10 Best Practices for Protecting Your Company’s Trade Secrets, Internet Access and Good Will

The exponential growth of technology has created amazing efficiencies in how businesses operate. Such cost savings come with a cost and companies need to continuously adapt to the ever changing opportunities and vulnerabilities. In 2020, it is predicted that over 5 billion people will be using the Internet, and within the next decade 6 billion people will have a constant connection to the Internet. The growth of your business is inextricably combined with the growth of the Internet.

Below are 10 best practices for your businesses to consider as you move forward:

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Manufacturing Showing Signs of Improvement in St. Louis

Part of a series on issues related to Manufacturers, Distributors and International Trade

Historically, St. Louis has been known as a manufacturing region. But over the past few decades, manufacturing jobs have dropped significantly. St. Louis has lost nearly half of its factory jobs since 1990 and now only 1 in 10 working St. Louisans work in manufacturing.

2011 saw a slightly positive sign of recovery in manufacturing. 3,400 jobs were added to the manufacturing sector in this region. Boeing’s deal to build 85 F-15s for Saudi Arabia should continue fighter jet production in the region through 2020. General Motors recently decided to make a huge investment in its Wentzville plant, adding over 1,200 new jobs.

The U.S. Bureau of Labor Statistics recently announced that total nonfarm payroll employment rose by 243,000 in January and the unemployment rate decreased to 8.3 percent. The BLS also recently announced that nonfarm business sector productivity increased at a 0.7 percent annual rate during the fourth quarter in 2011. This reflects of 3.6 percent in output and 2.9 percent in hours worked.

There are positive signs that St. Louis manufacturing jobs are increasing.

Posted by Attorney Ruth Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice.

Lack of an Exit Plan Equals Dead Company Walking

Part of a series on issues related to Manufacturers, Distributors and International Trade

Ralph Waldo Emerson warns that “rest, conservatism, appropriation, inertia; not newness, not the way onward” are forms of old age which causes people (I submit companies also) to be dead while they are yet alive. Yet, your manufacturing company can grow young again, if you as the leader/owner pursue and embrace strategic planning, innovation, and sustainability.

The root cause hindering such onward movement is frequently caused by a lack of succession/exit strategies for business owners/leaders. The Small Business Administration estimates that at any given time, forty percent of businesses are facing transfer of ownership issues. Without arriving upon a succession plan/exit strategy for the owner/leader, onward is not possible.

Rather, the bitter truth of humanity is realized – we all die and many times we take our companies with us. The familiar aphorism “shirtsleeves to shirtsleeves in three generations” describes the propensity of family-owned businesses to fail by the third generation. In fact, it is estimated that less than one-third of family businesses survive the transition from first to second generation ownership, and only 10 percent remain active for the third generation to lead.

By creating an exit/succession plan, a business owner/leader is forced to consider not only what the business needs today but what is needed for the future. The owner will make hundreds of decisions differently such as: making an S Corporation election; entering into contracts with key employees, distributors, and suppliers; maintaining clean records; developing and incenting a good management team; and/or transferring stock to family members. Without a plan, the business will mostly die due to the lack of necessary investment in leadership and talent, business systems, and “state of the art” equipment.

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Terminate an Employee Returning from FMLA Leave and You Could Be Sued in Your “Individual Capacity”

To add to the woes and stress of business owners, supervisors and managers, public and private decision makers who act directly or indirectly in the interest of the employer can be sued in their individual capacity under the Family and Medical Leave Act (“FMLA”).

Most of us forget it, but the same rules that apply to actions under the Fair Labor Standards Act also apply to actions brought under the FMLA (29 C.F.R. Section 825.104(d) (2009)). A July 11, 2011 decision by the Eastern District of Virginia Court, Eastern Division, titled Weth v. O’Leary (U.S. District Court of E.D. Virginia, Alexandria Division) provides important lessons regarding this issue with respect to terminating employees returning from Family Medical and Leave Act, especially if the decision makers are public officials and have sovereign immunity. 

In Weth, the Court refused to grant summary judgment and allowed a FMLA case to proceed to trial because of a highly suspicious timeline, prior raises and highly positive reviews, and the lack of write ups or written documentation bolstering the performance reason defense. 

