by Mark P. Carey | Jan 15, 2021 | Mark Carey, Noncompetition & Nonsolication Agreements, Podcast, Severance, Severance Negotiations
1. THINK OF YOUR SEPARATION/SEVERANCE OFFER AS A NEGOTIATION.
2. REVIEW WHAT YOU ARE BEING OFFERED – USUALLY MONEY.
3. CONFIRM THAT YOU ARE BEING OFFERED EVERYTHING YOU ARE ENTITLED TO
4. ASK FOR A COPY OF YOUR PERSONNEL FILE – YOU ARE LEGALLY ENTITLED TO IT.
5. CONFIRM WHETHER YOU HAVE AN ERISA GROUP BENEFITS PLAN WHICH COULD INCLUDE SEVERANCE BENEFITS.
6. CONSIDER WHETHER YOU MIGHT HAVE ANY LEGAL CLAIMS AGAINST YOUR EMPLOYER.
7. REQUEST TO BE RELEASED FROM ANY NON-COMPETE, NON-SOLICIT, OR OTHER RESTRICTIVE COVENANTS (IF ANY APPLY TO YOU)
8. REVIEW NON-DISPARAGEMENT PROVISIONS AND ASK THAT THEY LIKEWISE PROTECT YOU.
9. CONTROL YOUR FUTURE REFERENCE.
10. ARBITRATION CLAUSES.
For more information, please contact Carey & Associates, P.C. at 203-255-4150, www.capclaw.com or email at info@capclaw.com.
The content of this website is provided for information purposes only and does not constitute legal advice nor create an attorney-client relationship. Carey & Associates, P.C. makes no warranty, express or implied, regarding the accuracy of the information contained on this website or to any website to which it is linked to.
by Mark P. Carey | Oct 23, 2020 | Covid-19, Employment Contracts, Mark Carey, Newsletter, Noncompetition & Nonsolication Agreements, Podcast
[TRANSCRIPT]
You’re a free agent and your noncompetition agreement is void! That should make you feel less stressed about getting your next job in the very industry you have spent so many years cultivating, especially during this pandemic. Yes, I know your employer made you sign a noncompetition agreement when you were hired, but Covid-19 has changed everything.
I did not like noncompetition agreements before Covid-19 and I dislike them even more now seven months into this pandemic. According to the latest jobs report, click HERE, “the total number of people claiming benefits in all programs for the week ending September 19 was 25,505,499…” If you are a judge presiding over a complaint brought by an employer attempting to enforce a noncompetition agreement, would you enforce it against the unemployed employee in the face of these jobless numbers? Answer, No! Regardless of the law related to noncompetition agreements (restrictive covenant), no judge will want to prevent employees terminated without cause from getting a new job. Who is going to pay for the employee’s food? Who is going to pay for the employee’s mortgage? How is she going to buy medication or diapers?
The time has now come to confront the idiotic, senseless and self-serving practice followed by 50% of all employers to force noncompetition agreements on vulnerable employees, especially during this pandemic. We need to protect employees and the income they need right now to survive. We also need to confront employers and demand they stop using noncompetition agreements altogether because they are abusive and unnecessary. Employers are already overprotected by making employees sign Confidentiality and Proprietary Information Agreements, which protect against the disclosure of company trade secrets to third party employers.
NONCOMPETE MUST BE VOIDED DUE TO IMPOSSIBILITY
What does impossibility mean in relation to noncompetition agreements during the Covid-19 pandemic? Courts generally apply the doctrine of impossibility whenever there is an interference in achieving the purpose of the contract between the parties that is beyond their control and it was never foreseen prior to entering into the contract. “A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.” Roy v. Stephen Pontiac-Cadillac, Inc., 15 Conn. App. 101, 103-04 (1988) (internal citations omitted.) When impossibility is raised, “the court is asked to construct a condition of performance based on changed circumstances, a process which involves at least three reasonably definable steps. First, a contingency—something unexpected—must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable.” Id. at 104, quoting J. Calamari & J. Perillo, Contracts (3d Ed.) § 13-1, p. 537; see also Hess v. Dumouchel Paper Co., 154 Conn. 343, 349-52 (1966)
All employers “intentionally” manipulate employees to sign noncompete agreements in order to get the job, i.e. take it or leave it. Employers typically seek to prevent employees from working for a competitor for a period of twelve months after termination. Bam! A pandemic hits the U.S. and the world. That’s the impossibility event. Massive layoffs follow, covering nearly 40 million people. By the way, an estimated 157.76 million people work in the U.S. Of course we want the economy to return to normal as quickly as possible, and those unemployed workers are part of that economy. If 50% of all employers use noncompetition agreements, then we have a major economic obstruction caused by self-serving employers who deliberately seek to prevent these unemployed workers from earning a living. Sounds unfair, because it is. It is impossible for any employee to comply with the one sided noncompetition agreement because they need to put food on the table and just survive. That is the argument I am making and will make in every court case my firm becomes involved with. This is a public policy crisis plain and simple. There exist no current Covid-19 court decisions on this issue, but there are a few cases now in the pipeline. The public, the politicians and the courts are faced with a major public policy dilemma. Should the courts protect employers for the sake of protection alone or can they help employees by overriding noncompetition agreements entirely. I believe the scales tilt heavily in favor of employees, employed and unemployed alike.
WHAT IS A NONCOMPETE AGREEMENT IN 2020?
It is a promise the employee allegedly makes, without his/her consent, with their employer that after they are terminated, they need to refrain from accepting employment in a similar line of work, with a competitive company, or establishing a competing business, for a specified period in a certain geographical area. A non-compete clause ancillary to a valid agreement is unreasonable in restraint of trade and void as a matter of law if: (1) the restraint is greater than is needed to protect the business and goodwill of the employer; or (2) the employer’s need is outweighed by the hardship to the employee and the likely injury to the public. In other words, if you are unable to earn a living because you are sitting on the bench during the noncompete period, without pay, solely because of the employer’s self-serving noncompete, then a Court will void the agreement. The employer is already protected from the employee because the employer forced the vulnerable employee to sign the confidentiality agreement, a.k.a. Confidentiality and Proprietary Information Agreement, which protects against disclosure of company trade secrets to third party employers.
