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Trade Secrets: What Companies Must do to Protect them

Apr 1, 2020 | By Ottinger Employment Lawyers | Read Time: 3 minutes

A trade secret is, essentially, information of commercial value that is kept secret by those who have an interest in protecting and benefitting from its value. The attribute of secrecy is fundamental to whether certain information qualifies as a trade secret. Unless the entity possessing the information makes a reasonable effort to maintain the secrecy of the information, the information will not be deemed a trade secret and will not receive legal protection as such. The decision in the case of Abrasic 90 illustrates just how vital protecting secrecy is. Abrasic 90 v. Weldcote Metals, No. 18-C-5376 (N.D.Ill. Mar. 4, 2019). In that case, the court held that plaintiff Abrasic 90 could not show an adequate likelihood of success on the merits of its claims to warrant enjoining defendants, including plaintiff’s former CEO and his subsequent employer, Weldcote Metals, from operating in the abrasives industry and using Abrasic 90’s purported trade secrets to do so. Central to the court’s holding was its finding that, although some of the information taken by the defendants was of such a nature that its compilation might be protectable as a trade secret, Abrasic 90 “did virtually nothing to protect that information to preserve its status as a trade secret.” The company’s “data security was so lacking” the court had difficulty identifying “the most significant shortcoming.” The court nevertheless lists those shortcomings, which included: Failure to enter into any nondisclosure or confidentiality agreements with employees, distributors, or suppliers. The nonexistence of any policy around the confidentiality of its business information. Failure to train employees or otherwise instruct them regarding their obligations to keep certain categories of information confidential. Allowing the defendant CEO’s employment agreement, with its nondisclosure and noncompete provisions, to expire five years prior to his departure. Failure to ensure any confidential information was returned when employment relationships ended. Failure to ask former employees to delete secret business information from personal devices. Use of a shared network drive, accessible via a shared password, with no encryption and no restrictions on anyone’s ability to access, save, copy, print or email anything kept on the shared drive. Rejection by the company of its IT manager’s recommendation that the company segregate certain documents, allow access only on a need-to-know basis and adopt an “Acceptable Device Use Policy.” Generally, doing nothing to protect trade secrets that was, in any way, different than steps taken to protect information that was “indisputably not a trade secret.” The lessons are clear for any entity that wants to claim trade secret status for certain information. Steps to protect such information must include: Identification, labeling, and segregation of the secret information. When secret business information is unidentified and freely intermingled with non-confidential information, it undermines any otherwise reasonable measures to protect that information. Physically and electronically securing the information. Physical security means that hard copies of secret business information is kept in locked file cabinets, rooms or other areas of restricted access. Access to and use of electronic information must also be controlled. The information must not be made freely available on shared drives. Rather, access must be restricted to those who have a “need-to-know” the information. This may be done through encryption, access permissions systems, password protection, etc. Having clear data security policies to describe what is a trade secret, who is authorized to access, use, copy or disclose such information, and what employees must generally do to protect secret business information. Training employees on these matters. Adequate use of nondisclosure and confidentiality agreements with anyone to whom trade secret information is disclosed – especially employees. This includes keeping all such agreements current. Monitoring and enforcement of data security policies and nondisclosure and confidentiality agreements. Procedures to ensure the return or destruction of trade secret information in possession of others when relationships with employees, suppliers, distributors, and customers reach their end. Designating information as a trade secret can have important implications for executives embroiled in non-compete disputes. This is becasue New York courts generally will not enforce a non-compete agreement unless necessary to protect a companies trade secrets. If a company does not take steps to protect its trade secrets then the information will be not be deemed a trade secret. This will likely prove fatal to the companies attempt to enforce its non-compete agreement.