Plaintiff Weth initially sued O’Leary, both individually and in his official capacity as Arlington County Treasurer. The Court granted Summary Judgment in favor of O’Leary with respect to the official capacity claim because as a state constitutional officer, O’Leary was entitled to sovereign immunity. The Court refused to dismiss the individual claim because sovereign immunity does not apply to individuals sued in their purely personal and individual capacity. The Court cited favorable decisions from various Circuit Courts (Darby v. Bratch, 287 F.3d 673, 681 (8^th Cir. 2002)) where courts found that there was no reason to distinguish liability between individual corporate officers and individual public officials.

Weth was employed as a Deputy Treasurer for Litigation for the Arlington County Treasurer for six years. As late as 2009, Weth had received highly positive reviews regarding her job performance and approved salary increases. 

Weth was diagnosed with cancer in September of 2009 and advised O’Leary. In December, Weth initially sent emails to O’Leary advising him that she would need surgery in January, but then advised that the surgery would be in December. Weth worked until the 21^st of December, underwent surgery on the 22^nd of December and returned to work on the 16^th of February.

On her return date O’Leary advised her that she needed to begin looking for a new job immediately, that she was being demoted and almost all of her job duties were being removed and that her sole responsibility was to find a job. One month later, O’Leary suspended her, sent her home with the directive that she was being relieved of all of her job duties and her sole responsibility was to find other employment. 

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Your Employees Are Griping About You on Facebook: Can You Fire Them?

Have you ever caught your employees publicly griping about your company, or maybe even about you personally, on Facebook? If you have, your first instinct might have been to discipline or even fire them.

But according to several recent decisions from the National Labor Relations Board, if colleagues discuss compensation, working conditions or other issues related to their employment over Facebook, their conduct may be protected by the National Labor Relations Act (NLRA). Continue reading »

Employee Social Media Griping: Can An Employer Terminate Employees Because of Their Social Media Posts Without Violating Section 8(a)(1) of the National Labor Relations Act

Social Media is the new water cooler conversation. It enables and facilitates conversations that years ago would have taken places at the old-fashioned water cooler. In today’s world of Facebook and Twitter, employee complaining is instantly, electronically and permanently transmitted to the world. Social Media users think less about their posts and disclose more so that a simple gripe monologue is turned into dialogue – on steroids – with the world. Such platforms encourage employees to blur their personal and professional lines of behavior and blurt out what is bothering them without engaging their higher level thinking tools.

With seven hundred and fifty million people actively using Facebook, there is a significant chance that a post about working conditions, compensation or other issues related to their employment will spark a conversation with an employee’s colleagues, and such conversations may constitute concerted activity under the National Labor Relations Act.

The question remains, if your employees say something negative on Facebook about your company, their fellow employees or their supervisors, can you terminate without running afoul of the National Labor Relations Act?

The answer depends on the facts surrounding the post(s). The test is whether the employee is engaging in activity solely for himself or on behalf of other employees.

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Beware the Trojan Horse that is Social Media

While establishing and maintaining an organizational presence on popular media websites and blogs (Facebook, LinkedIn, etc.), businesses need to be aware of the legend of Troy and its supposed downfall due to a Trojan Horse. Greek mythology states that Greek warriors concocted a scheme whereby they built a wooden horse and offered it as a gift to the Trojans. The Trojans, in their greed and arrogance, accepted the gift and brought it within their gates. Then, at night as the Trojans slept, the Greek warriors emerged from the belly of the Trojan horse and defeated the Trojans changing the course of a ten-year siege.

Today, a Trojan Horse is more often thought of as a destructive software program that disguises itself as a helpful application. Similarly, although social media may be helpful for your business, be aware what could be lying in the belly of that Trojan Horse.

Line Between Private vs. Public Blurred

According to the Socialnomics web site, Generation Y will outnumber baby boomers sometime this year and 90% of them have already joined an online social network. For many young people, and even 50 year-olds, the line between private and public has disappeared as they tweet, blog, text and share the minutiae of both their personal lives and everyone around them – including their employer. Social media users are under the mistaken assumption that they own the web content they are generating and can retrieve it and delete it if needed.

They are also under the mistaken impression that what they say is protected by some cocoon and that the content they generate is private. This is not true, as evidenced by a Detroit hospital worker who was terminated after she posted a comment on Facebook about a man she treated who was accused of killing a police officer. She was fired for violating strict patient privacy rules under the federal HIPAA law. A Massachusetts 54 year old high school teacher also learned this lesson when posting negative comments about her school community, students, and parents even though she had set the privacy setting on her Facebook account. Moreover, cases are clear that locking a profile from public access does not prevent discovery in litigation either.

