Transcript:

[00:00:00] Voiceover: Welcome to the Life Unlimited Podcast with Larry Heller. You deserve complete financial advice so you can confidently live your life your way for life. Now let’s get into this week’s podcast episode.

[00:00:18] Matt Halloran: Hello and welcome to another Life Unlimited podcast with your host Larry Heller. Today we have a guest, Yogi Patel. He’s the managing partner at Outside Legal Counsel, LLP. Now he’s got lots and lots of experience.

[00:00:29] Matt Halloran: I’m not gonna actually run through the whole laundry list here ’cause it’s actually a lot, but he really focuses on privately held businesses and he works a lot with entrepreneurs. Now he’s not only, uh, you know, the managing partner, but he’s also an adjunct professor. Of law at the City, university of New York, and he’s been doing that since 2016.

[00:00:45] Matt Halloran: So today we’re gonna be talking about, corporate transparency and non-compete. So Larry, take it away.

[00:00:50] Larry Heller: Thanks, Matt. Thanks Yogi for, uh, for joining us today. I think the audience will learn some things and like Matt said, we’re gonna talk about two different topics today. We’re gonna talk about corporate Transparency Act, which is fairly new.

[00:01:04] Larry Heller: ’cause I guess that’s an act of. The Corporate Transparency Act of 2024. And then we’re gonna talk about non-competes and what’s going on in New York State and about the non-competes. So, uh, so let’s dive right in and let’s start with the Corporate Transparency Act. So can, can you give our audience a kind of a, an overview and the key provisions of the, of the act and explain how this differs from previous legislation.

[00:01:29] Yogi Patel: Yeah, [00:01:30] sure. First of all, thank you Larry for, uh, having me on. I’ve been looking forward to this, so, uh, I appreciate it. in terms of a corporate transparency act, first of all, it’s set to go into effect in 2024. literally in a couple of weeks. the key provisions are that new entities that are gonna be formed, whether it’s LLCs, corporations, and by the way, this is a federal law, so it’s not just New York state.

[00:01:53] Yogi Patel: It applies, you know, to, uh, every state, uh, in the United States. We’re required to file disclosure with, uh, sen, which is the, you know, part of the Department of Treasury and the financial disclosure that essentially needs to be, filed is what’s known as the beneficial ownership information.

[00:02:12] Yogi Patel: essentially what the government’s trying to do is. get a, a rec a document that reflects who the owners of these LLCs are, or these corporations are. the legislation essentially has anyone that owns more than 25% interest in these entities to disclose, that information.

[00:02:32] Yogi Patel: So their name, social security numbers, you know, addresses, this is all stemming from, years of, shell companies essentially being utilized by individuals to hide, the true owners of, uh, corporations and LLCs. And essentially this is the government’s way of cracking down on that and, uh, forcing, you know, parties to, uh, essentially reveal its information.

[00:02:53] Larry Heller: So, lemme, lemme just let, lemme just stop you there and clarify this. So, going forward, starting in 2024, [00:03:00] if you own a business, whether you’re an s-corp, an LLC, an LLP, and you own more than 25%, you are gonna have to declare, you’re gonna have to declare that and then that’s gonna become public knowledge.

[00:03:14] Larry Heller: So anybody’s gonna be able to find out, who the owner of this, corporation is. Correct.

[00:03:20] Yogi Patel: Well, not necessarily. So there’s, couple of different caveats here. it’s, first of all, it’s not so new corporations and new entities that are gonna be set up after, you know, after 2024 have, I believe it was 60 days, they just changed the rule to 90 days.

[00:03:34] Yogi Patel: So within 90 days, that information has to be, disclosed and submitted to.

[00:03:39] Larry Heller: But it’s only new corporations. So if you’re, if, if you had one already, you don’t have to, worry about it. No,

[00:03:45] Yogi Patel: no, no. Actually, that was the second part of my, my statement is that that’s for new corporations. It’s a 90 day window.

[00:03:52] Yogi Patel: For preexisting entities. it’s before the end of 2024, so it’s, you know, you have a year to essentially get this in. So it’s, it’s every entity out there that, know, that is not exempt. And I’ll talk about that in a second. But there are certain exceptions of certain ent. There’s a, a list of entities that are not subject to this rule.

