Before You Sign: The Non-Disclosure Agreement (NDA)

nat rosasco • December 13, 2018

 The first step in beginning many new business relationships is executing a non-disclosure agreement (NDA), also known as a confidentiality agreement. The NDA protects and provides instructions to handle non-public information. It’s also likely the first time two parties negotiate a written contract, providing insight on their document review, responsiveness, and willingness to compromise. The NDA is a safeguard and first impression that you shouldn’t take lightly.

 

In this article I review some of the more common provisions in the NDA and detail how you should approach them. Keep in mind that reviewing the document is just one part; you also must analyze the confidential information that you’ll be sharing. I rarely review an NDA without first discussing with my client what the transaction is about and what non-public material will pass to the other side.     After you appreciate the information you’ll be sharing, then you’ll be in position to analyze your counterpart’s NDA.

 

   1)   Make it mutual.

       If you’re handed an NDA, the first thing to check is whether it’s one-way or mutual. One-way NDAs protect only one party’s information, and put all of the obligations to keep that information confidential on the other party. Unless you have little-to-no bargaining power, you should not accept a one-way NDA (and even then you should ask for mutual protection). Most businesses will readily accept a mutual NDA when asked. Since an NDA doesn’t guarantee that you’ll be doing business with your counterparty, you shouldn’t risk sharing your confidential information with no protection.

 

   2)  Watch out for other contract obligations.

       Sometimes you’ll be faced with an NDA that tries to do too much. Pricing terms, supply obligations, personnel decisions, etc., do not belong in an NDA. The NDA should not guarantee any terms for future performance. After all, the parties will only begin sharing their information after signing the NDA. You’ll likely find something unexpected that will change your preconception of the deal. Leave the transaction obligations for a later contract once you’ve had time to analyze your counterpart’s data. You don’t want to be held to a promise that you can’t later keep because you didn’t have all of the details.

 

   3)  Don’t give away your intellectual property (IP) rights.

       Part of your own internal review will include identifying your confidential IP. Perhaps your counterpart is interested in paying you to use that IP. That’s great! But don’t give away your IP rights in an overeager NDA. If you need to share your confidential IP then make sure there’s nothing in the NDA that allows your counterpart to use it outside of the scope of the NDA. The NDA should not grant the other side to license or own your IP or anything they derive from that IP. If you want to collaborate on creating something new, then negotiate a separate contract to handle that.

 

  4)    Establish an end date.

       Many NDAs are silent as to their duration or require the receiving party to protect confidential information indefinitely. There is rarely – if ever – information that warrants your protection for more than a few years in the business world. Technology advances, vendors change, and processes become obsolete. You don’t want contracts holding you to obligations forever. Down the road they could lead to a mistaken breach or create an issue when you need to disclose all of your contracts, such as during an asset sale. The caveat is trade secrets which should remain secret. Get an end date for everything else.

 

  5)   Give some extra attention to the dispute resolution.

       It’s great to be excited about a potential deal with your counterpart, but don’t breeze through the dispute resolution provisions in NDAs. “We’re on the same page, this deal will never be an issue!” is a common sentiment and later regret of every manager who’s had to litigate a contract dispute. NDA dispute resolution is atypical to most contracts because it often includes non-monetary relief, such as an injunction. That type of relief is okay, but don’t give up your power to contest a claim, be served, or other due process rights. Dispute resolution provisions in NDAs tend to get bloated, so read them carefully in case they over-reach.

 

       The NDA is the door to many promising business relationships, but don’t rush through. Negotiate the NDA like any other contract and display your sophistication to your counterpart. Dedicate some time to ensure it’s fair, and that it sufficiently protects your own confidential information. Your business will be better for it.

