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The answer to that question is yes. The flip side, of course, is that some entities can also not be accredited investors. In addition to the well-known definitions of an individual accredited investor, an entity accredited investor includes: -A bank, insurance company, registered investment company, business development company, or small business investment company -An employee benefit plan, if a bank, insurance company, or registered investment advisor makes the plan’s investment decisions, or if the plan has assets in excess of $5 million -A trust with assets in excess of $5 million, not formed to acquire the securities in question, whose purchases are made by a sophisticated investor (a person with the knowledge and experience necessary to evaluate the risks of investment -A charitable organization, partnership, or corporation with assets exceeding $5 million -An entity in which all the equity owners are accredited investors. One can see that, unless the entity is a bank, insurance company, or investment company, the entity will usually have to have assets in excess of $5 million (not unlike the individual accredited investor’s sufficient condition of assets of $1 million). An entity can also be an accredited investor with less assets if all its owners are also accredited investors. So when you have to verify the status of accredited investors, when soliciting entities that aren’t banks, insurance companies, or investment companies, check not only the entity’s net worth, but also each of the owners’ income or net worth — even if the entity has insufficient assets to qualify as an accredited investor, the owners’ own accredited status (if they have it) can pass through to the entity.

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The legality of non-compete agreements may be in its last months here in Massachusetts, but for now such agreements are still valid. However, there are two major requirements in order for a non-compete to be valid and enforceable: one, the agreement must be bargained and compensated for; two, the scope of the restrictions must be reasonable. When I say that the agreement must be bargained and compensated for, I’m talking about the agreement having consideration, that thing you give up to get something in return. All contracts, including non-compete agreements, must have consideration in order to be valid. However, many employers run into the issue of consideration for their non-compete agreements. This usually happens because they decide at some point to put some or all of their key employees under non-competes, so they have an agreement drafted and then ask their employees to sign them. But the employer hasn’t given anything in order to get the protection of a non-compete, nor has the employee gotten anything for giving up his or her rights. Courts have consistently held that continued employment is not proper consideration. Ideally, non-competes are signed when the employee is hired — the offer of employment can act as consideration. However, if an employer wants to put current employees under a non-compete, it generally must be accompanied by promotions and/or additional job responsibilities necessitating the non-compete (usually along with commensurate raises, bonus, and/or benefits). Otherwise, it is very difficult to find consideration to support non-competes signed by current employees. A non-compete must also be reasonable in scope; there are three basic terms of scope: industry/position, geography, and time. In most states, each term must be as narrow as possible, while still granting the employer the protection it seeks, so as to not unfairly infringe upon the employee’s right to seek work. Industry/position terms are restrictions on the positions, job responsibilities, and industries the employee may work in under the non-compete. The terms have to be limited to protecting the employer’s legitimate interests, so a non-compete generally can’t bar a worker from obtaining any employment under the non-compete. Reasonable terms are generally limited to the employee’s current position/responsibilities and the employer’s specific industry. However, if an employee earns his or her living with a certain set of specialized skills, the terms must be limited even further. For example, a senior software developer whose primary marketable skills are limited to software development generally cannot be barred from obtaining any software development or related position — if he or she was, he or she would not be able to obtain employment during the non-compete. The terms usually must be limited to a certain set of job responsibilities, and the industry limited to the subset in which the employer participates and which contains its direct competitors. The geography term must also be limited to the employer’s legitimate interests — if it is not a national or international company, it may be unreasonable to include a geographic restriction outside of the company’s state. A broad geographic term may also be unreasonable if, in concert with other terms, it would force an employee to move in order to find employment. Finally, non-competes must also be reasonable in duration. Non-competes cannot be indefinite — at some point, the employee’s right to freely seek work, even with an employer’s competitor, begins to outweigh the employer’s legitimate interest in restricting the flow of their employees to competitors, as the employer builds and moves on from the work done by the employee. As a general rule of thumb, non-competes lasting a year or less are considered reasonable; however, the lower the level of the employee, the shorter the reasonable term becomes, as lower-level employees have less knowledge of and are less critical to the employer’s competitive advantages.

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We have finally gotten our website up and working. Through our website, we hope to bring you the latest news on law, local cases, and how we continue to help with the local community. We believe we have much to offer Dallas. We look forward to serving you!

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Creative Commons licenses typically allow third-parties to use CC-licensed material without fee (and sometimes pursuant to additional restrictions, such as only using CC-licensed material for non-commercial purposes), as long as the user notes the material as CC-licensed and attributes the author of the work. The updated Creative Commons license guidelines were recently released, and among other things provide really good guidance on how to make a proper attribution of CC-licensed work. Although there is no right way or wrong way to attribute, Creative Commons suggests that users attribute the following way: “(work title)” by (author) is licensed under Creative Commons (license version). It is also best practice to place the attribution nearby the work, rather than on a separate attribution page.

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The First Venture Legal Blog is going on a mini summer holiday break! The next new article will be published on Tuesday, July 9. Until then, hope everyone has a safe and enjoyable Fourth of July holiday!