A blog posting by Sheppard, Mullin, Richter & Hampton discusses the varying state laws regarding sufficient consideration for non-compete agreements signed at both the outset and during employment as well as other recent attacks on non-competes and restrictive covenants generally.

“Like other contracts, non-compete and restrictive covenant agreements must be supported by adequate and sufficient consideration at the time of execution. However, what constitutes adequate consideration for a restrictive covenant, especially a non-compete provision, varies from state to state,” write Mikela Sutrina and Kevin Cloutier.

Although some states will consider continued employment at the outset of the employment relationship sufficient consideration for an at-will non-compete, some states — for example, North Carolina, Montana, South Carolina, Oregon, Texas, Washington, and Wyoming — have expressly held that continued employment is insufficient consideration to support a non-compete entered into midstream of employment, the authors explain.

Read the article.

Pat Collins of Norris McLaughlin & Marcus discusses a recent decision by a New Jersey appellate court that highlights the well-established legal maxim that “when a party enters into a signed, written contract, that party is presumed to understand and assent to its terms.”

Writing in the firm’s employment law blog, Collins covers the case of ADP v. Lynch and Halpin. ADP sued two former employees who had resigned and went to work for one of ADP’s competitors.

ADP claimed they had violated terms of an agreement on a web page outlining incentive stock awards in exchange for the non-compete. Defendants argued that the clause covering the non-compete was merely an online check box that signified that they had read the agreement. It did not say they agreed to the terms, they argued.

The trial court and appeals court found otherwise.

Read the article.

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Employers may think their noncompete agreement or restrictive covenant prohibiting departing employees from taking a similar job at a competitor is ironclad, but that’s not always true, warns David B. Ritter, a partner in the Chicago office of law firm Barnes & Thornburg.

Ritter participated in a question-and-answer exchange with SHRM Online about the enforceability of restrictive covenants, what to consider when crafting them and which states limit enforcement of these agreements.

The discussion covered such questions as: What should HR know about the enforceability of restrictive covenants? What else should employers consider when crafting these measures? Which states are particularly limiting when it comes to restrictive covenants?

The discussion is on the site of the Society for Human Resource Management.

Read the article.

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All companies are susceptible to claims based on workplace violence, writes Natalie Lynch of Lynch Law Firm in Austin. Due to deeply-rooted legal principles, employers can be held liable for the acts of their employees, even when such acts are intentional and not within the scope of employment. Workplace violence can take on many forms, making it essential for employers and HR professionals to know how to identify it and prevent it.

In an article posted on her website, she covers topics such as defining workplace violence, effects of workplace violence, risk factors.

She also offers some suggestions to prevent violence in the workplace, including: implement an anti-workplace violence program, encourage reporting, assess the worksite, provide safety training, provide communication devices, maintain work vehicles, and consider security.

Read the article.

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The 8th U.S. Circuit Court of Appeals issued an opinion reminding employers that they cannot contract out of the Worker Adjustment and Retraining Notification Act (WARN) obligations requiring employers to provide 60 days’ written notice to employees of a plant closing or mass layoff, according to a post on the website of Winston & Strawn LLP.

In Day v. Celadon Trucking Services, Inc., the circuit court held that the purchaser of a business, Celadon Trucking Services Inc., was responsible under the WARN Act for providing notice of a mass layoff to more than 400 employees, even though Celadon never hired or fired those employees, the sales agreement characterized the transaction as a sale of assets, and stated that the seller, Continental Express Inc., was solely responsible for providing the WARN notices.

Steve Sheinfeld and Jeffrey Salomon wrote the article.

Read the article.

Navex Global and Bloomberg have posted an on-demand webinar discussing discuss discrimination regulations applicable to the workplace, from what constitutes discrimination to what limits employers can put on the words and actions of employees.

The 60-minute webinar is available free of charge.

“After the 2016 election, multiple studies have noted an increase in workplace harassment, through discrimination remarks and actions, from both sides of the campaign,” Navex says on its website. “This has resulted in divisive and sometimes hostile work environments.  HR, Compliance and Ethics officers must take action to create a welcome environment that is harassment-free.”

