The post How Estates Affect Real Estate Closings – Topic 2: Location, Location, Location! appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>After determining if the decedent had a valid will, as discussed here, the next step is confirming if an estate file has been opened and, if so, that filings have been submitted in the appropriate county. Estate files are opened and probated in the county where the decedent was living at the time of death. In many cases, probate in the decedent’s home county is sufficient to transfer assets. However, if the decedent owned real property in a different county, additional steps will need to be taken to effectively pass title and for the property to be sold.
For any transfer or sale of real property to be valid against claims of creditors, the decedent owner’s will must be probated or filed in the county where the property is located. For example, if the decedent was a resident of Forsyth County, but the property being sold is in Davidson County, there must be a filing in Davidson County. Thankfully, it is not necessary to fully probate the decedent’s estate in every county where property was owned. Instead, the filing is typically done through a process known as ancillary probate. This must be done even if the original estate file has already been closed! This can be done by filing a certified copy of the will, Certificate of Probate, and Letters Testamentary in the county where the property is located. The same rule applies for out-of-state decedents who owned property in North Carolina.
Confirming the existence of a will (or not) and that any estate filings have taken place in the appropriate county are only the first two steps. Once that information is confirmed, it is possible to determine who will be required to sign any documents necessary for closing. That determination will be explored further in subsequent posts!
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post Who Owns That Ghost Town Amusement Park? The Importance of an Operating Agreement appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>Imagine that you and your business partner decided to take on a long-term project to acquire and revitalize an abandoned amusement park. Your partner primarily provides the cash, while you provide the development expertise. You form a limited liability company (LLC) to own the amusement park. However, before the project is complete, your partner dies. What happens now?
These are essentially the facts in the case of McLure v. Ghost Town in the Sky, LLC, a case proceeding in the North Carolina Business Court. The short answer is that ownership of the LLC, and the possibility of continuing the project, depend on the LLC’s operating agreement. Operating agreements are vital to any LLC, and it is critical to pay close attention when drafting your LLC’s operating agreement.
In Maggie Valley, North Carolina, there is an abandoned ghost town-themed amusement park located on top of a mountain. The park has a long and interesting history involving disappearing sheep, sinking ground, celebrity visits, great success, and eventual failure. You can read more about the unlikely history here: https://en.wikipedia.org/wiki/Ghost_Town_Village
The current story starts in 2020. That year, an LLC called Ghost Town in the Sky, LLC was formed. Ghost Town owns about 250 acres where the abandoned theme park is located. Ghost Town had two owners when it was formed: an individual named Alaska Presley and another LLC called Coastal Development Carolina, LLC.
The general organization of Ghost Town was that Ms. Presley provided the money, while Coastal Development was tasked with obtaining financing to rehabilitate and eventually reopen the theme park. Ms. Presley and Coastal were both parties to Ghost Town’s operating agreement. The operating agreement included provisions concerning how members could be admitted to the LLC and how they could leave. The operating agreement also had specific provisions governing what would happen when Ms. Presley, who was in her nineties at the time, died.
LLCs are often the preferred corporate form for small businesses and startups. LLCs are flexible and relatively easy to form. In North Carolina, all you have to do is file a few documents and pay a modest fee to set up your new entity. Often business owners ask their accountants to form their new LLCs. But accountants do not usually provide operating agreements.
A properly formed LLC can sign contracts, open bank accounts, receive and pay money, own property, and pay taxes. The structure of an LLC is designed to be flexible. There are certain default laws that apply to the operation of LLCs, but most of those laws can be modified by contract between the members of an LLC. That contract is called the Operating Agreement.
Operating agreements are crucially important for an LLC. Operating agreements govern all aspects of the company. The operating agreement controls how the LLC is managed, who owns it, who can own it, and how an owner can cease to be an owner. The operating agreement establishes the relationship among the owners.
One of the most important things an operating agreement must do is dictate how members enter and exit the LLC. Typical operating agreements set forth how many initial members there are, how new members may be admitted, and how a member can cease to be a member. These provisions are often the heart of the LLC. For the members, these provisions decide who they are going to be in business with and for how long. If not drafted carefully, members can find themselves stuck in a business with members they have no desire to be in business with. Or members can find themselves left with an inoperable business if critical member decides to leave and take his or her skills and assets with them.
