E. Jason Tremblay

Arnstein & Lehr Partner E. Jason Tremblay authored the article, “5 ways to protect your company when a key employee departs,” which appeared in the January 23 edition of Inside Counsel. In the article, he stresses the importance for all companies to know what steps to take when an employee decides to leave, especially in circumstances where he or she leaves to work for a competitor.

Mr. Tremblay’s article appearing in Inside Counsel:

5 ways to protect your company when a key employee departs
In this competitive business world, it’s crucial to properly handle an employee’s departure, especially to a competitor

Employees frequently resign to work for competitors. This is likely to happen irrespective of whether they have signed a restrictive covenant. Therefore, in this competitive business world, it is important for all companies to know what steps to take when an employee decides to leave, especially in circumstances where he or she leaves to work for a competitor.

1. Prevent further access to company information
   Once an employee advises the company of their departure, it is critical to assume the worse and that the employee may engage in conduct that is harmful to the company. After all, there is a reason why he or she is leaving the company. The employee should be immediately relieved of any duties that would expose the employee to confidential information or the company’s customers. Passwords and email accounts should be disabled. The employee should be restricted from access to areas where confidential information is kept. The company also should request that the employee return all company-owned equipment such as laptops, cell phones or PDAs that would contain confidential business information, as well as all documents received from or generated during his or her employment.

To read the article in full, including all five steps, please click here.

Lori Adelson

Employers must be mindful of how they use criminal background information in making hiring decisions to avoid liability for failing to hire an applicant. Employers may not simply reject an applicant solely because they have an arrest record and/or “criminal” history. Rather, the employer must consider the impact of a conviction on the particular job.

Case in point – Pepsi Beverages (formerly Pepsi Bottling Co.) recently agreed to a pre-litigation settlement in the amount of $3.13 million dollars to resolve charges by the Equal Employment Opportunity Commission that it improperly considered arrest records in making hiring decisions. The EEOC claimed that as a result 300 otherwise-qualified African-American applicants were rejected because it appeared that Pepsi was flatly rejecting anyone with a criminal record instead of considering the conviction on the particular job. As part of the settlement, Pepsi is revising its employment policies, in addition to offering the 300 applicants positions with Pepsi.

The bottom line – MAKE SURE THE CRIME FITS THE JOB! Businesses should consult with their legal counsel and advisors to discuss a management training program that will best serve their needs to ensure they make appropriate employment decisions.

E. Jason Tremblay

Arnstein & Lehr Partner E. Jason Tremblay authored the article, “7 ways to protect your company when hiring from a competitor,” which appeared in the January 9 edition of Inside Counsel. In the article Mr. Tremblay recommends, when hiring a competitor’s employee, that a company should take certain steps to reduce the likelihood of being sued. He offers seven tips for the hiring process and how to behave once they start working.

Mr. Tremblay’s article appearing in Inside Counsel:

7 ways to protect your company when hiring from a competitor
Tips for the hiring process and how to behave once they start working for you

1. Investigate the employee’s employment background
   At the outset, it is advisable to determine whether there is any restrictive covenant limiting the employee’s employment rights. If so, it is prudent to discuss this fact with the prospective employee, obtain a copy of the covenant, determine whether the covenant is enforceable and evaluate whether the company should still hire the prospective employee.
2. Ensure that interviews are carefully conducted
   The company should make clear to the prospective employee that it is not interested in the competitor’s trade secrets and will honor valid restrictive covenants. An employer also should not review or accept any of the competitor’s documents that could be considered confidential and that the prospective employee may want to share with the company. Consider such documents “Exhibit A” in any lawsuit filed against the company by the competitor.

To continue reading the article, please click here.

E. Jason Tremblay

As it appeared in Inside Counsel

Orientation programs help to maximize employees’ commitment to the company.

To the extent you believe there is any relationship between an employee’s commitment to the company and the company’s performance, a new employee orientation program is an excellent first step in maximizing that correlation and getting the most from your employees.

