastrous, mistakes made by entrepreneurs and even seasoned business owners is failing to invest in legal advice and guidance on the front end of a deal or venture. Instead, they wait until something goes wrong to consult with an attorney.

As discussed on the SharkPreneur podcast, Tampa Bay business law attorney Jeffrey Lieser urges anyone involved in starting or operating a business to think of early legal intervention as insurance for their business. Just as you purchase insurance to protect your business against losses from theft or damage, you should also do what you can to protect against legal disputes that could lead to expensive and time-consuming litigation. The complex nature of business transactions makes it likely that you will be involved in a dispute at some point. That dispute could cost you and your business crucial time and resources and may even lead to the failure of your business. While there may not be a way to prevent all business disputes, you can certainly prevent some disputes and limit the financial repercussions of those disputes you cannot prevent. Consulting with an experienced business attorney before you enter into a contract, form a partnership, or embark on a business venture is the best way to decrease the risk of disputes and mitigate potential damages when a dispute does occur.

Consult the Tampa Bay Business Attorneys at Lieser Skaff Alexander

If you own a business, or you are a potential entrepreneur, remember that early law intervention is the best way to protect the time and money you have invested in the business. Having an experienced business law attorney on board from the beginning of any business transaction or venture should be every bit as important as purchasing actual insurance for your business.

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Business Law

Internal Limited Liability Company (LLC) Disputes: Direct or Derivative Claim?

As a member of a Limited Liability Company (LLC), you may find yourself in a position in which you believe legal action must be taken to prevent or remedy wrongdoing. If so, you may be entitled to file a direct claim or a derivative claim. If you file a derivative claim, you must first make a formal demand unless the exception to the demand requirement is applicable.

Direct vs. Derivative Claims

A direct claim is a claim based on a member’s right of action against another member. As such, a direct claim is made directly on behalf of the member or manager of the limited liability company against another member or manager of the limited liability company. For example, if a member was singled out and not allowed to vote on a particular company action, that harm might form the basis of a direct claim.

A derivative claim is based on a wrong that impacts the company itself. A derivative claim, therefore, stems from the company’s right of action not an individual member’s right of action. In a derivative lawsuit, a member seeks to enforce a right or to prevent/remedy a wrong to the company when the company has failed or refused to do so itself. Misappropriation of the limited liability company’s assets, for instance, might give rise to a derivative action. Although that misappropriation may indirectly harm the members of the LLC, the primary harm is to the LLC itself.

Derivative Claims and the Demand Requirement

If you are entitled to bring a derivative claim you need to first make a demand unless the exception to the demand requirement applies.  In the State of Florida, LLC derivative claims are governed by Fla. Stat. § 605.0802 which allows a member to pursue a derivative action to enforce a right of a limited liability company “if the member first makes a demand to the other members (in a member-managed limited liability company) or a manager (in a manager-managed limited liability company) requesting that either the members or managers cause the company to take suitable action to enforce the right and then the members or other managers do not take the action within a reasonable time, not to exceed 90 days.”

The only exception to the demand requirement under Florida law is found in subsection (2) of the statute which allows a derivative action to proceed without first making a demand “if a demand (as described above) would be futile or irreparable injury would result to the company by waiting for the other members or managers to take action to enforce the right.”

Contact the Tampa Bay Business Attorneys at Lieser Skaff Alexander

If you are a member of an LLC and believe you are entitled to file an action against a limited liability company, consult with an experienced business law attorney first to determine what type of action to bring and whether the pre-suit demand requirement applies.

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Business Law Employment Law

Executive order calls for more aggressive anti-trust enforcement and limited use of non-compete agreements

What is the status of Executive Order 14036?

On July 9, 2021, President Joe Biden issued an Executive Order (EO 14036) titled “Promoting Competition in the American Economy.” The Order includes 72 initiatives to tackle what Biden perceives to be the most pressing competition issues across the economy. The EO specifically encourages anti-trust agencies to focus their enforcement efforts in key, identified markets and coordinates other agencies’ ongoing response by calling on the Department of Justice and the Federal Trade Commission to enforce antitrust laws more vigorously. The EO itself addresses various topics and markets; however, its discussion of the labor market is applicable to the service industry’s hiring of employees who may be subject to non-competes, non-solicitation agreements or other restrictive covenants and preparation of same for these employees.

The EO states that companies stifle competition in labor markets with non-compete clauses by preventing workers’ ability to demand higher wages and to create a better work environment. Therefore, the EO encourages the FTC to limit or ban non-compete agreements entirely. The specific language of the EO addressing this issue is as follows:

To address agreements that may unduly limit workers’ ability to change jobs, the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.