The video covers strategies for developing policies and plans for training departments and employees to minimize and manage workplace harassment, and understand when disciplinary actions should – or must – be taken.

Educational Objectives:
Program participants will learn:
• What actions constitute discrimination in the workplace, including sexism, racism, and homophobia;
• Limits on how employers can approach and manage workplace harassment;
• Strategies for developing training plans for leaders as well as employees to minimize and avoid workplace harassment;
• What types of disciplinary measures might be taken by employers.

Who would benefit most from attending this program?
Human Resources leaders; compliance officers; ethics officers; anyone responsible for employee training within their organizations.

Watch the on-demand webinar.

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Companies looking to waive class action rights of employees may instead be waving goodbye to provisions in their employment contracts, warns David Heck in Proskauer Rose’s Minding Your Business blog.

He discusses two recent decisions in California — one administrative and one in the 9th Circuit — that recently found that class action waivers in employment contracts were unenforceable as a matter of law and public policy, resulting in the removal of entire or partial contractual provisions.

“Together, these rulings make clear that class action waivers in employment agreements are subject to a high level of scrutiny, even if such waivers are not explicit and signing of the agreement was voluntary,” Heck writes.

Read the article.

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Peter C. Vilmos of Burr Forman writes in an article published by JDSupra Business Advisor that contractors have several reasons to require that their high-level employees (e.g., C-Level) enter non-compete agreements.

“Non-compete agreements, or non-competition agreements, are contracts into which an employer and an employee enter that restricts the work the employee can perform for another company when the employee’s tenure at the employer company ends,” Vilmos explains. “Typically, it’s illegal to intentionally restrain trade; however, some states allow employers and employees to voluntarily enter into agreements with future employment restrictions.”

Read the article.

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Akerman LLP has launched WorkedUp, a new podcast that explores the ever-changing world of employment law and human resource management.

Hosted by New York labor & employment partner Matthew Steinberg, WorkedUp combines candid discussions, practical insights, and comic relief on the legal and business issues impacting employers nationwide, the firm said in a release.

The podcast will cover timely topics and emerging trends for 2017 and beyond, including the impact of the election cycle on employers, tech innovations in the workplace, and more. Episodes will feature discussions with a diverse roster of guests, including defense lawyers, plaintiff-side lawyers, in-house counsel, business executives, government agency representatives and other thought leaders.

Listeners may subscribe to WorkedUp on their mobile devices (iOS / Android) or listen on the firm’s website. Episodes are also available to stream at www.akerman.com/WorkedUp.

Akerman also delivers important developments in labor and employment law on the HR Defense Blog.

Listen to the podcasts.

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Uber Chief Executive Travis Kalanick said in a memo to employees that allegations from a former employee that she’d been sexually harassed at work, and that the company’s human resources department tried to cover it up was the first he’d heard of the incident. But two groups weren’t surprised, according to a report in The Los Angeles Times: women who work in tech, and Silicon Valley employment attorneys such as Kelly Dermody.

“There’s a phenomenon that happens in several industries, namely tech and financial services, where there’s a buffer around the men who are considered ‘high contributors,’ ” said Dermody, who has represented hundreds of women who work in the tech sector in gender discrimination cases. “They get to have a different set of standards, and their business success translates into them being above the law of the companies.”

Susan Fowler, the former Uber engineer who made the allegations, joined Uber as a site reliability engineer in November 2015. She claims that her manager at the time propositioned her, but Uber’s HR team told her it was the man’s first offense, so “they wouldn’t feel comfortable giving him anything other than a warning and a stern talking-to.” They also told her the manager “was a high performer,” writes reporter Tracey Lien.

Read the LA Times article.

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Although there should certainly be some consistency in the pursuit of any workplace investigation, the investigation of discrimination complaints requires sensitivity to some special considerations that will not always apply to other complaints, according to an article published by Lynch Service Company.

The articleoutlines some of those considerations and encourages the reader to become knowledgeable of the unique challenges that discrimination investigations present.

