Things have changed when it comes to getting paid.  Originally, depositing a partial payment meant you accepted that payment as full compensation.  But following changes in the Uniform Commercial Code (UCC), most courts today – including New York’s Court of Appeals – let creditors deposit a partial payment while still pursuing efforts to collect what they’re owed as long as they take steps to deposit the check “under protest.”

The older law placed creditors in a terrible bind.  A vendor, perhaps a website designer, might deliver services – let’s say a completed, working website – and bill her client for the agreed-upon $1,500.  The client, either believing the work wasn’t worth that much, or misunderstanding the terms of the bargain, might send payment for only $900. 

Under the common law, just as on a game show, this vendor would have had to ask herself the tough question:  Should I accept partial payment now, knowing that might be all there is – or keep trying to collect, knowing I might end up with nothing?  The former would have required her to accept a $600 loss for work she’d already done – but the alternatives were often untenable as well.

Even more unfair, vendors who were less legally aware did not realize that accepting partial payment meant forfeiting further payment down the line.  Clearly, the situation was ripe for change.

Today, under UCC Section 1-207, the simplest way for creditors to protect their rights is by endorsing a check with the comment “without prejudice” or “under protest” on the back before depositing it.  (Other payment types, such as cash or bank transfer, are more complex – please consult an attorney.)

However, many courts originally held that the UCC provision only applied to goods, rather than services.  So unless the website designer was offering computer hardware for sale as well, she might still have been out of luck.

In 1985, the Court of Appeals put that issue to rest and determined that any partial payment is subject to the rules of disputed payments, whether the parties were buying and selling goods or services.  See Horn Waterproofing Corp. v. Bushwick Iron & Steel Co., Inc., 66 N.Y.2d 321 (1985). 

This single change to the UCC has vastly simplified commercial transactions, both for goods and for services.  But awareness is still a barrier:  if you don’t know the law, you won’t realize the importance of endorsing checks under protest.  In this case, knowledge is power.  Just a few quick words stamped or written on the back of a check could make all the difference when it comes to collecting what you’re owed.

Image Credit

If you hire freelancers in New York City, you’ve probably already heard about the “Freelance Isn’t Free” Act signed into law back in November.  Now that it’s taking effect starting on May 15, 2017, most people we talk to have two questions:  How does it affect me?  Is it good news or bad news?

The answer to the second question isn’t entirely simple. 

For freelancers, it’s great news, offering more recourse if things go wrong in a business relationship.  The new law gives freelancers some of the privileges of companies and corporations without requiring them to register a business or trade name.  Any time they’re earning more than $800 from an employer over a 120-day period, that relationship will require a written contract from now on.

On a day-to-day basis, for either party, the new law may mean more administrative hassle. 
But for those hiring freelancers, even though it may seem like more trouble than it’s worth, taking the time to spell out your business relationship has a huge upside.  Clarifying expectations like what the freelancer is doing and how much you’ll pay may help eliminate confusion and misunderstanding later on.

Competing in the global “gig” economy, many freelancers have turned home-based workplaces into mini-sweatshops, putting in long hours for sub-par wages.  According to the Freelancer Union, which spearheaded the initiative, some 38% of NYC’s workers work freelance, and many have been exploited by late-paying and non-paying employers.

The new law requires that freelancer and employer set up payment terms in advance, and offers recourse to ensure timely payment and prevent employer retaliation or reduced compensation.
Although the law requires the city to set up an information program, including sample contracts in English and six other languages, we recommend creating a customized contract up front which will protect your business and assets from misunderstandings or breaches of the freelance relationship.

One final pitfall to avoid:  Whenever you’re setting up a contract, make sure you specify whether the freelancer is providing “work for hire,” meaning you’ll own all rights to the work product, or licensing the work product to you on a one-time or limited basis.  This applies to a range of creative content, including writing, art, programming, website design, or a range of other applications.

In addition to the possibility of court action, the new law also carries civil penalties up to $25,000 for gross violations or patterns of abuse.  So protect your business and get legal advice on how these changes will affect you and your business before the law comes into effect this May.

