Top Mistakes Small Business Owners Make And How To Avoid Them
At the Law Offices of Barron & Posternock, in Moorestown, NJ, our experience, as well as those of our clients, has left us sensitive to the numerous legal mistakes small business owners make. We offer this in an effort to help you avoid them.
Pre-Formation
1.Starting a business while employed by a potential competitor, or hiring employees without first checking their agreement with the current employer and their knowledge of trade secrets.The law is clear that if someone is currently working for a company, particularly if he or she is a key employee, they cannot operate a competing business. Even just incorporating may spark a lawsuit from the current employer. Would-be entrepreneurs should first go to their current employer and either resign, or tell them what they’re doing and ask them if they’d be interested in investing. Amazingly, that is often a very smooth way of ending that relationship. Under no circumstances should they misrepresent the nature of the new business.
Even after leaving the current employer, one cannot use or disclose the company’s trade secrets. Under the so-called Inevitable Disclosure Doctrine, if someone has been exposed to trade secrets at their job and leaves to work for someone else, and if their responsibilities in their new job are sufficiently similar, some courts will conclude that it is inevitable that they will use the information they had from the earlier position. They could face an injunction prohibiting them from working for the new employer until a number of months go by and whatever trade secrets they had are stale.
It also helps to know whether potential recruits are subject to covenants-not-to-compete. States vary in terms of how enforceable they are, but one shouldn’t assume they are not. One should also check to see what assignment of inventions might have been signed. Personnel files should be reviewed and recruits should check theirs, to be certain that a covenant-not-to-compete or an assignment of inventions wasn’t tucked into a signed non-disclosure agreement.
2. Mistakes When Leasing Office Space
Next to payroll expenses, facilities and related expenses are generally the second highest expenditure for a company. Some of the most commons mistakes that companies make when leasing space are… read on.
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