2009-PA-0029 (House Bill No. 4453) [PDF]
2009-PA-0030 (House Bill No. 4454) [PDF]
2009-PA-0031 (House Bill No. 4455) [PDF]

“At will” employment is the rule, not the exception
In most cases, an employment agreement is going to be what we call an “at will” agreement: the employee is employed at the will of the employer — and can be let go at any time, at the will of the employer. What if there’s a written agreement, but it doesn’t specify whether employment is “at will”? If the employment agreement doesn’t specify that an employee can only be terminated “for cause,” then the employment agreement is “at will.” At will employment is the default in most states (Michigan included).

Some written employment agreements specify that an employee may only be terminated for cause. Barring special circumstances (such as employment under a union or other associational agreement), termination “for cause” must be spelled out in writing in the terms and conditions of the employment agreement. The employment agreement should have a termination section that indicates when an employee can be terminated “for cause,” and it should contain a definition of the causes that justify termination within the agreement. (Note to employers: acts justifying termination for cause should be clearly spelled out. This benefits the employer as well as the employee, and avoids having a court modify the employment agreement in a legal dispute.)

Employment agreements which can only be terminated for cause are frequently used in a wide variety of industries and situations. For cause agreements are used for key employees in technology companies, founders and managers in startup ventures, professionals in finance and accounting, doctors and lawyers, and employees in unionized businesses and companies. For cause employment contracts are typical where the employee has more leverage than an ordinary worker and cannot easily be replaced.

There’s no employment contract
There is always a contract between a worker and a hiring party — even if there’s no written agreement. In the absence of a written contract, employment is always “at will”: the employee can be let go immediately. Unless, of course, the employee isn’t really an employee — many business owners are shocked to find out that in the eyes of the IRS and/or the state department of labor, their ‘contractors’ are really employees, or vice versa. If you’re the employer in this situation, ‘misclassification’ of an employee as a contractor is a very expensive mistake.

“Two weeks’ notice”
Many people believe that a company or employee owes the other party “two weeks’ notice” for terminating the work relationship. That’s not a legal rule, it’s a conventional practice. “At will” employees can be escorted off the premises immediately upon notice of termination, with an arrangement to pick up their belongings at a later time. While this can come as a shock to the employee, it’s something that attorneys routinely recommend to employers as a standard employment policy, for security reasons.

If you’re unemployed or looking to re-educate and change careers, you can identify training opportunities for green jobs by county or region.

If you have a business, the No Worker Left Behind program will assist you in moving into green industries — by providing consulting and employee training resources to facilitate the development of employee skills and expertise for green jobs within your company. Here’s a resource page containing links to several local and regional green initiatives. There’s a mailing list to receive information about green jobs in Michigan here.

It’s just not that simple. Contracts are a set of rules that spell out the parties’ mutual intentions and individual obligations for a jointly-agreed undertaking. Good contracts not only spell out the structure and the rules, they spell them out taking into account a wide variety of alternate realities — not just what everyone had in mind when they first started to negotiate and everything was kumbayah — but also how things should go under…weird circumstances. Wierd circumstances like floods, fires, earthquakes, strikes, martial law, and the US government taking over your company due to a collapse of the financial system.

Suppose you and I make a contract for me to tap-dance on your coffin on the date of your funeral, and in exchange I will receive a $1M dollar “retention bonus” (for sticking around until you are actually dead). You fulfill one of your obligations under the contract by showing up (dead), thereby providing me the necessary coffin to tap-dance upon. (And I made sure that you pre-arranged payment to me via a third party, since you wouldn’t be there to hand me my bonus check.) Just before I am about to start my tap-dance routine, the law of gravity is rescinded, causing me to fly off the earth, and causing your coffin to fly off the earth, too. I couldn’t tap-dance on your coffin, as I contracted, if I wanted to. Weird circumstances.

In writing good contracts, good contract lawyers actually spend a fair amount of time thinking along these “What are all the bad things that could go wrong?” lines. US commercial law has a doctrine for dealing with weird circumstances called “force majeure.” A force majeure term in a contract excuses either or both parties from their obligations under an agreement, because it is no longer possible to perform as promised due to circumstances beyond the parties’ control. (The great majority of professionally negotiated contracts contain a force majeure clause.)

My response to Mr. Sorkin’s argument in favor of paying the AIG rockstars used force majeure as an example of one of the many ways that a contract could be interpreted to excuse non-performance. I stated that AIG was extremely likely to be able to be excused from paying the bonuses due to the collapse of the financial system, and without breach under the actual terms of the contract — IF there were a force majeure clause in the contract to rely on. Here’s the link to my AIG bonuses / force majeure comment on the New York Times (and here’s a permalink to the comment text which I have placed here on the Arborlaw site.)

But, we don’t have to stop at force majeure, the issue which I chose. There are at least a dozen more legal theories that would support withholding those AIG bonuses. The New York Times has a pretty nice roundup of the main legal theories here: “Room for Debate: When Bonus Contracts Can Be Broken,” The New York Times (March 17, 2009), and Lawrence Cunningham makes an excellent and concise summary of the basic legal principles in an op-ed comment here: “A.I.G.’s Bonus Blackmail,” The New York Times (March 18, 2009).

Score another one for the contract attorneys (maybe).

In 2008 both Nevada and Massachusetts passed data privacy laws requiring encryption of personal data. The Nevada law requires all businesses to encrypt personally-identifiable customer data that are transmitted electronically. The Massachusetts law requires encryption of personal information on laptops and portable devices. Both states’ laws apply not only to resident businesses, but also to out-of-state companies with operations or customers in those states. Any company doing business in all 50 states will have to comply with these data encryption requirements.