Image Credit

Can you identify the single biggest threat to your trade secrets?  It’s not hackers or cybercrime: recent research shows that over 85% of trade secret lawsuits are actually against employees and business partners. 

Although there’s an element of risk in bringing anybody on board, here are five simple ways you can mitigate your risk, working proactively to keep your trade secrets as safe as possible.

1) Clearly define your secrets

Unlike patents, trade secrets don’t have to be formally registered, but creating an internal list of trade secrets you control will make things very clear for employees and business partners and help them understand what can be shared.  Once you’ve created this list, you’ll be able to make decisions in terms of who has access to what information.
Protect the information once it’s recorded.  Involve your IT department in establishing appropriate internal data security, and ensure that anybody with access has signed a nondisclosure agreement. 

2) Customize your NDAs

Many companies use a standard boilerplate nondisclosure agreement (NDA).  This can be a mistake, since a standard NDA may unwittingly give away some rights.  To avoid compromising your security, consult with an attorney to custom-tailor an NDA.
Take into consideration factors like when trade secrets must be returned and/or destroyed – particularly when the relationship with the arrangement with this business partner ends.  Does the agreement have an “expiry date” after which the partner is allowed to use your trade secrets?  This is never advisable, yet it’s often part of standard NDA agreements.

3) Communicate with employees

Many employees don’t have a clear sense of what an essential asset trade secrets are.  Employees who will be dealing with a trust business partner must understand what can and cannot be exchanged. 
Clarity is key here.  Unambiguous written guidelines will probably work best, along with a clear indication of who to turn to with any questions relating to information shared with the business partner.  This isn’t a “once and done” process.  Retraining every few months will ensure that they understand that protecting trade secrets is an ongoing concern for every single employee.

4) Communicate with business partners’ employees

The relationship of trust with your business partner extends to every single employee coming in contact with your trade secrets.  Therefore, your business partner’s staff must also ensure that they understand their requirements and obligations under the conditions of any NDA that they’ve signed.
Signing the document isn’t enough.  If they see that you will be vigilant about enforcing your trade secret rights, and that you’re checking in periodically to see how your information is being used at your business partner’s end, they will take your concerns more seriously.

5) If secrets do get out...

It happens.  Sometimes from within your company, and sometimes through a business partner; sometimes accidentally, and sometimes intentionally.  Whatever the case, you absolutely must have a Plan B ready in case trade secret information does get out.  Move to enforce your rights as soon as you become aware of the breach.  And once the situation is back under control, take a step back to evaluate lessons learned and to enhance security going forward.

The most essential thing to know about trade secrets is that they’re only protected by law if you’ve taken reasonable steps to keep them secret.  Vigilance up-front and on a systematic, ongoing basis will demonstrate to employees and business partners that you are very serious when it comes to protecting your intellectual property rights.  Following these five simple rules now will go a long way towards preventing bigger problems later on down the line.

Image credit

Using company email for personal matters can result in disastrous consequences  as illustrated in the recent New York case of  Peerenboom v. Marvel Entertainment.  The case involved Perenboom's subpoena of Marvel for its CEO's Isaac Perlmutter’s work emails relating to a private dispute between Peerenboom and Perlmutter over the management of their tennis club.   Perlmutter objected to the subpoena because some of the emails were between him and his attorneys and therefore were protected by attorney-client privilege.  Peerenboom countered that the attorney-client privilege had been waived since all emails sent by Marvel employees through the Marvel server were subject to monitoring.

Siding with Peerenboom, the court considered a number of factors in deciding whether privilege had been waived, including:  (1) Marvel's email policy banned personal email use; and (2) Marvel monitored the use of the employee email and put all employees on notice that their email was being monitored.  The court held that since these policies allowed third parties to access emails between Perlmutter and his attorneys, Perlmutter could not assert the privilege to prevent their discovery.

Waiver of attorney-client privilege may be an extreme result but it demonstrates the importance of transparent email policies.  If an employer is going to monitor employee email usage, employees should  be made aware of the policy.in a clear and unambiguous manner.  In so doing, employers can ensure that employees know that company email is for company business only.

Image Credit