WHAT IS THE BUSINESS INTEREST?
The argument in favor of enforcing noncompete agreements is primarily to protect the company’s trade secrets, client relations, customer goodwill, employee training. However, restraining competition is not a legitimate and enforceable business interest. As I have repeatedly stated, the employer is already protected against disclosures of trade secrets through the Confidentiality and Proprietary Information Agreement. The employer’s argument that a noncompete agreement is necessary to prevent the disclosure of trade secrets to third party employers is simply abusive and overreaching.
NONCOMPETE AGREEMENTS VIOLATE ANTITRUST LAW
I argue that noncompetition agreements violate Section 1 of the Sherman Act because every noncompete agreement is an unlawful contract to restrain trade. Section 2 of the Sherman Act makes it illegal to “monopolize, or attempt to monopolize, …any part of the trade…” (The Sherman Act, 15 U.S.C.§ 1)
You will never hear an argument in any litigation over the attempted enforcement of an employee noncompete agreement that the enforcing employer was seeking to restrain competition of its competitor businesses. Such a statement and action would constitute an unlawful antitrust action. But we know in reality, that is exactly what employers are doing. This conclusion is further supported by the recent statistics that nearly 49% of all employers use noncompetition agreement for some or all of their employees, a doubling of the amount from 2014. Noncompetition Agreements are a tool to kill competition, plain and simple. Do not fall for the argument about protecting the company from rogue employees seeking to damage the employer. This accusation, albeit true in the rarest of circumstances, is specious given the employer made the employee sign an agreement to protect the employer’s trade secrets, the Confidentiality and Proprietary Information Agreement.
For more information about this topic, please contact our employment attorneys at Carey & Associates, PC at 203-255-4150 or email to info@capclaw.com. Thank you for listening.
by Mark P. Carey | Oct 21, 2020 | Blog, Covid-19, Employment Contracts, Mark Carey, Noncompetition & Nonsolication Agreements
You’re a free agent and your noncompetition agreement is void! That should make you feel less stressed about getting your next job in the very industry you have spent so many years cultivating, especially during this pandemic. Yes, I know your employer made you sign a noncompetition agreement when you were hired, but Covid-19 has changed everything.
I did not like noncompetition agreements before Covid-19 and I dislike them even more now seven months into this pandemic. According to the latest jobs report, click HERE, “the total number of people claiming benefits in all programs for the week ending September 19 was 25,505,499…” If you are a judge presiding over a complaint brought by an employer attempting to enforce a noncompetition agreement, would you enforce it against the unemployed employee in the face of these jobless numbers? Answer, No! Regardless of the law related to noncompetition agreements (restrictive covenant), no judge will want to prevent employees terminated without cause from getting a new job. Who is going to pay for the employee’s food? Who is going to pay for the employee’s mortgage? How is she going to buy medication or diapers?
The time has now come to confront the idiotic, senseless and self-serving practice followed by 50% of all employers to force noncompetition agreements on vulnerable employees, especially during this pandemic. We need to protect employees and the income they need right now to survive. We also need to confront employers and demand they stop using noncompetition agreements altogether because they are abusive and unnecessary. Employers are already overprotected by making employees sign Confidentiality and Proprietary Information Agreements, which protect against the disclosure of company trade secrets to third party employers.
Noncompete Must Be Voided Due to Impossibility
What does impossibility mean in relation to noncompetition agreements during the Covid-19 pandemic? Courts generally apply the doctrine of impossibility whenever there is an interference in achieving the purpose of the contract between the parties that is beyond their control and it was never foreseen prior to entering into the contract. “A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.” Roy v. Stephen Pontiac-Cadillac, Inc., 15 Conn. App. 101, 103-04 (1988) (internal citations omitted.) When impossibility is raised, “the court is asked to construct a condition of performance based on changed circumstances, a process which involves at least three reasonably definable steps. First, a contingency—something unexpected—must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable.” Id. at 104, quoting J. Calamari & J. Perillo, Contracts (3d Ed.) § 13-1, p. 537; see also Hess v. Dumouchel Paper Co., 154 Conn. 343, 349-52 (1966)
All employers “intentionally” manipulate employees to sign noncompete agreements in order to get the job, i.e. take it or leave it. Employers typically seek to prevent employees from working for a competitor for a period of twelve months after termination. Bam! A pandemic hits the U.S. and the world. That’s the impossibility event. Massive layoffs follow, covering nearly 40 million people. By the way, an estimated 157.76 million people work in the U.S. Of course we want the economy to return to normal as quickly as possible, and those unemployed workers are part of that economy. If 50% of all employers use noncompetition agreements, then we have a major economic obstruction caused by self-serving employers who deliberately seek to prevent these unemployed workers from earning a living. Sounds unfair, because it is. It is impossible for any employee to comply with the one sided noncompetition agreement because they need to put food on the table and just survive. That is the argument I am making and will make in every court case my firm becomes involved with. This is a public policy crisis plain and simple. There exist no current Covid-19 court decisions on this issue, but there are a few cases now in the pipeline. The public, the politicians and the courts are faced with a major public policy dilemma. Should the courts protect employers for the sake of protection alone or can they help employees by overriding noncompetition agreements entirely. I believe the scales tilt heavily in favor of employees, employed and unemployed alike.
What is a Noncompete Agreement in 2020?
It is a promise the employee allegedly makes, without his/her consent, with their employer that after they are terminated, they need to refrain from accepting employment in a similar line of work, with a competitive company, or establishing a competing business, for a specified period in a certain geographical area. A non-compete clause ancillary to a valid agreement is unreasonable in restraint of trade and void as a matter of law if: (1) the restraint is greater than is needed to protect the business and goodwill of the employer; or (2) the employer’s need is outweighed by the hardship to the employee and the likely injury to the public. In other words, if you are unable to earn a living because you are sitting on the bench during the noncompete period, without pay, solely because of the employer’s self-serving noncompete, then a Court will void the agreement. The employer is already protected from the employee because the employer forced the vulnerable employee to sign the confidentiality agreement, a.k.a. Confidentiality and Proprietary Information Agreement, which protects against disclosure of company trade secrets to third party employers.
