Hotel & Motel Management - June 16, 2008 - (Page 8) 8 Legal FAQ H&MM June 16, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Ideas for non-competes, and transients vs. tenants IN THE details Questions and answers Develop non-compete plans Know your state laws Transients vs. tenants By Stephen Barth H&MM Columnist What are some tips for handling my company’s non-compete agreements? Q A Below is a list of recommendations: Develop a comprehensive definition of what constitutes your company’s confidential trade secret information. Require all applicants and all employees upon hire to sign a properly tailored confidentiality agreement that prohibits disclosure of confidential information. Have an anti-solicitation agreement that prohibits your former employees from soliciting your clients by using your confidential information. Have an anti-solicitation agreement that prohibits your former employees from soliciting your employees to leave their job to go to work for a competitor. In states that will permit it, have a covenant to not compete that restricts an employee from working for your competitors. Have an agreement that contains a severability provision that permits a court to remove any improper provisions in your confidentiality agreement. Have an agreement that requires the return of all confidential information on separation from employment and require employees to sign a termination certificate declaring that all information has been returned during their exit interview. In the event of violation by a former employee of your confidentiality agreement, do move quickly to obtain a temporary restraining order/preliminary injunction. Educate your employees about the confidentiality required of them toward your confidential information. Remind them at least annually. Don’t have a confidentiality agreement that is overly broad. In states that do not permit non-compete agreements, don’t have a restriction in your confidentiality agreement that prohibits working for former clients; only prohibit solicitation. Don’t have a client list that just contains names and addresses. It also should have client preferences, propensities and history. However, under the recent decisions, even Rolodexes may be protected if you identify the information as confidential from inception of the Rolodex and input measures to maintain confidentiality. Don’t have a restriction in your confidentiality agreement that prohibits former employees from hiring your employees. Don’t have an unreasonably long period of time on your non-compete or anti-solicitation provisions (typically no more than one or two years). Don’t defame former employees to your customers. Don’t seek injunctive relief against a former employee unless you have some evidence to establish actual or threatened solicitation of your customers or unauthorized use of your confidential information. Special thanks to Andria Ryan, partner in the Atlanta Fisher & Phillips office, for the above information. W hat are some characteristics to determine whether an individual is a transient guest or a tenant? Billing format. Transient guests tend to be charged a daily rate for their stay; tenants are more likely to be billed on a weekly or monthly basis. Tax payment. Transient guests must pay local occupancy taxes; tenants are ordinarily exempt from such payment. Address use. Transient guests generally list another location as their permanent address; tenants generally use the facilities’ address as their permanent address for such things as mail, driver’s license and voter registration. Contract format. Transient guests generally enter into a rooming agreement via a registration card; tenants normally have a lease agreement or a specific contract separate from, or in addition to, their registration card. Existence of deposit. Transient guests generally do not put up a deposit. This is true even if the hotel requires a transient guest to present a credit card upon checking into the hotel. Tenants almost always are required to give their landlord a deposit. Often this deposit is equal to a specified number of months of rent. Length of stay. While it is widely believed that any guest who occupies a room in excess of 30 days becomes a tenant, the fact remains that length of stay is usually not the sole criterion on which the transient guest/tenant determination is made. Most guests who occupy the same hotel room for more than 30 days may do so without affecting their transient status. It is true, however, that the length of stay for a tenant does tend to be longer than that of a transient guest. Existence of a permanent residence. The question wheth- er the occupant owns or leases a residence at a location other than the lodging property remains a pertinent one. Transient guests usually have “permanent” residences at other locations; tenants intending to establish a permanent primary residence at your property ordinarily do not. hmm@questex.com Stephen Barth is an attorney and the founder of HospitalityLawyer. com and the annual Hospitality Law Conference series. Contact him at (713) 963-8800 or sbarth@hospitalitylawyer.com. Guest Column Double jeopardy: Settlement can mean rough waters IN THE details No easy recoveries Read your policy Prepare before disaster strikes Get expert assistance By Ryan Pratt H&MM Columnist By Daniel Torpey H&MM Columnist hat does it take to recover from unforeseen disaster? Hospitality company owners and managers find themselves in a fluid, rapidly changing environment af- W ter such an events and they face many challenges—from repairing a partly operational property to struggling to reopen a completely closed hotel. The challenge goes beyond repair and reconstruction. It extends to business continuity issues like a loss of bookings and the need to rebuild business with customers who believe the venue is fatally damaged. The process of insurance recovery can be daunting. The concept of insurance is simple: “Pay me back what I have lost.” But the concept of loss can be highly subjective: The assumption that simply because one has paid premiums one will be paid what a policy is worth rarely is accurate. Fortunately, most business readers are unfamiliar with catastrophic loss and with the process of settling a claim. For those who face it, recovery—both physical and financial—can take months, even years, depending on the magnitude of the loss and complexity of the business. Phrases like “business continuity” and “catastrophe preparedness” often are tossed about in this context. But what do they mean in the hotel industry? In the context of insurance, the answer can be complex. Instead of being a discussion that begins and ends the day the claim is filed, collecting insurance after a catastrophe is a series of negotiations between you and an insurer that begins on day one of the loss. The many gray areas include poli- cy provisions, exclusions and limits; loss period, period of indemnity and the idle period; definitions of wind damage versus damage caused by rain, or flood, or by fire or explosion; what constitutes equipment failure as opposed to normal wear-and-tear. And the list goes on. How does the hotelier prepare for recovery if his business never has faced a catastrophic loss? The first step is to read the policy. Without needing to be an expert, having a fundamental knowledge of what is recoverable, what limits apply, and how the loss will be measured enhances decisionmaking after a loss. Many companies ask their broker or agent, their risk manager, and their general counsel to go over policy forms before a loss to understand what is covered and what is not. For example, See Double jeopardy | page 16 http://HotelMotel.com http://www.HotelMotel.com/digital_edition
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