How Connecticut NIL Agents Get Paid

With the rise of Name, Image, and Likeness (NIL) opportunities for student-athletes in Connecticut, the role of NIL agents has become increasingly important. These agents help athletes navigate endorsement deals, sponsorships, and other business ventures. However, many student-athletes and their families may wonder how NIL agents get paid in Connecticut and what rules govern these relationships.

Commission-Based Compensation

NIL agents in Connecticut typically earn a commission-based fee for their services, which means they receive a percentage of the compensation their clients (the student-athletes) earn from NIL deals. The exact percentage varies but commonly ranges between 10% to 20% of the athlete’s earnings from an endorsement or sponsorship agreement. These commissions are typically outlined in the contract between the athlete and the agent.

No Compensation for Athletic Performance

Connecticut law makes a clear distinction between NIL deals and compensation tied to athletic performance. NIL agents are not allowed to facilitate deals that pay athletes for their on-field or on-court performance. The agent’s earnings must be solely tied to the athlete’s commercial use of their name, image, or likeness.

Transparency and Disclosure

Under Connecticut’s NIL rules, both the athlete and the agent are required to fully disclose their relationship and any deals they enter into to the athlete’s educational institution. This ensures that there are no conflicts with existing sponsorships the school may have and that the school can confirm the legitimacy of the deals.

Additional Expenses

In addition to commission fees, NIL agents may also charge athletes for other business-related expenses. These can include legal services (e.g., contract review), marketing, and public relations. However, these expenses must be clearly outlined in the contract, and athletes should be fully aware of any additional fees they might incur.

Registered and Certified Agents

In Connecticut, it’s crucial that student-athletes work with licensed and registered agents who adhere to state laws and NCAA guidelines. Connecticut law requires that agents act in the best interests of their clients, providing fair representation and protecting the athlete from exploitative practices. Student-athletes and their families should vet their potential agents carefully to ensure compliance with state and NCAA regulations.

The Bottom Line

NIL agents in Connecticut typically get paid through commissions on the deals they negotiate for their clients. These arrangements provide agents with an incentive to secure the best possible endorsements for their athletes while ensuring that all agreements comply with both state law and NCAA guidelines. Athletes should carefully review agent contracts, fully understand the compensation structure, and ensure transparency to protect their interests.

For student-athletes in Connecticut, understanding how NIL agents are compensated is a crucial part of making informed decisions in this evolving landscape.

Ripple Labs Inc. Ordered to Pay $125 Million for Unregistered Token Sales

 On August 7, SDNY Judge Analisa Torres ordered Ripple Labs Inc. (“Ripple”) to pay $125 million and enjoined Ripple from future violations of securities laws. This high-profile ruling addressed the SEC’s motion for remedies and entry of judgment on Ripple’s Section 5 violations, stemming from the 2020 lawsuit regarding unregistered sales of Ripple’s XRP token. In 2023, Judge Torres found that the token only qualified as a security when sold to institutional investors, a significant ruling in applying securities laws to digital assets. In this week’s ruling, the Court reinforced the gravity of the violation while still noting that there were no allegations of intentional wrongdoing or fraud by Ripple.

The civil penalty falls far short of the $2 billion penalty requested by the SEC. The SEC’s request for disgorgement was also denied, as the Court found that institutional investors did not suffer direct monetary harm as a result of the unregistered sales relying on the Supreme Court’s decision in Liu v. SEC and the Second Circuit’s decision in SEC v. Govil clarifying the meaning of “victims.”[1] The penalty does exceed the $10 million fine requested by Ripple; however, Judge Torres noted that “there is no question that [Ripple’s] recurrent, highly lucrative violation of Section 5 is a serious offense.” Further, the Court issued a permanent injunction on the basis that Ripple’s “willingness to push the boundaries” of the Court’s previous Order demonstrated a reasonable probability of future violations. Still, Ripple has characterized the ruling as a victory.