[00:04:11] Yogi Patel: Let’s put it this way, it’s, publicly traded companies, big banks, major financial institutions. Those are the types of companies that do not have to, follow through with this, statute. Everyone else, private or smaller, privately held businesses, they’re all subject to this, this law.

[00:04:27] Yogi Patel: Uh, and to your specific question, [00:04:30] it’s. Entities that have, you know, preexisting entities are also subject to this law. So it’s, uh, not, you know, the new entities. I guess the only difference is they have, that has to be done within 90 days. Preexisting entities have a little longer, they have to get it done before the end of the year of 2024.

[00:04:45] Yogi Patel: But that still is a requirement that, every single entity is gonna have.

[00:04:49] Larry Heller: so, so, so then by 2025. Anybody that owns a corporation, people are gonna be able to find out, anybody that owns more than 25% of that corporation.

[00:04:58] Yogi Patel: So the, that’s the other piece of this is that this information is not supposed to be available to the public at large.

[00:05:05] Yogi Patel: Ah. So, so it’s meant to be maintained by the government, by treasury specifically. However, the legislation does have language that. The government has the ability to share that information internally, so to other, government agencies within, my assumption is federal agencies, but not so sure if state agencies are also gonna be privy to this information.

[00:05:27] Yogi Patel: It’s not meant for, there isn’t a public database that is gonna be available for you and me to just log onto and, you know, figure out who owns what.

[00:05:36] Larry Heller: but they could share it with like the IRS.

[00:05:38] Yogi Patel: That’s correct. The IRS, if there is, um, you know, department of Homeland Security, you know, you name the agency, depending on, what the basis is.

[00:05:46] Yogi Patel: And, and I’m sure there’s gonna be a, one of the issues here, Larry, is that, um, they haven’t really, the regulations have been sort of coming out in dribs and drabs. There, there isn’t, and they’re changing frequently, so, you know. There’s constant updates that are being presented, and [00:06:00] there’s also serious exposure in terms of like, well, who is supposed to complete this?

[00:06:03] Yogi Patel: And lots, you know, attorneys and accountants are both who are, who are traditionally involved in forming these entities, do not wanna take any responsibility for, completing this information because you have to also disclose that, you know, in terms of if you are the one that’s completing the information, you actually have to, list your name and.

[00:06:20] Yogi Patel: Put your information down. and there may be some liability there if the information that’s being provided is not accurate. So it’s kind of like a hot potato. No one, no one really wants to. Own up to this obligation in terms of professionals, uh, in helping clients deal with this.

[00:06:34] Yogi Patel: So it’s gonna be interesting to see how this plays out,

[00:06:37] Larry Heller: but who, so who do you, who do you think is gonna, is this something you’re gonna do? Who do you think is gonna be the, and, and, and obviously like you just said, Yogi, this is ongoing. So by the time you’re listening to this podcast, we may already have some clarification.

[00:06:48] Larry Heller: So check back with, Yogi and, uh, any updates. But as of now, who do you think is gonna be doing this?

[00:06:54] Yogi Patel: right now, I mean, we, you know, we constantly, we form, you know, possibly between, you know, two to five entities a week for different clients and, as soon as we’ve got wind of this, we have now essentially in our engagement letters, disclosed this new law and the obligations that companies are under.

[00:07:11] Yogi Patel: And essentially, made our clients aware that we’re not gonna be doing this. So they need to find somebody else to do it, or they themselves should do it, but. once we have a better sense of what the regulations are, we may start, providing this particular service to our clients in terms of helping them complete these documents and submitting them, on their behalf.

[00:07:29] Yogi Patel: But [00:07:30] until we have a better grasp of, the parameters of this law and what the exposure is and, and sort of how it’s gonna all play out. We’re a little, uh, reticent about doing so ourselves, and I understand from others that I’ve spoken to, they too, uh, you know, accountants specifically, everyone shares the same concern in terms of like, well, how does this expose us if the information that’s being provided is not accurate?

[00:07:51] Yogi Patel: And, uh, you know, what, you know, what’s the ramifications, you know, there?

[00:07:54] Larry Heller: So, so if I’m a business owner and I own more than 25% of my firm, what am I gonna need to do in 2024?

[00:08:01] Yogi Patel: You are essentially gonna have to go onto to Sen’s website and complete the, you know, the form. No one even knows what it looks like, by the way.

