Six Tips for Keeping Your Yoga Business Out of a Bind

Maybe you’ve lost your nine-to-five desk job. Perhaps you’ve decided to quit the office rat race altogether. Or maybe your inner spark simply ignited into a consuming fire to begin anew. Whatever the reason, you’ve decided to turn your yoga practice into a full-time business.

You’ve obtained all of your certifications. You’ve lined up your financing.

Now what?

Prior to closing the windows and cranking the heat, focus your drishti on the following six tips to keep you in the flow and out of court:

·         Incorporate Yourself. Depending on the size of your prospective business, a simple limited liability company may work for you. If you have practices in multiple locations or are offering products as well as services, you may want to form a C- or an S-Corp. There is no one correct way to get incorporated. But there is a wrong way – do nothing. Do not expose yourself to potentially disastrous personal liability. Speak with an experienced commercial lawyer about your specific needs.

·         Check Your Lease. Many new businesses fail to read the fine-print on leases restricting the very activities those businesses intend to conduct. Have an experienced commercial real estate lawyer review the lease before you sign.

·         Obtain Proper Insurance Coverage. Not all policies are alike. There is insurance tailored for studios and insurance for teachers. Depending on how you classify your instructors, you may need multiple policies for them, too. Liability, employee, and director/owner policies differ from state to state. Be sure to discuss your options with a competent insurance professional before you open your studio to the public.

·         Mindfully Classify Your Staff. There is a difference between “independent contractors” and “employees” in the law. This difference affects how your staff is paid, taxed, insured, and treated by the courts in the event of an adverse job action. Confusingly, even if you consider a staff member to be an independent contractor, if you exert too much “control” over that person (scheduling, instruction, etc.), the law (taxing authorities, courts) may treat that person as your employee. Speak with experienced employment counsel to better understand this tricky but important distinction.  

·         Use Narrowly Tailored Waivers and Releases. Have your students sign waivers and releases before they begin their practice with you. Be sure to include release language for your instructors as well as the studio. Many lawyers advise against asking students about pre-existing injuries. Consult with an attorney whom you know and trust on this issue.

·         Know Your Staff. Vet your staff. Verify a person’s training. Look for feedback from the studio’s students once a new hire begins. Speak with competent employment counsel about preforming a legally permissible background check.

Like every yoga practice, each business has its own unique opportunities and challenges. Following these six easy steps will help minimize your risk in your new yoga venture. Speak with competent tax, insurance, and legal professionals before you get started. Or meet with an experienced attorney to provide a professional audit of your current business practices.

Namaste. 

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006

New EU-U.S. Privacy Shield Requires Tougher Monitoring and Compliance for U.S. Companies

U.S. companies involved in the transmission of personally identifying information (“PII”) should be aware of the new “EU-U.S. Privacy Shield” unveiled by the U.S. Secretary of Commerce this week. The new Privacy Shield requires U.S. companies “to monitor and enforce more robustly” the privacy rights of Europeans doing business with American companies.

In addition to requiring greater transparency surrounding the collection and use of Europeans’ PII, the new Privacy Shield requires American companies to self-certify annually that they meet the privacy-protection requirements under the new EU-U.S. arrangement. American companies must now reply to complaints from individuals within 45 days, and U.S. businesses handling human resources data must cooperate and comply with European Data Protection Authorities.

If your company or business handles the personal data of Europeans, this new arrangement probably affects you. Consult with a legal professional experienced in the area of international data protection today.

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006

A Data Breach Incident Response Plan Can Minimize The Damage Caused by a Data Breach

Cyber-criminals are moving down the food chain. As larger corporations spend millions of dollars enhancing their cyber-security, data thieves and phishing-scammers are increasingly targeting small to mid-size companies. These smaller businesses typically lack the financial resources of Fortune 500 companies; accordingly, the bad guys are setting their sights on these relatively easy targets.

Cyber-crime is now everybody's problem. Although it is impossible eliminate your company's risk of suffering a cyber-attack or data-breach, there are small steps every small business can take to minimize the risk of suffering a catastrophic breach. The easiest of these steps is to draft, implement, and follow a Data Breach Incident Response Plan. 

