Read the NYT article here: https://www.nytimes.com/2019/09/05/business/economy/recruiting-labor-force.html?action=click&module=Well&pgtype=Homepage§ion=Business
The New York Times features an interesting employment law article today reporting that employers are accommodating employees with disabilities, employees who are parents, etc., because the economy is strong and unemployment is low. The article highlights Dell's program for recruiting and supporting employees on the autism spectrum. While this program is certainly laudable and a step in the right direction, I can't help but think that employers are obligated to make these accommodations for employees with disabilities regardless of the strength of the economy and that they are now showing that the accommodations are reasonable and should be continued in any economic cycle.
Read the NYT article here: https://www.nytimes.com/2019/09/05/business/economy/recruiting-labor-force.html?action=click&module=Well&pgtype=Homepage§ion=Business
It might surprise you that in the 21st Century we frequently hear from employees who have been terminated or whose jobs have been threatened due to pregnancy. Employees are protected from pregnancy discrimination under the Pregnancy Discrimination Act, which amended Title VII of the Civil Rights Act of 1964, and must be treated the same as other employees in their ability or inability to work.
Pregnant employees covered by the Family Medical Leave Act are entitled to 12 weeks of leave. Where employers often get tripped up is assuming that leave needed by pregnant employees is not protected if the employees are not entitled to FMLA leave (for instance, if the employee has not been employed for a year or if the company does not have 50 employees within 75 miles). Employers often forget that pregnant employees are typically required to be accommodated under the Americans with Disabilities Act and that leave is a reasonable accommodation under the ADA. In other words, in almost every case, an employer should be giving reasonable leave to pregnant employees. Depending on the circumstances, reasonable leave may exceed 12 weeks.
If you are facing discrimination or termination by your employer based on your pregnancy, it would be wise to discuss the circumstances with a knowledgeable employment law attorney.
First, congratulations on having an employment contract. Most non-unionized employees are employed at-will and do not have as many rights as those with contracts. Second, consider carefully the extent of the contract breach and whether the breach is worth making waves with your employer. This must be weighed against the danger of waiver--that is, by not insisting on your rights under the employment contract, you could be considered to have waived your objections.
Employees frequently seek our help when they have not been properly paid salary, bonuses or commissions as required by contract. Employers who fail to pay their employees properly typically cannot and should not be trusted to fulfill other contractual requirements to their employees, such as guaranteed terms of employment.
If your employer has not properly paid your salary, bonus, or commissions, speak with a highly-qualified employment attorney regarding your rights under the contract. In Texas, employees are entitled to attorney's fees incurred in enforcing their rights under the employment contract when the employer has breached it. In addition, an employer who commits a material breach of an employment agreement may find itself unable to successfully enforce non-compete or other restrictive covenants against the employee.
We get a number of calls from employees who are negotiating new positions or who are already employed and are asked to sign non-compete agreements. Smart employees negotiate the agreement on the front-end, preferably with the help of an attorney who either stays in the background or actually does the negotiating, depending on the employee's seniority level with the new/existing employer. (Employers will not be surprised to hear from a high-level executive's attorney regarding a proposed non-compete and other negotiable pre-employment issues.)
Often employees bring us non-compete agreements with arguably overly broad terms that may not be enforced by a Texas court or arbitrator. We always recommend that employees not sign a non-compete agreement thinking that it will be deemed unenforceable. One reason for this is that Texas law regarding non-compete agreements frequently changes. An agreement that is not enforceable today may be in the future. Another reason is that a Texas court can reform the non-compete agreement to make it reasonable. It is better to negotiate reasonable geographic and time limits in advance and preferably while the employer and employee are in the honeymoon phase. Even if the non-compete should be considered overly broad and therefore unenforceable (absent reformation), do you really want to be required to present it to your next employer and/or have the new employer threatened with a lawsuit? Most employers want their agreements to be enforceable; if a knowledgeable attorney explains to them the issues with their non-compete agreement, they are typically open to revising, which is in everyone's best interest.
Employees who are starting employment have more leverage than those currently employed who are asked to sign non-compete agreements. In some cases employees have reported to us that they have been threatened with their jobs if they don't sign and not allowed to negotiate the non-compete agreement at all. Depending on how unreasonable the non-compete agreement is, these employees sometimes consider making a job change, particularly if they were already considering a change and if the non-compete would keep them from working in their field for a number of years. Even if the employer will not negotiate the non-compete, it is helpful and worthwhile to discuss the enforceability of lack thereof with an attorney prior to signature. Many quality employment attorneys in Dallas offer a flat-fee review of non-compete agreements or offer a retainer and reasonable hourly rate for cases in which negotiation with the employer is desirable.