Perhaps unsurprisingly given the timing (in the middle of a pandemic) and the complicated history of the park itself, Ghost Town’s plans progressed slowly, if at all. Then, in 2022, Ms. Presley died. Under the operating agreement, Ms. Presley’s niece “succeed[ed] to all of Alaska Presley’s Membership Interest . . . with all the interests, rights and duties previously held by the decedent.”
Ms. Presley’s niece, Ms. McClure, was dissatisfied with Costal Development’s progress and immediately started asking for books and records to verify what had been done. Coastal Development refused, claiming that Ms. McClure was not actually a full member of Ghost Town and was therefore not entitled to that information. Ms. McClure filed a lawsuit to dissolve Ghost Town, and Coastal Development moved to dismiss.
Coastal Development argued that, under the Operating Agreement, to become a full new member of Ghost Town with voting rights, a person must be approved by the existing members. Coastal Development argued that it had not approved Ms. McClure as a member, and therefore she had no rights to participate in the management of the company. Coastal Development’s argument is supported in the statutes governing LLC’s, as new members usually do not become full members without some assent or input by existing members.
The North Carolina Business Court disagreed. According to the court, the case was an easy matter of contract interpretation. The operating agreement was clear and unambiguous about what would happen when Ms. Presley died. Specifically, Ms. McClure became the owner of all of Ms. Pressley’s interest in the LLC. All meant all, and therefore Ms. McClure became a full member of Ghost Town upon Ms. Pressley’s death, regardless of whether Coastal Development approved her becoming a member.
Coastal Development, at least according to it, had been putting significant time and effort into finding financing to reopen the amusement park. However, with Ms. McClure’s arrival as a member, Coastal Development stands to lose control of Ghost Town and any potential profit from the development.
Ms. Presley made sure that her heirs were protected in the case of her death by including specific provisions in the operating agreement. This was wise planning on her part.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post New Rule from the Department of Labor appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>On January 9, 2024, the Department of Labor (DOL) announced a new final rule for independent contractors under the Fair Labor Standards Act (FLSA)1. The new rule replaces the 2021 Independent Contractor Rule and provides guidance on how to analyze who is an employee or independent contractor under the FLSA2. The new rule takes effect on March 11, 20243. The new rule introduces a six-factor test for determining whether a worker is an employee or an independent contractor under the FLSA3. The six factors are:
The new rule is expected to result in more workers being classified as employees under the FLSA4. The DOL believes that the new rule will help workers and businesses understand their rights and responsibilities under the FLSA2 .
The new rule goes into effect on March 11, 2024 and applies to the FLSA but not to the laws related to the Internal Revenue. Employees cannot waive their rights to be an employee, if they are an employee they must be classified as an employee.
Businesses should review how they have classified their employees and make sure all independent contractors pass the six-point test.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
1 Final Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act, RIN 1235-AA43 | U.S. Department of Labor (dol.gov) https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking
2 Frequently Asked Questions – Final Rule: Employee or Independent Contractor Classification Under the FLSA | U.S. Department of Labor (dol.gov) https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs
3, 4 DOL narrows definition of “independent contractor” under FLSA | Nixon Peabody LLP
https://www.nixonpeabody.com/insights/alerts/2024/01/16/dol-narrows-definition-of-independent-contractor
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]]>The post Who owns my social media account? It all depends on who owns a dead fox. appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>In a recent case, the United States Court of Appeals for the Second Circuit was called on to examine who owns a social media account – the creator of the account or her employer? While social media is a relatively new phenomenon, the Court nevertheless found that long-standing principles of property law apply to the question of ownership, including principles concerning who owns a dead fox. Let me explain . . .
This case involves a dispute over an employment contract. Plaintiff JLM Couture hired the defendant, Hayley Paige Gutman, to design wedding dresses for JLM. Ms. Gutman signed a contract with JLM that included certain restrictive covenants, including covenants that Ms. Gutman would not use her name or any derivative of her name in commerce, as well as a covenant not to compete with JLM.
