The unfortunate reality is that disputes often arise in business matters. The time and costs associated with litigating disputes rarely serves the interests for the parties involve and the adversarial environment of litigation rarely fosters a collaborative effort amongst the parties to resolve the issue(s) mutually. To address this, many courts and administrative agencies have begun implementing various forms of alternative dispute resolution (ADR) mechanisms to resolve business matters in a timely, efficient and cost-effective manner. Some of the more common ADR mechanism include mediation, arbitration, conciliation, negotiation and collaborative law.

There are several benefits of ADR over traditional litigation in resolving disputes. Those benefits include:

• Reduced litigation costs and attorney’s fees;
• Saves time spent in preparing and scheduling for court hearings and trial;
• Provides parties the opportunity to retain control of proceedings and outcomes, rather than placing control in the hands of the court;
• Allows parties to preserve valuable relationships and potentially keep proceedings confidential;
• Avoids volatile and unpredictable jury awards.
• Provides greater likelihood of satisfaction with outcome

Statistical analysis of ADR sessions reveal four proven strategies for reaching successful agreements:

1. Reflect: Both parties are encouraged to listen and reflect on the issues presented from not only their perspective but that of the opposing parties as well.
2. Elicit: ADR provides the opportunity for participants to offer a range of possible solutions to the conflict and not be committed to only one resolution.
3. Offer/Tell: Each party is entitled to advocate for their own solution, while considering counter offers and legal analysis of the issues involved.
4. Caucus: Caucus is the process of meeting with ADR participants both separately and together. Although caucuses are scheduled with all parties present, each has the opportunity to discuss the matter privately with their own attorney. This removes the risk of making hasty agreements, allows for thoughtful consideration of individual benefits or goals and helps to diffuse confrontation situations.

If you are involved in a business conflict or dispute, call or contact the Law Office of Rosano, P.C. today to request a consultation to discuss your matter. Our staff can advise you of the available ADR options for your case and determine the best course of action to achieve the most successful results for all parties involved.

The Government Accountability Office estimates approximately 3.5 million workers are improperly classified every year. Improperly classifying employees is a common error, but one that could impose liability for both employers and employees. Improper classification of employees occurs when an employer inaccurately classifies an employee as an independent contractor regardless of whether that classification was intentional or not.

When an employer misclassifies a worker as an independent contractor instead of an employee, the worker’s rightto various employment benefits and employer contributions may be affected. Employers are required to withhold employment taxes and may be required to provide health benefit programs for their employees. Additionally, employees are entitled to safety protections and worker’s compensation benefits in the event of accidents and injuries suffered in the course of their employment. In contrast, independent contractors are generally not afforded any of these benefits and are solely responsible for paying both state and federal taxes.

It is imperative that an employer thoroughly analyze an individual’s employment status to avoid a misclassification. The Internal Revenue Service (IRS) provides several factors to consider when determining a proper classification. The following outlines some of those key factors to consider:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

• The worker must comply with employer’s required work schedule, place and manner of completing work
• The worker must perform the work specified instead of having the option to substitute other worker’s performance to complete the work.
• The worker is required to work, or be available to work, on a full-time basis.
• The worker receives a regular paycheck or payment based on a time period such as hourly, weekly or monthly.
• The worker’s expenses, such as travel or business expenses, are reimbursed by the employer.
• The worker uses the employer’s tools, material or equipment to perform the work.
• The worker has the right to quit without incurring liability for failing to complete the work requested.

An employment classification will depend on the entire relationship and will not weigh exclusively on one factor or another as dipositive. Further, factors which are relevant in one situation will not necessarily be relevant in another situation and therefore each worker’s situation should be evaluated individually.

The consequences of misclassifying a worker can be costly for an employer. A business may be selected by the IRS for an employment tax examination to determine if certain workers were correctly treated as independent contractors. If an employer classifies an employee as an independent contractor without any reasonable basis, the employer may be held liable for past employment taxes for that individual, as well as other monetary penalties. However, the IRS may provide relief to an employer under certain conditions. If an employee is incorrectly misclassified as an independent contractor under a reasonable basis and the employer treated all other similar employees in the same manner, the employer may qualify for employment tax relief under IRS Section 530 Employment Tax Relief.

If you are an employer, employee or independent contractor and want to evaluate your current employment classification, contact the Law Office of Rosano, P.C. Our staff has experience in determining employment classifications, in a variety of industries and employment contexts, and can provide legal advice on how best to formulate your employment relationships to comply with all state and federal law.

When a business has information that it considers essential to its success, that business may consider restricting the use of that information, by its employees, ex-employees or associates, to protect its business or customer contacts. The use ofa restrictive covenant serves this goal and comes in a variety of forms to protect different interests. Some of the more common restrictive covenants include non-compete agreements, non-solicitation agreements and confidentiality agreements.

A restrictive covenant, such as pre- or post-employment non-compete agreements, are clauses utilized by organizations in which one party (usually an employee) agrees to refrain from starting a business engaged in a similar service or profession as another party (usually an employer). Typically, the non-compete agreement is for a specified period of time and is entered into as a precondition of employee or at the conclusion of a business relationship. The specified period of time in which a party agrees not to compete is evaluated under a “reasonable duration” standard and will not be enforceable if the agreement is found to have exceeded this limitation. This evaluation will depend on the particular facts of a case. In addition to limitations imposed on the time duration, a non-compete agreement is usually geographically limited and should not be any broader in scope than reasonably necessary to protect the business’s interests.

A non-compete agreement may be used when dealing with intellectual property rights, product or process development, sales, marketing, engineering, design ideas and other business practices.

Another type of restrictive covenant is a non-solicitation agreement in which one party agrees to refrain from soliciting the customers or clients of another party for a direct benefit or for the benefit of a competitor. Like non-compete agreements, these types of contracts are found most often in employee/employer relationships.

The enforcement of non-compete and non-solicitation clauses are fact specific and depend on a multitude of factors. In Maryland, a non-compete clause will be upheld if:

• There is adequate consideration (offer of employment or continued employment is sufficient)
• The limits of the agreement are reasonably necessary for the protection of the business or employer
• They do not impose undue hardship on the employee
• They are not against the public interest

(Becker v. Bailey, 268 Md. 93 (1973)
Maryland courts will also consider the following factors in determining whether the agreement is enforceable:

• Uniqueness of the employee’s skills
• Whether the employee is exploiting close personal contacts with the employer’s clients
• They do not impose undue hardship on the employee
• Whether the non-compete is necessary to protect:
• Established customer relationships;
• Trade secrets;
• Sales or delivery routes; or
• Customer or client list

(Budget Rent A Car of Wash. v. Raab 268 Md. 478 (1973)

A confidentiality agreement, or non-disclosure agreement, is an agreement in which one party agrees not to disclose proprietary or confidential information of another party. Generally, confidentiality agreements focus on information that is not readily available to the public such as customer lists, trade secrets, marketing processes or procedures and business financial information.

Confidentiality agreements will likely be upheld in Maryland unless the alleged violator of the agreement can show the disclosed confidential information was learned or discovered from an independent third party. Unlike non-compete and non-solicitation clauses, confidentiality agreements are not bound by reasonable duration or geographical limitations.

Whether you are an employer looking to protect your business interests, a party to a business endeavor or an employee faced with a restrictive covenant, the Law Office of Rosano, P.C. can help to ensure any agreements containing restrictive covenants entered into are in full accordance with state and federal laws, safeguard your interests and provide thorough counsel on all related considerations. For a free consultation on how a non-compete agreement or other restrictive covenant may impact you or your business, call or contact our office today.