Business Law: Some Additional Legal Considerations For A Small Business Owner

By Justin M. Jacobson, Esq.

Building off the initial piece, this article explores some additional available legal protections that small business owners might consider when starting or operating an existing company. While this is not an exhaustive list, it is meant to explore a few other relevant legal protocols that might assist a company in legally operating their business both effectively and efficiently.

Trade Secret Protection For Small Business Owners

In addition to trademark and copyright protection for a company’s intellectual property assets, such as their company or product name or logo; similar protection might also be available for any trade secrets owned or established by the business, including any confidential information or any other private assets that they develop or create. In these situations, it is important to ensure that a company has written agreements in place with any third parties who contributes any work to their business as well as those who receive, review, or otherwise accesses or has access to any confidential trade documents and other related company “trade secrets.” For example, in order to obtain protection for this type of classified information, a business owner could ensure that written and executed non-disclosure agreements (referred to as “NDAs”) are in place with any individual or corporation that receives or is provided with access to the company’s confidential information. Additionally, a small business might further protect its materials by requiring any employee or third-party that contributes or has access to this information must sign an agreement that includes provision addressing confidentiality and non-disclosure obligations as they relate to the company’s confidential materials. These clauses would typically aim to prohibit the receiving party, the employee or independent contractor, from sharing any confidential trade secrets or information they receive as a result of their employment with any other third party as well as prevents the individual from using this protected information for their own benefit or purpose.

Furthermore, in some cases, copyright protection might also potentially be available for the specific confidential content if it is eligible for such protection. This might include registering a copyright for a confidential written presentation or some other protected visual image, diagram or any existing confidential business model or analytics software developed by the company and that is not publicly available. In all of these cases, it is also paramount to ensure that any and all “confidential” and sensitive information is labelled as such, including affixing wording such as “confidential” or “trade secret” prominently on these materials including on any the documents, diagrams, or data.

Visa and Immigration Matters For Small Business Owners

Additionally, when operating a business, there might also be some employment and labor law considerations to be aware of, including visa and immigration matters. For example, if an American-based company is hiring an employee who is a non-U.S. citizen, the company might be required to apply for and obtain a visa or other work permit or authorization to properly employ as well as pay this individual. The lack of an appropriate work permit can subject the company to substantial penalties, including potential liability for violation of status. In these cases, an eligible party must first prepare and file the appropriate visa application with the correct governmental entity to obtain the work permit. In the U.S., the organization responsible for these procedures is the U.S.C.I.S. Since the contents of each visa application differs based on which classification an individual is applying for, a small business owner should consult a specialist to ensure that they procure the appropriate visa type that provides the proper work authorization for a foreign worker. Next, once an application is submitted and the governing body approves the visa, the party must then finalize the documentation at their respective home country’s consulate or embassy. This means that the foreign individual must usually make an appointment with their local consulate’s office to finalize the work authorization procedure prior to entering the United States.

While these business entities provide numerous benefits to its owners, there are potential ways a third-party could potentially “pierce the corporate veil.” That is an attempt to attach an individual’s personal assets and disregard an existing entity’s protection of its owners. Thus, it is essential that a company follows any and all statutory procedures and guidelines, which differ in each state. Some of these formalities include the preparation of annual corporate minutes to ensure the corporation is a real functioning entity as well as filing of certain state required documents, including annual reports.

Consequently, since the length of a visa differs greatly based on the anticipated time frame that the individual will be performing the paid services in the U.S., it is crucial that a business owner is aware of the time limitations and that they apply for the correct type of visa classification that correlates to the requisite time period. Since many of these processes are time consuming, certain countries, such as the U.S., have created “expedited” or other premium processing options that may be available to speed up the visa approval process and provides a decision within a set time.

Social Media Marketing and Email Marketing for Small Business

Furthermore, with the rise of social media and email marketing as a chief or primary marketing mechanism for most small business, it is important to understand some legal matters related to these actions as they apply to small businesses. For example, there exists the Controlling the Assault of Non-Solicited Pornography And Marketing (CAN-SPAM) Act of 2003 referred to as the “Anti-Spam” law. This legislation created national standards for commercial e-mail communications and is regulated by the Federal Trade Commission (FTC). As a result, this Anti-Spam law governs mass emails sent to individuals. This legislation is applicable when a small business sends an email mailing to their existing customers as well as when the digital correspondence is sent to target potential customers. These rules aim to distinguish between “opt-in” and “opt-out” procedures, including informing the recipients on the procedure to “opt out of receiving future email” as well as “honor[ing the] opt-out requests promptly.” There are also other requirements such as mandating that messages include a “valid physical postal address” as well as including language indicating that the email is an “advertisement” without the use of “deceptive subject lines” or “misleading header information.”

Finally, as previously explored, it is essential to include a disclosure whenever a paid sponsored post is used by a business, especially when the post involves a third-party endorser. This requirement exists due to the public nature of the statement (the social media post) and the existence of a business relationship (whether in kind or paid) between the parties. Coincidentally, similar to email business communications, all paid social media posts, testimonials and endorsements all fall under the regulatory authority of the FTC. In these cases, an explicit disclosure is required by the posting party, whether the disclosure is written, auditory or in both mediums. While there is no specific language requirement for an influencer’s disclosure statement, the FTC states that it must contain “simple and clear language.” The statement must also be made “in the same language as the endorsement itself.” For example, potential terms that may be utilized include “advertisement,” “ad,” “sponsored,” “ambassador,” “paid,” or “partner,” as well as incorporating disclosure hashtags such as “#ad,” “#partner,” or “#sponsored.” This disclosure recommendation applies to any recorded videos, such as those distributed on live platforms such as YouTube, during any live online streams such as those on Twitch as well as for all non-static social media posts, including Instagram Stories in addition to Snapchat posts.

Overall, there are a variety of legal factors that small business owner should be aware of and consider prior to commencing business as well as when operating an on-going enterprise. As discussed, the above are just a few select issues that proprietors need to be aware of and must consider when operating a company. These are in addition to many others that have been explored in prior articles.

This article is not intended as legal advice, as an attorney specializing in the field should be consulted.

© 2022 Justin Jacobson Law, P.C.