Three common legal theories may apply to a workplace complaint: (1) disparate treatment, (2) disparate impact, and (3) hostile work environment. The article also explains the importance of understanding how a discrimination lawsuit unfolds, investigating properly, and, after concluding the investigation, re-evaluating the evidence in light of the guiding legal theory.

Read the article.

Disparate treatment and disparate impact are two very different types of employment discrimination that use two very different tests to determine if illegal discrimination has occurred and if an employer may be liable for such discriminatory conduct, according to an article published by Lynch Service Company. Having a better understanding of these terms and the potential liability they may impose on a business can help HR professionals and CEOs prevent expensive litigation.

The article covers anti-discrimination laws, disparate treatment, legal test for disparate treatment, disparate impact, and the legal test for disparate impact.

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Read the article.

The Rules of Evidence protects communication between attorneys and clients from being revealed to the other side during a dispute. It’s a basic concept found in federal and state rules of evidence throughout the country. It often comes into play when an employee or former employee alleges harassment or other wrongdoing, according to a report published by Lynch Service Company.

Harassment accusations are often a surprise. The company needs to figure out what really happened, and time is almost always an issue. It’s understandable that leaders want to start asking questions and investigating the situation.

If this happens in your organization, make sure your team resists the urge to jump into an investigation without an appropriate plan or your company could lose its attorney-client privilege. In many cases, the company accused of wrongdoing is unpleasantly surprised to learn that they will be forced to give the other side access to many of the internal communications the company assumed would be kept private. The human resources team and managers must navigate early investigations carefully and make sure the proper individuals are conducting them.

Read the article.

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The U.S. Supreme Court has agreed to decide whether companies can use employment contracts to prohibit workers from banding together to take legal action over workplace issues, reports The New York Times.

Adam Liptak writes that the court will consider three cases that follow a series of Supreme Court decisions endorsing similar provisions, generally in contracts with consumers. The question for the justices in the new cases is whether the same principles apply to employment contracts.

“In both settings, the challenged contracts typically require two things: that disputes be raised through the informal mechanism of arbitration rather than in court and that claims be brought one by one,” Liptak writes. “That makes it hard to pursue minor claims that affect many people, whether in class actions or in mass arbitrations.”

Read the NYT article.

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Practical Law and the Wage & Hour Defense Institute will present a free 75-minute webinar providing guidance on minimum wage and overtime pay exemptions applicable to sales employees under the Fair Labor Standards Act.

The event will be Wednesday, Jan. 25, at 1 p.m. Eastern time.

Speakers Paul Bittner of Ice Miller LLP (Columbus, OH) and Lawrence Peikes of Wiggin and Dana LLP (Stamford, CT), both members of the Wage & Hour Defense Institute, will discuss the sales exemptions, how to properly classify and compensate employees with sales duties, and the impact of improper classification, including:

• Understanding key elements of the exemptions.
• Defining “outside” sales.
• Distinguishing sales and sales-related activities.
• Defining a “retail or service establishment.”
• Structuring compensation.
• Identifying compensation “representing commissions.”
• Revisiting pharmaceutical sales and auto service advisors.
• Dealing with misclassified employees.
• Complying with differing state law.

A short Q&A will follow.
Presenters:
Paul Bittner, Partner, Ice Miller LLP (Columbus, OH)
Lawrence Peikes, Partner, Wiggin and Dana LLP (Stamford, CT)

Moderator:
Suzanne K. Brown, Senior Legal Editor, Practical Law Labor & Employment

Register for the event.

The doctrine of void contracts arose recently in an employment case in Florida, Griffin v. ARX Holding Corporation, writes Jason M. Knott for Zuckerman Spaeder LLP.

In that case, the plaintiff, Nicholas Griffin, had a prior conviction for extortion. ARX Holding hired him as its chief financial officer in 2009. But under federal law, an individual commits a crime if he has been convicted of a felony involving dishonesty and then willfully participates in the insurance business. Knott explains that Griffin could have obtained a waiver from insurance regulators, but he was unable to do so.

ARX fired Griffin, who sued, seeking an unpaid $215,000 bonus. But a court ruled that his employment contract was void from the outset.

Read the article.