A good Data Breach Incident Response Plan will include written instructions for your employees to follow in the event of a data breach. It should identify an Incident Response Team. Ideally, it will include sample notification letters for affected individuals, as well as notices to local, state, and federal authorities. 

No one plan will fit every small business. Talk to your company's legal counsel, IT-provider, and insurance carrier about drafting and implementing a Data Breach Incident Response Plan before your company suffers its next data breach.

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006

Is your business one cyberattack away from financial ruin?

A savvy business owner already knows the value of property and liability insurance. Yet in today’s digital age, more and more employers are adding cybersecurity insurance in their list of must-have protection.

Cybersecurity insurance is designed to assuage losses from cyberattacks, such as breaches in data, distributed denial-of-service attacks and network damage. With cyberattacks steadily on the rise, no organization is safe.

According to a 2015 report by the Ponemon Institute, the Target data breach in 2013 resulted in 40 million stolen credit and debit cards, as well as 70 million records containing identifying information about Target customers, including names, addresses, email addresses, and phone numbers. Other notable cyberattacks in 2014 include hacks on eBay, JPMorgan Chase & Co., Staples, and Sony Pictures Entertainment.

Small businesses are not immune to a cyberattack, either. Breaches against small to mid-size businesses have risen more than 300 percent in the past two years, according to the security company Symantec.

The Ponemon Institute indicates that cyberattacks throughout the remainder of 2015 will continue to be as bad, if not worse, as more sensitive transactions occur in the digital realm.

While cybersecurity insurance cannot protect businesses from hackers, it can help lessen the sting of a potentially costly aftermath.  On top of any direct financial loss incurred by a cyberattack, corporations often find themselves shelling out more money to fight lawsuits brought on by customers victimized by the attack.

As a Scott Godes’ article in The Corporate Counselor newsletter pointed out, a court refused to dismiss a class action complaint against Target Corporation brought by banks whose customers’ information was stolen. Though Target’s losses were somewhat offset by $90 million in insurance recoveries, the corporation is still on the hook for tens of millions of dollars in uninsured losses. Additionally, Target’s cybersecurity insurance has a reported “50 million sublimit for settlements with  the payment card networks.”

Before business owners purchase (or renew) any insurance policy, it is important to examine and evaluate the program to make sure the policy fits their needs.

Business owners should not assume that any loss suffered from a cyberattack is covered under their general liability policy.  According to the National Association of Insurance Commissioners and the Center for Insurance Policy and Research, the terms and conditions of a Commercial General Liability Policy may not cover issues arising from a data breach, including liability for security breaches, the cost to notify customers of a privacy breach and the costs associated with restoring and replacing electronically-stored assets.  A cybersecurity policy is most likely needed for financial protection in such instances.

As businesses continue to perform more transactions online, and as hackers are increasingly becoming more sophisticated in their methods, it is advantageous for employers to think long and hard about the value of cybersecurity insurance.

Of course, purchasing cybersecurity insurance does not equal a safeguard from hackers. To reduce the risk of a cyberattack, businesses should consistently update their firewalls and antivirus software, talk to employees about the dangers of clicking on suspicious links, and conduct regular audits of their IT infrastructure.

 

To download the report from Ponemon Institute titled “2014: A Year of Mega Breaches,” click here.

 

 

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006

Delaware court ruling limits employers' ability to enforce noncompete agreements

Et tu, Delaware?

 By: Kevin Burke

The enforceability of noncompete agreements in the United States has taken another hit this quarter, this time from the typically employer-friendly Delaware Chancery Court.

If your business is a Delaware corporation headquartered or with employees in a state other than Delaware, a recent decision out of the Chancery Court involving noncompete agreements will likely affect your company.[1]

In Ascension Insurance Holdings, LLC v. Underwood,[2] the Chancery Court of Delaware refused to enforce a noncompete agreement, expressly disregarding the parties’ agreement to apply Delaware law on public policy grounds in the process.

Although the parties initially agreed that Delaware law would govern the agreement, the court applied California law in rejecting the plaintiff employer’s request for an injunction against its former employee. This decision may come as an unwelcome surprise to many Delaware corporation employers who have come to rely on Delaware law as being both predictable and employer-friendly.