[00:08:08] Yogi Patel: Right. Because you, right up until now there you can’t, there isn’t anything to submit today. You know, December 14th, we go onto that website. there, I don’t, I don’t even believe it’s a sample form or anything like that that’s provided right now. So, no idea, Larry, unfortunately. Okay. In terms of what exactly, what we do know is that it’s gonna be.

[00:08:28] Yogi Patel: Basic information with respect to percentage of ownership, right? In terms of like what percentage do you own, uh, your personally identifiable information, you know, including addresses and potentially social security numbers that are gonna have to be disclosed, as part of this. But beyond that, I’m not really sure yet.

[00:08:44] Yogi Patel: I think we’ll have that information coming up pretty shortly though.

[00:08:46] Larry Heller: Okay. Have they come out and said, what happens if you don’t comply with this act in 2024?

[00:08:53] Yogi Patel: Yeah, so there is, there is a criminal and civil penalties associated with non, uh, you know, with failure to comply. so [00:09:00] it’s, it’s essentially, I have a feeling that they’re gonna try and make examples out, people who are not, you know, they, they, I’m sure there’s gonna be a bit of a grace period, like there is, generally speaking, with every new legislation that’s passed, especially one that is so, broad, broadly sweeping and impact impacting so many businesses.

[00:09:15] Yogi Patel: There’s certainly gonna be some grace period, but I, I do believe that, you know, there, the, I I don’t remember off the top of my head what the, statutory fines are, in terms of the amount, but they’re significant enough and so is apparently the, is a criminal, prosecution, uh, aspect of it. I, I imagine if the.

[00:09:32] Yogi Patel: Omissions are deliberate and willful. I, I, you know, that, that’s probably where that kicks in. But, you know, again, it’s still, the regulations are still pretty, bare bones in terms of, when this is gonna kick in, uh, under what circumstances it fall under civil versus criminal, what the numbers are, and that type of information.

[00:09:49] Yogi Patel: But, you know, look, the whole point here is that they. They wanna crack down on money laundering, essentially. I mean, that’s one of the, you know, key, key, uh, goals of this particular, uh, legislation. you know, having, concerns about foreign nationals owning, properties here in the United States under shell companies and not being able to figure out sort of who the end.

[00:10:09] Yogi Patel: Owner is, or who the beneficial owner ultimately is, that that’s essentially what this is all about. It’s to, these shell companies and the games that are often played in terms of hiding, who the true owners are. That’s what this is, you know. Going after.

[00:10:22] Larry Heller: Right. And that’s why I was just about to ask that question.

[00:10:24] Larry Heller: And basically what you said is they’re going after making sure people aren’t money [00:10:30] laundering or uh, uh, are doing things similar, similar to that or, so are there, uh, I know you said some of the exceptions out there for companies that don’t have to do, but are there any other potential challenges that, businesses should be aware of and certain strategies they can employ to navigate these challenges?

[00:10:47] Yogi Patel: Look, I think, you know, one thing that we noticed, right? So, you know, we work with a lot of business owners obviously, and you know, I can’t tell you how many times, and I’m sure you’ve, you know, you’ve probably had this experience yourself where, you’ll have somebody say, I’ve been in business with so and so, you know, I’ve been part in a partnership with so and so for X amount of years, even decades.

[00:11:05] Yogi Patel: And, you know, we don’t really have anything in writing. It’s a handshake deal or, The other, the other part of it too that I often get is, well, you know, we haven’t quite figured out, you know, what the percentage ownerships are. And, you know, we’re still in the process of working that out, but we wanna get the entity off the ground and eventually we’ll sort all of that out depending on sort of what our funding needs are, this, that, and the other.

[00:11:24] Yogi Patel: I think the, the real issue here is that, you know, before you could sort of get away with it, you know, in terms of. You didn’t need to disclose that information as part of the formation process, right? So you could have an entity that was off, you know, that was out created, in existence operating, there’s no, even though there, there are rules that, example, in New York, the LLC law says, you know, you should have an operating agreement in place. But that operating agreement never gets filed in any, any governmental agency, right? So there isn’t really any real incentive for parties to actually.

