Employment Law Blog

New York Non Compete Agreements Can Shackle Your Career

Historically, New York non compete agreements have been used to protect narrow and legitimate interests. For instance, a non-compete clause might limit the ability of high-level executives with access to trade secrets to use that information to a company’s disadvantage.  Or a non-compete agreement might allow a company to sideline a former employee with deep customer relationships for a period of time to give the company an opportunity to retain those clients after the employee’s departure. Over the past decade, however, the use of New York non compete agreements has expanded exponentially, such that they are standard procedure in almost every industry. See the Market Watch article (More Firm’s Requiring Non-Compete Agreements), Wall Street Journal article (Litigation Over Non complete Clauses Is Rising).  Despite this expansion, however, the enforceability of broad or abusive New York non compete agreements remains in question, as New York courts are more skeptical of non-compete agreements than courts in almost any other jurisdiction. As such, it is crucial for both companies and employees to remain aware of the broad principles of law governing New York non compete agreements. Of course, companies must balance their need for broad protections with the potential that their agreements will be found to be unenforceable. Employees, on the other hand, may use their awareness of the legal principles governing New York non compete agreements as leverage in negotiations prior to signing a contract, or perhaps as a way out of an agreement if the relationship has broken down. New York Non Compete Agreements May Only Protect a Company’s Legitimate Business Interests A New York non compete agreement must be justified by a company’s legitimate business interests. Specifically, there are two interests that courts in New York recognize as “legitimate”: a non-compete agreement is valid only if it protects trade secrets or customer or client relationships. Unfortunately non-compete agreements are often abused for other, illegitimate purposes, such as preventing employees from resigning without penalty. To the extent a company attempts to enforce its non-compete in this way, a court may find it to be unenforceable. New York Non Compete Agreements Cannot be Over-Broad Not only are New York non compete agreements restricted to those narrow interests, they must be narrowly tailored so that only those interests are protected. Specifically, non-compete agreements must be reasonably limited in time, geographic scope, and in the definition of competitive activity.  Regarding the geographic scope; an agreement can only prohibit competitive activity in an area that the company operates in. Traditionally, these limitations were quite narrow, but with increasing numbers of companies doing business solely online, national or even global non-competes are becoming more common.  In such cases, however, the definition of competitive activity must be carefully circumscribed. For instance, an employer only engages in a certain type of business, the non-compete agreement might be invalidated or narrowed if it prohibits the employee from engaging in other lines of work.  Finally, with respect to temporal limitations, non-compete agreements are generally (though not always) acceptable if they are limited to one year or less, but generally should not exceed that time. New York Non Compete Agreements May Be Unenforceable If the Employee Was Terminated Without Cause or If the Employer Breached The Contract In New York, courts often will not enforce a non-compete agreement against and employee who was terminated without cause.  The concept is simple—the enforceability of non-compete agreements depends on a mutuality of benefit. In other words, a company that is no longer willing to employ an employee cannot prevent that employee from working anywhere else. The law on this subject is developing, however, and we will cover this issue in more detail in a later post. Along the same lines, a company cannot enforce an non-compete agreement that is contained in a broader contract that the company has breached itself.  As such, employees may be able to void a non-compete agreement entirely if they can prove that their employer breached another part of the employment contract, by, for instance failing to pay full compensation or provide required notice before a termination. Click here for more on NY non compete agreements. If you need help dealing with a New York non compete agreement, please contact us.

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Employment Law Blog

Non-Compete Agreements are Bad for Business

As you may know, New York and most other states do not prohibit non-compete agreements. In fact, NY courts will enforce these agreements. In California, non-compete agreements have been prohibited since 1850 and many believe that this policy has contributed to the growth of California’s economy and especially so in the technology field. A while back, the National Law Journal ran an article by Richard A. Booth that suggests that California’s law against non-compete agreements may actually be good for business – especially the technology business. Mr. Booth argues that without non-compete agreements, companies are forced to retain quality employees with equity or other inducements. He also argues that with out the shackles of non-compete agreements, good employees are free to leave less productive companies at will. He suggests that this freedom of movement creates a more efficient marketplace and allows the best employees to be drawn to the best companies. In New York, by contrast, good employees get trapped with bad companies by non-compete agreements and this hinders growth as human resources get stuck in poorly run companies. The net effect of non-compete agreements is that employees lose the ability to move and the economy is handicapped. Companies can tie up human resources with non-compete agreements. In my opinion, New York should change its ways and stop letting companies hamper the market place with non-compete agreements.