We get this question frequently so I thought I might address it here. Often, employees assume that there is a cause of action called "wrongful termination" and that if the employer does not have good cause to terminate then the employee should not have been fired. If only that were the law. Unfortunately for employees, absent an employment contract, a termination is only "wrongful" in a meaningful legal sense if the employee is terminated for an illegal reason, such as age, race, disability, gender, pregnancy, etc. or for opposing or complaining of discrimination, complaining about unpaid overtime, for using FMLA leave, or for refusing to commit criminal acts (in Texas--many states have better whistleblower protection). This is not an exhaustive list but hits on the most common illegal reasons for terminating an employee.
Employees who believe they have been wrongfully terminated would do well to give deep thought to what really caused their termination. We tend to ask employees, "What do you think is the real reason for your termination?" When the real reason in the employee's heart of hearts is discrimination or retaliation, we are more interested in taking the case. When the real reason is "the supervisor never liked me," "the supervisor wanted to bring in his/her favorite past employee/friend/son/daughter," "the employer mistakenly believed I did something wrong," etc., we are less likely to be interested in the case.
Often, employees who are racial minorities or who have disabilities want to believe very strongly that they have not been discriminated against, and they tend to turn a blind eye when discrimination is staring them in the face. This is completely understandable, but it is helpful to speak to a high-quality employment attorney to explore questions such as whether white employees were treated the same as African American employees in discipline, for example, or whether the employer just assumed that an employee with cancer or another disability could no longer do his or her job. In other words, comparing with employees not in the protected category tends to tease out hidden discrimination. It is also helpful to discuss with an attorney whether there are issues regarding unpaid overtime. Even if the employee does not have a cause of action regarding the termination, an employment attorney may be able to assist with getting the employee's unpaid overtime and penalties.
Often employees will have very little notice when they are being severed from their positions. One day they are happily going about their jobs, and the next they are presented a severance agreement and sometimes even walked out of the building (and cut off from email) without being given the chance to say goodbye to their long-time colleagues and friends. For many employees, they have served years and even decades in their positions, and they leave the employer with their heads spinning and unsure what to do.
Dealing with the severance agreement often takes a back burner to dealing with the immediate emotional and financial issues facing any employee who loses a job. This is completely understandable, but employees should be aware that they will typically have just 21 days to review the severance agreement. In some cases, the employee may have only a few days to review (this is allowed when the employee is under 40), and in some cases the employee will have more time (45 days), such as when releases are sought from multiple employees. In any case, it is best to get a review of the severance agreement earlier rather than later so that an attorney will have time to evaluate and assist if needed.
Employees will typically be waiving the majority, if not all, of their rights by signing the severance agreement. In some cases, unemployment compensation and workers' compensation claims will be carved out of the agreement. While most employees read and take seriously the severance agreement's advice to consult an attorney, on occasion, we talk with employees who for some reason believed that they could sign the severance agreement and still sue the employer for discrimination or other unfair termination. In most cases this will not be possible.
Employees who are fired or laid off should discuss their options with a reputable employment law attorney to explore whether the termination or layoff was due to unlawful factors, such as age, race, disability, gender, pregnancy, protected leave, or retaliation for complaining of discrimination or unlawful behavior on the part of their employer, among other unlawful reasons. If so, the attorney will likely have leverage to negotiate a greater severance amount for the employee. Even without discrimination or other legally protected activity, a skilled attorney may be able to get additional severance for an employee, especially if the employee was highly valued at his or her place of employment and if the powers-that-be felt badly about the separation.
In addition to having an attorney assist with negotiating the actual severance amount, it is wise to understand and negotiate the non-economic terms of the severance agreement. For instance, what happens if an employee accidentally tells someone about the severance? (In most cases, they will have to pay the severance amount back to the employer and may even be liable for the employer's attorney's fees in collecting.) Does the severance agreement contain an additional non-compete, and is that non-compete enforceable? What will the employer tell prospective employers about the separated employee and reason for separation? Will the employer agree not to contest unemployment benefits? Will the employer agree to waive enforcement of a prior-existing non-compete as part of the severance? In some cases these "non-economic" considerations have more actual economic impact than the severance amount itself.
I personally have never encountered a client who was sorry that they had an attorney assist them with negotiating a severance agreement. In a few rare cases the amount offered will be high enough that the employee will accept the offer without negotiating, but even in those cases (and probably especially in those cases, since more is at stake) it is wise to have an employment attorney review the severance agreement to ensure that all is in order. Many local attorneys can offer a severance review for a reasonable flat fee and can offer negotiations with the employer for a reasonable hourly rate and retainer. In some cases, where the facts are particularly egregious, the employment attorney may be able to take the case on contingency so that the employee does not have to pay out-of-pocket.