What is the Business Interest?
The argument in favor of enforcing noncompete agreements is primarily to protect the company’s trade secrets, client relations, customer goodwill, employee training. However, restraining competition is not a legitimate and enforceable business interest. As I have repeatedly stated, the employer is already protected against disclosures of trade secrets through the Confidentiality and Proprietary Information Agreement. The employer’s argument that a noncompete agreement is necessary to prevent the disclosure of trade secrets to third party employers is simply abusive and overreaching.
Noncompete Agreements Violate Antitrust Law
I argue that noncompetition agreements violate Section 1 of the Sherman Act because every noncompete agreement is an unlawful contract to restrain trade. Section 2 of the Sherman Act makes it illegal to “monopolize, or attempt to monopolize, …any part of the trade…” (The Sherman Act, 15 U.S.C.§ 1)
You will never hear an argument in any litigation over the attempted enforcement of an employee noncompete agreement that the enforcing employer was seeking to restrain competition of its competitor businesses. Such a statement and action would constitute an unlawful antitrust action. But we know in reality, that is exactly what employers are doing. This conclusion is further supported by the recent statistics that nearly 49% of all employers use noncompetition agreement for some or all of their employees, a doubling of the amount from 2014. Noncompetition Agreements are a tool to kill competition, plain and simple. Do not fall for the argument about protecting the company from rogue employees seeking to damage the employer. This accusation, albeit true in the rarest of circumstances, is specious given the employer made the employee sign an agreement to protect the employer’s trade secrets, the Confidentiality and Proprietary Information Agreement.
If you would like more information about this topic please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150 or email to info@capclaw.com.
by Mark P. Carey | Aug 20, 2020 | Employment Contracts, Mark Carey, Noncompetition & Nonsolication Agreements, Podcast
In this edition of the Employee Survival Guide you will learn the real truth about why employers use noncompetition agreements and the strategies that we employ to remove these unwanted self-serving employment agreements for our clients.
by Elizabeth Swedock | Apr 29, 2020 | Arbitration, Arbitration Agreements, Blog, Employment Contracts, Liz Swedock, Noncompetition & Nonsolication Agreements, Severance Negotiation
By Liz Swedock
Most at-will employees who have been recently terminated are given a “Separation” or “Severance” offer from their (now) former employer, in the form of a contract (or packet). This post is intended to give you a few pointers of what to look out for in such agreements.
Remember – this is not legal advice for the individual! This is just a general guide for common issues we encounter. If you have any specific questions about your own separation contract, please call us!
1. Think of your separation/severance offer as a negotiation.
Most employees are not entitled to severance. There is no such thing as legally required “two weeks” pay or anything like that. However, most of the time employers offer terminated employees severance anyway.
Why do they do this? Because they want you to sign a legal release, which is a contractual agreement that you are waiving any rights or grounds you might have to bring a lawsuit against your employer. Your separation/severance packet is this legal release.
So, what does this mean? It means they are offering you something because they want you to sign that release. This is a tit-for-tat. Don’t be afraid to ask for more before you sign.
2. Review what you are being offered – usually money.
As noted, often at-will employees are not legally entitled to a specific amount of severance from their employer. The first element you should think about, before you sign, is whether they are offering you enough in exchange for what they want from you – that legal release.
There might also be other components in your separation/ severance offer, such as continuation of health care or other benefits, or stock vesting. Start by reviewing your agreement carefully to see what they are offering you.
3. Confirm that you are being offered everything you are entitled to.
Review your employee handbook and any other documents you signed at any point during your employment, whether when you first started or while you worked there.
You are always entitled to be paid out for any accrued sick time, vacation time, or any other form of PTO your company offers. You are also entitled to any earned wages, typically referred to as your “last paycheck.” You must be paid for all this time by your next usual pay period.
Review your documents to confirm whether there are any contractual or established policies regarding termination, separation, or severance. For example, your employer might be required to provide you with a notice period before they can terminate you. This might be days, weeks, or months. A notice period could be detailed in your individual employment documents, or in your company’s general documents, such as the employee handbook.
4. Ask for a copy of your personnel file – you are legally entitled to it.
All you need to do is send an email. It could be to HR or your own supervisor. Your personnel file will contain all of the documents you signed with your employer, so this can be particularly useful when you have been employed for a while and can’t remember if you kept copies of everything.
5. Confirm whether you have an ERISA group benefits plan which could include severance benefits.
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry. Sometimes employers also utilize ERISA plans for severance benefits.
If you are unsure, ask your employer and there is also a free website where you can search for your company name – https://freeerisa.benefitspro.com . You have to make an account, but it is actually free.
6. Consider whether you might have any legal claims against your employer.
If you have a valid legal claim against your employer, this is a huge source of leverage as you negotiate your separation/ severance offer.
Remember, (most of the time) this is a pretty simple exchange. They are offering you something (usually money) in exchange for your agreement to drop any potential legal claims you might have, even if you don’t have any. This boils down to mean that they are potentially offering you free money in exchange for nothing if you have no legal claims. Employers do this simply for peace of mind (and sometimes for reputational reasons in the industry).
If you do have a legal claim, that can be a game-changer in a separation negotiation. At that point, you have to consider the elements on a scale – the value of your legal claim on one side, against the value of the legal release your employer wants, on the other side. Bottom line, it means your company might be willing to offer you much more separation/ severance pay in exchange for you signing the legal release.
If you think you might have a claim, we encourage you to call us to discuss.
7. Request to be released from any non-compete, non-solicit, or other restrictive covenants (if any apply to you).
If you are subject to any type of non-compete, non-solicit, or other restrictive covenants, now is the time to request to be released. Remember – these are simply contractual agreements, and your employer can agree to release you at any time. Even if your employer is not legally required to release you, they are often willing to discuss the option, and/or might agree to reduce the restrictiveness of such covenants. This is part of the negotiation.
Even if such covenants are not spelled out in your separation/ severance offer – they might still apply to you if your separation/ severance offer “incorporates by reference” a prior contract. Sometimes, if an employee signed a non-compete while they were employed, the separation/ severance offer might say something like “Employee agrees that Employee’s Employment Agreement is expressly incorporated by reference into this Agreement as if set forth fully herein.” This means that every single restriction in your employment agreement still applies to you, even after you sign the new separation/ severance offer. Be aware.