 

To read more: https://www.law360.com/capitalmarkets/articles/1867540/ripple-ordered-to-pay-125m-penalty-in-sec-case

To read our analysis of the 2023 Order: https://www.pastore.net/s-d-n-y-issues-ruling-regarding-cryptocurrency-regulation-the-ripple-effect/

[1] Liu v. SEC, 591 U.S. 71 (2020); SEC v. Govil, 86 F.4th 89 (2d Cir. 2023).

Legal Challenges for Fitness Influencers

As a fitness influencer, the journey to stardom on social media is as challenging as it is exciting. Understanding the legal landscape is crucial in safeguarding your interests and ensuring your career thrives amidst the dynamic demands of content creation and brand collaborations. Here are key insights to help you navigate these challenges:

  • Understanding Contracts: When partnering with brands, clear and comprehensive contracts are vital. These agreements ensure that both parties’ expectations and obligations are explicitly outlined, helping to prevent misunderstandings and disputes.
  • Intellectual Property Awareness: Your content is not just a reflection of your creativity but also a crucial business asset. Protecting your copyrights and trademarks is essential to maintaining control over your work and reinforcing your brand’s value in the marketplace.
  • Regulatory Compliance: Adhering to guidelines set by entities like the FTC and respecting platform-specific rules are foundational to building trust with your audience. Transparent disclosure of sponsored content and conscientious privacy practices are not just good ethics—they’re good for business.
  • Risk Management: Proactively identifying and addressing potential legal issues before they escalate can save you from future headaches. Understanding common pitfalls in the influencer industry can help you navigate smoothly and confidently.

By focusing on these core areas, you can build a more secure and successful career in the fast-evolving world of social media. For those seeking deeper dives into specific topics or facing unique challenges, consulting with a legal expert who understands the nuances of the influencer industry can be invaluable.

Remember, the path to success is best navigated with knowledge and preparedness. Equip yourself with the right information and support to continue inspiring your followers and achieving your business goals.

Legal Essentials for Fitness Influencers: Navigating the Complexities

In the rapidly expanding world of fitness influencers, understanding and adhering to legal standards is crucial. As influencers transition from fitness enthusiasts to public figures, their legal needs become more intricate and vital to their continued success and brand integrity.

Intellectual Property Rights. Fitness influencers often create unique workout routines, slogans, and branded content. Protecting this intellectual property is essential to maintain exclusivity and leverage for monetization. Registering trademarks for brand names or catchphrases can safeguard an influencer’s business assets.

Contract Law. Influencers frequently engage with brands for endorsements and sponsorships. It is important to understand the terms and conditions of these contracts thoroughly. This includes compensation, deliverables, the scope of work, and termination clauses. Professional legal advice can prevent potential conflicts and ensure fair agreements.

Disclosure and Compliance. Influencers must comply with the advertising guidelines set by regulatory bodies such as the Federal Trade Commission (FTC) in the U.S. This includes clearly disclosing any partnerships or sponsorships in their posts to maintain transparency with their audience. Non-compliance can lead to hefty fines and a tarnished reputation.

Liability Issues. Offering fitness advice online can be tricky. Without proper disclaimers, influencers might be held liable for any injuries or damages that occur from followers attempting their routines. It is advisable to clearly state that content is for informational purposes only and not a substitute for professional medical advice.

The intersection of fitness and law may seem overwhelming, but it is indispensable for influencers aiming to build sustainable and compliant brands. Consulting with legal professionals who specialize in digital media and entertainment law can provide the necessary guidance to navigate these waters smoothly.

For fitness influencers, the digital stage is fraught with potential legal issues, but with the right knowledge and support, they can continue to inspire and engage responsibly and profitably.