Employment Law Blog

Your Employment Rights: A Guide for Workers

Mar 20, 2020 | By Ottinger Employment Lawyers | Read Time: 13 minutes

If you are reading this, it’s probably because you’re facing a work-related problem. Maybe you’re worried that you’ve been discriminated against in the hiring process because of your race, gender, sexual orientation, or disability. Maybe there’s a problem with the way your company has been treating you, how much they’ve been paying you, or how many hours they ask you to work. Maybe you’ve just lost your job, and the reason doesn’t seem fair. This guide is designed to help you access the information you need to understand your employment rights and protections under the United States’ employment laws. In our opinion, the best kind of legal advice addresses problems before they get out of hand, keeping people in their jobs and out of the courtroom. We hope this guide will give you the legal know-how necessary to resolve your workplace problems without too much fuss. That said, we understand that some work-related issues cannot be resolved without help from legal professionals. If that’s your situation, we hope that this guide will help you understand how you can use the law to protect your rights and defend your interests. Employment law sets mediates relationship between companies and their workers. There are many different aspects to this relationship and, unfortunately, many different ways it can go wrong. Click on the links below to find about more about your rights and protections in each area of employment. Employment At Will and Why You Have No Right to Your Job Many employees believe that the law protects them from being fired without notice or without reason. Unfortunately, most employees are employed “at-will” meaning that they do not have the benefits of such protections. If you are employed at-will (and most employees are), your employer can terminate you without cause, without notice, and at any time. On the other hand, you also have the right to quit at any time, without giving a reason. Generally, unless your employer has specified that you are not at-will, the law presumes that you are. At-will employment is the rule, not the exception to it. This can be discouraging news for employees who have just been laid off without explanation or without notice. The good news is that even at-will employers do not have the right to fire their employees for illegal reasons (such as due to discrimination, or in retaliation). If you believe your employer may have illegally fired you, please contact an attorney to discuss your options. At-Will Employment (New York) At-Will Employment (San Francisco) For more information on at-will employment, including how to determine if you are not an at-will employee, please see these articles, or watch the video linked below: Fired at Will – You Can Be Fired for any Reason Employment Rights – Pay and Hours We all work for at least one reason — to get paid. However, a lot of us don’t understand the laws that regulate our wages and the hours we work. So, where do these regulations come from? The Fair Labor Standards Act, or FLSA, is the backbone of your right to fair pay for the hours that you work. The FLSA is a federal law, so it applies nationwide. This law establishes: the 40 hour week, the rules for overtime pay, the minimum wage, restrictions on child labor, equal pay for equal work done by a man or woman, and the standards for pay for time off work. State and local laws may provide greater degrees of protection, but the FLSA sets the minimum standard across the country. These protections have some restrictions — such as on who qualifies for overtime pay or who qualifies as an “employee” (versus an independent contractor) — and we have elaborated on those questions on our practice area pages (linked below). As always, if you have specific or detailed concerns about your particular situation, please don’t hesitate to contact an attorney for a free consultation to discuss your options. Explore these articles to learn more: Minimum Wage in San Francisco Overtime in New York Employment Rights – Discrimination Federal law prohibits employers from discriminating against their employees on the basis of things like race, national origin, sex, disability, etc. State laws frequently provide additional or more specific protections. For example, in California and New York, state law stipulates that employers cannot discriminate against people for being married or unmarried, or on the basis of their involvement with the military. Unfortunately, discrimination still happens despite the existence of these laws. So what is discrimination? It can manifest itself in a number of different ways, but, basically, it includes any action that adversely impacts an employee or a job candidate — such as firing, denying a promotion, or refusing to hire someone — and is also prejudicial or biased in motivation. Sometimes, discrimination is fairly obvious. At other times, discrimination can be subtle and unintentional; your employer may not realize that you are being impacted. Either way, you have the right to pursue legal options to address the discrimination. For more information on discrimination and your legal protections, please see this article: Workplace Discrimination in New York and San Francisco Employment Rights – Family and Medical Leave Life happens, and sometimes you need to take time away from work to deal with the ups and downs that life brings. The Family and Medical Leave Act (or FMLA) is federal legislation that provides you with the right to take time off work for the family health issues, births, and adoptions that shape the lives of workers. This section explains when you are entitled to a leave of absence, what protections you have while on leave, and what to do if your employer does not uphold your rights. What events entitle you to family or medical leave? There are two situations when you are eligible for leave under the FMLA: When welcoming a new member to the family through a birth, adoption, or foster placement; and When you or a family member are facing serious health problems. Medical leave […]

