DO MY EMPLOYEES OWE MY BUSINESS ANY DUTIES?

It will likely come as no surprise, but it’s pretty safe to say that we live in a hyper-competitive business environment. With that reality in hand, it’s not hard to understand that employers will generally try to do all they can to protect their interests and business share from competitors. That said, it’s not always the devil you know that does you in. In addition to worrying about competitors, businesses also need to be concerned about their own employees engaging in harmful conduct that will hurt the business.

While this isn’t so much the case if you’re pushing Slushies at the local 7-Eleven, depending on your profession, many employers will try to protect their interests by having their employees sign restrictive agreements meant to maximize potential damage control. These types of agreements typically include provisions that address non-competition, non-solicitation, invention assignment and confidentiality.

What precisely are each of these covenants? Their names pretty much say it all, but here’s a quick synopsis. Non-competition agreements typically state that you will not start a competing business within a certain period of time and geographic region if you leave the business. Non-solicitation agreements prevent an employee from trying to “poach” clients or customers for his own benefit. Invention assignments basically give a company the rights over anything an employee has designed, created or invented while in the company’s employ (even sometimes items that are developed off-hours). And confidentiality agreements state that an employee may not share, reveal or use for their own benefit any of a company’s proprietary information either during or after his term of employment.

Restrictive covenants generally go a long way in protecting a business’s interests and laying the ground work for potential violations if they do occur, but these agreements may not always be dispositive. There are instances where certain of these agreements have been determined to be against New York’s public policy at least under some circumstances. That, however, is an issue I’ll take up in another article.

As a general rule, restrictive covenants will be upheld by our courts. Even so, the burden lies on the plaintiff to demonstrate that they should be upheld and that there has been a violation, but how? To start, one will look at whether the employee breached any of the fiduciary duties that it owed the company while employed by it. Generally speaking, employees owe their employers a duty of loyalty. If the employee is an executive, director or some other higher-up in a company’s hierarchy, he may also owe a duty of care.

As the name implies, a duty of loyalty generally prohibits employees from engaging in conduct that results in the employee taking a company’s opportunities for himself, competing with the company (directly or indirectly) or soliciting its employees. In short, employees are required to always act in the best interest of their company while employed by it, and they may not intentionally do anything to harm the company’s interests. Likewise, a duty of care requires that certain employees use their best business judgment in making decisions for the company. These individuals are required to make informed business decisions that include an analysis of all available information; decisions shouldn’t be willy-nilly or made at the ill-informed whim of a manager.

Depending on the job, duties of loyalty and care may exist outside the scope of a restrictive covenant. Regardless though of whether you’ve got a contractual breach claim or a common law claim against an employee, you need to know your rights if your business has potentially been harmed by the employees conduct, so always consult with counsel. While an attorney can assess your situation on its merits, if your case proceeds, it will likely end up in a jury’s lap to decide not only whether a particular duty was owed, but whether the duty was breached and what damages you’ve suffered.

HEADS UP NYS PROPERTY OWNERS - THE STAR PROPERTY TAX PROGRAMS IS REQUIRING YOU TO RE-REGISTER!

If you own real estate, you know that one of the few advantages to living in New York State is a modest tax break offered through the State’s STAR property tax rebate program, which gives homeowners a break on their local school taxes. Most homeowners will qualify for exemptions under either the Basic or Enhanced STAR program, but your eligibility will depend on such things as your age and whether the property is your primary residence.

Once a homeowner remits his or her application for STAR eligibility, their qualifications to remain in the ranks of the program are typically self-renewing, meaning that most individuals didn’t need to worry about doing anything to keep the credit. There’s a change coming though!

Based on the results of an investigation in Rockland County, investigators discovered fraud and systemic abuses in just five towns that amounted to almost $680,000 in credits that were improperly taken. The majority of the fraud resulted from persons claiming credits for which they were ineligible, such as for second homes or for rental property. The legislature calculates that on a statewide basis, these abuses cost New York more than $13 million in revenue during the 2011-2012 fiscal year. If allowed to continue, projections suggest that the abuses will have cost the state more than $73 million in revenue by 2016.

In an effort to purportedly address this abuse, the State legislature has decided to pass as a part of its budget deal new rules requiring all homeowners to re-register for their ongoing STAR status. The intention is to re-qualify those homeowners who are purportedly eligible for the program, while weeding out those merely trying to take advantage of the system.

Was there no other more efficient way for the legislature to accomplish this goal than to place the burden on all homeowners to re-register? I think there likely was, but our politicians (in their infinite wisdom) have deemed this solution to be the best, and so we are stuck with it. That said, no details as to how to re-register or when re-registration must be completed by have been forthcoming from the state as of yet.

Given the potential negative impact on your individual wallets if you forget or fail to re-register, one can only presume (or should I say hope) that the state and/or local assessors will notify homeowners about the process when everything is finally set in stone. Then again, perhaps it’s the cynic in me, but given the potential impact on the state’s coffers as far as a positive revenue stream if people fail to re-register, maybe this information won’t be as forth coming or widely publicized as it otherwise should be… Only time will tell, but rest assured that I’ll update you with any relevant information about the process as it becomes known.