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Employment Law Blog

10 Things Companies Want in Their Severance Agreements

The list below was taken from the Ohio Employers Law Blog written by Jon Hymen. The Ohio Employers Law Blog is written for companies and the ten items listed below are points that companies often include in their severance agreements. If you, as an employee, are provided with a severance agreement, you will probably see similar terms in your severance agreement. The ten points listed below might be useful to know about so you can understand why those terms are present. After some of the points listed below, I have added points from the employee’s perspective in bold. 1. Consideration: A statement that the consideration provided to the employee is more than that to which the employee is otherwise entitled to employment by way of employment. Otherwise, the release and waiver could fail for the employee not receiving anything of value in exchange. Consideration is the legal term for an exchange of value. A contract is not enforceable unless there is a tangible exchange of value. In a severance agreement, the exchange of value is usually an extra payment to the departing executive in exchange for a waiver of the executive’s right to sue the employer. It is important that you understand this part of the severance agreement. You should not sign a severance agreement unless you understand exactly what you are getting and what you are giving up. 2. Confidentiality: A covenant as to the confidentiality of the agreement. You do not want other employees learning the terms of the separation, or that agreement was even reached. Otherwise, it could open the floodgates to other employees seeking separation packages. As an executive who is leaving the company, you may also be interested in keeping the terms of your departure confidential. If so, you should ask your employer to make the confidentiality agreement mutual so it protects you as well. 3. Secrets: A covenant as to the confidentiality of employer’s confidential and proprietary information. 4. Return of Property: A covenant that all corporate property has been returned, or will be returned by a date certain. In some cases, executives are escorted out of the building right after they learn of the termination and they never get the chance to remove their personal property from their offices. If this happens to you, be sure to include a clause in your severance agreement that requires the return of your personal property. It is best if you can list the items that you need to have returned. 5. Transition: A promise to reasonably cooperate with the employer as to the transition of job duties and responsibilities. If the company is seeking your cooperation in transitioning your job to another employee, then you may also ask the company for assistance as you try to find alternate employment. As we all know, it is far easier to find a job when you have one and therefore it may help if you remain with the company in some limited capacity during your job search and retain your company email and a company phone number. It may serve everyone’s interest if you keep your company email and phone number for a few months so you can help the company transition your role and so that you can look for another job. 6. No-rehire: A promise that the employee will not apply for any positions in the future, and that the company is not obligated to consider him or her for future employment. Because there is some risk that a clause such as this could be viewed as retaliatory, indemnification language is not a bad idea. If you work for a large organization such as General Electric, you may not want to sign a severance agreement that contains a no-rehire clause because they own so many other companies and this could bar future employment with any of them. We have had many clients run into trouble with these clauses as they try to obtain alternate employment. Also, I have found that many companies are willing to remove this clause upon request. 7. No Liability: A statement that the agreement is not an admission of liability. 8. Governing law, Jurisdiction, and Venue: An agreement as to the law that will govern the agreement, and the jurisdiction and venue in which one must file any lawsuit regarding a breach of the agreement. 9. Entire Agreement: An integration clause, stating that the written agreement is the parties’ entire agreement, that no other written or oral agreements exist, and that the parties may only amend the agreement in writing signed by all. 10. Voluntariness: An acknowledgement that the employee read and understands the agreement, and had sufficient time and an opportunity to consult with his or her own legal advisor prior to signing the agreement.

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Employment Law Blog

What Is In A New York Severance Package?

We get a lot of questions about severance packages. People want to know what is in one and how much money they should contain. New York severance packages vary from company to company and there is no set formula to determine their value. Most severance packages in NY, however, usually contain some or all of the following: 1. Severance Pay Severance pay is an amount that the company has decided to pay a departing employee. I can be paid in a lump sum or paid out over time. Some companies use rough formulas to determine severance pay and they range from one week’s pay for each year of employment to a month’s pay for each year of service or more. Or the amount may not be linked to the length of employment. Typically higher ranking company officers receive more money than lower-ranking employees. Some top-level executives even have their severance pay determined in advance in their employment agreements. There is no legal formula that must be followed and there is no rule requiring the payment of any severance. 2. Separation Agreement This is a contract that sets out the terms of an employee’s separation from the company. It will typically explain the amount of severance pay, the end date of employment, and any obligations that the employee owes to the company such as a promise not to compete or steal clients or customers for a set time. The agreement will usually contain a waiver of any rights including the ability to file a lawsuit against the company for anything. Employees, of course, are not required to agree to any of these terms but the employee will usually not receive their severance pay unless they sign the agreement. 3. Outplacement Services Many companies provide outplacement services as part of a severance package. I have never seen much value in these services and usually ask companies to pay our clients more money in lieu of these services. Some employees, however, find that these services are helpful. 4. Health Insurance Health benefits usually end on an employee’s last day of employment. Some companies will provide departing employees with a period of paid health insurance coverage as part of a severance package. Most employers are required under COBRA to provide employees with the option of paying for their own health insurance at the company rate for 18 months. COBRA notices are not usually part of a severance package. 5. Vacation Pay Depending on a companies policy, an employee may receive a check for any unused vacation pay and floating holidays. 6. Stock Options or Company Equity A severance package will usually explain the value and payment terms of any equity interest owned by the employee.