As to the current status of the FTC’s enforcement of the EO, there does not appear to be any new developments related to the actual enforcement of any non-competes or non-solicitation agreements since the EO was signed. Since July 9, 2021, only nine cases have been decided involving the FTC. Only one case involves an antitrust violation (DaVita acquiring substantially all of the dialysis assets of the dialysis business of the University of Utah)., No case addresses the enforcement of non-compete agreements or other restrictive covenants.  Id.

Additionally, the FTC has had a total of 77 press releases since July 9, 2021; however only one addresses a workshop that will be held regarding this topic. On October 27, 2021, the FTC and the DOJ’s Antitrust Division announced that they will host a virtual workshop called “Making Competition Work: Promoting Competition in Labor Markets” on December 6th and 7th via webcast on the FTC’s website. Below is an excerpt from the FTC’s website regarding the workshop and registration:

Making Competition Work: Promoting Competition in Labor Markets

DEC 6, 2021 9:00AM-5:00PM
DEC 7, 2021 9:00AM

EVENT DESCRIPTION

“Making Competition Work: Promoting Competition in Labor Markets,” will bring together lawyers, economists, academics, policy experts, labor groups, and workers, and will explore recent developments at the intersection of antitrust and labor, as well as implications for efforts to protect and empower workers through competition enforcement and rulemaking.

The workshop will bring together lawyers, economists, academics, policy experts, labor groups, and workers to discuss efforts to promote competitive labor markets and worker mobility. They will specifically address competition issues such as the increased use of restrictive contractual clauses in labor agreements, including non-competes and non-disclosure agreements. Panelists will also discuss potential steps antitrust enforcers may take to ensure fair competition for workers.

Attorneys and scholars who study competition policy expect the FTC to propose a federal rule that would outlaw non-competes for workers below a certain income level and may impose limits on the duration or scope of the clauses. But they believe an outright ban is unlikely. Id. Attorneys writing on this issue agree that there is no reason for employers to abandon non-compete agreements at this point. However, they should re-evaluate their non-compete agreements by considering whether they target a protectable interest, such as consumer contacts, trade secrets, and goodwill.  Id. They also point out that the EO does not address trade secrets and, therefore, they encourage employers whose businesses are dependent on trade secrets and proprietary information to consider a trade secrets agreement separate from a non-compete agreement. Id.

To provide a brief history of this similar effort to limit or ban non-competes, Senator Marco Rubio had introduced a bill “Freedom to Compete Act” that sought to amend the Fair Labor Standards Act of 1938 to protect entry-level, low wage workers from non-compete agreements back in January of 2019. However, this bill was never signed into law. More recently in February of 2021, the “Workforce Mobility Act of 2021” was introduced in both the House and the Senate. It sought to limit the use of non-competes to situations in which a business is sold or dissolved, authorize the Department of Labor to take steps to educate the general public about non-competes, and give workers a private right of action to sue for its violation. However, there has been no activity on this legislation since then, which likely explains Biden’s decision to sign the EO.

Where Does Florida Fall Regarding the Executive Order?

So far, Florida has not taken any action in response to the EO. Currently, there is no proposed legislation pertaining to non-competes or other restrictive covenants. There are also no proposed amendment(s) to the current governing statutes §§ 542.335 and 542.336 regarding any limitation or ban of non-competes in this context. There does not appear to be any developments on this issue involving non-competes or other restrictive covenants since the Florida legislature passed § 542.336, which became effective on June 25, 2019.[1] Additionally, no cases addressing these statutes appear to have been decided on appeal since the EO was signed. However, other states like Nevada, Oregon, Illinois, and the District of Columbia have passed legislation either limiting or banning non-compete agreements. Id.

Where Does Florida Fall Regarding Enforcement of Non-Competes Generally?