8. Review non-disparagement provisions and ask that they likewise protect you.
Many separation/ severance offers contain non-disparagement clauses, which will say something along the lines of “employee agrees not to make any statements which disparage the company or are in any way harmful to the reputation of the company.” These provisions are very broad and much more broad than the legal definitions of defamation or slander. A single angry comment on Facebook, for example, could be a violation of this provision. If you sign an agreement that contains this, be aware that you should avoid any negative commentary about your former employer, including online.
Likewise, you can ask for the same protection for yourself – that the employer commits not to make any disparaging, damaging, or negative statements about you in the future. Again, don’t be afraid to negotiate.
9. Control your future reference.
Similar to non-disparagement, you also have the option to ask for language which will control what your now former employer can say about you when you need future potential employers to call them for a reference. The exact language is up to you, but we often request a provision that will only allow the employer to confirm your dates of employment, and position or title held. You can agree or not agree to allow the former employer to give out your salary information.
10. Arbitration clauses.
Many separation/severance offers include a clause which states that any dispute under the agreement must be brought in arbitration. Like the rest of the provisions, it is ultimately up to you what you are willing to sign, but we typically encourage clients to fight against these provisions. It can be counter-intuitive, but if a dispute arises, our experience has demonstrated that employees can often have much more leverage without arbitration restrictions.
For more information about this article, please contact our employment attorneys at Carey & Associates, P.C. at info@capclaw.com or call 203-255-4150.
by Mark P. Carey | Apr 21, 2020 | Age Discrimination, Age discrimination, Blog, Disability Discrimination, Discrimination, Employment Contracts, Family Medical Leave Act, Gender Discrimination, Newsletter, Noncompetition & Nonsolication Agreements, Pregnancy Discrimination, Race & National Origin Discrimination, Retaliation Discrimination, Severance, Severance Negotiations, Sexual & Gender Discrimination
A record 22 million people were laid off in one month since the coronavirus pandemic shut down large portions of the U.S. economy as of the week ending April 16, according to the Wall Street Journal. The estimated current employment rate is 13.5%. But were all those layoffs really due to the corona virus or did employers use the pandemic as cover to get rid of employees for other reasons, maybe unlawful reasons. This is the big question many unemployed Americans are now asking. Please review the following frequently asked questions and see which applies to you.
FAQ: Were you recently furloughed, laid off, demoted or terminated due to COVID, but your co-workers remain employed?
FAQ: Is your Employer still operating and profitable, yet you were laid off or had your compensation reduced due to a business decision to reduce costs or eliminate your job position?
FAQ: Were other younger employees retained, while you were furloughed, laid off, demoted or terminated?
FAQ: Were you laid off or terminated and not offered any severance or insufficient severance?
FAQ: Were your unemployment benefits interfered with?
FAQ: If you were unable to continue to work because you were sick, because a family member was sick or because you have young children at home, were you permitted to take FMLA leave or were you instantly laid off or terminated?
FAQ: Were you the only one furloughed, laid off, demoted or terminated or due to COVID, even though your Employer is calling it a “reduction in force”?
FAQ: Do you think your Employer was looking for an excuse to get rid of you?
If you answered yes to any of the above, your seemingly straightforward COVID-based termination may be unlawful. Unfortunately, the majority of Employees in the U.S. are “at-will”. This means that employees are at the absolute and arbitrary whim of their employers and they may be demoted, terminated or otherwise treated adversely for any reason or no reason at all. The exception to the anything goes rule of an at-will employment arrangement is that employees may NOT be treated unlawfully.
If you have recently suffered an adverse change in the terms and conditions of your employment amidst the COVID-19 crisis, you may still have viable claims against your employer for unlawful or wrongful treatment. COVID-19 is not and should not be a catch-all excuse or defense for employers’ bad behavior and even a crisis of this magnitude does not relieve employers of their obligation to treat employees lawfully at all times. If something does not feel right to you about the circumstances of your change in employment, it is prudent to speak to an employment attorney and review the fact pattern surrounding your work situation. It is in your best interest to discern whether your employer may be using COVID-19 as a sham or cover for otherwise unlawful behavior.
Unlawful or wrongful acts that may entitle an employee to monetary damages for claims against their employer will usually fit in one of three scenarios. Employers actions can be shown to be unlawful if they:
1) violate or fail to comply with any legislative mandate, act or
statute;
2) breach a valid contract or agreement; or
3) discriminate, harass or retaliate based on a protected class trait.
COVID-19 does not give employers a green light to violate laws, ignore contracts or discriminate against employees, and a termination under any one of those scenarios might be a wrongful one.
Scenario 1 – Statutory Violations:
Employers must abide by all existing laws and statutes, especially as they apply to the COVID-19 pandemic. It is the employers’ obligation to stay abreast of and comply with all new mandates imposed and legislation enacted in response to COVID-19, including, but not limited to enhanced FMLA, the CARES Act and the expansion to the Unemployment Compensation Act. This is in addition the existing laws that have long protected employees from discrimination and retaliation such as Pregnancy, Sex Harassment, Sexual Stereotype, Disability, Age, Whistle Blowing and Family Medical Leave, to name just a few. Thus, any analysis of whether your termination was lawful and proper should begin with a review of the facts relative to the controlling law and any revisions and updates to those laws. If you identify any facts in the events leading up to your termination that just do not seem right, you may have uncovered the hidden basis for your termination. For example, you got a good review last fall and received a bonus in January, but in March you were terminated without explanation. The small window between the January bonus and March termination should be closely examined for any facts supporting bogus performance issues, favorable treatment given to other employees and not you and replacement by coworker who is substantially younger and lesser qualified. The examples are endless, but you get the gist. See further discussion below.