Resolving Partnership Disputes in the Fitness Industry

In the dynamic fitness industry, partnership disputes can emerge from differences in business vision, management styles, or financial expectations. Effectively resolving these disputes is critical for maintaining the operational health of any fitness business. Here’s how disputes can be navigated through legal strategies:

Negotiating Operating Agreements and Shareholder Agreements

The foundation for preventing and resolving disputes lies in well-crafted operating agreements for LLCs and shareholder agreements for corporations. These documents act as a blueprint for business operations, detailing the distribution of profits and losses, management duties, and dispute resolution mechanisms. Clearly defined rights and responsibilities, coupled with clauses like buyout options or decision-making processes, help mitigate conflicts before they escalate.

Mediation

Mediation is a preferred strategy for its efficiency and its focus on preserving professional relationships. This process involves a neutral third party who assists the disputing partners in finding a mutually satisfactory resolution. Mediation is informal, cost-effective, and quicker than traditional legal processes, making it ideal for resolving disputes while maintaining ongoing professional relationships within the fitness community.

Litigation

While often seen as a last resort due to its public nature and potential costs, litigation is sometimes necessary to resolve deep-rooted disputes decisively. For those in the fitness industry facing such scenarios, engaging with a specialized firm like Pastore LLC can provide the expertise needed to navigate complex legal landscapes. With extensive experience in litigation, Pastore LLC offers robust representation, ensuring that clients’ interests are effectively protected and advanced in court.

Arbitration

Similar to litigation but conducted outside of court, arbitration involves resolving disputes through an arbitrator or a panel. It is generally quicker than court proceedings and can be kept confidential, which helps protect the business’s reputation. Many agreements in the fitness industry might mandate arbitration as the method for dispute resolution, emphasizing its role in efficient conflict resolution.

Effective handling of disputes in the fitness industry requires a combination of proactive agreement drafting and strategic use of resolution methods. Whether through mediation or litigation, it is important to address conflicts swiftly and effectively. Firms like Pastore LLC play a crucial role for those needing to pursue litigation, providing expert guidance and representation that aligns with the best interests of the business. In every case, working with legal professionals adept in these areas can help safeguard the longevity and success of your fitness enterprise.

Digital Assets: A Brief Summary of the Current Legal Landscape

Since Bitcoin’s creation in 2009, cryptocurrency and digital assets have skyrocketed in both popularity and value. Today, the global cryptocurrency market cap is roughly $2.78 Trillion.[1] This quick growth has led to people and entities attempting to fraudulently enter the market and perform illegal activities under the guise of a mysterious new asset class. As such, these currencies have received considerable attention from administrative agencies such as the SEC, CFTC, and FTC.

Relevant Supreme Court Cases Relied Upon by the SEC

The 75-year-old Howey test guides courts’ inquiry into allegations of the Securities and Exchange Acts when the SEC finds questionable behavior.[2] Under Howey, an investment contract exists when there is: (1) the investment of money (2) in a common enterprise (3) with a reasonable expectation of profits (4) to be derived from the efforts of others. This test is flexible and may apply to any contract, scheme, or transaction, regardless of whether it has any characteristics of traditional securities.

The Reves test aids Howey in digital asset litigation. Unlike Howey, where clear prongs must be met for an investment contract to be present, Reves lays out factors to balance while considering whether notes are securities. When applying the Reves test, courts “begin with a presumption that every note is a security. From there, the analysis turns on four factors: (1) the motivations of the parties; (2) the plan of distribution of the instrument; (3) the reasonable expectations of the investing public; and (4) whether some factor such as the existence of another regulatory scheme significantly reduces the risk of the instrument.”[3] The SEC has applied this test several times in cease-and-desist orders and has relied on it in recent litigation involving digital assets. Like Howey, Reves is a Supreme Court decision released decades before the emergence of crypto and digital assets.

The SEC acknowledges that tokens, in and of themselves, are not securities. Thus, the appropriate question becomes whether transactions, in which a particular token is implicated, qualify as investment contracts.