HR Daily Advisor will present a complimentary webinar discussing what the overtime changes mandated by the U.S. Department of Labor FLSA mean for employers and recommend strategies for meeting these new challenges.

The event, sponsored by Kronos, will be Thursday, August 25, beginning at 2 p.m. EDT.

The overtime changes will extend overtime pay protections to more than four million American workers, HR Daily Advisor says on its website. The implications are enormous, affecting everything from job classifications and time tracking to compensation and compliance policies.

Register for the webinar.

Wearable electronic monitoring devices have been long used to help monitor an individual’s health and fitness, writes Karen Turner for The Washington Post. “But now wearable use is becoming increasingly common in the workplace to record, analyze and enhance worker productivity, raising concerns among lawyers and labor specialists who feel that it’s a step toward stripping employees of workplace rights.”

She quoted from a recent study by customer management software company Salesforce showing that 86 percent of U.S. companies plan to invest more in wearable applications on the job this year. And 40 percent are considering using wearables to monitor employee time management and real-time employee communication.

But some labor lawyers are concerned about unintended legal consequences. For instance, some employees might not be meeting productivity standards due to a medical condition or disability. And employers could be sued simply because they have access to physical data about their employees.

Read the article.

With the recent passage of the Defense of Trade Secrets Act (DTSA), businesses are welcoming the many benefits the statute brings, including federal jurisdiction, robust equitable relief, and the ability to recover compensatory damages, punitive damages, and attorneys’ fees, according to a report by Fisher & Phillips LLP.

The article points out that many employers may overlook a requirement that requires revisions to existing confidentiality agreements and restrictive covenants.

“Namely, employers are required to provide employees with notice that they are entitled to immunity if they disclose a trade secret for the purpose of reporting suspected illegal conduct,” writes Michael R. Greco. “If employers fail to give notice in the manner required by the DTSA, they will not be able to recover punitive damages or attorneys’ fees. Consequently, employers must pay careful attention to the DTSA notification requirements, which are not as straightforward as many believe.”

Read the article.

Littler Mendelson, the world’s largest employment and labor law practice representing management, has released the results of its 2016 Executive Employer Survey. The fifth annual survey, completed by 844 in-house counsel, human resources professionals and C-suite executives from some of America’s largest companies, examines the key legal, economic and social issues impacting employers as the 2016 presidential election approaches.

New Overtime Rules, Aggressive DOL Enforcement Plague Employers

The Department of Labor (DOL) has advanced several regulatory initiatives that have brought the agency’s enforcement of federal employment laws more to the forefront for employers. The vast majority of respondents to this year’s survey (82 percent) expect DOL enforcement to have an impact on their workplace over the next 12 months, with 31 percent anticipating a significant impact (up from 18 percent in the 2015 survey).

This concern is no doubt driven in large part by the recently finalized Fair Labor Standard Act “white collar” overtime regulations that drastically increase the number of Americans who can qualify for overtime pay. Although respondents completed the survey in the weeks prior to the release of the final rule, 65 percent had already conducted audits to identify affected employees.

“Employers are clearly feeling the impact of the DOL’s increasingly aggressive regulatory agenda, most notably the new overtime regulations,” said Littler attorneys Tammy McCutchen and Lee Schreter in a joint statement. “While it is encouraging that the majority of respondents started to prepare before the rule was finalized, more than a quarter (28 percent) said they had taken no action given delays in the rulemaking process. Given that the reclassification process can take up to six months and the rule is unlikely to be blocked from going into effect on December 1, 2016, employers should move quickly to ensure compliance.”

Further, in ranking the priority they expect a presidential candidate from each party to place on various issues, the majority of respondents (75 percent) said income inequality (e.g., overtime rules, state equal pay, minimum wage laws, etc.) would be a significant priority of the Democratic candidate. This is in comparison to only 4 percent who felt income inequality would be a significant priority of the Republican candidate.

Joint Employer, ACA among Top Regulatory and Legislative Issues Facing Workplace

Increased DOL enforcement is just one example of employers grappling with a continuously shifting regulatory and enforcement landscape, as federal agencies continue to be the governmental bodies inflicting the most pressure on employers.