California Minimum Wage Laws

Jan 23, 2020 | By Ottinger Employment Lawyers | Read Time: 10 minutes

A Guide to Minimum Wage Laws in California for Employees Minimum wage refers to the minimum hourly rate of pay that employees must be paid for their work. Generally, employees must be paid the highest minimum wage that has been established for the jurisdiction in which they work. Our California employment lawyers will explain. Please don’t hesitate to call our firm at (800) 668-7984 or send us an online message for help. What is the California Minimum Wage? At the federal level, the minimum wage is governed by the Fair Labor Standards Act. Federal law currently sets the minimum wage at $7.25 per hour. However, federal law allows states and cities to set a minimum wage that is higher than the federal rate. 29 U.S.C. § 218(a). California has established a higher minimum wage than the federal rate, so employers in California are required to pay the minimum wage that has been established by state law (unless an even higher rate has been established by the city or county in which they operate – see below). Labor Code § 1182.12. The California minimum wage is scheduled to increase gradually over time. California minimum wage rates and their scheduled increases are shown in the following table: Hourly Minimum Wage Rates in California Effective Year(January 1 to December 31) Employers with more 25 orfewer employees Employers with morethan 25 employees 2018 $10.50 $11.00 2019 $11.00 $12.00 2020 $12.00 $13.00 2021 $13.00 $14.00 2022 $14.50 $15.00 2023 $15.50 $15.00 For January 1, 2024, and thereafter, the California minimum wage is automatically adjusted using a methodology tied to the consumer price index. The methodology for further increases essentially applies an increase over the prior minimum wage that is equal to the lesser of: 5%; OR “[T]he rate of change in the averages of the most recent July 1 to June 30, inclusive, the period over the preceding July 1 to June 30, inclusive, period of the … nonseasonally adjusted the United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W).” The result is rounded to the nearest ten cents. If the CPI-calculated rate is negative, then there is no increase or decrease in the minimum wage for the following year. Labor Code § 1182.12(c). If the Governor determines that economic conditions do not support the California minimum wage increase, a scheduled increase may be temporarily suspended. When the Governor suspends the increase, it is simply postponed until the following year. Labor Code § 1182.12(d). Local California Minimum Wage Rates Some cities and counties within California have established higher minimum wages than the state’s level. Jurisdiction Minimum Wageper hour as of July 2018 Notes San Francisco $15.00 Adjusted annually based on CPI Oakland $13.23 Increases tied to CPI-W for San Francisco-Oakland-San Jose Berkeley $13.75 Increases to $15.00 October 1, 2018, and tied to CPI thereafter Los Angeles $13.25* *For employers with more than 25 employees ($12.00 for employers with 25 or fewer employees) San Diego $11.50 Increases tied to CPI San Jose $13.50 Increases to $15.00 on January 1, 2019 The University of California at Berkeley has compiled and maintains local city and county level minimum wage rates here. Who Must be Paid California Minimum Wage? The minimum wage must be paid by employers to employees in “all industries.” Employer means “any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.” Labor Code § 1182.12. Employees who work in the state must be paid California’s minimum wage even if they don’t live in California. See Sullivan v. Oracle Corp. Employees cannot waive their right to receive the California minimum wage. This means that even if an employee agrees to work for less than minimum wage or agrees to any arrangement that would result in them receiving a lesser rate of pay, that agreement is considered unlawful and will not be enforced. See Civil Code §§ 1668 and 3513. This is the case even if the agreement is a collective bargaining agreement. Contact Us Schedule your free consultation. When Doesn’t California Minimum Wage Apply? There are some situations in California where the minimum wage does not apply or where employees may be paid less than minimum wage. Source: 8 CCR §§ 11010-11170 Executives, Administrative Staff, and Professionals California’s minimum wage laws do not apply to staff classified as executive, administrative or professional. However, the exemption of these types of positions from minimum wage law is basically moot. This is because to meet the legal definition of executive, administrative or professional, an employee must be paid a salary that would put their equivalent hourly “wages” well above the minimum wage. For these employees, their monthly salary must be at least twice the state minimum wage, assuming they are working 40 hours per week. So, if the applicable minimum wage is $11.00 per hour, the monthly salary required to qualify as an executive, administrative staff or professional would be $3,813 (two times $11 per hour times 40 hours per week times 52 weeks per year, divided by twelve months per year). Learners An employee in a job in which they do not have similar or related experience may be paid at a rate that is 85% of the minimum wage, rounded to the nearest nickel. This only applies during their first 160 hours of employment. After 160 hours of employment, their wages must be increased to 100% of the minimum wage. At Camp Camp counselors and student employees of an “organized camp” may be paid at 85% of the hourly California minimum wage rate. Labor Code § 1182.4, subdivision (a). An “organized camp” means an outdoor site with programs established to provide an outdoor group living experience “with social, spiritual, educational, or recreational objectives” for at least five days during a season. Health and Safety Code § 18897(a). Trailer parks, resorts, motels, hunting camps, and penal or correctional camps do not count as “organized camps.” Health and Safety Code § 18897(b). Disabled The Division of Labor Standards and Enforcement of the State of California may issue licenses to authorize employment of persons whose “earning capacity is impaired by physical disability or mental deficiency at less than the […]