Recent and Unfolding Developments

Last year, separate lawsuits brought by the SEC—involving Ripple Labs, Inc. (“Ripple”)[4] and Terraform Labs PTE Ltd (“Terraform”)[5]—resulted in, unsurprisingly, inconsistent results. In Ripple, the Southern District of New York analyzed three types of sales: institutional, programmatic, and “other distributions under written contracts.” The court held that institutional sales of XRP, a cryptocurrency, were investment contracts, and therefore subject to securities regulations. Programmatic sales, however, did not meet the third Howey prong, because it was not certain that buyers had an expectation of profits from Ripple’s efforts. The “other distributions” were given to employees in exchange for consideration other than money, so the court could not find the first Howey prong.

Terraform saw the Southern District of New York rule that three separate currencies were securities based on Terraform’s conduct while advertising the currencies, promised profits, and were responsible for developments that would play a large role in the currencies’ future value. Terraform, decided a few days after Ripple, expressly rejects Ripple’s distinction between secondary markets and direct sales, saying Howey makes no such distinction. The clear divide between courts within the same District is yet another example of how the SEC’s regulation by enforcement is not conducive to innovation or growth within the digital assets market.

The SEC has attempted to strike while the Iron is hot post-Terraform, commencing actions against prominent cryptocurrency platforms Binance, Coinbase and Kraken over the last year. These suits are still unfolding, with hearings set throughout 2024.

Looking at one of the actions brought in the wake of the Ripple and Terraform decisions, the Southern District of New York recently held that the SEC’s action against, among others, Coinbase, Inc. (“Coinbase”) may, for the most part, proceed.[6] The SEC had charged Coinbase with acting as a national securities exchange, a broker, and a clearing agency with respect to transactions in 13 identified crypto assets, which the SEC contended were securities, and of offering and selling securities without a registration statement. Coinbase moved for judgment on the pleadings, arguing that the SEC’s claims should be dismissed, as even if the SEC’s allegations as pleaded were true, they fail to give rise to an entitlement to relief. The Court found that “the SEC has sufficiently pleaded that Coinbase operates as an exchange, as a broker, and as a clearing agency under the federal securities laws, and, through its Staking Program, engages in the unregistered offer and sale of securities.”[7] The Court followed Terraform in not refusing to accept a distinction between secondary markets and direct sales stating,

with specific regard to the Crypto-Assets at issue here, there is little logic to the distinction Defendants attempt to draw between the reasonable expectations of investors who buy directly from an issuer and those who buy on the secondary market. An investor selecting an investment opportunity in either setting is attracted by the promises and offers made by issuers to the investing public. Accordingly, the manner of sale has no impact on whether a reasonable individual would objectively view the issuers’ actions and statements as evincing a promise of profits based on their efforts.[8]

Thus, for now, there remains no clear answer on the status of secondary markets. While this does not mean that the SEC will ultimately be successful in proving the merits of its claims, it does mean that the SEC overcame a huge initial hurdle.

Key Considerations for Developers

While Ripple and Terraform provide thorough inquiries into digital assets as securities, neither are binding precedent nor have they brought clarity to the market. With this in mind, the Howey test remains instructive to assets in the digital assets class, with factual distinctions serving as helpful guides on how an asset may fall within or outside of the definition of a security.

Tangible and definable. The Court’s decision holding Ripple’s “other distributions” fell outside of the realm of a security rested squarely on its failure to satisfy the first prong of the Howey test, as Ripple provided its token in exchange for nonmonetary contributions. Ripple is a rare case where the first Howey element is not met. Providing money in exchange for a currency, though, is usually a straightforward inquiry and typically met.

Commonality of enterprise. Commonality can be found through either horizontal or vertical commonality. Horizontal commonality exists when there is a pooling of assets, usually combined with the pro-rata distribution of profits. Vertical commonality is present when the fortunes of investors are linked with those of promoters. The common theme here is that funds from investors are linked to the company providing the currency itself. On the other hand, Bitcoin and Ethereum are not regulated by securities laws because they do not possess the requisite centralization and are sold exclusively through secondary markets.

