Avoiding Restrictive Covenant Problems – Simple Steps That Can Save You Heartache and Expense

In the past week, I have been involved in two situations in which an employer received a “cease and desist” letter from a potential competitor. The employers had hired employees away from the potential competitors and were then notified by the potential competitors that the employees were subject to various restrictive covenant obligations. The potential competitors’ letters made various demands regarding the restrictive covenants and restrictions to be placed on the employees’ activities.

As many of you know, restrictive covenants prevent employees from engaging in various types of actions both before and after they leave employment. Restrictive covenants include such things as:

• Non-competition restrictions which prevent an employee from working for a competitor;
• Non-solicitation of employee restrictions;
• Non-solicitation of customer restrictions;
• Confidentiality protections;
• Trade-secret protections; and
• Assignments of inventions.

Pay Equity: A Growing Priority in the #MeToo Era

In the #MeToo Era, employers who are focused on proactive sexual harassment prevention and response measures should also be mindful of other aspects of gender equity, such as pay equity. The Wall Street Journal recently reported that the U.S. Equal Employment Opportunity Commission (EEOC) is investigating Uber for potential gender discrimination in hiring and in its pay practices. The investigation is in line with the EEOC’s 2017-2021 Strategic Enforcement Plan, which included a focus on equal pay protections as a strategic priority.

Uber is just one of a number of companies facing public scrutiny over their pay practices. For example, Netflix was the subject of reports earlier this year that it had paid its female lead less for her Queen Elizabeth role in The Crown than her male co-star. Netflix subsequently announced that, going forward, “no one gets paid more than the Queen.” 

Former Partner Loses Millions by Violating Non-Compete

Non-competition and non-solicitation agreements can be useful tools for companies trying to protect their key client relationships and confidential information. Enforcing these agreements, however, can sometimes be difficult, given the law’s general disfavor of them. A recent Minnesota Court of Appeals case illustrates how a thoughtfully drafted non-compete can protect a company in the event that a former key employee begins competing with his former company.

Sick and Safe Time Leave Reaches Northern Minnesota

The City of Duluth, Minnesota recently became the third major Minnesota city to enact a local law providing eligible employees with paid leave for sick or safe time absences. On May 29, 2018, the Duluth City Council adopted Ordinance No. 10571 (the Ordinance), which establishes minimum standards for earned sick and safe time leave. The Ordinance is set to take effect on January 1, 2020. 

Covered Employers and Employees

The Ordinance is written to apply to employers with five or more employees nationwide—regardless of where those employees are located. Employee eligibility, however, is written to tie to how much time an employee spends working in Duluth. Employees are to be eligible for paid sick or safe leave under the Ordinance if they: (1) work in Duluth more than 50% of their working time in a 12‑month period; or (2) are “based in” Duluth, spend a “substantial part” of their time working in Duluth, and do not spend more than 50% of their work time in a 12‑month period outside of Duluth.

A BREAK IN THE DAM: U.S. SUPREME COURT RULES PUBLIC UNIONS MAY NO LONGER COMPEL PAYMENTS FROM NON-MEMBERS

In a highly anticipated 5-4 decision, in which Justice Gorsuch cast the deciding vote, the U.S. Supreme Court overruled its own previous case and held today that a labor union may not require employees in the public sector to pay for its services. The decision, Janus v. AFSCME Council 31, may significantly weaken unions operating in both the public and private sectors and throw labor relations between government workers, their employers, and their unions into turmoil.

Class Action Tolling in the Wake of China Agritech—The Good and the Bad for Employers

Earlier this month, the U.S. Supreme Court addressed whether, after denial of class certification, a putative class member can file a new class action after the applicable statute of limitations has expired, as opposed to joining an existing case or pursuing an individual lawsuit. The Court held, in China Agritech, that this is not allowed, creating potentially significant ramifications for employers. Had the Court ruled the other way, claimants who were unsuccessful in obtaining class certification might have had the ability to perpetually file new class actions, one after the other, in a never ending effort to obtain class certification.

NLRB Chair Confirms Board Will Do Rare Rulemaking on Joint Employer Standard

The Chair of the National Labor Relations Board (NLRB), John Ring, confirmed on June 5 that the NLRB will engage in formal “notice-and-comment” rulemaking on the subject of joint employers, about which we have written many times (1, 2, 3, 4, 5). Ring’s announcement was made in a letter to three Democratic senators who had written to him expressing concern that the NLRB was contemplating formal rulemaking on the joint employer issue. Such rulemaking is rare for the NLRB. “Candor requires me to inform you,” wrote Ring, “that the NLRB is no longer merely considering joint-employer rulemaking. A majority of the Board is committed to engage in rulemaking, and the NLRB will do so. Internal preparations are underway, and we are working toward issuance of a Notice of Proposed Rulemaking (NPRM) as soon as possible, but certainly by this summer.”

Confirmation of the plan for formal rulemaking should come as welcome news to employers across the country, many of whom have watched with increasing dismay as the NLRB has issued a variety of shifting joint employer rulings. The NLRB’s joint employer standard addresses the conditions under which two companies may be found jointly responsible for unfair labor practices, union organizing and other collective bargaining matters.