Is your Smart TV spying on you?

Is your Smart TV spying on you?

Quick Recap

Vizio, a consumer electronic company known for its affordable televisions, recently came under fire for its data collection methods. A feature in the televisions, Smart Interactivity, collects information about the user’s viewing habits and remains active unless you opt out of it. Vizio then shares the data it collects with third parties, such as advertisers and content providers. However, Vizio argues they never shared any information that would lead the third parties to identify the user. It is important to note that Vizio does not consider IP addresses to be personal information.

Lawsuits

Two federal lawsuits were filed in California against Vizio in November of 2015, one in Northern California and the other in Central California. The suits allege that tracking violates CA consumer laws because private information is disclosed without permission of the viewer. While purchasers can opt out of the data collection, they are not provided with adequate disclosures on the information being shared about them in the time they did not opt out. Both lawsuits were mainly concerned with Vizio violating the Video Privacy Protection Act, which prohibits “any company engaged in rental, sale or delivery of audio visual content and not necessarily just video tapes—from divulging any personally identifiable information about its customer to a third party, except where the customer has clearly consented to such data sharing.” Vizio consumers never consented to the data sharing. In addition to Vizio being named as the defendant, the lawsuits also went after the company that provided the software to track users.

The new year brought good news for Vizio. Judge Beeler, in the Northern California lawsuit against Vizio, approved the order for the companies to use mediation to resolve their dispute. Since these lawsuits quickly became class action lawsuits, there are hundreds of thousands of people demanding answers from the television company.

With the majority of the televisions becoming smart televisions, we urge consumers to be careful in protecting their privacy. Not only are smart televisions capable of tracking your viewing habits, they can also track your cell phone number if that cell phone is connected to the same Wi-Fi as the television. While Vizio did not directly respond to the lawsuits, they continue to state that users can opt out of the Smart Interactivity feature.

Sources:

  1. ABA Journal
  2. TechHive
  3. Top Class Actions
  4. Northern California Lawsuit
  5. Central California Lawsuit
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Are you hiring an Independent Contractor or an Employee?

Are you hiring an Independent Contractor or an Employee?

What is the issue?

Many employers treat their employees as independent contractors in an attempt to reduce their tax burdens. This misclassification has caught the attention of state governments and court systems across the nation. Illinois and New York have enacted strict laws imposing penalties on employers misclassifying their employees as independent contractors. Both states have task forces that are responsible for uncovering any misclassification in the construction industry.

Federal courts use an “economic realities” test to determine whether someone is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). Depending on the state, they may also use framework provided by the IRS to determine the hired individual’s status. IRS Publication 1779 looks at three categories to answer the crucial question: Behavioral control, Financial control, and the Relationship of the Parties.

1. Behavioral Control

This category of the IRS Publication 1779 focuses on how the work was performed and the level of supervision. Some other questions to consider when identifying your employee or independent contractor are:

  • Who has the right to supervise the work?
    • Employees are highly supervised, while independent contractors are rarely supervised.
  • Who provides the equipment or the supplies needed for the job?
    • An employee is provided with the tools necessary for the job, while the independent contractor brings his own supplies.
  • Can the individual hire helpers or “subcontract” the work?
    • An independent contractor is usually able to hire helpers.
  • Who controls the timing of when the work is completed?
    • Employers strictly control timing for their employees, but not for their independent contractors.
  • Are training or company procedures required to perform the work?
    • Independent contractors should not need any training to perform their job, while employers are expected to provide their employees with training. Employees should also be aware of company policies and procedures.

2. Financial Control

This second category focuses on the financial control within the relationship. It looks at how financially invested an individual is in the job. Here are some questions to consider:

  • Is the individual significantly invested in his/her work or are they just working for a paycheck?
    • Independent contractors are generally more invested in their work than employees, who only work for a paycheck.
  • Is the individual reimbursed by the employer for business expenses?
    • Employees are typically reimbursed, while independent contractors see business expenses as business costs.
  • Does the individual have an opportunity for profit or loss based on quality and/or quantity of the work?
    • The quality and quantity of the work done by independent contractors usually determines their profits or losses, but the same cannot be said for employees.

3. Relationship of the Parties

The last category of the IRS Publication 1779 focuses on the relationship between the individual and the employer. Some questions to consider when identifying the individual you are hiring are:

  • Is there a written contract between the individual and the company?
    • Independent contractors should have a written contract with the company.
  • Does the individual receive any benefits from the company?
    • Employees may receive benefits from the company, but the independent contractor only receives the consideration set forth in the written contract.

Although many states do not have strict laws enacted against misclassification, we recommend employers carefully consider whether they have hired an employee or an independent contractor. The financial ramifications of misclassification are significant. Not only can employers be held liable for unpaid minimum wages and overtime pay, they may also have to pay the employer’s portion of FICA contributions. We recommend using the IRS framework provided above to carefully consider whether you have hired an independent contractor or an employee to avoid financial penalties in the future.

Source referenced: JD Supra

Giving away your Trade Secrets to protect them?

Giving away your Trade Secrets to protect them?