Shortly after signing the contract with JLM, Ms. Gutman created an Instagram account and a Pinterest account, both of which used the name “@misshayleypaige.” These social media accounts were not created at the direction of JLM, but over time they came to be used as advertising platforms for JLM products. JLM employees had access to the accounts to help manage, post content, and respond to inquiries.
This employment arrangement lasted for several years. In 2019, JLM and Gutman discussed but were unable to reach an agreement to extend the employment agreement. Ms. Gutman then changed the passwords on the social media accounts, effectively blocking JLM’s access. She also announced that she was leaving JLM.
JLM sued Ms. Gutman for breaching her employment contract. The case is ongoing, has been very contentious, and presents the court with many different issues. This post will focus on the issue of ownership of the social media accounts.
At the district court level, JLM sought a preliminary injunction giving it control over the social media accounts. A preliminary injunction is an extraordinary remedy. To grant a motion for a preliminary injunction, a court must find, long before the case is actually decided, that the party seeking the injunction is likely to succeed on the merits of the case. In other words, the court is asked to project which side is most likely to win the case in the end.
JLM argued that it had the best claim to ownership of the social media accounts. They had a contract forbidding Ms. Gutman from using her name in commerce, and they had a long history of developing, promoting, posting to, and managing the social media accounts. Ms. Gutman argued that JLM could not stop her from using her own name, and she had created the social media accounts on her own for her own use.
The district court examining the issue found that social media accounts were a different kind of property, and therefore the court needed a different test to determine which party owned the accounts. The court came up with a multi-factor test that it applied to the ownership of the social media accounts. Applying that test, the court determined that JLM had the best claim to ownership of the accounts and granted the injunction, ordering Ms. Gutman to turn the accounts over to JLM.
The appeals court disagreed. While acknowledging the somewhat novel issue presented, the court nevertheless found that there was no need for a multi-factor test for ownership of the social media accounts. Instead, traditional analysis of property rights was sufficient to determine ownership of social media accounts. The court summarized its holding: To summarize: the analysis of social-media-account ownership begins where other property ownership analyses usually begin—by determining the account’s original owner. The next step is to determine whether ownership ever transferred to another party. If a claimant is not the original owner and cannot locate their claim in a chain of valid transfers, they do not own the account.
I was getting to that part. The court of appeals, in rejecting the multi-factor test used by the lower court, noted that property rights have long been litigated, and we have clear rules. In making this point, the court cited the somewhat famous case of Pierson v. Post 2 a case out of New York decided in 1805, almost 220 years ago.
Pierson v. Post is a case often used in law school property classes. The facts of the case are succinct and a bit comical: The declaration stated that Post, being in possession of certain dogs and hounds under his command, did, “upon a certain wild and uninhabited, unpossessed and wasteland, called the beach, find and start one of those noxious beasts called a fox,” and whilst there hunting, chasing and pursuing the same with his dogs and hounds, and when in view thereof, Pierson, well knowing the fox was so hunted and pursued, did, in the sight of Post, to prevent his catching the same, kill and carry it off.
Post, a fox hunter with his “dogs and hounds,” found and was chasing a fox at the beach. Pierson saw Post on the hunt, but rather than let Post shoot the fox, Pierson shot and killed the “noxious beast.” Post, angry at losing his prey, sued Pierson for trespass, claiming that Pierson had shot Post’s fox.
Post argued that by expending his time and effort to locate and chase the fox, the fox became Post’s property. Therefore, Pierson trespassed on Post’s property by killing the fox. Pierson argued that the fox did not belong to Post or anyone else until Pierson killed it, at which time Pierson owned the fox.
The court agreed with Pierson. In its analysis, the court cited even older law, referring to the Justinian Institutes, a written compilation of Roman law first published in 533 AD. According to the court, referring to the Justinian Institutes, “pursuit alone vests no property or right in the huntsman; and that even pursuit, accompanied with wounding, is equally ineffectual for that purpose, unless the animal be actually taken.” The analysis went on to find that wild animals are no one’s property until someone “deprive[s] them of their natural liberty.”