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Employment Law Blog

Severance Package Values in New York

Severance package values tend to track the health of the economy. During good times, companies typically offer more generous severance pay, but values drop during downturns.   When people need help the most, companies offer less. This is because companies themselves are often struggling to survive. So what should employees do to protect themselves? First, smart employees save money to create their own cash reserves. You cannot rely on your employer to help you, so help yourself by creating your own severance package with a big savings account. Instead of buying new cars or widescreen televisions, save some money. Second, be proactive with your career. If you sense that your job is in jeopardy, don’t wait to get fired – instead start an immediate and aggressive job search and find alternate employment. You never want to become unemployed. Today many companies will not even consider an applicant who is unemployed. Being unemployed today must be avoided at all costs – it can cause financial ruin. It is much easier to find a job while you still have one, so you know what to do. In certain cases, employees can negotiate substantial increases to their severance packages. These situations are generally limited to cases involving illegal conduct by the employer such as discrimination, sexual harassment, overtime pay violations and the like. For example, in a recent case we handled, our client was fired at the age of 64 after over 20 years of employment with the company and replaced by a substantially younger person. In that case, our client had a potential age discrimination case and we used this as leverage to negotiate a much better severance package. In another case, our client was fired soon after she was diagnosed with a serious disease and we used the threat of a disability discrimination case to enhance her severance pay offer. Most firings, however, are not illegal. This is because most everyone is an “at-will” employee who can be fired at any time for any reason or no reason at all. In these cases, employees have a tough time negotiating better deals because they have no leverage. So people today should not count on getting a fat severance package to get them through a period of unemployment. During these days of high unemployment, smart employees save money and take control of their careers. The best way to handle a severance package today is to avoid getting one by leaving an unstable job for a better one before you get fired. Please feel free to contact our firm if you have a question. We have been helping employees for over 20 years.

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Employment Law Blog

Severance Agreement Oppression

Regulators are getting stricter about severance agreements.  Read on to learn about how some severance agreements were found to be TOO strict and how to protect yourself when signing one.  There are certain claims that you cannot waive in your severance agreement.  For example, you cannot waive your EEOC (Equal Employment Opportunity Commission) claims.  But your employer can make you sign away your right to recover monetary damages for any EEOC claims. Don’t let yourself suffer from severance agreement oppression. If the severance agreement has an employer non-disparagement clause, there must be language in the agreement to allow former employees to give truthful information to the EEOC and that allows the employee to testify about their employer if subpoenaed. You cannot waive your FLSA (Fair Labor Standards Act) claims.  But your employer can make you sign a statement acknowledging that you have been properly paid. You can waive your claims under the ADEA (Age Discrimination in Employment Act) in a severance agreement. In order for the ADEA waiver to be valid, the employer must be sure these seven factors are met: The severance agreement must reference the ADEA by its full name. The employee must be provided at least 21 days to sign the severance agreement. After signing the agreement, the employee must be provided at least 7 days to change his or her mind. The employee must be advised to consult an attorney before signing the agreement. If the employee was terminated as part of a group, he or she must be given written notice. Employees terminated as part of a group have at least 45 days to considering signing the agreement. Employees terminated as part of a group have a right to see a written list of the group of workers from which the employer chose the workers to be laid off. The list must state who was laid off, who was not and the age and title of every employee in the group. Integration and Severability A severance agreement should contain an integration clause.   An integration clause states that the severance agreement is the one true agreement – that there are no side agreements, whether oral or written.   The integration clause may include a carve-out for important side agreements, such as an agreement about the employee’s pension. A severance agreement should also contain a severability clause. A severability clause states that if one portion of the severance agreement is deemed to be invalid, the rest of the agreement still stands. Our firm will review your severance agreement and meet with you via phone or video chat, review your severance agreement, answer your questions, point out any issues and suggest modifications, and draft a written analysis to assist you in understanding your situation. For this review and consultation there will be a legal fee of $750.  One our employment lawyers will review your agreement and meet with you for 20 minutes in person or by phone to over the agreement.   See here for more information. Don’t let severance agreement oppression get you down.