Setting expectations of profits. Leading investors to expect financial gain typically comes through the advertising campaign and how the currency is marketed to investors. Guaranteeing a specific return on investment with no hedging language (think “may” return a certain percentage as opposed to “will” return a certain percentage), speaking to how much better a currency is than others, and similar behavior are key cues that lead the average investor to expect a return on investment, likely making the currency a security.

Active participation. A party to the transaction bearing responsibility for the continued development of an asset or exercising continued management or promotion of a network contributes to a reasonable investor’s expectation of a profit derived from the profits of others. This can be important both at the time of investment and after the investment. An investment will be reevaluated at a later date depending on how important the continued efforts are to the asset’s value.

Attachment to an investment. Coins themselves are not securities. They need to be tied to something that may appreciate over time. Additionally, buying something purely for consumptive value may lead to its falling outside of securities laws’ purview.

Companies considering launching digital assets through initial coin offerings or on a decentralized finance platform should be mindful of the factors courts have weighed in recent cases. This area of law is evolving rapidly, and it is essential to stay abreast of developments in current cases and in changes to the regulatory framework. Pastore LLC has securities lawyers with expansive experience in securities litigation, aiding broker-dealers, investment banks, and investment advisers, and can be effective counsel advising clients on digital assets and cryptocurrencies’ status as securities.

[1] Digital Assets, Forbes, https://www.forbes.com/digital-assets/crypto-prices/?sh=1c9647f62478 (last visited Mar. 30, 2024).

[2] Framework for “Investment Contract” Analysis of Digital Assets, U.S. Securities & Exchange Commission, https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets (last visited Mar. 30, 2024).

[3] SEC v. Genesis Glob. Capital, LLC, No. 23-cv-00287 (ER), 2024 U.S. Dist. LEXIS 44372, at *25-26 (S.D.N.Y. Mar. 13, 2024) (internal quotation marks omitted) (citing Reves v. Ernst & Young, 494 U.S. 56, 65-67 (1990)).

[4] SEC v. Ripple Labs, Inc., 2023 U.S. Dist. LEXIS 120486 (S.D.N.Y. July 13, 2023).

[5] SEC v. Terraform Labs Pte. Ltd., No. 23-cv-1346 (JSR), 2023 U.S. Dist. LEXIS 132046 (S.D.N.Y. July 31, 2023).

[6] SEC v. Coinbase, Inc., 2024 U.S. Dist. LEXIS 56994 (S.D.N.Y. Mar. 27, 2024).

[7] Id. at *105.

[8] Id. at *68 (citing Terraform I, 2023 WL 4858299, at *15).

Key Regulations Concerning NIL Deals

Since the NCAA’s policy change in 2021 allowing college athletes to profit from their Name, Image, and Likeness (NIL), both states and schools have scrambled to adopt regulations to govern these deals. While specific rules can vary widely depending on the jurisdiction and institution, several key regulations have emerged as common themes across the country. These regulations are designed to protect student-athletes, ensure fair play, and maintain the integrity of college sports.

