Employment Law Blog

States are acting on the dangers to hourly and lower paid workers of noncompete agreements.  Most of the proposed legislation to limit noncompete agreements is aimed at prohibiting their use for these workers.  Noncompete agreements for these employees should be unnecessary--these are employees who have no trade secret information or significant customer relationships, which are the primary reasons for noncompete agreements.  However, cases have arisen where companies seek to obtain some competitive advantage at the expense of lower paid and hourly employees.  In one case, a Seattle, Washington coffee shop sought to enforce a noncompete agreement against its former baristas.
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Thirty-five years after deciding that arbitration clauses in employee benefit plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) were unenforceable, the U.S. Court of Appeals for the Ninth Circuit became the last circuit to approve the use of mandatory arbitration clauses in ERISA benefit plans.  In this decision, Dorman v. Charles Schwab Corp, the court decided that an ERISA plan could limit participants to the use of individual arbitration as the sole forum for resolving certain benefits claims.
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Since the 1991 Supreme Court case, Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, the Supreme Court has steadily broadened the use of the arbitration in the employment context.
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Marijuana use has always been a concern in the workplace, but the recent changes in states’ laws have created new challenges for both employers and employees.  States have begun to decriminalize marijuana and permit its use for recreational and medicinal uses.  However, it is still illegal under the federal Controlled Substances Act (CSA) as a Schedule I substance. 

Because it has historically been criminalized, employers include marijuana in their drug testing for new employees and any random or “for cause” testing.  The states that have legalized marijuana have not prohibited such testing for marijuana.
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Because of the widespread use of arbitration clauses in employment and consumer agreements, Congress seeks to rein in their use.  The most ire was brought on by the use of these agreements to prevent employees and consumers from bringing class action lawsuits.  To address these concerns, the U.S. Rep.
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Regardless of how many employees it has, an employer must keep wage and hour records.  The courts have made it clear that if the employer does not have records of an employee’s hours, the employee’s assertions are presumed to be true.  The employee’s claims are taken as true by the court unless the employer can rebut it with documentary evidence.  Even if the employee is incorrect, unless the employer can prove the actual number of hours, the employer will be responsible for a significant amount of backpay.

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In New York, it is easy for employers to require restrictive covenants but it can be difficult for them to be enforced after you leave their employment.  However, an employee makes it easier by committing bad acts on the way out the door.  Thus, be very careful about what documents or information you bring with you to your next employer.  To be safe, upon leaving do not take any non-public information that belongs to your former employer and do not take any of the employer’s property.  Finally, speak to an attorney prior to contacting any clients that you service on behalf of the former employer.
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As you may have noticed, the State of New York’s Department of Labor (DOL) has been focusing on certain independent contractor relationships that resemble employee-employer relationships.  This focus has become more intense as the State faces more financial problems.  Thus, it is important that both individuals and companies are serious and cautious with their dealings with the DOL.  If you receive a questionnaire from the DOL concerning taxes, workers compensation, unemployment, or other issues regarding your operations, respond to it promptly.  If you are unclear as to how to respond to the correspondence, speak to a lawyer or accountant.  Most issues can be resolved through negotiation if they are dealt with early in the process.  However, once it goes from being investigation or enforcement action to a judgment or collection proceeding, it becomes much more difficult and time-consuming to assert meritorious defenses.

An overly broad restrictive covenant will not protect an employer’s interests.  In order to effectively prevent a former employee from stealing customers or utilizing confidential information, it is important that an employer can quickly run to Court and file an application for injunctive relief.  A restrictive covenant that is overly broad or unreasonable will delay any attempts to obtain injunctive relief.  If a restrictive covenant is overly broad, a Court will issue injunctive relief only after arguments about where the new line should be set.  Often this requires disclosure of confidential customer information, along with the negotiation of a confidentiality agreement.  As a result, not only will any Court assistance be delayed, but the former employer will have to disclose even more customer information.  Accordingly, if you are truly interested in protecting your Company’s proprietary information and customer contacts, it is worth the extra time and money to have appropriate and enforceable restrictive covenants drawn up for each employee that could damage the Company if they suddenly left for a competitor. 

One of the biggest mistakes made by managers is giving poorly performing employees average ratings on performance evaluations.  While it is very difficult to do, managers must give accurate performance evaluations, especially to poorly performing employees.  Otherwise, any subsequent adverse employment action taken against the employee is susceptible to legal challenge.  A common situation is that a poor performing employee with average performance evaluations goes out on pregnancy, disability, or other protected leave.  If the performance issues are not documented before the employee goes on leave, any action taken against this employee while on leave or soon after they return can appear to be retaliation for going out on protected leave.  At that point, assertions that the manager was about to address the performance issues will appear to self-serving and disregarded.   Thus, the manager will not only be forced to keep a spot open for the poorly performing employee who is on leave, but will have to wait a reasonable time after the employee returns before addressing the performance issues.