Employers Can Require COVID-19 Vaccinations For Most Employees

By nat rosasco • February 25, 2021
As this relentlessly awful year mercifully draws to a close, a light at the end of our pandemic tunnel is rapidly approaching. COVID-19 vaccines are poised for approval, and it is expected that distribution will begin in earnest shortly. But no matter how much and how confidently the FDA and other health experts proclaim these vaccines to be safe and effective, there are large numbers of Americans who say they won’t get the shot when it becomes available. The most recent Gallup poll found that only 63 percent of Americans say they are willing to be inoculated against the disease. Many of those who don’t want to get vaccinated will soon find out that they work for an employer who feels differently. Those employers may also tell them that they either need to get the vaccine or need to find a new job. And, in most cases, employers may be well within their rights to terminate employees who refuse to take the COVID-19 vaccine. Mandatory Vaccinations Are Not New Companies that have spent the better part of the year – and lots of money - trying to keep their workplaces COVID-free see the vaccine as the apex of those efforts. With a fully vaccinated workforce, business owners can operate without disruption and provide employees, customers, clients, and patients with confidence and peace of mind. But all of those benefits of the vaccine only accrue to fully vaccinated workforces. So, many companies may mandate that employees get their shot as a condition of continued employment. By doing so, they are following a legally sound path that predates the current pandemic. Well before anyone had heard of coronavirus, plenty of employers, primarily in the health care sector, required employees to get the flu vaccine and vaccinations against other infectious diseases. Most public school districts also require proof of vaccinations before a student can enroll and attend classes. Since most employees in Illinois work on an “at-will” basis, they can face termination for almost any reason not expressly prohibited by federal, state, or local laws. Generally, no law stands in the way of an employer requiring the COVID-19 vaccine for its workers. ADA and Religious Exceptions However, employers who make vaccines mandatory need to be mindful that employees with legitimate health or religious concerns about the vaccine may be protected from termination and other adverse employment actions if they refuse the shot. But these exceptions don’t necessarily apply just because someone doesn’t believe in vaccines generally (“anti-vaxers”) or thinks that forcing them to get vaccination is an infringement on their liberties. Employees who have a disability recognized under the Americans with Disabilities Act (ADA) that prevents them from taking the coronavirus vaccine cannot be forced to get the vaccine, so long as their exemption does not impose an “undue hardship” on the employer. Such disabilities in this context may include a compromised immune system or an allergy to an ingredient in the vaccine. While there has been no definitive guidance on the subject, one could credibly argue that an employee’s refusal to get vaccinated is an “undue hardship” if it places the health and safety of other employees and visitors at increase risk of infection. Even in such cases, however, an employer may need to make a “reasonable accommodation” for the employee, such as allowing them to work from home. Similarly, the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 may protect a worker if their “sincerely-held religious beliefs” preclude them from getting a vaccination. Such beliefs do not include political or personal views. The burden is on the employee to demonstrate the legitimacy of their religious objections to the vaccine. More Than Legal Issues To Consider Even when an employer is within their legal rights to require employees to get the COVID-19 vaccine, other considerations may weigh against such a mandate. For example, they may need protection against an employee who has an adverse reaction, even if they signed a waiver upon receiving the shot. A vaccination requirement may also get an adverse reaction from employees generally as well as the general public if it seems heavy-handed and overreaching. Of course, those that decide against a mandate face risks if someone does contract the coronavirus in the workplace and sues. Please Contact Grogan Hesse & Uditsky With All Of Your COVID-Related Employment Questions If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.

Are You Eligible for the Second Round of PPP Loan Forgiveness?

By nat rosasco • January 11, 2021
The Paycheck Protection Program (PPP) is back , offering a second round of loan forgiveness to new borrowers and qualified second-time PPP borrowers. The second round of PPP loans has earmarked up to $284 billion to support business owners' payroll costs and other eligible expenses through March 31, 2021. Loans will be available to first-time participants on Monday, January 11, and existing PPP participants on Wednesday, January 13. First Draw PPP Loan Eligibility Borrowers that did not participate in the first round are generally eligible for a First Draw PPP Loan if they were in operation on February 15, 2020, and fall into one of the following categories: Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans. Eligible self-employed individuals (including sole proprietors and independent contractors). Non-profit organizations, including churches. Accommodation and food services operations with no more than 500 employees per location. Sec. 501(c)(6) business leagues with no more than 300 employees that do not receive more than 15% of its income from lobbying. Qualifying news organizations with 500 or fewer employees per location. Second Draw PPP Loan Eligibility Existing PPP participants are generally eligible for a Second Draw PPP Loan if the borrower: Used or will have used its First Draw PPP Loan as authorized. Has no more than 300 employees. Can prove it has suffered at least a 25% reduction in gross income between the same quarters in 2019 and 2020. Our team is committed to monitoring new developments with the PPP and providing you with the information you need. It is essential that your small business consults with knowledgeable corporate attorneys , financial advisors, and accountants on your PPP eligibility and forgiveness applications. If you have any questions about the new eligibility requirements or any other issues involving the PPP, please feel free to call or email us.

Amendments to PPP Loan Forgiveness

By nat rosasco • June 5, 2020
Many businesses that received Paycheck Protection Program (“PPP”) funds are coming to the end of their respective eight-week time periods (“Expenditure Period”) during which they must use the PPP funds to obtain forgiveness under the CARES Act. Unfortunately, many of these businesses have found it difficult to reopen and remain fully operational throughout the Expenditure Period and consequently to meet spending thresholds necessary to obtain full forgiveness. Luckily for these businesses, some much needed flexibility is on its way. Paycheck Protection Program Flexibility Act On June 5th, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA made the following changes relevant to PPP loan forgiveness: Extends the Expenditure Period from eight weeks to the earlier of twenty-four weeks from the date of the loan origination or December 31, 2020. Reduces the required payroll spending amount to a minimum of 60% on payroll instead of the current 75% minimum requirement. This would allow businesses to use the remaining 40% of the PPP funds on rent and other operational items as needed. Extends the deadline for workers to be able to be rehired to December 31, 2020 instead of the current cutoff of June 30, 2020. Extends the PPP loan to a five-year term instead of the current two-year term. As any amendments governing the use and repayment of PPP loans may be vital to a small business’ ability to continue to operate and successfully plan for the future, our team will continue to keep you up to date on the on-going developments. As always, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to use your PPP funds. Should you have any questions, don’t hesitate to call or email us.
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