Independent Contractor Misclassification in California

Oct 18, 2018 | By Ottinger Employment Lawyers | Read Time: 16 minutes

A California independent contractor has different legal rights and obligations than an employee. The distinction between these arrangements can have dramatic consequences for workers and companies. According to an article from the Los Angeles Times, the hiring of California workers as independent contractors has recently “exploded.” The article cites a 2016 study by economists that estimates that twelve and a half million people, or 8.4% of the U.S. workforce, are now deemed, independent contractors. Generally speaking, the difference between independent contractors and employees in California is whether or not the entity paying for services has the right to control or direct the manner and means of work (tending to signify an employment relationship), or whether the person providing the services has independently made the decision to go into business for himself or herself (suggesting an independent contractor relationship). The determination of each respective status can be particularly tricky because the definitions, criteria, and factors that courts and federal and state agencies apply to determine employee or independent contractor status can vary from one context to another. For example, when an employer is determining what sort of IRS tax forms it must prepare, it must consider that the IRS looks to common law definitions of employee and independent contractor in making the determination. This method of classification is slightly different than the method used in federal cases, which applies what is usually referred to as the “economic reality” test in determining a worker’s status. However, when the question before a court is whether or not a worker is entitled to the protection of California’s non-discrimination laws, then state law, as well as another set of factors would apply in making the determination. Our CA employment lawyers will explain what you should know about California misclassification and independent contractor law. For immediate assistance, please don’t hesitate to give us a call at (415) 508-7786 or submit the short form below: Contact Us Schedule your free consultation. Independent Contractor vs. Employee in California In addition, California courts apply a different set of standards when determining whether or not a worker is an employee or an independent contractor for each case, depending on the purpose of the determination. For example, a different set of standards applies for cases under California’s workers’ compensation laws as opposed to wage and hour laws, and for purposes of determining the following: Unemployment insurance benefits, Disability insurance; and State income tax withholding. Although the specific tests applied under federal and state laws differ, the factors in those tests are often confusingly similar to each other. They may even overlap or repeat. Furthermore, the application of the relevant factors in any of these tests to the circumstances of a particular case can be extremely fact-specific. There may be some factors suggesting a California worker is an employee and others suggesting he or she is an independent contractor. It is even possible that a worker can be considered an independent contractor for purposes of IRS tax filing, but they are considered an employee under California’s wage and hours laws. The recent California Supreme Court decision in Dynamex v. Superior Court of Los Angeles helps decipher some of the confusion around what laws and factors apply in the context of wage and hour laws, but it leaves other questions unanswered. We’ll further discuss the Dynamex case and how it applies in Chapter 3 below. Independent Contractors in California Today, over 53 million people are classified as independent contractors, but many of these workers have been improperly identified. Why is this? Unfortunately, employers frequently stand to save money by misclassifying their employees as independent contractors, as it means they don’t have to provide as many benefits and protections. What’s the difference between an independent contractor and a regular employee? Independent contractors have, in theory, more “independence” than standard employees. The usual definition of an independent contractor is someone who is in business for him or herself, and not for an employer or supervisor. Traditionally, independent contractors in California have the rights to decide when and where they work, set their own fees, have multiple clients, have their own tools/materials, provide skills or expertise that is not part of a company’s usual repertoire, etc. In other words, an independent contractor is his or her own boss. A company might hire an independent contractor to perform work for the company, but that doesn’t necessarily make the contractor an employee of that company. When determining whether or not a worker is an independent contractor or an employee in California, it is important to see how much control a company has over the worker; the greater the control, the greater the likelihood the worker should be classified as an employee. The greater the independence, on the other hand, the greater the likelihood that the person is a contractor. However, despite having greater autonomy, independent contractors don’t enjoy the same rights under California law as employees. They can be fired far more easily, and aren’t entitled to overtime pay or even the minimum wage. They may be required to work long, unbroken hours without extra compensation. They are ineligible for unemployment insurance, and they are not protected by federal and state antidiscrimination laws. Employees, on the other hand, are protected by state and federal law: they must be paid at least the minimum wage, they are entitled to receive overtime, and they’re eligible for unemployment insurance. Other benefits and protections available to employees but not to independent contractors include: Retirement and health benefits; FICA tax payments; and Workers’ compensation insurance. Essentially, being misclassified as an independent contractor when you are performing the work of an employee is a serious violation of your rights. Such a misclassification has the potential to deprive you of substantial wages, not to mention basic employee rights. How do I know if I’m an independent contractor or an employee in California? You are probably an employee if: You are paid by the hour You work full-time for the company You are closely supervised by the company You received training from the company You receive employee benefits Your company […]