Generally, and particularly in this competitive work environment, many employers feel that they do not have time to properly orientate new employees. And, if they do have the time, they feel as if the costs of such a program are outweighed by the possible benefits.

However, this sends a bad message to the employee from day one. An orientation program can communicate to new employees the values, beliefs, culture and history of the company, all of which can foster the desire for new employees to be committed to the company and its operations.

To read further about developing formal orientation programs for new employees,  please click here.

E. Jason Tremblay

Effective January 1, 2012, the minimum wage in the State of Florida will increase from $7.31 to $7.67 per hour. Minimum wage for tipped employees, such as waiters and waitresses, will increase from $4.29 to $4.65 per hour. This $0.36 per hour increase comes on the coattails of a previous minimum wage increase in Florida in June 1, 2011. Florida employers should therefore be prepared to again increase the hourly pay of any employees on minimum wage as of January 1, 2012. For further information, please contact your labor and employment attorney at Arnstein & Lehr LLP.

Mark A. Spognardi

Arnstein & Lehr Partner Mark Spognardi recently wrote the article, “Employers’ Summer of Disconnect: Obama Labor Board pushes anti-employer agenda,” which appeared in the September 20 issue of the Westlaw Journal. In the article Mr. Spognardi discusses how the National Labor Relations Board (NLRB) has had a busy summer proposing and implementing rules and issuing decisions designed to promote the unionization of America’s workforce.

In the article, Mr. Spognardi states that the board has issued a final regulatory rule requiring employers to notify employees of their rights under the National Labor Relations Act. He comments that the Obama NLRB has been “delivering victories to organized labor at a time when the public sentiment toward unions has become, at best, distrustful and at worst, disdainful.”

To read further about the NLRB’s recent rules, proposals and decisions please click here.

David S. Wayne

In today’s day and age, when social media and networking have become an everyday occurrence, legal issues continue to arise.  One such recent issue that has reared its head before the National Labor Relations Board is whether postings by employees on social media sites such as Facebook are protected activities under the scope of the National Labor Relations Act.  As discussed in the November 8, 2010, New York Times article Company Accused of Firing Over Facebook Post, the board is addressing whether limitations on employees’ posting of comments on social media sites constitute improper restrictions on the rights to discuss working conditions and/or unionization.  The import of this issue could be far-reaching and lends further support to why employers should revisit and refine (or establish if one does not exist) policies pertaining to Internet postings by employees.

Title VII

Although federal law does not directly prohibit discrimination based upon sexual orientation, a recent decision from the Southern District Court of Florida illustrates how an employee may be able to state a claim under Title VII for discrimination based upon sexual orientation if the alleged discriminatory conduct was based upon the employee’s failure to conform to gender stereotypes.

In Anderson v. Napolitano, Case No. 09-60744 (S.D.Fla. Feb. 8, 2010), the Plaintiff, a former Federal Air Marshal, filed suit against the Secretary of the Department of Homeland Security alleging, among other things, sex discrimination on the basis of gender stereotyping in violation of Title VII of the Civil Rights Act of 1964.  The Plaintiff claimed that shortly after his transfer to the newly established Miami Field Office in late 2001, he began to suffer discrimination and harassment due to his sexual orientation.  In support, Plaintiff provided several examples of alleged harassment, including:

(1) that the acting-Special Agent in Charge publicly referred to him as a “fag” and encouraged coworkers not to associate with him;
(2) that “someone in the Miami Field Office had written the word `Fag’ on a grease board next to Anderson’s office”; and
(3) that on one occasion, the Special Agent in Charge denounced the Plaintiff for bringing to his attention a subordinate employees’ complaints of racial discrimination and then told the Plaintiff “It’s my perception, and I could be wrong — that because you’re gay you’re super sensitive to issues of discrimination.”  When the Plaintiff denied this characterization, he was told “You’re too gay. You’re too flamboyant. You’re too `in your face’ around other [Federal Air Marshals].”

