2017 is in the books and 2018 is now upon us. A dramatic close to 2017 on Capitol Hill ushered in sweeping changes to the tax code that will begin to impact both employers and employees in a number of ways – some more immediately – from employers losing deductions for sexual harassment settlement payouts, to penalties for high nonprofit executive compensation, to tax deferral on exercise of stock options for public company executives, to employee benefit plans. Wage and leave-related issues are also likely to dominate in 2018, as more states (and employers on their own initiative) increase wage thresholds and broaden employee paid and unpaid leave entitlements (even for some smaller employers). Salary history bans, such as those already enacted in New York City, Massachusetts, and California, will continue to get traction in 2018 as more states and municipalities jump on that bandwagon. We also expect to continue to witness a significant shift in the NLRB’s enforcement policy and decision-making; the NLRB’s new General Counsel has already announced a number of changes that are sure to make employers sigh with relief. Also in 2018, employers could continue to face rising uncertainty with respect to health plans in the wake of the tax bill’s repeal of the individual mandate that was central to keeping health plans affordable under the Affordable Care Act. Finally, so that we can help keep you accountable to the five New Year’s resolutions we made for you over the holidays (that we know you were eager to adopt as your own), we have collected them for you here: (1) review and refresh your non-harassment policies and training; (2) update your leave policies; (3) make sure your job applications comply with new state ban-the-box laws and salary history inquiry bans; (4) assess the strength and enforceability of your post-employment covenants under changing state law; and (5) make sure your employee benefit plans are compliant.
Many state legislatures spent 2017 tinkering with post-employment covenants. Given the growing trend to legislate locally and the employee mobility issues that seem to nag every employer, we thought the New Year would be a perfect time to review and revisit your post-employment covenants. So for our multi-jurisdictional employers (which seems to be everyone these days), how do your post-employment covenants legally measure up?
New job to-do list: (1) send goodbye email; (2) attend goodbye party; (3) update LinkedIn account; and (4) then use said LinkedIn account to send old colleagues new contact information. This sounds like a pretty standard modus operandi for the modern job-hopper, right? In fact, this last act, that LinkedIn contact, provided the nub of a recent non-solicit case out of Illinois state court.
In Bankers Life v. American Senior Benefits, an appellate court found that an ex-employee’s invitation to connect with old colleagues via LinkedIn did not violate his non-solicitation agreement with his former employer. The Bankers Life opinion, though not designated for publication by the Illinois appellate court, provides insight into the line between the permissible and the prohibited in the context of solicitation via social media.
If you’ve been following my corporate divorce series, you are familiar with my view about who owns what at the end of the employment relationship, who pays what to whom, and even how to end the relationship. But I have yet to address the notion of custody and whether my employment-as-marriage metaphor withstands an analogy to the post-employment solicitation of employees.
It is the employee’s relationship with fellow employees – and the employer’s attempt to insert itself into this relationship – that drives this discussion.
A recent Circuit Court case confirms that the term “non-inducement” means just that. In American Family Mutual Insurance Company v. Graham, the Eighth Circuit affirmed a jury verdict against an insurance agent who, the jury found, breached a non-inducement provision based in part on his promise that he could work up some “quotes that will make you smile.”
Those of you reading our Employee Mobility blog posts are familiar with California’s unique approach to non-compete agreements: they are, except in a few limited circumstances, unenforceable in the Golden State. And that unenforceability extends to post-employment non-solicitation provisions restricting individuals from soliciting business from former customers — a “warm market” to those in the know in the sales community.
But a recent decision highlights an exception to this (infamous) California ban on post-employment solicitation.
Written by Jen Rubin
Those of you who joined us for our November 13 webinar on “Post-Employment Solicitation of Customers & Employees in the Social Media Age” will be interested in a recent social media-related non-solicitation case from Connecticut that – you guessed it – echoes some of the guidance that I, together with my partners Michael Arnold and Bret Cohen, provided about how to take social media developments into consideration when drafting your post-employment non-solicitation covenants.
The latest casualty to post-employment covenants came at the hands of a Connecticut trial court, which struck down a non-solicitation agreement under New York law as reaching beyond the legitimate business interests that deserve protection.
Written by David Katz
A recent non-compete case out of a New York County court offers employers valuable drafting tips on non-compete and non-solicitation provisions.
Written by Jennifer Rubin
A federal district court in Washington has confirmed that an employer’s relationship with the cows that its employees serviced is insufficient to establish a legitimate protectable interest to enforce a non-compete.
Yes, the court’s decision in Genex Cooperative, Inc. v. Contreras not only confirmed that bovine inseminators were free to solicit their prior clients (and cows), but the case provides some good reminders about drafting enforceable non-competes.
The case involved three bovine inseminators who, unhappy with their wages and working conditions (which included the failure to adhere to state minimum wage laws), quit their jobs with Genex and, the next day joined its competitor CRV USA — who immediately put them to work inseminating the cows of Genex customers. Continue Reading Keep Your Hands Off the Customers … and the Cows