It is not surprising that Florida has not (yet) reacted to the EO in any measurable way to restrict or ban non-compete agreements or restrictive covenants, considering that the language within §542.335 appears to favor employers in the enforcement of these agreements. For example:

  • Florida law requires courts to construe restrictive covenants in favor of providing reasonable protection to all legitimate business interests – 542.335(h)
  • What is a legitimate business interest?
    • Trade secrets
      • What is a trade secret?
        • Defined as information (including a formula, pattern, compilation, program, device, method, technique, or process) that derives an actual or potential independent economic value from not being generally known to or readily ascertainable by other person who can obtain economic value from its disclosure AND
        • Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Fla. Stat. 688.002(4))
    • Valuable confidential business/professional information that otherwise does not qualify as trade secrets
    • Substantial relationships with specific prospective or existing customers
    • Customer, patient, or client good will associated with:
      • Ongoing business practice by way of trade name/trademark, service mark or trade dress
      • A specific geographic location
      • A specific marketing or trade area
      • Extraordinary or specialized training
  • Florida law prohibits interpreting the restrictive covenant narrowly against the restraint or against the drafter of the agreement – 542.335(h)
  • Florida law also prohibits courts from refusing to enforce restrictive covenants solely on the basis that they violate public policy without making specific findings about the public policy – 542.335(i)
  • Florida law allows courts to enforce restrictive covenants by issuing temporary and permanent injunctions – 542.335(j)
  • Florida law creates a presumption of irreparable injury to the employer seeking enforcement after finding a violation has occurred. – 542.335(j)

The employer must prove that the restrictive covenant is reasonably necessary to protect the legitimate business interest. § 542.335(c). But if the employer establishes the restrictive covenant is reasonably necessary with prima facie evidence, the burden shifts to the employee to prove the restrictive covenant is overbroad, too long or not reasonably necessary. Id. At that point, the Court should only modify the restrictive covenant to what is reasonably necessary to protect the business interest, not eliminate it entirely. Id.

[1] § 542.336 narrowly prohibited and invalidated restrictive covenants for physicians who practice a “medical specialty” in a county where all physicians in that medical specialty are employed by the same entity or its affiliates.

Categories
Business Law COVID-19

Business COVID-19 Waivers for Employees and Customers

The COVID-19 pandemic has taken all of us into uncharted waters. After an unprecedented near nationwide shutdown, many states are going through the process of reopening. For business owners, the ability to re-open is often crucial to the very survival of the business. At the same time, a business may have valid concerns about the possibility that an employee or customer could contract the virus while on the premises, resulting in the filing of a lawsuit against the business. In an effort to avoid costly litigation, some businesses are requiring workers and/or customers to sign a liability waiver — but do waivers actually work?

Are Waivers the New Normal?

Businesswoman hanging an "Open" sign after COVID-19 shutdown.

Just as social distancing and wearing a mask in public have become the new normal, signing a liability waiver before returning to work or entering a business may also be commonplace going forward. The New York Stock Exchange is requiring traders to sign a waiver before entering the trading floor, while Walt Disney Co.’s website cites “severe illness and death” risks for customers at its Orlando, Florida, amusement parks. The Trump campaign even had attendees at a rally sign a waiver agreeing not to sue the campaign if they contract the virus.

Why Are Businesses Requiring Waivers?

Business owners are contemplating the use of waivers to avoid the very real possibility of costly litigation that could ensue if a worker or customer claims they contracted COVID-19 at the business.

Typically, workers are covered under workers’ compensation if they are injured or become ill on the job, but questions remain unanswered regarding Covid-19 coverage. In order to qualify for workers’ compensation benefits, a worker need not prove that the employer did anything wrong, only that the injury or illness is job-related. Illnesses like the cold or flu, however, are not usually covered under Florida’s workers’ compensation laws, because they are seen as a hazard of daily living. Though the Florida Department of Financial Services has issued a directive to honor Covid-19 claims made by frontline state employees (such as police officers, first responders, corrections officers, state healthcare employees, child safety investigators and active national guard members), this directive has not been categorically extended to all employees, which could leave employers vulnerable to negligence lawsuits if Covid-19 claims are treated like cold or flu claims. 

Customers have long been able to pursue a personal injury lawsuit based on the concept of premises liability if they were injured or became ill as a result of the business owner’s negligence. For a business that already suffered significant economic losses during stay at home orders, the prospect of a hefty damages award may be enough to implement the use of a liability waiver.

Does a Liability Waiver Really Work?

It depends. The basic idea behind a liability waiver in the context of the coronavirus pandemic is to protect a business from liability for damages if someone contracts the virus while working or visiting the business. In legal terms, this is accomplished by asking the person executing the waiver to “assume the risk” of contracting the virus. Can a waiver actually protect a business though? The answer is less than certain, – and depends on a variety of factors that are likely to change in the coming months.

Liability waivers have historically been limited by the courts in three important ways. First, only known risks can be assumed by the person signing the waiver –, meaning a waiver must clearly state the risks – (in this case, contracting COVID-19). Second, it must be a voluntary assumption of the risk.  Finally, a waiver must be consistent with public policy, which may present issues for both employee and visitor waivers due to the bargaining position between employees and employers, as well as certain businesses and visitors that are consumers.