[00:11:55] Yogi Patel: Memorialize their ownership interest in business ventures, up to this point, except for [00:12:00] obviously avoiding disputes and making sure everything is clean and buttoned up. And that’s good enough of a reason in our opinion, right, in terms of why that should happen. But I. The reality is, you know, startups and, and, non-lawyers or, generally don’t place too much, value to memorializing those types of, documents.

[00:12:17] Yogi Patel: And so that’s where I think there’s, you know, now you’re up against sort of this requirement where you do have to disclose this information. And by the way, there’s also updates that are required to this. So the way I read the, the regulations that, if you’re bringing on new partners down the road, if you are changing the ownership percentages over time.

[00:12:34] Yogi Patel: You need to update this information. In other words, that’s another trigger for, resubmitting the, the, the information to the government. so I think that’s gonna be some of the real, real challenges here is to get, folks to understand that, you can’t put this off anymore in terms of deciding what the ownership interests are gonna be.

[00:12:50] Yogi Patel: And, what Perce, you know, who, who’s gonna be subject to disclosure under this particular law. You can’t just say, Hey, we’ll get to that when we get to that. You know, I think this needs to be sort of predetermined now, and this conversation’s going to happen much sooner.

[00:13:03] So anyone that’s out there that’s owning a corporation, keep posted and make sure that you, uh, comply with this in 2024 as some of these changes become, uh, I guess become permanent.

[00:13:14] Larry Heller: Yeah. So let’s switch, let’s switch gears a little bit and let’s talk about non-compete clause. And again, you know, today’s podcast is. It’s December 14th, 2023 when we’re recording this. So by the time this comes out, both the, uh, corporate Transparency Act and now the [00:13:30] non-compete clause, there could already be changes.

[00:13:32] Larry Heller: But, let’s talk about the pending LEGA LE legislation in New York State regarding non-com, non-competition clauses, and what are really the key changes and provisions that it’s introducing to current law.

[00:13:44] Yogi Patel: Yeah, no, that’s, so this is a really interesting topic, right? Because up to this point, non-competes or non, have not been codified in any, any, any manner in New York State.

[00:13:53] Yogi Patel: And what I mean by that is. There isn’t any law in the books with respect to non-competes. there’s case law, you know, meaning that the, challenges to non-com non-compete clauses by, by parties. And there is a whole body of law that has been developed through case law. But, you know, and, and, and just generally speaking, you know what the rule right now is, is that in order for a non-compete clause to be enforceable, it has to be reasonable in geography and, uh, in, in duration.

[00:14:21] Larry Heller: lemme just back up a second. Sorry, Yogi. And just explain to our audience what we mean by non-compete clause. So you want to, tell everyone kind. Yeah. I apologize

[00:14:29] Yogi Patel: what that means. Sorry. Sure. Yeah. So non-compete. You know, the idea, the non-comp, non-compete is sort of, the clause essentially states that, you know, once your employment ends with your current employer, you can join another company that provides the same or similar services, for a potential amount of time, uh, within a specific area.

[00:14:50] Yogi Patel: That’s generally how it’s. Carved out. It’s, you know, most employers have these clauses to protect their trade secrets, their intellectual property to [00:15:00] keep, you know, employees from essentially taking clients with them, even though that can be achieved through a non-solicitation clause, which is a little different than the non-compete.

[00:15:08] Yogi Patel: Right? The, the, the, again, the distinction there between the two would be the non-solicit clause. When you see that, that’s generally. If you leave us and join a another company, you can’t poach our existing, you, you can’t poach our clients. You can’t poach our employees. So that’s separate and apart from non-compete, meaning you can’t go work for someone else, right.

[00:15:29] Yogi Patel: Um, that does something that very, that does something as similar as we do, in the same industry, you know, whatever the case may be.

[00:15:37] Larry Heller: So basically you’re an account, you work for. An accounting firm and you sign a noncompete that if you leave, you can’t work, in the accounting business, in the accounting world for, for let’s say a year, that’s a non-compete versus a non-solicit.

[00:15:52] Larry Heller: You leave and you try to take some of the other clients that a good explanation. So they’re not really, they’re not really focusing on the non-solicit in this law. They’re really focusing on the non-compete.

[00:16:03] Yogi Patel: That’s absolutely right.

[00:16:04] Larry Heller: Right. So now what’s the, what’s the changes that they, that are proposed now on the non, non-compete that won’t, there won’t be a non-compete.