Scenario 2 – Breach of Contract:
Even an at-will employment arrangement must be considered in light of any existing employment contracts or agreements between the employer and employee. In addition to or in the absence of a formal written employment contract, Courts may look to such documents as offer letters, on-boarding communications, employee handbooks, published severance plans and emails in order to demonstrate the existence of any enforceable covenants between the parties that may speak to such topics as causes for termination, compensation, bonus, healthcare, long term incentive compensation and severance. Thus, where a valid contract can be established as to any of your employment terms, your employer is bound by those terms and any deviation may be an unlawful breach for which you might be able to seek and recover damages. So, if you have been terminated or otherwise caused to separate from your employer, even if you are at-will and even amidst the COVID-19 crisis, it is imperative that you review all of your documents in order to discern that you are being treated lawfully according to the terms that were agreed upon and promised to you.
Scenario 3 (THIS IS THE BIGGIE) – Discrimination Claims:
Even if you are an at-will employee who was let go as a result of COVID-19, you may still have a claim for wrongful termination against your employer if their decision to let you go was at all based on discriminatory motives. Discrimination is unlawful and where an adverse act is taken against you because of such protected traits as your age, gender, pregnancy, race or national origin, disability, perceived disability, associational disability or sexual orientation, you may have legal claims against your Employer.
In the absence of direct evidence of discrimination or the smoking gun as we call it, discrimination can be shown if you are a member of the protected class and you were treated adversely (demoted, furloughed, laid off or terminated) under circumstances which give rise to an inference of discrimination, i.e. circumstances that show discrimination was the substantial motivating reason for the adverse act taken against you. The way an employer can defend itself against such a claim and rebut that inference is to show that there was a “legitimate” lawful reason for the termination, such as performance issues and other cause such as a business decision or reduction in force.
Certainly, you can all see where this is heading. COVID-19 and the related financial fallout provides your employer with the legitimate business reason it needs to “lawfully” terminate you. However, this cannot be accepted at face value. In fact, if you are able to show that the supposed legitimate reason relied on by employer was a sham or cover for discriminatory motives, you may prevail on your claims against them in a severance negotiation. There are surely many situations where an employer, especially during these challenging economic times, needs to make a tough business decision to lay off employees or institute a reduction of force, and where their decision to do so is legitimate and truthful.
Employer May Have Used Covid-19 As An Excuse to Fire You
However, there are also many instances where certain employees are selected within the context of a business decisions, based on discriminatory motives. For example, the company makes the “business decision” to lay off only the older employees, or only the female employees or only the pregnant employees. In addition, there might not even be any explicit or formal business decision to reduce costs or a effectuate a reduction in force, but your employer may still feel safe engaging in discriminatory behavior knowing or hoping that any terminations taking place now will be viewed as a necessary and legitimate, due to the Covid-19 business climate. Again, we cannot allow employers to use this catch-all defense to what maybe culpable and unacceptable discriminatory behavior. If you see something, say something to an employment attorney.
There is no doubt that both employers and employees are presently finding themselves in the most difficult and tenuous circumstances. However, employers, in response to COVID-19, seemingly have absolute power and new founded legitimacy to make discriminatorily targeted employment decisions against their at-will employees, under the guise of a business decision. And this is very concerning and unlawful. If you are in a protected class because you are over the age of 40 or fall into any of the other class of protected traits discussed herein, and have seen a change to your employment that you do not believe was made as the result of a good faith business decision, cost reduction, reduction in force in response to COVID-19, or other legitimate basis, we encourage you to speak to an employment attorney immediately. You may be entitled to reinstatement, severance or increased severance or settlement dollars relative to your discrimination claims for wrongful termination or other possible improper acts by your employer.
Carey & Associates, P.C. is currently providing complimentary consultations for potential new clients who are experiencing any employment related issues or believe they might have possible employment claims, as a result of the COVID -19 pandemic. Feel free to contact our office if you need help with that or any of your employment matters.
by Mark P. Carey | Mar 30, 2020 | Blog, Newsletter, Noncompetition & Nonsolication Agreements
If this blog article has caught your attention, you likely already understand what a non-compete is and might even be dealing with a non-compete situation presently.
Just to summarize, a non-compete is a restrictive clause or agreement whereby an employee agrees not to become employed by a “competitor” of their former employer or to otherwise “compete” with their former employer. These restrictive covenants are usually restricted to a reasonable length of time and geography.
Non-compete agreements can sometimes be found to be unenforceable if the restricted party can show that they are not “reasonable”. If the restrictive terms are deemed to be too broad, too long a period of time, or not necessary to promote a legitimate business reason, a court may void a non-compete.
Many states, including CT, have been exhibiting an increased distaste for non-competes, with courts more apt to find these agreements unreasonable and unenforceable. In light of current events, we envision an even stronger trend in this direction. There has already been and will continue to be company downsizing and dissolution, which means employees and executives will need to seek new employment or start their own business. We hope and expect Courts to favor employees, more than ever, during this economic crisis. We envision all of the current non-competes under which displaced employee’s may now find themselves, to be subject to scrutiny in the coming months as things continue to unfold.
While there are many scenarios where non-competes will need to be addressed in a Covid-19 context, below are four scenarios where you might want to promptly seek counsel regarding a non-compete
IF YOU ARE CURRENTLY UNDER A NON-COMPETE:
If you left your employment before (or during) the Covid-19 pandemic and are currently honoring a non-compete, all bets may be off in certain situations. For example, if your former employer or career happened to have been in what has now been termed an “essential business”, we would argue that your non-compete should be void. Courts often look to the totality of the circumstances when analyzing these agreements. As such, given the current outbreak and the need for essential workers in fields such as health care, banking, liquor stores and distribution, pharmacies, construction, marijuana dispensaries, to name just a few, one can make the argument that the public’s interest in having as many people working in these essential fields during this time, outweighs the former employers’ interest in enforcing a non-compete. Each state has their own designation of what constitutes an essential business.
In addition, arguments can be made that an act of God, such as a pandemic, can invalidate a contract or non-compete. We can advise you about this and have strategies for voiding your non-compete if you are an “essential” employee sitting on the sidelines honoring your non-compete, or even if you are not an essential employee based on the reasonableness of enforcing such an agreement when an act of God has wrecked so much havoc on employees and our economy.