Additionally, Florida courts have made clear that they will not enforce waivers that attempt to protect a business from actions arising from the business’s gross negligence or intentional acts.  Likewise, a waiver that requires an employee to waive the right to workers’ compensation or unemployment benefits is also unenforceable.

Should I Require a Waiver for My Business?

If you are a business owner who is concerned about your liability exposure during the coronavirus pandemic, it is in your best interest to consult with an experienced business law attorney before you consider utilizing a liability waiver. Additionally, business owners should carefully analyze the potential non-legal impact of requiring visitors or employees to sign waivers (i.e., potential effect on image). While a carefully drafted waiver may provide your business with some protection, it should be uniquely tailored both to your business and to the ever-changing laws relating to COVID-19

Categories
Business Law COVID-19

Jeff Lieser Joins AM Tampa Bay to talk about Payroll Protection Program

On April 3, 2020, the Paycheck Protection Program was established with the intent to support small U.S. businesses during the COVID-19 pandemic. Program funding was depleted within a few days, in part, because some of the loans were distributed to companies that were not the intended recipients. The Paycheck Protection Program received an additional $484 billion on April 24, 2020, when President Trump signed a second COVID-19 rescue bill.

Problem with the Original Paycheck Protection Program Structure

As originally structured, there was an inherent flaw in the Paycheck Protection Program (PPP). Under PPP requirements for loan forgiveness, businesses had to spend 60% of the loans on payroll with the other 40% on rent, mortgage, interest, or utilities within 8 weeks of receiving the funds. For struggling businesses that had been forced to close due to the pandemic, there was no payroll, which meant that the loan could not be forgiven. 

Issue Rectified with Second Payroll Protection Program Structure

The second COVID-19 rescue bill extended the timeframe that businesses were required to use the funds from 8 weeks to 24 weeks. As states allow businesses to reopen, more small businesses can seek forgiveness of the loans under the federal guidelines. However, challenges still remain. 

During an interview with WFLA News, Jeff Lieser, an attorney at Lieser Skaff Alexander, said that while the Small Business Administration (SBA) has a guide for loan forgiveness, this process is dense and difficult to understand. Mr. Lieser urges businesses to stay in contact with their lender and to ask questions about any part of the process that is unclear. In addition, Mr. Lieser encourages business owners to continually review the Frequently Asked Questions (FAQ) of the SBA’s website to stay current of changes and updates to the loan program. 

Loan Forgiveness Process

The main purpose of the Paycheck Protection Program was to ensure that small businesses could continue operations during the shutdown but qualifying for loan forgiveness is a complex process. Business owners must be prepared to provide their lenders with complete and detailed documents of how the loan funds were spent and prove that the disbursement complied with the payroll percentage requirement.  For businesses that utilize payroll programs or third party payroll process companies, this part of the process may be simplified but rent, interest, and other expenses must also be fully documented. 

Mr. Lieser encourages business owners who are having difficulty documenting their qualifications for loan forgiveness to contact an attorney specializing in business law to support them in this process. 
 

Categories
Business Law COVID-19

Virtual Mediation During COVID-19

With the coronavirus pandemic forcing more people to stay home, businesses across the country must find ways to perform their work without face-to-face interactions. Yet the pandemic has not reduced sources of disagreement.

Fast resolution of conflicts is often necessary for businesses to navigate this unusual time, and mediation can help with that. Yet the demands of social distancing make traditional, face-to-face mediation difficult. To answer this concern, Tampa mediator, Jeff Lieser, offers virtual business mediation services.

What Is Digital Business Mediation?

Digital mediation is an online form of traditional mediation. Specifically, it:

  • Man Attending a Virtual MeetingConnects disputing parties with a mediator through a secure, private online conference platform.
  • Allows the mediator to walk the parties through their dispute without face-to-face conflict.
  • Allows for electronic signatures of any resulting legal documents or agreements.
  • Takes place with no face-to-face, in-person contact, helping all parties maintain proper social distancing to stop the spread of COVID-19.

With virtual mediation, you get the same high-level mediation services you expect from Mr. Lieser, but in a virtual environment.

Does Online Mediation Work?

Jeff Lieser is a skilled business and real estate mediator. He knows how to spot subtle cues, like body language and facial expression, of the participants to help guide the discussion. You may wonder if virtual mediation is as effective. The answer is yes. Even in a digital environment, a skilled mediator can facilitate resolution.