[00:16:11] Larry Heller: That means anybody can leave and, and go work for someone else,

[00:16:15] Yogi Patel: essentially. Yeah. That’s where we’re headed. So, so the, so, and this is what also what’s sort of interesting, you, I’ve been sort of reading the, the, so, so the, the New York State Assembly passed the bill. I’d say sometime over the summer that essentially it’s a cha, it’s a new provision to the labor [00:16:30] law that essentially outlaws non-competes, right?

[00:16:32] Yogi Patel: There’s really, very limited exceptions that they would allow for non-competes to even exist, uh, under the, the, the version that has been passed by the assembly. It’s awaiting the governor’s, signature in order to, to get enacted. And, and that’s, and she, the, the go the, you know, governor Hool has until the end of this year, until literally another two weeks to essentially, sign off on this legislation.

[00:16:55] Yogi Patel: My understanding is that there’s been a lot of lobbying, expectedly from, banks and other, you know, major employers who. want to protect some type of, uh, wanna retain some exceptions to this law. So they wanna be able to impose non-competes on individuals that are earning over $200,000, for example, is one, criteria that I’m hearing about in terms of trying to water down the existing legislation that has been passed by the, assembly, uh, the way the assembly is passed it right now.

[00:17:24] Yogi Patel: It’s essentially just outlawing. All non-competes essentially. And, and, and one thing I will say is that it’s not, it’s forward looking. It’s now backwards looking. And what I mean by that is if you have a non-compete that was signed today, uh, before the, the law went into effect in January, assuming she signs it.

[00:17:41] Yogi Patel: that non-compete that was signed would still be in, is not voided as a matter of law. So essentially, all companies that have existing non-competes in their documents with their employees. they’re still subject to the, the prior common law, meaning are they reasonable in scope and, in order to determine whether or not they’re [00:18:00] gonna be enforceable.

[00:18:01] Yogi Patel: So they’re not outlawed as a matter of law. Uh, the way that the new proposed legislation is, uh, intended to do, meaning, starting, you know, January 1st, 2024, you cannot have a clause like that if everything stays the same. If Governor Hool, you know, no changes are made to the existing legislation, that’s gonna be the fundamental difference.

[00:18:22] Larry Heller: Okay, so, so if you already have this in place, that should, you still should be protected under the old law, but, uh, anything going forward will, uh, will, will change. So given that, what kind of advice do you, will you give to businesses regarding their current non-competition agreements and, legislation and, and there are specific recommended actions that they should take to ensure that they’re in compliance.

[00:18:44] Yogi Patel: So look, I think that, so there’s a couple of different things out there. One is that this is just on a state level, right there, there are, there’ve been discussions brewing now for the last couple of years in terms of the federal government essentially outlawing, non-competes, right? So, the FTC for example, has, is in the process right now of getting comments, From, you know, uh, part of the rulemaking process with agencies is there is a, a comment period in terms of the agency, taking feedback from the public in terms of proposed regulations. And so right now the federal gov, the FTC is in the process of doing Z and kind of kicked off this can for about a year now.

[00:19:21] Yogi Patel: But there’s a very good chance that non-competes, even if the New York doesn’t. At this particular law or a version of it, there’s a chance that on the federal [00:19:30] level it’s gonna get outlawed at some point. So that may impact all of this anyway, you know, irrespective of what happens. So that’s something to keep, keep in mind.

[00:19:37] Yogi Patel: but, absent that right now, obviously nothing, you know, the advice that we’ve been giving employees employers right now is that, a, you gotta get it in now, right before the end of the year. given the current pending legislation, assuming it stays the way it is, at least we know that. If you have one in place prior to 2024 that it’s gonna be considered valid.

[00:19:57] Yogi Patel: But having said that, you know, it still needs to be reasonable, right? It still needs to be narrowly tailored in terms of, what the current law requires, or the, you know, case law requires, meaning it can be overly broad. You can’t have, you often see language that says you can’t work anywhere in the United States or anywhere across the world, you know?

[00:20:15] Yogi Patel: Uh. for three years, five years, you know, that’s, there’s a good chance that if an employee decided to challenge that particular clause, a court would agree. You know, it’s public. The courts don’t favor non-competes. The idea is that, you know, people should be out there free to kind of, be employable or have a right to earn, you know, and, and it needs to be balanced against the company’s interest in protecting its, its interest, but you know, not at the expense of somebody earning a living.