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Employment Law Blog

Retaliation Cases Are Favored by the EEOC

A recent report from the Equal Employment Opportunity Commission (EEOC) reveals that retaliation cases are preferred by the agency.   The EEOC enforces the federal laws that make it illegal to discriminate or retaliate against a job applicant or employee. Retaliation Charges Lead the Way Another interesting aspect of the report was that the largest percentage of charges – 42.8 percent of the 88,778 total charges – were for retaliation.   Sex discrimination came in at 29.3 percent of charges, followed by disability discrimination at 28.6 percent, age discrimination at 23.2 percent, national origin at 10.8 percent, and religious discrimination at 4 percent. Color claims accounted for 3.1 percent of charges, the Equal Pay Act claims comprised 1.1 percent, and the Genetic Information Non-Discrimination Act allegations made up 0.4 percent. (The figures add up to more than 100 percent because some charges allege discrimination on multiple bases.)   This is the first year that retaliation charges were the most prevalent. The rising number of retaliation claims is concerning for employees.   We hear from a startling number of San Francisco employees who have suffered employment discrimination who are afraid to complain because they fear retaliation from their employers.  These fears persist despite many laws which specifically prohibit retaliation.   If you have questions about your employment rights or think you might be retaliated against please contact us. San Francisco and other Bay Area Employees Don’t Have It Any Better California’s Department of Fair Employment and Housing (DFEH) is a statewide administrative agency that enforces the Fair Employment and Housing Act (FEHA).   The FEHA, like its federal counterpart the EEOC, protects all San Francisco, Bay Area, and California employees from discrimination and harassment on the basis of age (40 and over), ancestry, color, religious creed (including religious dress and grooming practices), denial of family and medical leave, disability (mental and physical) including HIV and AIDS, gender, gender expression, gender identity, genetic information, marital status, medical condition (cancer and genetic characteristics), national origin, race, sex (including pregnancy, childbirth, breastfeeding, and medical conditions related to pregnancy, childbirth or breastfeeding) and sexual orientation. There were 18,480 charges filed with the DFEH in 2013 (the last year statistics are available for).  Like the EEOC, there were only a small number of lawsuits filed by the DFEH.  Of the 18,480 charges filed, only 40 lawsuits were filed by the DFEH.  As with the EEOC, for San Francisco and other Bay Area employees enforcement of the prohibitions against employment discrimination and harassment is ultimately left to the employee.  It is the goal of the Ottinger firm to help you with your efforts. Please contact us if you are a San Francisco or Bay Area employee who has suffered harassment or discrimination at work. The Statistics Reveal That The EEOC Does Not File Lawsuits to Enforce the Harassment and Discrimination Laws The most revealing statistic was the embarrassingly low number of lawsuits filed by the EEOC.  The EEOC’s enforcement duties include the duty to file lawsuits on behalf of employees.  However, of the 88,778 charges there were only 167 lawsuits filed.  That means your chances of the EEOC filing a lawsuit on your behalf is .0019%. Employees who have suffered harassment or discrimination and who are hoping to rely on the EEOC to vindicate their rights are in for a shock.  Instead, actual enforcement of the discrimination and harassment laws the EEOC is responsible for is left to the employee.  The employment attorneys at the Ottinger firm are available to help you in your efforts.  If you have suffered discrimination or harassment please contact us or submit a free case evaluation.

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Employment Law Blog

Non-Compete Clause: How to Escape from Them – Video.

Un-shackle Your Non-Compete Clause Do you feel trapped by a non-compete clause?  Is there a job you want but feel chained to your current employer due to a non-compete clause.  You are not alone. Non-Compete clauses have been overused and abused.  More cases are being filed challenging the validity of non-compete clauses.  And employees are winning more of these cases.  This video provides three examples of arguments that have been used to defeat non-compete clauses. The tide is turning against the use of non-compete agreements.  Here are a few articles discussing the trend. Wall Street Journal Inc. – The Case Against Non-Compete Agreements See our main page on non-compete agreements. Transcript of video: Hi, I’m Robert Ottinger. I’m an employment lawyer, and I’ve been representing employees for over 15 years.  Many of our clients come to us because they want our help getting out of a non-compete agreement that’s keeping them from going to the job they want.  Well, I’m going to give you three examples of circumstances in which you can get out of your non-compete agreement. Example one is if your employer fires you without cause.  In that case, a non-compete agreement is pretty much void and unenforceable. Two, if your employer has changed the nature of your job or the way you’re paid after you signed the non-compete agreement, you can argue that the contract is now changed, so it can no longer be enforced. And three, one court last year held that a non-compete clause couldn’t be enforced because the employee had only worked there for less than two years, so that’s now a new factor some courts are looking at. Well, those are three examples, if you’re bound up by a non-compete clause, don’t give up hope.  There may be a way to get out of it. Contact us online or call us at 347-492-1904 for a free consultation about your non-compete clause.   We have been helping executives for over 15 years.

