Legal Issues We are Following in 2020:
At Legal Direction, we have our eye on the following legal issues:
Independent Contractor vs. Employee: On January 1, 2020, a California law went into effect that makes it harder to classify workers as independent contractors. Because California is such a large economy, the change is garnering national attention. Nine other states (not NC) have introduced similar legislation and several states (not NC) are forming task forces on employee classification. NC does, however, have a permanent Employee Classification Section to the NC Industrial Commission that takes complaints and shares misclassification information with federal authorities.
Our clients have struggled with the distinction in the past and often don’t realize there is a huge body of tax law (IRS) and employment law (Department of Labor) that outlines the difference between contractors and employees. In short, the more control you exert over a worker (provide tools, workspace, specific hours, specific manner of doing the work, etc), the more likely the worker should be an employee. If, however, you hire the worker for specific project, at a specific price and a deadline, the worker is likely to be a contractor. The penalties to the employer for getting this wrong are steep.
Overbroad Non-compete Agreements. Courts HATE non-compete agreements; they hate telling people who want to work that they can’t. As a result, non-competes must be carefully drafted to protect a legitimate business interest. We see a lot of overreach in non-competes, whether it is restricting low-level personnel such as receptionists or drivers, restrictions on holding ANY job for a competitor instead of a similar job, or geographic restrictions that don’t make sense (“100 miles from any location of the Employer"). Non-compete agreements are supposed to keep key personnel (executives) from taking your company’s customer relationships to a new job and unfairly competing. To be enforceable, non-compete agreements must be signed (1) before or on the first day of work or (2) during employment only if there is additional compensation to the employee for signing the agreement (spot bonus or pay raise). Remember, non-compete agreements must have reasonable limits on time and geography as well.
Think carefully about what you want to protect and the most limited restrictions you can use to accomplish your goal. If you overreach and are challenged in court, all your non-competes could be thrown out.
Website Accessibility. When the Americans with Disability Act passed in 1990, the internet wasn’t a thing. Now there is a court case that could state that a company’s website has to be accessible by blind, deaf or otherwise disabled customers in the same way a physical location must be. In some states (not NC), all websites potentially need to be accessible. In others (still not North Carolina – we haven’t had a ruling on this issue at all yet), only websites that mimic a company’s bricks and mortar operations are required to be accessible (a grocery store website must allow blind people to place orders, for example). This will be a hot issue this year.
A Bonus Tip: We recommend using the full year “2020” on all hand-written dates, so no one can alter “1/28/20” to 1/28/2019” for bad purposes. And while we are at it, always write out “Internal Revenue Service” on checks so the same shady people can’t alter “IRS” to “MRS” and write their name!