Employment Law Blog

Non-Compete Trends Favor Executive Mobility

Jul 5, 2018 | By Ottinger Employment Lawyers | Read Time: 3 minutes

An encouraging new trend we have seen lately is more states enacting laws or enhancing existing laws that limit the enforceability of non-compete clauses. The specific laws that apply to non-compete clauses in employment contracts vary greatly from one state to another. While some of the basic law around this area is outlined in court opinions — or “case law” — there are also legislatively enacted laws that affect what is and isn’t allowed in different states. This year, Utah, Idaho, and Colorado joined recent moves by California and Illinois to strengthen laws covering an employee’s right to switch employers. Meanwhile, case law around non-compete clauses also continues to develop. Non-compete clauses can take many forms. Generally speaking, a non-compete clause is a provision that restricts an employee from directly competing with the employer while in the employment relationship, from accepting later employment with a competitor of the employer or from going into business against the employer after the employment relationship has ended. A non-compete provision may cover only a short period after employment, or it may last many years. Non-compete agreements may or may not include provisions against “poaching” one’s colleagues (known as “non-solicitation” clauses). Geographically, they may be limited in scope to a particular neighborhood, town or city, or they may reach across an entire state or region. They may only encompass the employer’s existing clientele, or they may broadly restrict employment by the employee within an entire industry. Indeed, where these lines are drawn in a particular non-compete clause can determine whether or not the clause is considered legal and enforceable or null and void. Employers are, of course, fond of non-compete clauses because they perceive them as protecting competitive advantages and trade secrets while supporting workforce stability. For employees, though, non-compete clauses can have drastic and lasting effects on their ability to earn a living. And, for society in general, the impacts of non-competition agreements can be significant. Since they restrict people’s ability to switch jobs easily, taking their accumulated expertise and knowledge with them, they impact social and geographical mobility as well as wage and salary growth. It is conceivable that left entirely unfettered, they could hurt innovation across whole industries. Thus, like other restraints on free-trade and competition, there are limits to what various jurisdictions — and the courts — consider acceptable in a non-compete clause. Here are some recent developments: This spring, Utah enacted a new law to limit the reach of non-compete agreements in the broadcasting industry. This law adds more strength to a bill they enacted two years ago. The two-year-old law in Utah imposed, in general, a one-year post-employment time limit on non-compete agreements. With this new law, employers in the broadcasting industry may not impose non-compete agreements on employees making a salary of less than $47,476 annually. Nor may they enforce a non-compete provision against an employee who was not terminated for cause unless the employee breached their employment contract. Also this spring, Idaho moved to repeal a burdensome requirement it had enacted two years ago which required employees to prove that their change of employers did not irreparably harm their former employer. With Idaho’s repeal of Idaho Code Section 44-2704(6), the burden is once again on the former employer to show a likelihood of irreparable harm before a court may issue an injunction against the employee’s