IF YOU ARE CURRENTLY FURLOUGHED:
If you have been furloughed during the Covid-19 pandemic, but still employed, you might be worried that your furlough will at some point turn into a permanent separation from your job. If you currently have a non-compete with your employer and your furlough results in a termination, or you decide to leave during your furlough to accept other more gainful employment, it is important that you look to the specific terms of your non-compete in order to understand if it is enforceable under these unique circumstance. For example, some non-competes are not enforceable if you were terminated not for cause. In addition, if your furlough morphs into a termination or even a voluntary resignation, and you are subject to an enforceable non-compete for a period of time following your separation from your former employer, it is our position that your non-compete starts to run from the time you were furloughed not the time of your permanent separation. For example, if you are presently employed and have a 1 year non-compete from the time you ceased being employed, if you become furloughed for 2 months because of Covid-19, and then ultimately separated from your employer under these same circumstances, we will make the case that your 2 month furlough was “time served” and your remaining non-compete should only be for 10 months.
IF YOU ARE AN EMPLOYER LOOKING TO HIRE SOMEONE WITH A CURRENT NON-COMPETE:
Non-compete agreements often require the employee to inform any future employer about the existence of the non-compete. A future employer can be liable for interfering with a contract if they knowingly hire an employee who is under a non-compete. The new employer may be forced to fight an injunction and risk having to forfeit the recently hired employee, as well as subject to potential damages, if a court finds that a valid non-compete was in place and has been breached. But we will argue that all bets are off, and all of this is about to change in a Covid-19 world. We will fight for employers to show that the enforcement of the non-compete is unreasonable because people need jobs now and if an employer is willing to hire, they should not be restricted from doing so. There should be no obstacles to employers hiring at this time. Non-competes have been falling out of favor before Covid-19, and we believe that they will be even more frowned upon in the coming months. Courts will be reluctant to punish employers who are making efforts to getting back to business and providing employment even where there might be an existing non-compete.
IF YOU ARE A DISPLACED EMPLOYEE WHO IS BEING ASKED TO SIGN A NON-COMPETE IN ORDER TO SECURE NEW EMPLOYMENT:
Unfortunately, we are all finding ourselves right now in an “employers’ market” so to speak. While employers and their businesses are suffering immeasurably, they are still in the driver’s seat and the decision makers when it comes to hiring and firing. As such, if you are lucky enough to get new employment in this environment and an employer inserts a non-compete clause into your employment agreement, you might not have a great deal of leverage to fight back on this, as we would normally counsel our clients to do. If you find yourself in this situation, we still have strategies to protect you in lieu of fighting for the removal of the restrictive covenant at the outset and risking your new employment opportunity. We are having our clients sign affidavits contemporaneously with their employment contracts which speak to the extraordinary circumstances of obtaining employment amidst Covid-19. Contractual terms may be unenforceable if you can show that you signed under duress or that you did not intend to enter into a non-compete but had no choice. We believe that Courts will be reluctant to enforce non-competes entered into during this time and we have strategies such as the aforementioned affidavit that can be used at a later date if the employee needs or wishes to attempt to void a non-compete entered into during these unprecedented times.
If you have questions or concerns about this article, please contact one of our employment attorneys at Carey & Associates, P.C. at 203-255-4150 or by email at info@capclaw.com.
by Mark P. Carey | Jul 31, 2019 | Age Discrimination, Blog, Disability Discrimination, Discrimination, Employment Counseling, Gender Discrimination, Mark Carey, Noncompetition & Nonsolication Agreements, Performance Improvement Plan, Pregnancy Discrimination, Race & National Origin Discrimination, Retaliation Discrimination, Severance, Severance Negotiations
The next recession is now here, depending on the of source of information or this source. The Federal Reserve is reversing interest rate hikes to soften the economic expansion and the unemployment rate is at a 50 year low. We are well past the cyclical ten year timeframe as recessions go. What is your strategy to preserve your job in the face of this new recession? What is your strategy if and when you are laid off?
You are probably thinking, “what strategy?” You get up, go to work and hope you can continue to remain an at-will employees until the end of the new pay period, under the presumption you have no control over your job. Better yet, you planned on retiring from your company in the distant future. On the other end of the spectrum, there are employees who think their longevity with their employers will insulate them from any headcount reductions during recessions. Both viewpoints are wrong and employees can control their employment outcomes during a recession.
5 Strategies To Save Your Job During a Recession
The following strategies are followed by our clients when they see the “writing on the wall” by their managers. Although some clients never see the messaging from their employer, we do. Depending on how soon you pick up all the clues determines which strategy to pursue. Hint, the sooner you speak with an employment attorney the better. If we are engaged earlier in the process, we can evaluate and develop an aggressive strategy that will force the employer to maintain your employment and/or pay a larger severance package with more favorable terms.
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Plan Ahead and Gather Intelligence From Managers and Coworkers
Are you proactive about your employment or do you follow the wait and see approach? Becoming proactive with your employer means obtaining objective feedback from your managers and coworkers. No, I am not referring to the annual performance review or 360 reviews. A proactive employee will develop an initial assessment of his or her own performance by quietly engaging in one on one discussions with managers and coworkers about their working relationship and performance. You will need to keep detailed notes of these conversations in order to track the information over time and over various contexts. Forget about the formalities of the annual review or the vague performance metrics employers follows. I am talking about all the intel you can gather by having a straight up ever day conversation with your manager and coworkers. Examine the body cues such as facial expressions, tone of voice and the context of conversations in relation to those cues. Observe more instead of being reactionary or defensive. The better you are at this task, the more intelligence you will pick up, as your manager or coworker will not know you are gathering information. Once you collected this information, you will need to strategize how to position yourself as a thought leader, influencer, leader and over-all get the job done kind of employee. Lead by example and always remain the consummate professional during all interactions with your employer and coworkers.
Ironically, your employer is collecting similar information about you and your coworkers. In a recent article from SHRM, “A good way to begin is by collecting information about the organization’s workforce that can be used for long-range planning. ‘[HR] should be looking at the data, knowing who is where in their careers, who is where in their teams’… ‘Are people ready to move into the next position? Are they happy where they are?’ Review job descriptions and tasks and determine whether responsibility for those tasks can be more evenly distributed throughout the team. By understanding the big picture, HR leaders can advise business leaders on how to ready the workforce for future changes without resorting to morale-damaging layoffs.”