For purposes of both laws, the personal information affected by the data privacy encryption law includes an individual’s name, plus one of the following: driver’s license, credit card information, or social security number (SSN).

Both laws establish liability standards for failing to encrypt personal information as required. The Nevada law allows companies complying with the encryption requirements to benefit from a $1,000 per individual cap on liability, which are otherwise unlimited under a lawsuit for negligence. Links:

Text of Nevada data privacy security and encryption law (NRS 597.970)

Text of Massachusetts data privacy security and encryption law (201 CMR 17.00: Standards for The Protection of Personal Information of Residents of the Commonwealth)

Michigan and Washington are among states currently considering similar laws.

One of the latest features of the Kindle 2 raises a classic copyright issue: What happens when new technology impacts existing licensing deals?

Kindle 2 has a feature which reads text aloud. Authors and publishers contend that this feature creates an audio work under the US Copyright Act.

Under Section 106 of the US Copyright Act, the owner of a copyright has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

17 USC s. 106. (Those links in the body of Section 106 all purposely go to the same page: the Definitions section of the US Copyright Act. That’s because the definition of a copyright term is important. The definition of copyright terms of art “as defined in the Act” is controlling — and not the ‘dictionary definition’ that the public may be familiar with.)

They don’t have the right to read a book out loud. That’s an audio right, which is derivative under copyright law.

Social media’s social activist moment is officially here. Votereport.com is using Twitter and special applications for the iPhone and Android cell phones, to monitor polling conditions, voting wait times, voter registration problems, and voting machine dysfunction in the US presidential election.

Anyone with a Twitter account, or with an iPhone or Android phone, can participate:

http://twittervotereport.com/spread-the-word/

Harry Potter’s creator J. K. Rowling and her publisher Warner Brothers Entertainment sued RDR and Vander Ark last year to stop publication of the lexicon, claiming that it infringed copyrights in the overwhelmingly popular Harry Potter series of books. Warner Brothers Entertainment, Inc. and J.K. Rowling v. RDR Books et al, (USDC SDNY, Case No. 07-CV-9667). (A copy of the original complaint in the “Harry Potter Lexicon” case can be found here.) US District Court Judge Robert Patterson ruled earlier today that Rowling had proved her case: publication of the “Harry Potter Lexicon” would cause her irreparable harm as a writer.

A lexicon is a glossary or reference work organized like an encyclopedia or dictionary, usually in alphabetical order. In Vander Ark’s case, the “Harry Potter Lexicon” contained entries referencing and defining creatures, characters, place names and spells from the novels, and was a print-based version of his popular website HPL: The Harry Potter Lexicon.

Judge Patterson ruled that the “Harry Potter Lexicon” constituted copyright infringement of Rowling’s works. Even in cases of copyright infringement, a “fair use” defense frequently applies to allow portions of a copyrighted work to be used to facilitate specifically approved purposes — includes educational and teaching use, news reporting, formal literary criticism and inquiry, and parody. The Court found no “fair use” in this case. According to a Yahoo News article, Patterson’s ruled states:

because the Lexicon appropriates too much of Rowling’s creative work for its purposes as a reference guide, a permanent injunction must issue to prevent the possible proliferation of works that do the same and thus deplete the incentive for original authors to create new works.

Stingy minimum damages award speaks volumes
I’m completely underwhelmed by the damages awarded in the case. $750 for each of the seven novels about the boy wizard and $750 each of the two companion books for a total of $6,750. And for good reason: the 1976 Copyright Act now allows for damages of up to $100,000 for each act of infringement. Judge Patterson is certainly sending a message here about the spirit of the law, even if it contradicts his ruling on the letter of the law.

Fair-use reference, or derivative work?
Concordances and lexicons of authors’ works have traditionally been allowed under the fair-use defense to copyright infringement — with some exceptions. But copyright infringement is a highly facts-and-circumstances-dependent legal analysis: discussing copyrighted work and making a “transformative use” of the material is allowed, but cutting and pasting sections of a copyrighted work to assemble them into a reference work arguably could create a “derivative work” under section 101 of the Copyright Act, which is an exclusive right reserved to the copyright owner. Rowling’s lawyers argued against a finding of fair use, stating that the “Harry Potter Lexicon” adds no commentary or criticism, and makes no other transformative use of Rowling’s creation: it “takes too much and does too little.”

Judge Patterson touched upon the distinction between a reference and a derivative work in his ruling.

While the Lexicon, in its current state, is not a fair use of the Harry Potter works, reference works that share the Lexicon’s purpose of aiding readers of literature generally should be encouraged rather than stifled…. [The] Lexicon [however] appropriates too much of Rowling’s creative work for its purposes as a reference guide.

I’ll be analyzing the ruling in Warner Brothers Entertainment and J.K. Rowling v. RDR Books tonight to see what kind of precedent this decision contains about the boundary between reference and derivative work.

Warner Brothers Entertainment, Inc. and J.K. Rowling v. RDR Books et al, (USDC SDNY, Case No. 07-CV-9667).

See Ruling of September 8, 2008 – Warner Brothers Entertainment and J.K. Rowling v. RDR Books et al (the “Harry Potter Lexicon” case) for a copy of the decision in PDF.

Many thanks to Dineen Pashoukos Wasylik for pulling this down off PACER.