Post was out of luck. Simply chasing the fox did not make him the owner. Pierson became the owner of the fox when he killed it.
The simple takeaway from the court’s holding in the JLM v. Guttman case is that property is property, and the same principles that have always governed property ownership will continue to apply. The court of appeals sent the case back to the district court to look at the chain of title. Did Ms. Guttman “kill” her fox when she opened the social media accounts? If so, did she do anything after that to transfer the social media accounts to JLM? These basic questions of property ownership, centuries old, still form the basis of private property rights today.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
1 JLM Couture, Inc. v. Gutman, Nos. 21-2535, 22-1694, 2024 U.S. App.</ br>
LEXIS 1050 (2d Cir. Jan. 17, 2024).
2 Pierson v. Post, 3 Cai. R. 175 (1805).
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]]>The post How Estates Effect Real Estate Closings – Topic 1: Will or No Will? appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>In recent years, there has been an uptick in the number of real property transactions involving estates. This development has, understandably, generated many questions from the parties involved – buyers, sellers, and realtors – particularly surrounding who needs to sign documents and what other actions need to be taken to successfully close on the property. The answers to those questions will ultimately depend on each individual transaction and can become quite complex, but this series of posts will hopefully serve as a good starting point.
The first, and possibly most important, question to ask is whether the deceased owner of the property had a valid Last Will and Testament. Without a will, real property automatically transfers to the deceased party’s heirs via intestacy, which is determined by North Carolina statute. It is important to note that there may be multiple heirs, even if the decedent was married. Additionally, heirs may not be local, so being able to identify who may have an ownership interest in the property as early in the process as possible will be helpful.
On the other hand, if the owner had a valid will, real property transfers to the person or people named (“devisee(s)” or “beneficiary”). The devisee can range from individuals, a group of people (i.e. “my children,” “my surviving heirs,” “my siblings,” etc.), the estate, the Executor, a trust, etc. Knowing this information ahead of time will make it easier to determine who may need to sign documents for closing. However, for the will to validly pass title to real property, it must be filed for probate – simply having a will is not enough!
The will should also name an Executor, sometimes called the Personal Representative. If there is not a will in place, a Personal Representative will need to be appointed. This is an important step because the Personal Representative of the estate will likely be required to join in signing documents for closing if the estate is still pending (i.e. the final accounting has not been submitted and approved).
Determining the current owners of the property, whether heirs or named beneficiaries, and the Personal Representative of the estate is only the first step in the process. Confirming that the will is validly probated, assessing who needs to sign closing documents, and verifying that the property can be sold requires several other questions, which will be discussed in subsequent posts.
Read Part II
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post The Corporate Transparency Act – What is it, and Does it Affect Me? appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>On January 1, 2024, the long-awaited (some might say dreaded) Corporate Transparency Act (“CTA”) went into effect. The provisions of the CTA are briefly summarized below. In short, the CTA imposes significant new reporting obligations on business entities. As with all new legislation, the devil is in the details. If you have questions about the requirements, please contact us for assistance.
The CTA is a significant piece of legislation aimed at enhancing transparency in corporate ownership and combating illicit financial activities such as money laundering and terrorism financing. The primary objective of the CTA is to create a more robust framework for collecting and maintaining beneficial ownership information of certain entities in the United States.
One of the key provisions of the CTA is the requirement for certain companies to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Beneficial owners are individuals who directly or indirectly control or own a significant interest in a legal entity, such as a corporation or a limited liability company.
The CTA applies to entities that qualify as “reporting companies.” These include corporations, limited liability companies, and similar entities formed under state law. There are certain exemptions from these reporting requirements, largely for publicly traded companies and certain financial institutions. These exceptions are relatively narrow. Most companies are subject to the reporting requirements.
Reporting companies are obligated to submit detailed information about their beneficial owners to FinCEN, including names, addresses, dates of birth, and unique identification numbers such as driver’s license or passport numbers. The collected data is intended to be confidential and will be used by law enforcement agencies to trace and investigate illicit financial activities.