Key Regulations Concerning NIL Deals

  1. Disclosure Requirements. Many states and schools require student-athletes to disclose NIL deals to their institution. This ensures transparency and allows schools to monitor compliance with NCAA rules and state laws.
  2. Prohibition of Pay-for-Play. Regulations commonly prohibit NIL agreements that directly pay athletes for their performance on the field or court. The intent is to distinguish NIL compensation from pay-for-play arrangements, maintaining the amateur status of college athletes.
  3. No School Involvement in Securing Deals. There is a general prohibition on schools being involved in negotiating NIL deals on behalf of their athletes. This aims to prevent conflicts of interest and ensures that NIL deals are made independently of the athlete’s participation in collegiate sports.
  4. Compliance with School and Conference Policies. Student-athletes must comply with policies set forth by their schools and athletic conferences. These policies often include restrictions on partnering with certain types of businesses (e.g., alcohol, tobacco, gambling) and guidelines on how athletes can use school logos and trademarks.
  5. Education on NIL and Financial Literacy. Recognizing the complexity of NIL deals and their potential tax implications, some states and schools mandate or encourage education programs on NIL, financial literacy, and contract law for student-athletes.
  6. Agent Registration and Certification. To protect athletes from exploitation, regulations often require agents and advisors involved in NIL deals to be registered and certified. This helps ensure that those representing student-athletes are qualified and adhere to professional standards.
  7. Conflict of Interest and Endorsement Limitations. Rules may restrict deals that present a conflict of interest with existing school sponsorships or that are deemed detrimental to the school’s image and values. Athletes are typically barred from endorsing products or services that conflict with NCAA rules or school policies.

Impact and Considerations

The patchwork of state laws and individual school policies creates a complex regulatory environment for NIL deals. While these regulations aim to provide a framework for the ethical and fair conduct of NIL activities, they also present challenges. Compliance can be burdensome for student-athletes and institutions alike, necessitating careful navigation of the legal landscape.

As the NIL space continues to evolve, further adjustments to regulations are expected. Stakeholders, including lawmakers, educational institutions, and advocacy groups, are closely monitoring the impact of NIL deals on college sports to ensure that the regulations serve the best interests of student-athletes, schools, and the broader sports community.

(Paul Fenaroli  (former NFL Athlete) is an Associate Attorney at Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges. He can be reached at 203.658.8470 or pfenaroli@pastore.net.)

Navigating the New Frontier: The Rise of NIL Collectives in College Sports

The landscape of college athletics has undergone a seismic shift with the introduction of Name, Image, and Likeness (NIL) rights, granting college athletes the unprecedented ability to profit from their personal brands. Amidst this transformation, a new concept has emerged at the forefront of the NIL era: NIL collectives. These entities, often formed by universities, alumni groups, and third-party organizations, are rapidly reshaping the dynamics of college sports, providing a structured platform for athletes to capitalize on their NIL opportunities while ensuring compliance with the complex web of regulations governing these activities.

The Purpose of NIL Collectives

At their core, NIL collectives serve as bridges connecting student-athletes with businesses and brands interested in leveraging the athletes’ NIL for endorsements, sponsorships, and other promotional activities. By facilitating these deals, collectives not only help athletes monetize their fame but also ensure that such agreements adhere to state laws, NCAA rules and school policies.

Beyond deal-making, many collectives are committed to providing athletes with resources and education on financial literacy, personal branding and the legalities of contract negotiation. This holistic approach is crucial, empowering athletes to navigate the NIL landscape wisely and sustainably.

The Impact on College Athletics

NIL collectives are redefining the recruitment game, offering schools an additional allure for prospective talents. The promise of a supportive, compliant, and profitable NIL ecosystem can be a significant draw for recruits, potentially tilting the competitive balance in favor of those institutions with the most robust NIL programs.

However, the rise of collectives also brings challenges and concerns. Issues of equity and access loom large, with fears that the focus on lucrative deals for a few may overshadow the broader athlete community, particularly those in less prominent sports. Moreover, the expanding commercialization raises questions about the future of amateurism in college sports and its traditional values.

Regulatory and Legal Considerations

The regulatory landscape surrounding NIL and collectives is still in flux, with state laws, NCAA policies and potential federal legislation evolving. This fluidity presents both opportunities and pitfalls for collectives, requiring vigilant compliance efforts and adaptive strategies to navigate the legal complexities.

Legal professionals play a pivotal role in this environment, offering guidance to collectives, universities, and athletes alike. From structuring collectives in compliance with regulations to negotiating contracts and safeguarding athletes’ rights, attorneys are indispensable navigators in the NIL era.