Disclosure of Company Information at Risk

Given the fact that technology is moving so fast and disclosure is instantaneous, worldwide and permanent, companies need to train their employees on the dangers of purposeful or inadvertent disclosure of company information. What is at stake for the employer is the loss of confidential information and trade secrets, disclosure of protectable third party information or medical information, suits from other companies for disclosure of secrets, and discrimination suits. For instance, companies recruiting and hiring managers often use social media in order to obtain more information on a candidate than they otherwise could. Continue reading »

Mergers and Sales – Trade Secrets & Confidential Information

Who Owns the Salesperson’s LinkedIn Account?

Owners/shareholders own businesses for many reasons, including selling the business at a value higher than the investment cost. However, when a business owner goes to sell his or her business and attempts to obtain the highest price available, it is important to understand where the value of that business lies and how to maximize that value to any potential buyer.

In many instances, a significant part of the business’s value is found in the intellectual property possessed by the employees.

Part of that intellectual property is found in the trade secrets and confidential information that the company develops to provide its services and products faster, cheaper, and better over time. A very critical component is the customer networks that its sales/marketing people developed over time.

Who owns those networks, especially LinkedIn, and the data associated with them? Continue reading »

Stepping Back. US MicroLending with Kiva: Raising Capital + Raising You

When the usual suspects are rounded up to determine the reason for the decrease in start-ups and/or business failures in 2009/2010, in this author’s view, some blame must be placed on the business owner’s own failure to have introduced himself to his “better self” in the words of Napoleon Hill.

Bob Calcaterra recently noted this problem in the August 2010 Missouri Venture Forum Newsletter.

In Ralph Waldo Emerson’s essay “Experience,” he posits that all of us have an iron wire which he calls “Temperament” upon which the seeds of the individual are strung. He further argues in his essay “Compensation” that “strength grows out of our weakness and that indignation which arms itself with secret forces does not awaken until we are pricked and stung and sorely assailed.”

This veto or limitation power of adversity is the theme in the Summer 2010 Wilson Quarterly article “What Next for the Start- Up Nation” where the author speculates as to what attributes Israel start-up founders have that create so many successful start ups (persistence, mission critical focus, etc.) .

In twenty-seven years of counseling small businesses, I have found that the business owners who are the most successful are self disciplined, incredibly focused, hungry and have an iron will.

When one reviews the evidence of successful start-ups, one sees so many first and second generation Americans who will not give up. So, for those of you with the iron will or who want to develop that iron will by apprenticing at the bottom or “start where you are and build”, please check out the Microlending article in the New York Times. You will be introduced to Kiva.org, who has just started a pilot program lending to business owners in the United States. Remember, Microsoft was created in 1975, at the end of the first great recession since the Depression.

Who knows what will happen, you may become a Bill Gates.

Raiding Your Competitors’ Salespeople in Missouri: What are Owners’ Key Questions?

Your competition is hurt and bleeding and your industry is down. You own a business and you are in the enviable position of having extra cash. However, barriers to entry are low in your industry and buying your competition’s business may not be a good investment.

An easier strategy, a bit predatory of course, is to hire the salesperson from the failing businesses.

You have searched the internet as to the wisdom of the idea, and you are a bit confused. As fate would have it, the decision is made somewhat easy for you and you are approached by the salesperson in question who lets you know he can bring a substantial book of business given that he is fairly sure his employer’s ship is sinking.

You are aware of the duties that an employee owes an employer, and you intend to stay squarely within the law. The competitor is savvy and you know there has to be a non-competition/non solicitation agreement. You quickly arrange a meeting with the salesperson and you ask her to bring a copy of her non compete/non solicitation for legal review.

So, what are the key questions you should be asking in Missouri during these hard economic times:

1. Has your compensation arrangement been recently unilaterally changed?
2. Has the business changed hands (Roeder v. Ferrell-Duncan, Clinic, Inc.)?
3. Is the employer in the process of being downsized and will you be asked to sign a severance agreement (Carboline v. Lebeck and PPG Industries)?
4. What are the events leading up to the decision to seek new employment-material breach issues (McKnight v. Midwest Eye Institute of Kansas City, Inc.)?

The answers to these questions will help you and your counsel determine whether you need to buy the business, hire the employee or pursue other strategies.