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File Internal Complaints of Discrimination to Maintain Your Job
Once we determine you are may be the victim of employment discrimination or have other employment claims, we will advise you about bringing these claims to your employers attention without escalating to an external governmental agency. The main idea here is to engage in a protective activity to force your employer to “back the heck off” and cause them to reevaluate your potential termination. Our longest standing record to keep an employee employed using this method is two years (my opposing counsel in that case was not happy, but I was not there to please him).
If necessary, you may need to file your discrimination claims with governmental agencies in order to preserve your legal rights. The same antiretaliation laws apply and employers will back off for a limited period of time in order to avoid you asserting an easy to prove retaliation claim.
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Dealing With Performance Improvement Plans (PIPS)
Combatting those inaccurate, one-sided and self-serving performance improvement plans. We wrote about this issue in Are Performance Improvement Plans (PIPS) Illegal? A PIP is a clear indicator you will be terminated and you will need to engage an employment attorney ASAP!
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Severance Negotiation Based Years of Service
This strategy is relatively straight forward. If you are slated for termination in a layoff, your employer may have a severance plan governed by ERISA, a federal statute that governs these plans. Essentially, an ERISA severance plan spells out the amount you will be paid a salary continuation based on the number of years you worked for the company. There is one catch, you will need to sign a waiver and release of all your legal claims against the employer in order to receive the payout. You will also need an employment attorney to review the settlement agreement to insert favorable terms or get rid of unfriendly terms like noncompetition agreements. Make sure when speaking with an employment attorney that he or she is an ERISA attorney, as there is a difference. Our ERISA attorneys know how the statute works and will even point out in certain cases that you can create an ERISA plan based on one employee, “you”, even though the employer never created an ERISA plan. Engage us to learn more.
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Getting Rid of That Noncompete Agreement on the Way Out
Great, you will be getting terminated but your employer stuck you with a noncompete, either at the start of your job or as part of the severance agreement. What do you do? The noncompete does not benefit you at all, only your employer. Now you have to navigate away from jobs you would normally apply for given your years in the same industry. Is this fair? No. Someone has to pay the utilities, mortgage and household expenses, but do not count on your employer to do you a favor. I have long taken a stand against these selfish one sided agreements and forced employers to rescind them or obtain an order from the court to void them. We can help you remove your noncompete agreement with your employer and make you a free agent in the job market. We will challenge the validity of the agreement with the employer directly and if the employer does not back down, we will take them to court through what is called a declaratory judgment action. Essentially, we ask courts to void the agreement due to lack of intention by the employee to enter into the agreement, aka a lack of consideration.
If you need more help planning for your future employment issues, please contact an employment attorney in our office. Employment law is all we do.
by Mark P. Carey | Jun 12, 2018 | Age Discrimination, Arbitration, Arbitration Agreements, Blog, Disability Discrimination, Discrimination, Employment Counseling, Mark Carey, Newsletter, Noncompetition & Nonsolication Agreements, Pregnancy Discrimination, Pregnancy Discrimination, Race & National Origin Discrimination, Religious Discrimination, Retaliation Discrimination, Sexual & Gender Discrimination
We all build relationships based on trust. Some relationships require more trust than others. For example, marriage, medical professionals and hiring lawyers. We all take the time to explore whether these relationships are the right fit for us. We even memorialize these important, sometimes life-changing, relationships with contractual agreements. But when it comes to the relationship with your employer, you might as well start hand feeding piranhas.
Meet Your Antagonist: Your Employer
An antagonist is someone who actively opposes or is hostile to another; an adversary. Does this describe your current or former employer? In my role as the employment attorney, I do not hear very many people say they trust their employers. In fact, the opposite is true. According to a Harvard Business Review article, “In both your personal life and your work life, you’re bound to encounter people who take advantage of you, and these painful experiences can make you cynical.”
You have several reasons to be cynical about your employment relationship. Your employer is not interested in whether you are happy at work, fulfilled in your career aspirations, concerned about your personal responsibilities at work or anything remotely realistic to a nurturing relationship. In fact many employees have a low level of trust in their employers. The 2016 Trust Barometer report from Edelman revealed that a third of employees do not trust their employers. Employees reported a lack of engagement, short term profit seeking, lack of belief in the company mission, poor product quality, unethical behavior, bad corporate reputation, invisible CEOs and lack of corporate communication to employees.
At-will Employment is Bad for You
When you are employed at-will, as most of you are, you might as well be on a first date for the next several years. You would think that after knowing your employer for three or more years, you’d just settle down and get engaged to be married. However this is not so. Unless you have a coveted and rare employment contract with a “for cause” termination provision, your employer can bounce you with little or no notice. Many of you have felt this scorned feeling from prior jobs. So where is the trust in the at-will workplace if you can never predict your future with a reasonable certainty on a day-to-day basis? There is none. Ouch!
Somehow, we have just grown accustomed to this dysfunctional at-will relationship and let employers manipulate us with unenforced corporate codes of conduct, lofty corporate double speak and fear.
Management by Fear Does Not Create Trust
The most common corporate management practice today is to maintain a consistent level of passive-aggressive practices which propagate employee fear and insecurity. From my vantage point, I see a persistent pattern by employers accusing employees of subjective performance issues while their objective performance criteria are “meets” or “exceeds expectation”. Employers use performance management techniques such as performance improvement plans and coaching to force out undesirable employees. No one ever remains long after being managed this way. I also see cases of overt ruthless conduct, where a supervisor discriminates against pregnant employees as having “baby brain.” Saying things like, “I don’t want another woman working on the desk” or “If you’re being honest with yourself, do you really think you could do this job?” And the comments get even worse. “I don’t want to hear any complaining from you, you and [spouse] did this to yourselves.” Only a supervisor with intentions to rid themselves of pregnant employees will make discriminatory statements like this to push the employee to quit out of fear of reprisal.
Discrimination Does Not Create Trust
The absence of trust becomes more noticeable when employees experience discrimination in the workplace or need to take time off due to health issues affecting themselves or a family member. For these employees, their career with their particular employer has taken an abrupt turn for the worse.