Looking Ahead

As we venture further into the NIL era, the significance of NIL collectives in college athletics will undoubtedly continue to grow. These entities have the potential to not only transform how athletes engage with the market but also to influence the very fabric of college sports. The challenges are significant, from ensuring equitable opportunities to maintaining the spirit of amateurism, but so too are the opportunities for empowerment, education, and entrepreneurship among student-athletes.

The future of NIL collectives, like the landscape of NIL itself, is poised on the edge of vast potential and profound change. Stakeholders across the spectrum of college sports—legal advisors, educational institutions, athletes and businesses—must collaborate to navigate this new frontier responsibly and innovatively. Together, they can ensure that the NIL era heralds a period of growth, opportunity and fairness for all involved in college athletics.

As we chart this unexplored territory, one thing is clear: NIL collectives are more than just a passing trend. They represent a pivotal development in the business of sports, reflecting a broader shift towards recognizing and compensating the value that student-athletes bring to their institutions and beyond.

(Paul Fenaroli (former NFL Athlete) is an Associate Attorney at Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges.  He can be reached at 203.658.8470 or pfenaroli@pastore.net.)

Are Your Website Terms of Service & Privacy Policies Enforceable? Turns out not as much as you might think.

In late January, the N.D. of California (Chen J.) rendered a decision that may have wide impact on the enforceability of Website Terms of Service across the Internet and Metaverse.  Does this sound the death knell for “informed” click-through consent to either terms of use or data privacy policies?

It very well may….and a close review of your terms of service language and enforceable informed consent by the user is required to avoid the pitfalls that Meta Platforms, Inc. (“Meta”) literally brought upon themselves.

Meta brought a suit against Bright Data Ltd. (“Bright Data”) for breach of its Terms of Use.  Bright Data is an Israeli company that gathers information by “scraping” the web for Fortune 500 companies and other clients.    Judge Chen of the N.D. of Cal., found in favor Bright Data on cross motions for Summary Judgment testing the enforceability of Meta’s Terms of Service.

Judge Chen found that the Terms of Service did not apply to web-scraping activities conducted by Bright Data when Bright Data was not logged in.  Bright Data had FaceBook and Instagram accounts – but they were not bound by the Terms of Service unless they were using their Meta accounts to conduct web-scraping.  Meta was able to produce no such evidence.  Judge Chen did find that the survival clause of the Terms of Service such as choice of law and jurisdiction applied to non-logged-in users but otherwise sounded the death knell for Meta’s enforceable Terms of Service in their current form.

Judge Chen was skeptical about the placement and availability of the Terms of Service on Facebook and Instagram as well.  Although only dicta, these comments may also spurn new litigation on the enforceability of consent.  Informed Consent is a hot-button topic.  This decision, while still appealable – needs to be carefully considered and dissected to determine its effect on every company’s website policy and the user’s manifestation of consent.  For convenience this decision is attached.

Pastore, LLC stands ready to help companies review and adapt to the latest theories and developments in website governance and privacy polies.  Website Terms of Service and Privacy Policies need to be an ever-evolving collection of guidelines and control mechanisms and Pastore, LLC is a leading creative innovator and can assist you in a top to bottom review of your forward-facing websi

Big Changes in Unemployment Benefits: What Connecticut Employers Need to Know

The unemployment and severance law landscape is constantly evolving. Connecticut’s legislature recently passed Public Acts 21-200 and 22-67, aiming to enhance the financial stability of the Unemployment Insurance (UI) Trust Fund following the COVID-19 pandemic. Companies that operate in Connecticut should prioritize these changes, implemented on Jan. 1, 2024, as they profoundly impact employers and the labor force within the state.

This article will explore the modifications in unemployment benefits and severance pay, potential legal implications for noncompliance, and strategies to navigate the changes effectively.

