Startup

Major Ambiguities Remain, but Health Care Vendors Should Focus on California Consumer Privacy Act Preparedness

Posted by on Jul 26, 2019 in Limiting Liability, Startup, Update!

Are you a health care vendor that does business in California? If so—and keep in mind that the concept of “doing business” in California may be broader than you expect—there are new, expansive data privacy requirements that might start keeping you awake at night. California created waves in the information privacy space with its enactment of the California Consumer Privacy Act of 2018 (the “Act”) last summer. The Act, which will be operative beginning January 1, 2020, was hurriedly enacted to prevent a proposed ballot initiative from going to voters in November 2018. That process created a number of significant ambiguities, which remain present in the Act. There are significant questions regarding what types of businesses will be subject to the broad-reaching obligations of the statute and forthcoming regulations. Businesses that have, thus far, managed to avoid the application of the similar EU General Data Protection Regulation (the “GDPR”) may nonetheless fall within the scope of the Act and confront new and expanded compliance obligations similar to those imposed by the GDPR. Based on the current wording of the statute, a “business” subject to the Act’s requirements includes a for-profit entity that (i) collects the personal information of California residents, (ii) determines the purposes and means of processing that information, (iii) does business in California and, among other potential triggers, (iv) has annual gross revenues in excess of an inflation-adjusted amount of $25 million. It remains to be seen whether the forthcoming regulations will define the scope of revenue (which, at present, does not appear to be limited to a business’s California revenue), the meaning of information “processing,” and other related concepts.    With respect to applicability, the statute also contains a carve-out for commercial conduct that takes place “wholly outside of California.The present definition of this concept contains somewhat contradictory language, and it is not yet clear what any amended or clarified language will look like.  Businesses potentially subject to the Act should also be wary of the way that the Act ambiguously defines “personal information.” The Act does not apply to medical information governed by HIPAA, which will provide some relief to many health care vendors. However, the Act does apply to other categories of personal information, including IP addresses and other information concerning consumers’ (including patients’) interaction with a business’s website. Even more significantly, the Act appears to apply to (i) employee personal information contained in employment records and (ii) the personal information of client officers and employees that a business gathers in providing services to, and interacting with, its clients (i.e., not traditional “consumer” interactions). Absent some clarification to the contrary in any further statutory amendments or in the forthcoming regulations, health care vendors should prepare to comply with the Act in connection with these particular categories of information.    Due to the current broad scope of the Act, the potential applicability to information collected or disclosed in 2019, and the fact that the Act has significant “teeth” from an enforcement standpoint, health care vendors should not wait for these concepts to be fully refined. Rather, they should prepare now to comply with the Act’s core requirements by taking the following actions, among others: Determine what personal information the business collects, how it collects it, where it stores it, and how it manages, uses, and discloses the information, as well as any service providers that collect or receive information on its behalf (including determining whether any disclosures of information could be deemed the “sale” of information under the Act) Provide appropriate mechanisms through which consumers can make permitted requests of the business Prepare to evaluate,...

Read More

The Importance of Getting Your License Before You Start Your Own Construction Business

Posted by on Jul 24, 2019 in Governance, Limiting Liability, Practice Pointers, Startup, Your Entity

Are you thinking about starting your own construction business? If so, whether in the commercial or residential setting, it is imperative to find out if you are required to have a license. Keep in mind each state has its own requirements. If you’re in Tennessee, it’s highly likely you’ll need one. Under Tennessee’s Contractors Licensing Act, it is unlawful for any person or business to represent itself as a licensed contractor, or to act in the capacity of a “contractor” while not licensed. Now, you may be thinking “I am not a contractor. I am a designer, or a supplier, or a subcontractor, etc—so the contractors’ license requirement does not apply to me and my new business, right?” Well, not necessarily. The term “Contractor” is incredibly broad under the Licensing Act. “Contracting” includes, among other things, bidding, offering to engage, supervising, overseeing, scheduling, directing or in any manner assuming charge of construction, alteration, improvement, or negotiating a price for projects of $25,000 or more (including all labor, materials, and equipment). Electrical, mechanical, plumbing, HVAC, and roof contractors must also be licensed when working directly with any contractor to perform projects when the total cost of that portion on the project is over $25,000. Tennessee also regulates licenses for certain types of “home improvement” in most of the larger counties. For example, a home improvement contractor’s license is required for residential projects that range from $3,000 to $24,999 (i.e. projects designed for a residence or dwelling unit with no more than 4 units). Again, the term “home improvement” includes a vast array of construction-related work, all of which requires a license – such as repairs, replacement, remodeling, alterations, and more.  Obtaining the appropriate contractor’s license before you start working is extremely important from a risk management standpoint. In fact, contracting in Tennessee without the appropriate license can expose your new business and possibly you, personally to significant liability. For example, to represent yourself as a licensed contractor without the required license, or to act in the capacity of a contractor without the required license, constitutes an unfair and deceptive act under Tennessee’s consumer protection law. This is significant, particularly to a business in its infancy, as you could end up on the hook for a dissatisfied client’s attorneys’ fees and triple their actual damages.  While there are a variety of other matters that must be tackled before getting a new construction business off the ground, licensing is certainly an important box to check off the list. The guidance of an experienced construction attorney can help alleviate any worries you may have in navigating the laws that may apply to you. In addition, finding a well-versed construction attorney can assist a new business in a multitude of areas spanning from drafting of construction contracts, handling of construction defect claims, payment and lien disputes, and other related matters. If you have questions specifically related to construction or general startup matters, please contact me or a member of Chambliss Startup group. *This blog post is brought to you by Logan...