[00:20:40] Yogi Patel: Right. So. Our advice is, well, listen, if there’s a way for you, and by the way, Larry, I mean we. You know, we represent a lot of executives working for major corporations, including, Google and Amazons and, and, and, and, and whatnot. And I could tell you, you know, right now that many of these major companies are doing away with [00:21:00] non-competes entirely.

[00:21:00] Yogi Patel: They, they on their own, they’re not even waiting for this. They see where this is headed and they see the value in sort of, doing away with it. They’re strengthening their non-solicitation clauses because they see the, you know, that’s certainly. You know, what’s more important to them is not losing those relationships, not losing those business, you know, clients walking out the door, but the idea of preventing somebody from joining a competitor for any particular amount of time, absent some type of garden leave.

[00:21:25] Yogi Patel: Right? So the, in the financial industry, I mean, I’m, I’m sure this is something that you, you, you know, you’re probably aware of in terms of, you know, what, you work for an investment bank or something like that. They’re willing to pay you for six months, you know, after the, the end of your employment to sit on the sideline.

[00:21:38] Yogi Patel: and essentially, sit it out. That, by the way, is something that if an employer is willing to do, even under the new regulations that might be permissible, right? So the idea here is it’s one thing to kind of terminate an employee and say, okay, thank you. We don’t need you. oh, by the way, I. You can’t work for anyone for the next six months to a year.

[00:21:57] Yogi Patel: but we’re not gonna compensate you for that time while you sit it out. That’s kinda where that line is a little bit in terms of if you have a, a garden leave type of policy where you have the ability to actually a, a, a policy that pays them for that six to, you know, eight months or whatever it is that you want them to sit out of the marketplace.

[00:22:13] Yogi Patel: There is more of an appetite for that, right? Because it’s sort of like, okay, you know, you’re, at least they’re getting paid for that time period and the employer is getting what they want, which is this cool down period, you know, in terms of their ability to, move on to the next, their competitors.

[00:22:25] Yogi Patel: So I think that’s kind of where the balance is gonna be eventually, if, and to me. [00:22:30] As an employment attorney that represents both employers and employees. that’s something that I think is fair, right? I mean, the idea is, look, if you want somebody to sit it out, sit out, and you want them to not compete, then maybe you should pay them for that time period that you expect them to sit out, you know?

[00:22:43] Yogi Patel: And that seems like a fair deal. Both parties are getting what they want in that instance, you know? But right now, the way it stands, you know, that. There is no such obligations unless the company takes that obligation on its own.

[00:22:54] Larry Heller: I guess maybe there’s gonna be a lot of different exceptions here.

[00:22:56] Larry Heller: I’m gonna throw something out that we just went through with a, with a client, selling the, the client is selling their business and they’re a professional. and part of the. Clause is that they’re gonna work there for another two years, but at the end of that period of time, they can no longer, they cannot operate within 50 miles of the business that they’re selling for five, I believe it was five years.

[00:23:18] Larry Heller: I’m not sure how long that would be. Obviously they’re getting paid a buyout, so would that be something that would come under this exception and they wouldn’t be able to compete somewhere, somewhere else? Or would this possibly change

[00:23:31] Yogi Patel: No, that’s a, it’s a, that’s a great, great question. And, and believe it or not, that’s one of those sort of open-ended issues that the new statute does not address.

[00:23:41] Yogi Patel: So, and to your point, non-competes, you know, in, in, with respect to the sale of a business are very common, right? In terms of like, that’s a fundamental, component of some of these transactions where there there’s an expectation that, the seller is not gonna then just turn around and, and join a competitor or start their own new business, [00:24:00] in that field.

[00:24:00] Yogi Patel: Interestingly, the law, at least the way the current legislation is, is drafted, does not address that. It kind of leaves that, you know, that question, open. Now, I’ve been reading some blogs and articles about this issue in terms of trying to figure out kind of where, how this is gonna play out.

[00:24:15] Yogi Patel: There’s a good argument to be made that. The intent here is not necessarily to preclude that, right? Because this is, you’re not a traditional employee in that regard. Especially if you are, your transaction is, you know, there’s an earnout component to it and you’re still required to remain, uh, with the company to help, you know, transition.