The employer moved for summary judgment, claiming that the Plaintiff failed to state a claim under Title VII because these allegations related to harassment based upon sexual orientation, not harassment based upon sexual stereotyping.  The Court agreed, and granted summary judgment to the employer.  In doing so, the Court distinguished the facts of this case from another case recently decided where a plaintiff was able to successfully state a claim for gender discrimination, because the alleged discrimination was based upon the plaintiff’s “effeminate” mannerisms (including his high voice, he walked in an feminine manner, “did not curse and was very well-groomed,” and crossed his legs like a woman).  In contrast, the discrimination alleged by Plaintiff in this action did not relate to the Plaintiff’s failure to conform to gender stereotypes, but rather, his sexual orientation.  For example, the allegation that the Plaintiff’s supervisor referred to him as a “fag” and told him he was “too flamboyant” was clearly directed to the Plaintiff’s behavior as a gay man, not behavior associated with a woman.

Notwithstanding the Court’s decision, employers must recognize (1) that certain forms of discrimination based upon sexual orientation may also constitute discrimination based upon gender stereotyping.  In this case, slightly different facts or testimony could have resulted in a different result and the employer facing an expensive trial; and (2) although discrimination based upon sexual orientation is not currently prohibited by federal law (although Employment Non-Discrimination Act (“ENDA”) legislation which would prohibit such discrimination has continually been proposed in the U.S. Congress since 1994), state and/or local laws may prohibit such discrimination.  For example, although not prohibited by Florida law, discrimination based upon sexual orientation is prohibited by Illinois law.

HIRE Act Payroll Tax Exemption

In conjunction with the recently-passed Hiring Incentives to Restore Employment (“HIRE”) Act, the Internal Revenue Service (“IRS”) just issued a form Employee Affidavit that employers can use to claim a payroll tax exemption.  You can view and print out the form affidavit at: http://www.irs.gov/pub/irs-pdf/fw11.pdf

As we detailed in our earlier posting on the HIRE Act, the new law contains two significant tax breaks that are available to most private employers.  First, it exempts an employer from its obligation to match the Social Security portion of FICA tax in 2010 for any unrelated employee, hired after February 3, 2010 and before January 1, 2011, who (1) swears under oath that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins his or her employment with the employer, and (2) was not hired to replace another employee, except an employee who voluntarily resigned or was terminated for cause.  In order to establish that an employee’s hiring meets the first of those two elements, employers can have the qualified employee sign the form affidavit, which is also known as a Form W-11.  Second, the HIRE Act also offers a tax credit to companies that keep a newly-hired qualified employee for at least 52 consecutive weeks, so long as the employee’s wages during the last 26 weeks of that period are at least 80 percent of his or her wages during the first 26 weeks of the period.  The tax credit is equal to the lesser of $1,000 or 6.2 percent of the employee’s wages during the 52-week period.

Should you have any questions about the HIRE Act or ascertaining its applicability to newly-hired employees, please contact your Arnstein & Lehr LLP attorney.

Illinois General Assembly considers Illinois Not to Compete Act

Illinois businesses should be aware that Illinois House Bill 4923 would radically alter the law regarding non-competition agreements in Illinois by creating the Illinois Not to Compete Act.  This Act would restrict the enforceability of non-competition agreements in several key respects and create numerous rebuttable presumptions in favor of employees that would make it more difficult for employers to enforce non-competition agreements in Illinois.

The Act would limit covenants not to compete to only “key” employees or independent contractors who either are informed of the non-compete two weeks before their first day of employment or who enter into a non-compete as a result of a promotion or material increase in compensation or bonus.  Further, while Illinois courts have upheld covenants not to compete that are up to three years in duration, this Act would create rebuttal preemptions that any covenant not to compete in excess of one year is void and that any geographic or service area that the contractor did not work in during the year prior to termination of employment is void.  In addition, while the Act would allow courts to modify the terms of overbroad non-competes, courts could not award any damages incurred by employers prior to the date of modification.  Finally if the non-compete contains an attorneys fee provision in favor of the employer, the Act would automatically make the attorneys fee provision mutual and allow courts the discretion to award attorneys’ fees to a prevailing employee in declaratory judgment actions.

A complete copy of House Bill 4923 can be found here.