Articles Posted in Business

In case you missed it, on June 21 the Supreme Court of the United States passed a judgment that states were now allowed to impose taxes on online sales.  This overrules its previous decision to rule out tax collection on stores that did not have a physical presence in that state.

So what does this law means and how is this going to look for your online business?

Before we go further into the South Dakota vs. Wayfair Inc. ruling, it is important to be familiar with how sales tax on online purchases used to work until now. The previous verdict from 1992, also known as Quill Corp. vs. North Dakota ruling, set forth that online retail merchants only had to impose taxes on their online sales in states where they had a physical presence or a “nexus.”   This means that the customers were required to pay the tax on the purchase to their home state directly.

bitcoin-1056983-300x169Cryptocurrencies like Bitcoin have been spreading like cyber-kudzu during the past couple of years in certain corners of the online investing world. More cautious investors still might be hanging back to make sure they’re not a crypto-bubble. And now all investors have a reason to hesitate: a series of legal and regulatory investigations that call into question their stability as investments.

Among the recent developments that could give would-be investors pause:

  • The U.S Securities and Exchange Commission in May announced that it had secured injunctive relief to halt alleged “ongoing fraud” by an unregistered, non-exempt Initial Coin Offering (ICO) that had raised as much as $21 million in cryptoassets. Titanium Blockchain Infrastructure Services, Inc., EHI Internetwork and Systems Management, Inc., and Michael Stollery, a self-described “block chain evangelist,” were collectively accused of fraud in connection with purchase, offer or sale of securities under both the Securities Exchange Act and the Securities Act. The SEC alleged that the defendants created a digital asset known as BAR and TBAR tokens, orchestrated a social media campaign based on false corporate relationships—including, most egregiously, a supposed link with the Federal Reserve Bank—and false testimonials to show their supposed expertise. The complaint further alleged that the group of defendants had generated demand by offering various incentives and creating a sense of urgency, then inflated the price of the tokens on the secondary market in a “pump and dump,” or “create and inflate” scheme. Such schemes are seen as a widespread problem on crypto-exchanges.

Cryptocurrency has been a trending topic of discussion for the last several years. Cryptocurrencies such as Bitcoin and Ethereum have captured the public’s attention with their unstable, and highly fluctuating market values, as well as their promises for quick and easy rewards.

Geo Bellas Chicago Business Lawyer

Currency in the Digital World

But what exactly are cryptocurrencies? And how secure are they as an investment?     Questions such as these are precisely what Federal and State regulators, as well as Congress, are struggling to explore and answer.

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Under a new Illinois law, non-compete agreements must be premised on a legitimate business interest and narrowly tailored in terms of time, activity, and place.  In addition, under the newly enacted Illinois Freedom to Work Act, employers are prohibited from entering into non-competes with employees who make less than $13/hour.

To prove the point, the Illinois Attorney General filed a suit in October against a payday loan company (Check Into Cash) because the employer required all store employees, including those making under $13 an hour, to agree to a one-year non-compete.  The suit alleges that the non-compete prohibits all store employees from working “directly or indirectly . . . as an employee, officer, consultant, or in any other capacity, for any individual, firm or entity, which provides deferred presentment, deferred deposit, and/or any other payday advance services, . . . and/or any other consumer lending services or https://www.businessattorneychicago.com/files/2017/11/11.1.17-1-300x150.jpgmoney services.”  The suit contends that the non-compete in question: (1) prohibits employees from working within 15 miles of any Check Into Cash location, not just the store the employee works in; (2) prohibits employees from working for any company that directly or indirectly provides consumer lending services, regardless of whether that company competes with Check Into Cash; (3) applies equally to all store employees, regardless of position or time spent with the company; and (4) applies to employees who make less than $13 an hour.  See: http://www.illinoisattorneygeneral.gov/pressroom/2017_10/20171025d.html

Employers should review their non-compete agreements to ensure compliance with Illinois law.  All restrictive covenants should: (1) be supported by adequate consideration; (2) narrowly tailored, in time, activity, and geography, to protect the employer’s legitimate business interests; and (3) not apply to low-wage employees as defined by the Freedom to Work Act.  If the employer is concerned about a low-wage employee’s exposure to trade secret information, they should also consider other means of protection, such as confidentiality agreements.

Can Student Loans Ever Be Discharged?