General enforceability of Texas non-competes
Texas law generally disfavors non-competes as a restraint on trade, but recent Texas Supreme Court decisions and the adoption by Texas of the Uniform Trade Secrets Act bring Texas closer to those jurisdictions generally favoring restrictive covenants.
Statutory requirements for Texas non-competes
To be enforceable under Texas law, a non-compete must meet the requirements of Section 15.50(a) of the Texas Business and Commerce Code:
· The non-compete must be “ancillary to or part of an otherwise enforceable agreement.”
· The non-compete must contain reasonable limitations as to time, geographical area, and scope of activity.
· The non-compete must not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer.
Sufficient consideration for Texas non-competes
Texas case law clarifies that non-competes must be supported by sufficient consideration. Because Texas is an at-will employment state, an offer of at-will employment is illusory and is not sufficient consideration. The most common form of consideration for non-competes in Texas is giving the employee access to confidential information. See Alex Sheshunoff Mgmt. Serv’s, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006); Mann Frankfort Stein & Lipp Advisors v. Fielding, 289 S.W.3d 844 (Tex. 2009).
Best practice: The agreement should state that employees will receive confidential information even if the employee is terminated immediately after hire.
· Sufficient consideration can consist of specialized training. See id.
· Stock options can also constitute sufficient consideration. Marsh USA Inc., v. Cook, 354 S.W.3d 764 (Tex. 2011).
Reasonable limitations as to time
· Two years is typically deemed to be a reasonable time period for restriction in Texas. Brink's Inc. v. Patrick, No. 3:14-CV-775-B, 2014 WL 2931824, at *5 (N.D. Tex. June 27, 2014).
· Texas courts have allowed restrictions as long as five years. See, e.g., Johnson Serv. Group, Inc. v. France, 763 F.Supp.2d 819, 826 (N.D. Tex. 2011) (“two to five years has repeatedly been held as a reasonable time limitation”); Salas v. Chris Christensen Systems Inc., No. 10–11–0107–CV, 2011 WL 4089999, at *19 (Tex. App.—Waco Sept.14, 2011, no pet.) (“we cannot say that the Agreement's five-year restraint is per se unreasonable”); Amey v. Barrera, No. 13–01–0130–CV, 2004 WL 63588, at*6 (Tex. App.—Corpus Christ–Edinburgh Jan. 15, 2004, no pet.) (upholding a non-compete agreement that prohibited the defendant from working in “Corpus Christ and surrounding area for 5 years” as reasonable and enforceable).
· Despite the possibility of enforcing a five-year restriction, the better practice is to use the more reasonable time period of two years.
Reasonable limitations as to geography
· Texas courts have generally upheld non-compete agreements that prevent an individual from performing similar services to those he provided in territories in which s/he previously worked. See e.g., Johnson Serv. Group, Inc. v. France, 763 F.Supp.2d 819, 826 (N.D.Tex. 2011) (“Texas courts have upheld geographical limitations preventing competition within a metropolitan area, as the 50–mile limitation essentially does here.”); Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 794 (Tex. App.—Houston [1st. Dist.] 2001, no pet.) (upholding a reformed noncompete covenant that prohibited a former manager from working in those counties where he previously oversaw operations); Propath Services, LLP v. Quest Diagnostics Clinical Laboratories, Inc., No. 3:00–CV–2391–H, 2002 WL 535056, at *10 (N.D.Tex. Apr. 9, 2002) (holding that a covenant which prohibited a party from acting in forty-eight Texas counties was not unreasonable because the defendants marketed the relevant services within those counties); Daily Instruments Corp. v. Heidt, No. H–13–2189, 2014 WL 710683, at *12 (S.D.Tex. Feb.21, 2014) (“Geographic restrictions are reasonable to the extent they are commensurate with the territory in which the employee worked during his employment with the employer.”).
· Texas courts will not uphold non-competes restricting employees from working anywhere the employer had commercial activity if the particular employee did not work in the expanded area. Cobb v. Caye Publishing Group, 322 S.W.3d 780 (Tex. App.—Ft. Worth 2010, pet. filed) (covenant not to compete cannot be enforced outside of area where the employee worked despite the employer’s commercial activity).