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Employment Law Blog

Getting Fired Without Cause Will Void a Non-Compete Agreement in New York

Non-compete agreements in New York are typically rendered unenforceable if the person subject to the agreement is fired without cause. Non-compete agreements are disfavored in New York and will only be enforced if there is a legitimate reason. Courts have generally found that no legitimate reason exists if an employee is fired without cause. If the company decides to let the employee go through no fault of the employee, then it would be extremely unfair to restrict that employee’s options in the workplace.  A company cannot terminate an employee and then try to prevent that employee from working for a competitor. But this rule does not apply if you are fired “for cause” or if you resign. Also, be wary of severance agreements that try to bind you to a non-compete agreement.   If you are fired or laid off, do not sign a severance agreement that says you are bound by a non-compete agreement.   If you do you could find yourself bound by the non-compete again. As Donna Ballman explains in the referenced AOL article, the law in each state is different. In California, for example, non-compete agreements are generally unlawful and are rarely enforced. Massachusetts is also considering similar legislation to remove non compete agreements as needless restraints on trade. In my opinion, New York should also outlaw non-compete agreements.

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Employment Law Blog

IS JESSE PINKMAN ENTITLED TO OVERTIME PAY?

THIS POST CONTAINS SOME SPOILERS Jesse Pinkman has a lot of things on his mind, including an open DEA investigation and the violent death of everyone he’s ever loved.  Unpaid wages are probably not high on his list of priorities. Still, he may want to think about talking to an employment lawyer when the dust settles, as Jesse may be owed a lot of money.  Leaving aside for a moment the illegality of his profession, Jesse has an argument that he is entitled to overtime for at least part of the work he did over the course of the show. There’s No “Meth Superlab” Exemption to the FLSA In the first few seasons, Jesse and Walter set up shop in their own Winnebago. They set their own hours, determined the places they worked, and provided their own supplies. As such, they were clearly self-employed, or perhaps independent contractors for Tuco Salamanca and the cartel.  Either way, they would not be entitled to overtime.  Likewise, at the end of the show, Pinkman was more or less enslaved by the Nazis. Overtime at that stage was the least of his concerns. But in Season Three, Walter and Jesse were employed by Gus Fring, the fried chicken magnate and cartel overlord, in his underground meth Superlab. The terms of their employment were determined by Fring, they were paid a fixed salary (of $15 million a year between them), and, especially as Fring became suspicious of Walter, they worked under close supervision. As such, they were most likely employees for the purposes of federal law. Under the Fair Labor Standards Act, all employees are entitled to overtime compensation for any hours worked over forty in a given workweek, unless they fall within one of several defined exemptions. For instance, “learned professionals”–employees in a position that requires an advanced degree, such as doctors and lawyers–are not entitled to overtime compensation. Computer specialists, executive employees, outside salespeople, small farmer workers, and casual domestic workers are all likewise exempt from overtime rules. Walter White was Jesse’s supervisor and manager, and would therefore fall under the executive exemption. But Jesse does not neatly fit into any of these categories. By the middle of season four, Gus and Walter had agreed to a long term, $15 million a year deal. Assuming Jesse was entitled to half, he was making a salary of $7.5 million per year. The most likely exemption that Jesse might fall under would therefore be for “highly compensated” workers. The federal regulations contain a special rule for  workers who make $100,000 or more per year. To qualify for this exemption, however, Jesse would have to perform “office or non-manual work” as his primary duty, and cooking meth arguably falls outside the scope of that rule. Of course, bringing a federal lawsuit against Gus Fring’s estate or Los Pollos Hermanos for unpaid overtime compensation would lead to some extremely uncomfortable questions about tax evasion and money laundering (not to mention building a methamphetamine empire). Most fans probably hope that after Jesse’s final escape he is free and happy in Alaska. But if he ends up getting what’s coming to him, he might as well try to make sure that includes unpaid wages. I wonder if Saul Goodman takes employment cases?

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