new employment. In Colorado, the legislature passed a law that allows physicians to continue treating patients with “rare disorders” even when that would otherwise constitute a violation of the physician’s non-compete agreement. This serves to clarify Colorado’s existing law which generally prohibited non-compete agreements except in certain specific cases, such as for protection of trade secrets. In addition to these statutory changes, we’ve also seen recent case law affecting non-compete agreements: In Wisconsin, non-compete clauses are governed by Wisconsin Statute 103.465. In Wisconsin, to be enforceable, the statute requires that a non-compete covenant must be “reasonably necessary for the protection of the employer,” only cover a reasonable period, only cover a reasonable territory and not be an unreasonable restraint on employees. In January this year, the Wisconsin Supreme Court held, in Manitowoc v. Lanning, that this statute, which generally refers to “covenants not to compete,” also applies to non-solicitation agreements that would prevent employees from soliciting, inducing or encouraging other employees to terminate employment with one employer to accept employment with a competitor. The court found that the statute applies to all such covenants that are restraints of trade, regardless of whether they specifically include the term “compete” in their label. Last but not least, the South Dakota Supreme court decided a case in March of 2018 entitled Farm Bureau Life Insurance v. Dolly. In that case, the court declined to enforce a non-compete clause. The clause would have prevented a former insurance salesman from selling insurance to any of Farm Bureau’s former customers, even though the former customers had approached him and he had not actually reached out to the customers or otherwise solicited them for their business. The court held that “an agreement not to solicit — rather than not to sell to — an insurer’s existing customers [was] the only reasonable interpretation of [South Dakota Codified Laws 53-9-12].” The court concluded by stating, “The general rule against contracts in restraint of a lawful profession, trade, or business is a legislative expression of public policy….”

Financial Executive

Jul 4, 2018 | By Ottinger Employment Lawyers | Read Time: < 1 minute

Financial Executive? Get the Latest Employment Law Advice from Ottinger Employment Lawyers As a financial executive, you need the latest and best information regarding Non-Compete agreements, Severance packages, Commission and Bonus Disputes and other important areas of employment law that directly affect your career. Ottinger Employment Lawyers is proud to present our special “Financial Executive” page designed exclusively for you. Make sure to check back regularly for fresh content, or signup to our mailing list for the latest updates. Five Ways to Defeat New York Non-Compete Agreements Are you trying to move from one employer to another in the same industry? A non compete agreement can ruin your plans. Learn More Severance Agreements – How to Improve the Terms Severance agreements are often open to further negotiation. Companies expect a counter offer after their initial offer. Crush Your Non-Compete Is your Non-Compete agreement holding you back? Watch this video from Ottinger Employment Lawyers to learn your rights. Watch Now Severance Packages – Key Points for Every Agreement A severance package is designed to ease your transition out of the company. But what are the key points? Learn More When do Non-Compete Agreements Apply? When do non-compete agreements apply? What about when there isn’t actually any competition? We have the answers for you. Learn More

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