With the National Labor Relations Board’s recent expansion of the definition of a “joint employer,” 70 percent of respondents expect a rise in claims over the next year based on actions of subcontractors, staffing agencies and franchisees. Approximately half of respondents predicted higher costs (53 percent) and increased caution in entering into arrangements that might constitute joint employment (49 percent).

“It is significant and telling that only 2 percent of respondents said the expanded definition of a joint employer will have no impact on their workplace,” said Michael Lotito, co-chair of Littler’s Workplace Policy Institute. “This finding shows the breadth of the NLRB’s decision, overturning a standard of joint employment that had been in place for decades, which required a relationship that was actual, direct and substantial.”

As was the case in the 2015 survey, 85 percent of employers said the Affordable Care Act (ACA) would have an impact on their workplace in the next 12 months. While two-thirds said they do not expect a repeal of the ACA if a Republican is elected president this fall, respondents saw a greater likelihood of changes to individual provisions. Fifty-three percent said a Republican administration could lead to a repeal of or changes to the Cadillac excise tax and 48 percent saw a likelihood for changes to the play-or-pay mandate.

Rising Public Attention to Social Issues Influences the Workplace

Employers have always had to keep an eye on demographic and social trends, but as information spreads more rapidly and as office culture shifts to accommodate a new generation, today’s companies are increasingly experiencing the incursion of social issues into the workplace.

In the largest year-over-year change in Littler’s survey results, 74 percent of respondents expect more discrimination claims over the next year related to the rights of LGBT workers (up from 31 percent in 2015) and 61 percent expect more claims based on equal pay (up from 34 percent in 2015). This change is driven by LGBT discrimination and equal pay ranking among the top enforcement priorities for the Equal Employment Opportunity Commission (EEOC), but it also mirrors key focus areas for the Obama administration, government efforts at the state and federal levels, and increased public awareness.

“The EEOC has sent a clear signal that it will continue to prioritize rooting out discrimination based on sexual orientation and equal pay, so employers’ instincts that claims in this area will likely rise are right on the mark,” said Barry Hartstein, co-chair of Littler’s EEO & Diversity practice. “As LGBT rights and the gender pay gap continue to be in the headlines and topics of discussion among the general public, employers can expect to face increased pressure to address these issues in the workplace.”

In addition, the changing nature of work and the rise of the so-called gig economy have given companies more hiring options than ever, including independent contractors, contingent workers and an online workforce. While this shift has created greater flexibility for workers and increased efficiency for employers, it has also given rise to more independent contractor misclassification lawsuits and regulatory investigations. Despite the legal challenges, more than half of respondents at large-cap organizations either said they were not reluctant to hire more freelancers or contractors (24 percent) or they were neutral on the matter (35 percent).

Employers Take Steps to Prevent Workplace Violence

In response to tragic mass shootings across the nation, companies are taking a range of actions to keep their employees safe, including updating or implementing a zero-tolerance workplace policy (52 percent), conducting pre-employment screenings (40 percent) and holding training programs (38 percent). Only 11 percent of respondents said they had not taken any action because violence is not a concern for their company.

“Putting policies in place to increase awareness of workplace violence and ensure that employees understand how to report threats in the workplace are steps that all employers would be advised to take,” said Terri Solomon, a Littler shareholder with extensive experience counseling employers on workplace violence prevention. “Unfortunately, even though workplace violence – and particularly active shooter instances – are statistically rare, no employer is truly immune, so taking preventative action can help save lives.”

View the 2016 Executive Employer Survey Report here: http://www.littler.com/files/2016_littler_executive_employer_survey.pdf

About Littler

Littler is the largest global employment and labor law practice, with more than 1,000 attorneys in over 70 offices worldwide. Littler represents management in all aspects of employment and labor law and serves as a single-source solution provider to the global employer community. Consistently recognized in the industry as a leading and innovative law practice, Littler has been litigating, mediating and negotiating some of the most influential employment law cases and labor contracts on record for over 70 years. Littler Global is the collective trade name for an international legal practice, the practicing entities of which are separate and distinct professional firms. For more information visit: www.littler.com.