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?
Last week the Federal Trade Commission and the Department of Justice jointly issued guidance to educate companies, and in particular human resource professionals, on how antitrust laws apply in the employment arena, particularly with respect to hiring and compensation matters. Human resource professionals should familiarize themselves with this guidance, which we summarize below, as the DOJ and FTC made it clear that HR professionals may be held individually responsible for certain employment-based antitrust violations.
Does this sound familiar: employee disregards a non-compete and joins a competitor; former company calls foul and initiates a lawsuit; parties fight it out, but by the time litigation has run its course, the non-compete period in the underlying contract has expired. The dispute is moot, right? Not necessarily according to the Ninth Circuit in Ocean Beauty Seafoods v. Pacific Seafood Acquisition Company. There, the Court applied the doctrine of equitable extension to tack on a non-compete period to an agreement after the original period had run.
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.
If you have been following my corporate divorce series, you may have read the “Break Up” piece where I advised newly terminated folks to keep their cool if they are unexpectedly fired because their post-firing behavior might impact a severance offer. Yes, it turns out that your parents were right when they told you that if you have nothing nice to say, don’t say anything at all. And in the ideal world, everyone would play by that golden rule. Sadly, that is not the case in the real world.
Apparently this is a big issue for real divorce cases where courts routinely fashion orders preventing spouses from disparaging one another in their children’s presence. While such court orders are uncommon in employment and other commercial disputes, it is far more common to see private parties contractually agree to play nice after resolving a dispute.
Even though it may stick in our First Amendment craw, it turns out that you can be contractually (and therefore judicially) gagged in the right circumstances. Here are some things employees and employers should keep in mind when negotiating what is commonly known in corporate divorce as “non-disparagement” provisions.
The Ninth Circuit Court of Appeals recently sent a case back to a district court to revisit its enforcement of a settlement agreement that prohibited an employee from future employment with the employer and any company the employer later acquired or served. The opinion in Golden v. California Emergency Physicians Medical Group addresses whether California Business & Professions Code section 16600 extends to non-compete agreements only and certainly provides ammunition for future attacks on no re-hire provisions in settlement agreements and other non-traditional restrictive covenants.
The “employee choice” doctrine is one of those employment terms that is as misunderstood as “right to work,” “employment at will” and my personal favorite, “labor lawyer”. But a recent New York Federal court in IBM v Smadi, spelled it out pretty clearly: the employee choice doctrine is alive and well and has just a few simple components.
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.
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.