Delaware is strongly contractarian in its law. The Chancery Court routinely respects the rights of parties to freely contract and to be able to rely on the enforceability of their agreements. When parties choose to apply Delaware law in their agreements, Delaware law will be applied with only very limited exceptions. In fact, the Underwood court expressly noted that “[u]pholding freedom of contract is a fundamental policy of [Delaware].”[3]

However, where it is clear that the public policy of the so-called “default state” – the state where the contract was formed and will be enforced – conflicts drastically with Delaware law on a particular issue, Delaware law will not be applied.

Put another way, Delaware is generally supportive of choice-of-law provisions, but recognizes that allowing parties to circumvent state policy-based contractual prohibitions through the promiscuous use of such provisions would eliminate the right of the default state to have control over enforceability of contracts concerning its citizens.

Unlike Delaware, which allows employers to restrict former employees from competing so long as such restrictions are reasonable in scope and necessary to protect the former employer’s legitimate business interests, California public policy disallows contractual agreements not to compete.[4]

In Underwood, the Chancery Court analyzed the relationship between the employer and its former employee and found that the dealings between them all centered in California. Since the noncompete agreement at issue was “abhorrent and void”[5] under California policy, the Delaware Court refused to apply Delaware law and would not enforce the restrictive covenant.

What does this instruct Delaware corporations headquartred in states other than Delaware?

In drafting restrictive covenants containing noncompete provision, a shrewd Delaware corporation will no longer merely rely on a choice-of-law provision citing Delaware to guaranty the application of Delaware’s relatively pro-employer noncompete laws.

Rather, a prudent Delaware corporation must take into account the extent of the nexus between the agreement it seeks to enforce and the state in which the company seek to enforce it. If your Delaware corporation and its employees are headquartered in a state with a public policy (or outright ban) against noncompete agreements, best practices dictate the implementation of a plan to protect against competition from former employees without relying on the application of Delaware law alone.

A narrowly tailored non-solicitation agreement or a written policy against the misuse of proprietary information are two examples of ways to protect against future unfair competition from former employees.

As always, it is critical to consult with counsel experienced in this area of the law and with knowledge of the specific needs of your business.

 

 

[1] http://courts.delaware.gov/opinions/download.aspx?ID=218380

[2] Chancery Court of Delaware, January 27, 2015, C.A. No. 9897-VCG

[3] Ascension Ins. Holdings, LLC v. Underwood, 2015 Del. Ch. LEXIS 19, *13

[4] Cal. Bus. & Prof Code §16601

[5] Underwood, 2015 Del. Ch. LEXIS 19, *4

 

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006

Time for the NFL to say 'lights out' to the blackout rule

     Commissioner Ajit Pai of the Federal Communications Commission, Ralph Wilson Stadium, the Sports Blackout Rule and your author each shares something in common: we are 40 years-old.

     Like many mid-lifers, the four of us are ready for change. The Ralph recently enjoyed a $130 million face lift.  This lawyer, your author, is blogging about legal issues. And FCC Commissioner Pai wants to end the federal government’s support of the outdated television blackout rules.

      Fans of the Buffalo Bills are all too familiar with the NFL’s blackout policy. It seems like at least one game falls victim to the antiquated blackout policy every season. In fact, but for our sainted mother’s heroic purchase of Houston Oilers AFC Wildcard tickets from AM&A’s on January 3, 1993, my brother Bob and I would have missed the Greatest Comeback in NFL History.    

     The SBR, of course, impacts more than just Bills fans in Western New York.  This rule allows the NFL to prevent home games from being televised locally if the game is not sold out 72 hours prior to the game’s start time. Although nationally-televised games in the National Hockey League, the National Basketball Association, and Major League Baseball are often blacked out in the local markets in which they are airing, these games can still be seen on their local regional sports network that normally has their local broadcasting rights.