Reasonable limitations as to scope of activity
· In determining whether the scope of activity is reasonable, Texas courts will consider “whether the defendant is restricted from earning a living if the agreement not to compete is enforced.” Evans Consoles Inc. v. Hoffman Video Sys., Inc., No. 3:01-CV-1333-P, 2001 WL 36238982, at *8 (N.D. Tex. Dec. 6, 2001) (citing American Express Financial Advisors, Inc. v. Scott, 955 F.Supp. 688, 693 (N.D. Tex. 1996); French v. Community Broadcasting of Coastal Bend. Inc., 766 S.W.2d 330, 334 (Tex. App.—Corpus Christi 1989)).
· If the ban is not industry-wide, the non-compete is more likely to be enforceable. Brink's Inc. v. Patrick, No. 3:14-CV-775-B, 2014 WL 2931824, at *5 (N.D. Tex. June 27, 2014).
What happens if the non-compete is overly broad?
If a Texas Non-Compete is overly broad, Texas courts may reform the non-compete restrictions and then can award the employee’s attorney fees. For this reason, it is advised to use less restrictive terms for time, geography, and scope.
Which employees should sign a Texas non-compete?
While it may be tempting to ask all employees to sign a non-compete, only those employees who truly present a threat to the employer should be asked to sign for the following reasons:
· The downside to asking low-level employees to sign a non-compete is that it is unlikely that they will possess sufficient confidential information (or other adequate consideration) to meet the requirements of Section 15.50(a) of the Texas Business and Commerce Code.
· In addition, employers may waive their rights to enforce the non-compete against more important employees if they do not enforce the non-compete across the board.
· Companies such as Jimmy Johns have recently come under fire for requiring employees as junior as sandwich makers to sign non-competes: http://www.nytimes.com/2014/10/15/upshot/when-the-guy-making-your-sandwich-has-a-noncompete-clause.html?_r=0
Physicians in Texas are subject to special rules for non-competes, including allowing the physician access to certain patient files and buy-out rights. I will address these rules in an upcoming post.
Massachusetts joins California, Connecticut, Washington, D.C. and several cities in requiring employers to provide paid sick leave to employees after a voter referendum passed with 60 percent of voters in favor. The full text of the Massachusetts Paid Sick Leave Initiative can be found here. The Massachusetts law will require up to 40 hours weeks of paid sick leave where employers have 11 employees or more and will require up to 40 weeks of unpaid sick leave for employers with fewer than 11 employees. The law will go into effect July 1, 2015.
Both part-time and full-time Massachusetts employees of the larger employers (11 or more employees), will earn one hour of paid sick leave for every 30 hours of work. Leave can be taken to care for a family member, to attend routine medical appointments for self or family member, or to deal with domestic violence for the employee or child. Up to 40 hours of unused sick time may be rolled over into the following year. Similar unpaid leave will be earned by employees of smaller employers.
Employees are required to give advance notice of their need for leave when possible and may be required to present documentation to the employer regarding the leave. Employees cannot be penalized by employers for using sick leave as allowed under the law.
Responding to trend of cities/municipalities in states including California and New Jersey passing their own sick-pay laws, ten states, including Georgia, Wisconsin, Louisiana, North Carolina, Tennessee, Mississippi, Kansas, Arizona, Indiana, and Florida have passed laws prohibiting local jurisdictions within the state from passing such laws.
Considering that the United States is one of only 22 wealthy nations that does not guarantee paid sick leave to workers, employers and employees should not be surprised to see this trend continue. According to the Huffington Post, "nationally, only one in three workers in the bottom quarter of the wage scale has paid sick leave, while only one in four part-time workers does," so such measures will likely have the most impact on lower-income employees.
CNN Money reports here that post-recession, it is taking workers 44 and older five weeks longer than younger workers to find a new position. Prior to the recession, older employees took less time (4.5 weeks less) than younger workers to find a new job. The article states that "strict laws make employing older folks more expensive."
I would suggest that the more likely explanation is that companies who dealt with layoff requirements under the Age Discrimination in Employment Act (ADEA), including strict ADEA notice requirements during the downturn, consciously or unconsciously discriminated in hiring once it picked back up. It is more difficult to prove hiring discrimination than discrimination against employees, so older workers facing such discrimination may have little recourse.
Another possible explanation is that employers post-recession are looking to hire employees at lower salaries, and older and more experienced employees are simply asking for more money and thus taking longer to find work. Still, as the economy improves one would expect these statistics to revert back to normal unless employers are simply afraid of dealing with ADEA compliance/and or afraid of lawsuits by older employers. For information on dealing with ADEA compliance requirements or if you have been terminated because of your age, contact Dallas employment attorney Michelle MacLeod at the MacLeod Law Firm by emailing firstname.lastname@example.org.
Michelle is a Dallas employment attorney representing executives and professionals in severance negotiations, employment agreement negotiations, and non-compete issues, as well as in employment litigation and arbitration.