[00:24:33] Yogi Patel: And, uh, you’re still, there’s money owed to you on account of. different, milestones that have to be met during that period, you know, for the earnout to, to materialize. And then as part of that, you know, the non-compete, you know, following that is, you know, it’s, it’s, it’s apples and oranges in my opinion.

[00:24:50] Yogi Patel: Right. In terms of like treating someone in that position the same as treating somebody who is just a W2 employee, you know, that is not benefiting from the sale of their business. Uh, I don’t think that’s what the, the legislators intended. But again, it’s silent. And so I have a feeling that that’s gonna be probably another one of those issues, that there’s probably gonna be additional regulations issued if this gets passed, to provide some clarity on how that, that’s gonna be dealt with.

[00:25:14] Yogi Patel: But for the time being, it’s an open question.

[00:25:17] Larry Heller: I mean that just seems, you know, fair. I mean it, on one hand it does, it does seem fair that if you’re, I dunno, sell, um, coffee at coffee chain and technically you sign a non-compete, you can’t go sell coffee on [00:25:30] the other side and make a living.

[00:25:31] Larry Heller: That the, you know, that’s kind of, uh, understandable why the non-compete doesn’t make sense there. But if, if there’s something where it’s a, a business that’s so highly technical, uh, you don’t want that person to work. For you for many years and then go, go across the street and open up a a competitor, um, without any type of, uh, delay in that.

[00:25:52] Larry Heller: So, uh, so I guess there’s a lot of potential legal and practical imp implications that are still gonna have to be decided on upon about the pending legislation. So, uh, any other suggestions or ideas on how employers should navigate some of these changes that are coming up?

[00:26:10] Yogi Patel: Look, I think, you know, uh, obviously, uh, we try and, our clients we are, you know, we constantly send, uh, newsletters out to advise of developments in terms of these areas of law that are, potentially applicable to them.

[00:26:25] Yogi Patel: You know, it’s, it might be worthwhile to, let’s say, respect to the Corporate Transparency Act that we discussed earlier. You know, they have a, um. subscription, almost like a newsletter that you can sign up for, which obviously we did, you know, months ago, just because this is sort of our industry and we wanted to, you know, be aware of what was happening, but it’s not a bad idea for business owners to also, subscribe to some of these types of, newsletters and updates that, you know, some of these governmental agencies are gonna, are, are providing.

[00:26:51] Yogi Patel: And I’d imagine that once the. New legislation gets passed in terms of the non-compete. If it gets passed, you know, there may be similar types [00:27:00] of, uh, updates that, you know, uh, businesses can, uh, receive, you know, on Canada and obviously they’re always welcome to sign up for our newsletters and receive that information that way as well.

[00:27:10] Larry Heller: Right. So, Yogi, this has been great information for our, uh, listening audience out there and for those business owners, I, I guess you gotta be, you know, be prepared and be aware of some of these changes that are gonna happen in 2024. Um, and you mentioned your newsletter, but if, if anyone wants to reach out to you to find out more or have any questions about both the non-compete and the Corporate Transaction Act, uh, where can they get ahold of you?

[00:27:34] Larry Heller: Yogi?

[00:27:35] Yogi Patel: You know, you could Google us, uh, outside legal counsel, LLP, that’s the name of our firm. You could put my name in there, Yohi Patel, outside Legal Counsel, LLP. And that should take you directly to our website and all of my contact information is on our website. happy to speak, drop us an email, give us a call, happy to jump on a call and help.

[00:27:52] Larry Heller: Great, Yogi, thank you so much, UBA, for being our guest today.

[00:27:55] Yogi Patel: Thank you so much for having me on, Larry. Much appreciated

[00:27:58] Matt Halloran: and I wanna thank everybody for listening to the show today. Listen, there’s a lot of complexity here and making sure that you have an attorney with experience in your corner and somebody who has a lot of experience like Larry and Heller Wealth Management with, business owner specifically, can make all the difference for you to make the best decisions, not only this year for and in the year to come.

[00:28:16] Matt Halloran: So we’ll make sure that we have all of those links in the show notes for Yogi and Larry and for Larry and Yogi, this is Matt Haller and we’ll see you on the other side of the mic. Very soon.