California Code of Civil Procedure Section 2019. 210 is something to consider if you want to pursue trade secret litigation, especially if you are the one alleging the trade secret misappropriation. California’s Section 2019. 210 requires that the party alleging the misappropriation must identify the allegedly stolen trade secret “with reasonable particularity” before commencing discovery in litigation.

This may not seem as a problem right away, but imagine being in the following situation. Your company has three key trade secrets. One of your employees decides to leave your company and work for your competitor. She also takes a briefcase full of documents with her, but you do not know which documents she took. In order to sue the former employee and get any discovery in the case, you must identify those stolen trade secrets. Now, the question is whether you should give away all three trade secrets, or only two. What if you identify two trade secrets and the employee only had one? Clearly, the person alleging the trade secret misappropriation faces a lot of trouble.

On the other hand, Section 2019. 210 can be a powerful weapon to fight frivolous lawsuits and discovery requests. However, the key point here is that if you are looking to file a trade secret misappropriation case, you should probably consider other options before starting a lawsuit.

Source referenced: JD Supra

Legal Challenges with Online Reviews

Legal Challenges with Online Reviews

If you have ever bought something on Amazon or tried to find a new restaurant to eat at, one of the first things you probably did was read reviews and consider what other people had to say about the product or the restaurant. Turning to Yelp or the reviews section on Amazon is becoming an ordinary thing. People selling these products and business owners know the value potential customers place in their reviews and they are trying their best to keep customers happy or prevent them from writing negative comments. Some business owners are even willing to pay random people, who have never bought the product or visited their business, to write positive reviews. Robert Lee found himself in the middle of an online review lawsuit after visiting a New York City dentist.

The Incident with the Dentist

Lee visited Dr. Stacy Makhnevich at Aster Dental when he was in desperate need of treatment for his toothache. Before Dr. Makhnevich treated Lee, he signed a “mutual agreement to maintain privacy” contract which said he would not be able to comment about the services of the business. The dentist, according to the agreement, had a copyright protection and Lee would not be able to publicly comment on her services. Lee received his treatment and later realized he was overcharged. In addition, Dr. Makhnevich would not give him the dental records he needed to be reimbursed by his insurance company. Lee started writing negative reviews of the dentist on Yelp and other dental sites. When Dr. Makhnevich read the reviews, she demanded the online companies take the reviews down. She also sued Lee for copyright infringement. Lee fought back and aimed to invalidate her copyright claim. In the end, the U.S. District Court for the Southern District of New York said the privacy agreement was null and void. The agreement was found to be deceptive and Lee was awarded more than $4,700.

The reason dentists like Dr. Makhnevich and other business owners are so aggressive about their online image is because a 2015 survey by Mintel Group Ltd. showed that 54% of people read online reviews before purchasing goods or services. Harvard Business School found that adding even one star to a restaurant’s Yelp page can increase business by 5-9%. However, consumers are very intelligent and can be very suspicious of companies with only positive reviews. This should serve as a warning to business owners.

Freedom of Consumer Speech

Consumers have certain rights in the market and one of these rights is to speak their mind about the products and services they purchase. Since more and more business owners are including consumer gag clauses into their agreements, there are laws being put in place to protect consumer speech. Strategic lawsuits against public participation, or SLAPP suits, specifically spell out consumers’ rights to post negative, fact-based reviews. California’s Civil Code 1670.8 made the state the first in the nation to give consumers the right to post negative, honest reviews on Yelp. Congress is working towards passing a nation-wide law similar to California’s.

Companies like Amazon and Yelp are working with the FTC to make sure no fake reviews are posted online. The FTC also says consumers cannot be reimbursed in any way for writing positive reviews. Amazon and Yelp have even stricter guidelines and use “artificial intelligence to determine whether a review is legitimate and whether the poster and marketer have a connection.” Some authors on Amazon believe the company is being too strict by taking down reviews of people who received the book for free. Fans of the author are also not permitted to post reviews. A petition has been started by several authors to get Amazon to change its online book reviews policy. However, this effort seems unlikely to succeed.

Taking Fake Reviewers to Court

In 2015, Amazon named more than 1,000 John Doe users who created fake reviews. In an effort to provide customers with honest reviews, Amazon specifically shows “Amazon verified purchase” tags from consumers who bought the product. However, the problem of whether these people actually received the product and used it before reviewing it still remains. Many believe Amazon and other companies should not take their concerns over online reviews to the court because “the Communications Decency Act holds that an internet service provider can’t be held liable for something published by a third party—like a reviewer.” Amazon’s suit did lead to the shutting down of a few websites that sold reviews. Yelp filed a similar lawsuit against websites selling reviews and won by default when the defendant failed to show up to court. Both Amazon and Yelp agree that going to court is their last resort. They have practices in place to detect and stop fake reviewers before taking them to court.

New York Attorney General Eric T. Schneiderman has been working with Yelp and other companies to identify fake reviews. Many companies pay workers overseas $1-$10 per fake review, which is a violation of New York’s false advertising laws. A total of 19 fake review companies were identified and fined. Different states and the FTC are working together to stop these companies. The hope is that companies will come together to protect consumer rights and business owners will be more honest about their online image.

Source referenced: ABA Journal