No Termination Payment for You!

I was recently asked whether the US had any regulations similar to the EU’s Commercial Agent Regulations–pursuant to which, upon termination or expiration of certain agency contracts, the agent would be entitled to an indemnity/compensation payment. The specific question related to a sales agency agreement, but the answer for the US is valid for agency, distribution and similar agreements.  The short answer is ‘no,’ the general rule in the US is that there are no termination payments due upon termination of a ‘commercial agent’ (or expiration of the term of the agency agreement). Notwithstanding that answer, I’d point out two things for an Irish/NI company potentially appointing a commercial agent in the US: (i) the underlying agency agreement should be clear on intellectual property rights in that the ownership of principal’s IP remains with the principal, the agent’s use of that IP inures to the benefit of the principal, and that the agent, even after termination/expiration, will execute whatever document are reasonably necessary to reflect the principal’s ownership of its IP; and (ii) the underlying agreement should also be clear that the agent must return all confidential materials/information to the principal upon termination/expiration of the term.

 

You might be an Employee if….

On Friday, I used the phrase “Uber Settlement” as (maybe) click-bait to introduce an important, but hidden, issue facing Irish and Northern Irish companies operating in the US. As I noted in that post, many Irish and Northern Irish companies use a variety of ‘independent contractors,’ especially in the early stages of operating here—consultants and the like who are not intended to be employees. The risks associated with just labeling someone as an independent contractor can be significant, and very expensive. I’ve seen many Irish and Northern Irish companies make the same mistake—assuming that because the relevant contract states that someone is an independent contractor, such person is, in fact, an independent contractor and not an employee. Based on my experience, Irish and Northern Irish companies: Continue reading

What the Uber Settlement Means for Irish/NI Companies Operating in the US

Uber recently settled—for US$100 million—two class-action cases involving some of its drivers, and one of the issue points in the litigation was whether Uber drivers are independent contractors or employees under relevant US law. The contractor/employee distinction is a huge issue in the US, and it has flow-through effects on tax withholding, health insurance, employee rights, collective bargaining, employee eligibility for employment under US immigration laws, etc. It is one area where the US Department of Labor is focusing its compliance efforts. In the Uber case, the distinction was important because if an Uber driver were an employee, he or she could be entitled to minimum wage, certain benefits, and Uber’s ‘no tip’ and termination policies might be inapplicable. Those concerns do not exist for independent contractors, both generally and in the Uber case.

So, what does this mean for Irish and Northern Irish companies operating in the US? Bottom line: Be sure you’re correctly identifying someone as an employee or as an independent contractor. Continue reading

Everybody is an Employee…Maybe…Possibly

Businesses operating in or expanding to the US, including those from Ireland and Northern Ireland, use independent contractors to avoid some of the baggage associated with the employer/employee relationship under US law.  The use of independent contractors recently has gotten more complicated due to the US Department of Labor’s publication of Administrator’s Interpretation 2015-1.  The Interpretation is part of the Department’s closer monitoring of the ‘independent contractor’ designation. Businesses from Ireland or Northern Ireland operating in or expanding to the US, and using the services of an independent contractor (such as a sales agent) should take another look at how they designate a person as an ‘independent contractor,’ as soon as possible. Continue reading