Yes, and there’s a new tool to help bankruptcy lawyers deter29905732 mine whether clients qualify

Contrary to common perception, not all student loans can be wiped out in bankruptcy court. Although the Bankruptcy Code does protect federal loans and some private loans from discharge, student loans can be discharged if the debtor can prove an “undue hardship,” which usually means you’re living in poverty and not likely to escape any time soon.

BIG WOES FOR ZILLO

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Zillo, the gigantic online real-estate database company, has a gigantic headache, legally speaking. It is currently the target of a class action lawsuit in Illinois. Zillow is the website that allows a person to search for properties for sale–properties located just about anywhere. And Zillow’s cornerstone feature–Zestimate–allows one to look up the estimated value of a property–most any property, most anywhere, whether it is for sale or not.  (Your own home may well be listed there right now; just go to the site and put in your address.)

Lots of people love Zillo; it is free, comprehensive and convenient.   Its legal problems stem from its Zestimate feature.

DRIVERLESS CARS: THE FUTURE OF PRODUCT LIABILITY LITIGATION?201606_TE_CAR_090-header-300x225

 Any business that will contribute to the production of driverless vehicles must give serious thought to the risk of products-liability lawsuits. And that includes suppliers, even of minor parts. We may think of driverless cars as a phenomenon of the future, but that future is closer than you think.

“Driverless car” is generally defined as a vehicle which, for most of a journey, will take charge of steering, accelerating, indicating, and braking. For the near future, the technology is intended only to assist the driver, not to replace him. It is expected that the driver will be able to take control of the “driverless” vehicle at any time.

Are Employee Non-Compete Agreements Still Valid for Low-Level Employees? Non-Compete-Clause-e1417451038467-300x171

Non-compete arguments are staple in every Chicago Business Lawyer’s legal arsenal and a necessary to protect a business under certain circumstances.  A non-compete agreement, also known as a non-competition covenant or clause, is an agreement between an employer and an employee that places restrictions on the employee after the employment relationship ends.  Non-compete agreements can be useful tools for businesses that want to protect their investment in the training and development of their staff.  Typically, these agreements restrict former employees from working for certain competitors for a specified period of time.  Although Illinois courts tend to dislike non-competes, courts will enforce a non-compete agreement if drafted property.

When considering the enforceability of non-compete agreements, Illinois courts look to see if the agreement is reasonable and supported by adequate consideration.  In particular, when determining the reasonableness of a non-compete, the court considers whether the terms of the agreement are no more than what is required to protect the legitimate business interest of the employer, and narrowly tailored in terms of time, activity and place.

electronicsignature-222x300Are Digital Contracts Legal?

If you are a Chicago business owner who is over the age of thirty, you remember the days of paper contracts that were typed and then snail mailed before they were revised, retyped and then mailed again.  Once the final terms were agreed upon, the parties signed the original paper document, sometimes by coming together to sign and have signatures authenticated by a notary.

While written contracts were not necessary or even preferred in every business situation, the days of paper contracts for most types of transactions are fading into the Illinois sunset.  In the digital era, electronic contracts with electronic signatures are the norm except in those areas that the statute of frauds[1] requires in writing such as a transfer of land, a Will or a contract where performance cannot be completed in one year. If your small business is not using electronic contracts and signatures on a daily or weekly basis, you may want to consider consulting with a Chicago business lawyer who is familiar with the laws and regulations affecting electronic records and signatures and can confirm that your company is in full compliance.

crowdfunding-620x480-300x232What is Equity Crowdfunding?  Is this the Future of Raising Investment Capital?

It seems that while nearly everyone  has heard of crowdfunding, the concept of equity crowdfunding is not as well known but is gaining traction.  For those Chicago business owners that are new to this developing area, prior to May 2016 crowdfunding was available only to accredited investors (those with an annual income of at least $200,000 or a net worth of more than 1 million, not including the value of a primary residence).  Although the 2012 federal Jumpstart Our Business Startups Act[1] (JOBS) provided for non-accredited investors, the Securities and Exchange Commission (SEC) did not authorize equity crowdfunding to begin until May 2016.

Since that time, Article III of the JOBS Act has seen 49 successful offerings with 11.5 million dollars committed according to a November 17, 2016, Forbes report[2] on the state of equity crowdfunding.  While the report suggests that the large majority of startups are not yet using non-accredited crowdfunding under Title III, it is anticipated that equity investment platforms will see tremendous growth moving forward.