For example, you become pregnant while employed and take a maternity/paternity leave under company policy and FMLA. When you return, your job duties have changed and so has the person you reported to. Pregnancy discrimination is one of the most perverse examples of a lack of trust an employee can encounter. The employer has a maternity leave policy and you take a leave under said policy with no resistance. However, upon returning to work you face pregnancy discrimination when your employment is terminated. The employer will jump at an opportunity to replace you rather than reinstate you. We would all agree, this is not an ideal trust building experience at any company, yet pregnancy discrimination continues to persist.
If you complain to your employer about issues of discrimination or whistle blowing, you will immediately cause your employer not to trust you. You have a legal and moral right to complain about these issues, but do not expect reciprocation from your employer. You just threw yourself off or under the company bus. This equals your spouse cheating on you and then pointing the finger at you as the cause for why they had the affair. Your employer’s Human Resources Department will not help you when you are down and have complaints about coworkers or your supervisor. I am sure the folks in HR are nice people, but their “job” is to protect the employer, not you! Don’t make the mistake in confiding with human resource personnel, unless absolutely necessary to build a case for retaliation.
Arbitration and Noncompete Agreements Don’t Create Trust
Arbitration and non-competition agreements and employer trust are like oil and water with a sprinkling of gasoline for added flare. The U.S. Supreme Court’s further endorsement of employer arbitration agreements cemented in stone the future of employee litigation and the permanent role of arbitration in your career. Listen, don’t be fooled, arbitration agreements are bad for you, your rights, your claims, the economy and are only good for employers. Noncompetition agreements are even a better example of a lack of employer trust. When your employer is finished with you and terminates your employment, they sink a big fishing hook in you and reel you back in at their whim each time you land a new position. The employer cries foul, complaining you are single handedly destroying the company via working for the competitor. These two forms of employment agreements represent the worst in every company that mandates them. An arbitration agreement is a tool to conceal bad corporate acts from employment attorneys like myself and non-competition agreements are used to threaten competitive employers in the market place.
Rise Up and Demand More Trust
It is time to call an end to bad corporate practices- the deceit, the greed, the lies and the double speak. Employees should demand more from their employers. Rise up and unite together and tell your employer you would trust them only if they demonstrated trust to you first. Trust begets trust.
Have questions or think you’ve been discriminated against at work? Let our employment law attorney’s help you get justice. Get in touch today!
by Mark P. Carey | Feb 21, 2018 | Blog, Employment Contracts, Noncompetition & Nonsolication Agreements
If you have a non-competition agreement (also known as non-compete) with your employer, it’s important that you understand the information which can be used to legally destroy the agreement. Here are factors the courts here in Connecticut use to analyze non-compete agreements.
1. Employee Must Have an Intention to Enter into Non-compete Agreements
No one can make you sign an agreement. An employee must intentionally and voluntarily consent to entering into a non-competition agreement. But why would any employee ever want to do that. These agreements are one sided and only protect the employer. If your employer forces you to sign an agreement under threat of termination, you do have rights. Once you leave and work for a competitor, your old employer may come after you. You can successfully argue that the non-competition agreement was a sham or a take it or leave it agreement. Again, why would you ever want to enter this type of agreement? Courts routinely relieve employees from non-competition agreements here in Connecticut based on this argument.
2. The Non-compete Agreement Must Be Reasonable in Duration
Every non-competition agreement must be reasonable in duration of time. We have seen compete periods of up to five years. Courts in Connecticut have held that one and two year limitations are reasonable. However, this is only one factor in the court’s analysis and it is not dispositive.
3. The Non-compete Agreement Must Be Reasonable in Geographic Area
Every non-competition agreement must be reasonable in geographic scope. Larger employers set the geographic scope to be worldwide and nationwide. Smaller employers use more localized areas such as 15 miles from each office, an example would be a real estate office. The Courts here in Connecticut will analyze this as one factor, but it is not the controlling factor. Courts will not enforce a non-compete if the company has several offices in Connecticut and restricts employees to 15 miles from any office in Connecticut; effectively barring employment in Connecticut. William Raveis Real Estate is a company that uses this type of non-compete geographic scope. Recently, the Court informed Raveis that this form of agreement is unenforceable.
4. The Non-compete Agreement Must Not Limit the Employee’s Ability to Work
The biggest factor in whether a non-compete would be enforceable is whether the agreement limits the reasonable ability of the employee to obtain work in his or her chosen profession. If the agreement is too lopsided in favor of the employer, Courts here in Connecticut will void the agreement. Courts typically review the protections afforded the employer to protect against competitive behavior versus the employee’s right to work and make a living. Each case is fact and context specific. The next item on the list provides the solution regarding the balancing of interests between the parties.
5. Strategy to Escape Non-compete Agreements
If the employer has a non-compete, we always look to determine if the employer enforces these agreements consistently. The employer’s burden is to show it consistently applies the agreement to everyone. But if some employees leave with non-compete agreements and start a competitive hedge fund in competition with their former employer, like Bridgewater Associates, Courts will deny protection to the employer. Go to the Connecticut Superior Court website and look up the employers actions to sue employees. Also ask around and see if other employees who have departed received nasty cease and desist letters when they went to work for a competitor. If they did not receive a cease and desist or were not sued in Court, this information becomes your leverage to argue your non-compete agreement is not legally enforceable.
The main argument we always use is that the employee never intended to enter the agreement, thus there was no legal consideration or glue to bind you to the agreement. This is a basic contract issue. You will need to draft a sworn affidavit that explains when you received the agreement, had little if any time to review it, did not consult an attorney, you could not negotiate the agreement and the employer conditioned your job unless you signed the agreement. We routinely send the signed affidavit to the employer along with a very detailed legal argument. Employers either forget the matter or try to push back with a cease and desist letter, assuming you went to work for a competitive employer. We will also file suit here in Connecticut against the employer to get the noncompetition agreement to be declared illegal and unenforceable.
Are you currently looking for help with a non-competition agreement or have other employment law questions? At Mark P. Carey P.C., our employment attorneys are here to provide information and help to all Connecticut employees.