Read More

You May Need Some Legal Advice—7 Reasons Why Seeking Legal Advice Now Will Benefit Your Startup in the Future

Posted by on Jun 6, 2019 in Entity Formation, Governance, Intellectual Property, Startup, Your Entity

So, you’ve decided to start a business. You may be wondering, is it really necessary to consult with an attorney right now? The answer—it all depends on the nature of your business and how much risk you are willing to take. Small legal mistakes when establishing your startup have the potential to affect your business’ success and cost you and your startup financially in the future. We understand that hiring an attorney is daunting for a new business operating on a limited budget. However, there are a few business areas for which you should consider seeking legal advice early on in the life of your startup. 7 Reasons Startups Should Seek Legal Advice Now for Future Benefit: Entity Formation: There are many different legal entity forms a startup may take—a sole proprietorship, general partnership, joint venture, limited partnership, corporation, or limited liability company. Each has pros and cons and different tax implications. Picking the right form for your startup has liability, legal, tax, and financial implications. While information on entity formation is available through the U.S. Small Business Administration and other resources, an attorney can advise you on which business structure is best based on your business plan and goals, as well as your personal liability and tax expectations. Structuring Ownership, Control, and Responsibilities: If your startup has more than one owner, it is recommended that your startup have certain agreements prepared that outline the relationship between the owners—such as who has what responsibilities, who has the power to make certain decisions, each owners’ financial interest in the startup, and how to handle ownership termination. These agreements often take the form of operating agreements and buy-sell agreements for LLCs, or bylaws, restricted stock purchase agreements, and shareholder agreements for corporations. Ultimately, formal owner agreements help prevent future disputes and the need to hire a lawyer to resolve such disputes. Although such agreements may not seem like a priority in the early stages of your startup, they can be key to the future stability and security of your business. Additionally, these agreements are often easier to negotiate and prepare during the honeymoon phase of your startup, rather than down the road when money and emotions are involved. Conducting Business Through a Website: If your startup conducts any business online, it is going to need a Privacy Policy and a Terms of Use Agreement. A Privacy Policy is a legal statement on a website that describes how personal data collected from users and customers of the website will be used. A Terms of Use Agreement is a policy on a website that describes the terms and conditions of users’ use of the website. Beware of blindly copying policies from other websites that offer similar services to your startup—often, policies are tailored to a specific business and will not provide you with adequate protection. An attorney can produce a custom Privacy Policy and Terms of Use Agreement for your website that provides you with the specific liability protection your startup needs. Regulatory Compliance: Depending on the character of your startup’s business, you may be subject to state and federal regulations. An attorney can advise you on which regulations your startup is subject to and the steps your startup must take for compliance. Protecting Your Startup’s Brand: Whether you plan to grow your company on a local, national, or international scale, you will want to ensure that your startup’s brand is protected. By acquiring a trademark in your startup’s name and logo, you can prevent other companies from using your name or branding (or a confusingly similar name or branding) for similar products and services within a...

Read More

Terminating Your Contract: Things to Remember Part 1

Posted by on Jan 16, 2014 in Startup

Contracts often have various provisions concerning when and how a party may terminate the contract. Typical termination provisions can cover situations in which the party terminates for cause or without cause. The distinction between the two types of termination clauses can be crucial to your contract rights and remedies. A provision governing termination without cause essentially gives one or both parties the right to terminate the contract for any reason, whether or not there has been a breach. Often called a “termination for convenience” clause, these provisions can have various effects on the practical terms of your deal, which you may want to consider when you’re drafting or negotiating your contract. For example, 1) If a termination without cause provision is going to be a part of your contract, consider how much notice you would like to have or give if you or the other party wants to terminate the contract without a breach. Things to consider would be how long it will take you to find another seller or service provider to fill in the void. 2) It is common for a service provider or seller to raise the price or quote a little bit in order to account for the fact that the other party may suddenly terminate the contract. Be aware of how the pricing structure works in your deal, and try to substantiate where the costs are attributed. 3) Consider your capital investment. Many times a termination without cause provision can expose you or the other party to losses resulting from a shorter contract period. If the contractual relationship is cut short early, the party may not have recovered their costs yet. Therefore, it is common to see some sort of cost recovery provision or penalty provision in the event a party terminates without cause. Stay tuned for more on termination for cause provisions. While there are many other issues to consider when you’re drafting termination provisions, these are just a few that you may want to keep in mind. You should always consult an attorney when you’re in the process of drafting and negotiating a...

Read More

Developing an App? Protect your Intellectual Property!

Posted by on Dec 4, 2013 in Startup

If your startup company is working on developing an app, remember that the app, or the development process, raises intellectual property issues that you should consider. For example: if there is a process or method embodied in the app, it may be something worth patenting the app may have a name that should be protected by a trademark the app may have terms used in connection with it that should be protected by a trademark the app developer may treat the app’s source code or other aspects of the app’s development as a “trade secret“ the content of the app itself should maybe be protected by copyright–if original (e.g. the app’s graphic, textual, images and artwork, database elements and software code) If you’re working on an app, or having an app developed for your company, please see an attorney for further discussion on how best to protect your IP in the...

Read More

Social Media, Marketing and Privacy Issues: Tips to Remember

Posted by on Nov 20, 2013 in Startup

Before launching a social media marketing campaign, consider the following: Be sure you disclose what information you collect from your audience, why you collect it, and how you use that information. Does your marketing campaign or website use “cookies”? If so, disclose it. If you do not know, ask your web developer (or someone else who could explain this practice to you), then disclose accurately what your site uses. Does your marketing campaign target children? If not, be sure to address this honestly- for example by prohibiting use of your site by children under the age of 13. If so, be sure you comply with the Children’s Online Privacy Protection Act. It would be a good idea to have a lawyer review your policies or advise how to comply with this law. Always remember to contact an attorney if you have any specific questions or...

Read More