 

Major Changes in Connecticut

Critical changes to Connecticut’s unemployment benefits include:

  • Disqualification of unemployment with severance – Previously, unemployment benefits and severance pay could be received concurrently as part of a separation agreement. Now, receiving severance pay for a specific period disqualifies the employee from unemployment benefits during that period.
  • Increased payment – The minimum weekly unemployment benefit payment has increased from $15 to $40. It will be subsequently indexed annually due to inflation. However, the minimum benefit will revert to $15, when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
  • Accrued vacation pay – An employee’s receipt of accrued vacation pay at the time of dismissal won’t disqualify them from unemployment benefits, assuming they meet other eligibility requirements. However, vacation pay issued during a shutdown period will still lead to disqualification or reduction in benefits.
  • Annual inflation adjustment – The minimum base period earnings requirement for unemployment benefits increased from $600 to $1,600 and will be subsequently indexed annually to inflation. However, the minimum base period earnings requirement will revert to $600 when the federal government provides a fully federally funded supplement to the individual’s weekly benefit amount.
  • Maximum unemployment benefit rate – This will be frozen from October 2024 through October 2028.

Connecticut employers must also note the tax changes, including the taxable wage base increase from $15,000 to $25,000, and ensure compliance.

 

Legal Ramifications for Noncompliance

Although the legal consequences may differ depending on the specific type of non-compliance, the most immediate outcome can be financial penalties. Falsifying or intentionally misstating employee hours or wages to reduce UI contributions can lead to significant fines and potential legal action. Failure to submit required UI reports or providing inaccurate information can also result in fines and potential audits from the Connecticut Department of Labor (DOL).

If an employer doesn’t submit the required paperwork or provides incorrect information, it can delay or deny UI benefits for laid-off employees. This can have severe financial repercussions for workers experiencing job loss. Failure to comply with UI regulations can negatively impact the employer’s rating, potentially leading to denials of future UI claims for affected employees.

Non-compliance with UI laws can result in a public record of violations, damaging the employer’s reputation and making it difficult to attract new customers and retain talent. In high-profile cases, non-compliance can lead to negative media attention and further damage to the employer’s brand and reputation.

There may also be other legal consequences, such as the DOL filing court orders requiring employers to comply with UI regulations. Employees or the DOL may bring civil lawsuits against employers for violating employee rights or the UI system.

 

Strategies to Navigate the New Laws

Although navigating the complexities of the new unemployment benefits changes requires careful consideration of your specific situation, here are some general strategies to consider:

  • Remain compliant – Familiarize yourself with the changes to unemployment insurance eligibility, employer tax rates and other relevant provisions to remain compliant. State agencies like the DOL offer information and resources to help employers and workers understand the new UI laws.
  • Stay informed – Since this recently came into effect and legal interpretations and penalties may still be evolving, it’s imperative that you stay informed about any updates and modifications to help you adjust your strategies as needed.
  • Review your internal policies – Update your company’s policies and procedures concerning layoffs, terminations and severance packages to align with the new laws. This includes documenting reasons for termination, eligibility for unemployment benefits and severance pay calculations.
  • Retain detailed records – All termination decisions, reasons for termination and communication with affected employees are critical and will be valuable in case of legal challenges.
  • Keep open employee communication – Be transparent with employees about the new laws and their potential impact on them. Consider holding informational sessions or providing written materials to explain the changes clearly. Open communication with employees can help avoid future disputes.
  • Seek legal counsel – Understanding the nuances of the new UI laws is necessary to ensure compliance and avoid potential legal issues. Likewise, legal counsel can assist you with appealing decisions, challenging tax assessments and negotiating agreements to protect your interests.

Remember, these are just general strategies. The approach you take will depend on your company’s specific circumstances. Consulting with a qualified employment lawyer who specializes in your jurisdiction is essential to developing a tailored plan for effectively navigating the legal complexities of these new UI laws. For legal inquiries, please contact us at Pastore LLC.

 

This article is intended for informational purposes and does not constitute legal advice.

 

(Joseph M. Pastore III is chairman of Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges. He can be reached at 203.658.8455 or jpastore@pastore.net.)