For business owners struggling due to COVID-19, disagreements are going to happen. Through our virtual mediation services, Florida businesses can work through those differences. We can help you come to a successful conclusion, all while doing your part to reduce the spread of COVID-19.

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Business Law

Jeffrey Lieser Cited in Business Observer as he Works to Protect Client’s Intellectual Property on the Web

As reported in the Business Observer, Jeff Lieser of Lieser Skaff Alexander, represents a client in a multi-million dollar lawsuit filed in U.S. District Court in Tampa against a publicly traded, New York City-based company. The lawsuit alleges that the company used LSA’s client’s content without consent and for its financial gain. In the Business Observer article, Jeff offers ideas to business owners to protect themselves from similar situations.

Monitor the Internet for Your Content

First, Lieser recommends that companies protect their intellectual property by continually monitoring of the content on other sites, especially competitors, for possible theft of content. If you believe that content has been plagiarized, send a demand letter that the content be removed, and if that isn’t successful, then take legal action, if possible.

Protect Your Site with Strong Terms of Service

He also encourages entrepreneurs and other business owners to have strongly worded terms of use or service on their sites. This could include a statement that the content of the site, including blogs, cannot be shared, copied, reprinted or otherwise used without the express, written permission of the owner of the site.

Protect Digital Content From Previous Employees

Another issue is post-employment computer access by former staff members. Use an offboarding procedure that protects digital content from being accessed by former employees. When a person leaves your company, immediately delete all login credentials and change parking lot, building and other access codes to secure your physical property, as well as all internal computer networks and cloud-based systems.

Use Non-Compete Agreements

Finally, Lieser encourages employers to have a strong and legally enforceable non-compete agreement, and challenge the former employee if they are in violation. Remember, just because someone signs an agreement doesn’t mean that they will honor it, so you must protect your interests by demanding its enforcement.

Protecting intellectual property is challenging when your online content is easily stolen by your competitors. You must monitor websites and take immediate action to assure that violations are addressed. This situation is even more difficult when former employees abuse their access to your intellectual property and violate non-compete agreements. Seeking legal protection is often the best way to resolve these situations.

Intellectual property and employment law is complex and working with an attorney to protect your interests before a problem arises is the best course of action. Jeff Lieser and his team work with clients to help them avoid these types of issues and aggressively represent clients whose intellectual property rights have been infringed upon or who have been damaged by the actions of former employees. Contact our office today to learn how we can help you protect your business.

Categories
Business Law

Civil Theft Lawsuits May Be Used to Recover Personal and Business Property

When someone wrongfully takes your property, you can use Florida’s civil theft Statute (F.S. 772.11) to recover the property and/or seek damages. This law is designed to make the victim whole after a theft and encompasses a wide range of “property.” Individuals and businesses can use the civil theft law to reclaim property, recover damages, and more. The same Statute offers protection against exploitation of the elderly.

What Constitutes “Theft”

A successful civil theft claim requires that you prove:

  1. The statutory elements of theft; and
  2. Felonious intent.

This essentially means that you must prove that you owned the property and that the other person took it or denied you the use of it knowing that they did not have a legal right to the property.

What is Property?

Under this law, property has a broad definition. The property must have value and can include: tangible and intangible personal property and real property.

Key Aspects of a Civil Theft Claim

Before filing a civil theft claim for damages the plaintiff must serve a 30 day written cure notice to the defendant. The notice must include a demand for treble damages (three times the amount) if the defendant fails to timely pay.

A civil theft lawsuit must be initiated within 5 years after the cause of action accrues or within 5 years from the date that the civil theft conduct ends.

Trial

At trial, the plaintiff must prove the civil claim with “clear and convincing evidence,” which is higher than the “preponderance of the evidence” burden of proof that other civil lawsuits must meet.

The type of evidence that the plaintiff must present will depend on the nature of the claim. This may include theft, possession of altered property, or dealing in stolen property.

The jury or judge will determine the actual damages that the plaintiff sustained and, if actual damages are found, multiply that amount by three. The court will also make a determination as to the amount of attorney’s fees and interest to be assessed. No punitive damages are allowed. n>

Closing

Civil theft claims may arise from a variety of circumstances because of the broad definition of property.

If you believe you have been the victim of civil theft or have been served pre-suit notice, please contact the attorneys at Lieser Skaff Alexander. Our skilled lawyers have extensive experience in this area and have represented both sides in civil theft lawsuits.