The CTA is an important step in addressing the issue of anonymous shell companies being exploited for money laundering and other financial crimes. By requiring the disclosure of beneficial ownership information, the legislation aims to make it more difficult for individuals to hide behind complex corporate structures to engage in illegal activities.
The implementation of the CTA also represents a shift toward aligning the U.S. regulatory framework with international standards for combating financial crimes. Many countries have already adopted similar measures to enhance transparency in corporate ownership, and the CTA brings the United States closer to a more globalized approach to preventing money laundering and related offenses.
Again, this short summary is by no means comprehensive. It is essential for businesses and stakeholders to stay informed about this important change and ensure compliance with the CTA’s requirements.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post How can I protect myself from misclassification of employees as independent contractors? appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>The Department of Labor and the Internal Revenue Service work together to identify organizations misclassifying employees as independent contractors. There are a few best practices to be aware of in order to protect yourself against fines. See the ones identified below.
These are just a few guidelines and if your organization has any questions as always check with your human resources department or your legal counsel.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post Buying or Selling a Property Held in Trust appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>Trusts are an estate planning vehicle used to protect assets, including homes and other real property. Trusts can be a complex concept, but in general a trust is set up to allow a designated person, called the trustee to manage specific assets for the benefit of one or more individuals, called the trust beneficiary or beneficiaries. The trust is established by a written document that sets forth the purpose of the trust, the powers and duties of the trustee, and the identity of the beneficiaries.
The trustee and beneficiary can be the same person. When real estate is involved, it is common for the beneficiary to reside in the home owned by the trust. Fortunately, property that is held in a trust can typically still be transferred, sold, or conveyed. However, the process is different for a property being sold by a trust as opposed to an individual.
Whether and under what circumstances a property held in trust can be sold depends on the trust itself. The trust may contain restrictions on the sale of property. At the very least, the sale must be approved by the trustee as being in the best interest of the trust beneficiary. This is not difficult when the trustee and beneficiary are the same person. But in some circumstances, this can be tricky. If you are negotiating to buy property from a trust, make sure you are dealing with the correct party with the authority to sell.
Once the terms of the sale are agreed, the closing attorney handling the transaction will need certain information including: (1) who is currently acting as trustee, (2) the trustee’s authority to transfer or sell the property, and (3) the current status of the trust, i.e., that it is in effect and has not been revoked. Most or all of the necessary information for the closing attorney will be located within the documents creating the trust. Oftentimes, the full trust documents are lengthy and contain many provisions that do not apply to real estate transactions. Because of this, the attorney who assisted in forming the trust will usually prepare a certificate of trust, which contains the necessary and most relevant information applicable to the trust’s assets in a condensed format. Be sure to keep this document handy and provide it to the closing attorney as soon as possible. The closing attorney will arrange for a title search and will ensure compliance with the trust documents.
Key Takeaways: In order to avoid any issues or delays, it is important to provide all of the trust information to the closing attorney as early in the process as possible. The seller/trustee should also be made aware that it may be necessary for the closing attorney to review the trust documents in full before the closing occurs or to prepare documents – so don’t pack them up in a box and load them in the moving truck!
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post Federal Regulations That Apply to Compliance Programs appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>A: Below are seven statutes that apply to a compliance program:
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
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]]>The post What really is a Trade Secret? appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
]]>There are many laws both federal and state that protect trade secrets. Most conform to the Uniform Trade Secrets Act which imposes both civil and at times criminal penalties. If you steal someone’s trade secrets and use them to make money for you and try to put your competitor out of business at the same time, this is a real problem and can result in monetary awards to the other party.
Trade secrets are valuable information that your company uses to function which is not available to the public and kept confidential. To claim it is a trade secret it must not be available to every employee and classified as “top secret”. There is only a few people privy to information and not the entire workforce. Many companies require key level employees to sign an agreement holding them personally liable for the release of information. These are key when a violation of a trade secret is alleged. Remember to keep your trade secrets secret.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.
The post What really is a Trade Secret? appeared first on Greensboro Attorneys | Business Law, Estate Planning, Employment Law.
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