     Although the FCC is not authorized to review or approve contractual agreements between any of these professional sports leagues and their television programming partners, Commissioner Pai opined that “[t]here is no reason for the FCC to be in the sports blackout business” at all. “We should be on the side of sports fans instead.” For Mr. Pai, support of the SBR runs afoul of the FCC’s basic mission: “I don’t believe the government should intervene in the marketplace and help sports leagues enforce their blackout policies. Our job is to serve the public interest, not the private interests of team owners.”

      The NFL does not agree.  Its lawyers, lobbyists, and Commissioner Roger Goodell argue that the SBR actually helps consumers. In recent months the NFL has been dispatching emissaries to meet with the FCC. The NFL argues that the FCC must continue to support the SBR as “a key component of the commercial and regulatory system that has enabled the NFL to keep its games available on broadcast television.” 

      The suggestion, of course, is that without the blackout rule, the average consumer of broadcast television would be denied the opportunity to watch NFL games unless he or she shelled out the cash to attend in person. The implicit threat is that, absent the SBR, the NFL would enter into exclusive deals with cable and satellite providers and would turn its back on network broadcast television. Although Mr. Goodell acknowledges that the NFL is “99 percent sold out,” and a potential repeal of the FCC’s support of the SBR “has very little impact on [the NFL’s] business,” he nevertheless says a repeal of support from the FCC “could have an impact on the overall business model for free television,” adding that it would be “devastating to [NFL] consumers and consumers in general.”

      Congress is skeptical of Goodell’s argument. In fact, Representative Brian Higgins (D-Buffalo), a long-time opponent of the SBR, recently invited FCC Commissioner Pai to join him for a power lunch of chicken wings and conversation at Buffalo’s iconic Anchor Bar.  The Congressman joined Commissioner Pai in voicing his strong opposition to the SBR. “The 40-year-old sports blackout rule is unfair, antiquated and harmful to fans that have backed their hometown teams through their support and tax dollars,” Higgins said.

      Congressman Higgins is not alone on Capitol Hill when it comes to opposing the SBR. Senators Richard Blumenthal (D-Conn) and John McCain (R-Arizona) have also reached out to the FCC.   

     “Now that the comment deadline has long passed, we urge the Commission to move forward expeditiously on eliminating the sports blackout rule,” Senators Blumenthal and McCain wrote. “We believe that the rule unfairly harms consumers by insulating the NFL from market realities and punishing fans in cities with large stadiums and declining populations. We applaud the FCC’s decision to propose elimination of this outdated rule that is no longer supported by facts or logic, and blocks fans from enjoying their favorite teams.”

     The Senators added, “[w]e agree wholeheartedly with the Commission that, ‘the sports blackout rules have become obsolete,’ and we believe the record clearly supports the FCC’s tentative conclusions in favor of eliminating this unnecessary rule. In sum, the Commission has collected the facts and has a rich public record upon which to base a decision. Now it must act.”

      And act the FCC should. Anyone who has seen the renovated Ralph knows that change is good. The Sports Blackout Rule is a pre-cable, pre-satellite relic that no longer serves a legitimate purpose. NFL revenues are at all-time high.  Commissioner Goodell acknowledges that NFL games are 99% sold out. It’s time for the FCC to withdraw its support of sports owners in favor of serving the broader public interest.

Kevin Burke is a partner in the Civil Litigation and Labor and Employment Practice Groups at Lippes Mathias Wexler Friedman LLP in Buffalo. He can be reached at kburke@lippes.com

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Kevin Burke

Kevin Burke is a partner in the Litigation, Labor & Employment Practice Group at Lippes Mathias Wexler Friedman LLP. EDUCATION: J.D., George Washington University Law School Georgetown University - B.A., magna cum laude Nichols High School School (Buffalo, New York) EMPLOYMENT: Lippes Mathias Wexler Friedman LLP - A partner in the Litigation Practice Group INTERESTS: Member, Nichols School Alumni Board Past Board Member and Officer, Western New York Trial Lawyers Association Bennett High School's Law Magnet Program Bar Association of Erie County Annual Mock Trial Tournament Attorney Coach Past Member, Kiwanis Club of Buffalo Past Member, Child & Family Services Annual Fund Board Leadership Buffalo Graduate, Class of 2006