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.

U.S. Senate passes HIRE Act

News reports say that House Speaker Nancy Pelosi expects the House will soon consider the Senate-passed $15 billion jobs bill (H.R. 2847), known as the Hiring Incentives to Restore Employment (HIRE) Act, that passed the Senate by a 70-28 vote on Feb. 24.  The bill passed by the Senate and presently before the House includes tax incentives for businesses to hire unemployed workers in 2010, an extension of federal aid for highway programs, an extension of a small business expensing tax break, and the establishment of a Build America Bonds program.

The tax incentives for hiring in the proposal presently before the House includes a new program that would exempt employers that hire unemployed workers from paying Social Security taxes on the new hires for the remainder of 2010. The proposal would also offer employers an additional $1,000 tax credit for any new hire who stays on the job for one year.

The HIRE Act significantly pared down the House’s original bill that it passed Dec. 16 by a narrow 217-212 vote.  The original House bill was a much larger $150 billion package that also included six-month extensions of the emergency unemployment insurance benefits program and the COBRA subsidies to help those who have lost their jobs to continue their health insurance.

Short extensions of unemployment benefits (until April 5) and COBRA subsidies (for those involuntarily terminated between March 1 and March 31) were signed into law on March 2.

Even if the HIRE Act is enacted in its present form (and odds are that it will not be since 3 caucuses within the Democrats in the House are already on record that they have problems with the bill), it is expected to create a quarter of a million new jobs.  That is not much when compared with the 8 million jobs lost in the US since 2007, but proponents are calling the HIRE Act a “good first step.”

ENDA

The Employment Non-Discrimination Act (ENDA) would create federal protections against workplace discrimination based on sexual orientation and gender identity.  The first version of the bill was introduced in 1994.  The latest version, introduced in June 2009, is currently in committee. The House Education and Labor Committee held a full committee hearing on the bill in September, and the Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing on ENDA in November.

The Act, as proposed, would make it illegal to fire, refuse to hire, refuse to promote, or refuse to compensate an employee based on sexual orientation or gender identity. If passed, it would not apply to the military or to religious organizations and would exempt businesses with fewer than 15 employees. Further, the law doesn’t require employers to provide benefits to the same-sex partners of their workers. And law would not allow a “disparate impact” claim like the one available under Title VII of the Civil Rights Act of 1964 – which means an employer wouldn’t have to justify a neutral practice, even though it might have a statistically disparate impact on individuals because of their sexual orientation or gender identity.

In 29 states, employees can still be fired because of their sexual orientation, and discrimination against transgender people is legal in 38 states.  Illinois law provides protection for both sexual orientation and gender identity discrimination.  Florida state law provides none.

According to the Human Rights Campaign, 87 percent of Fortune 500 companies have adopted polices barring discrimination based on sexual orientation.

The Obama Administration, in tandem with the President’s support for the bill, recently added language to the federal jobs Web site that explicitly bans gender identity-based employment discrimination under the federal Equal Employment Opportunity (EEO) policy. This is the first time that employment discrimination on the basis of gender identity has been explicitly banned by the federal government.

A link to the new policy can be found here.

Click here for a summary of LGBT laws by state

EFCA

While the Employee Free Choice Act (“EFCA”) received front page treatment immediately after the November ’08 elections and through the spring, 2009, it has slowly lost its life force, so as to become moribund.  While quickly introduced into the House, it rapidly lost support among key Democratic Senators, including Sen. Arlen Specter (D – Pa.) and Sen. Dianne Feinstein (D – Ca.).  By June, the Senate Democrats and labor were at least six votes short of that needed for cloture and to end debate.  Since then, the bill has been comatose, on a deathbed.  While the bill is labor’s priority, it has received much less attention from President Obama, who has focused his energy on health care, climate change, and the great recession.

Many commentators have speculated that labor has a fighting chance to revive and pass EFCA if it pushes hard in 2010 before the mid-term elections, with compromises in mind.  Such compromises would include super majority card checks, quickie elections, or some combination of both; elimination or modification of mandatory interest arbitration for first time labor agreements, and implementing financial penalties and fines for employers who fail to bargain in good faith, or engage in surface bargaining; guaranteeing unions access to employees at the workplace, and limiting or restricting the employer’s right to engage in captive audience speeches; and imposing civil monetary penalties for unfair labor practices.

The chances of passage could be enhanced if a compromise version was tacked on as an amendment to a job creation or other large bill.  But the compromise would have to be just that, and not hand either management or labor a lopsided win.  Such an effort will have to begin now, as the midterm elections are only 10 months away, and all indications are that Democrats in both Houses will lose a significant number of seats.  One can imagine the frustration of SEIU President Andrew Stern as he reviews union expenditures after his weekly visits to the White House.

This next two quarters, Arnstein & Lehr will be conducting several seminars to educate employers on how to remain union free, no matter what happens with card check at the end of the day.   We will keep you informed of developments, and look forward to seeing you there.  Happy New Year to all.

Mark A. Spognardi is a partner in Arnstein & Lehr’s Labor and Employment Law Department.  His practice is devoted exclusively to representing management in  traditional and non-traditional labor and employment law litigation and counseling.

Rep. George Miller (D-Calif.) Nov. 3 introduced legislation (H.R. 3991) that would guarantee five paid sick days for workers sent home or told to stay home by their employer in relation to a “contagious” illness, such as the H1N1 virus.

Miller (D-Calif.), chairman of the House Education and Labor Committee, introduced the “Emergency Influenza Containment Act”with seven co-sponsors, including Rep. Lynn Woolsey (D-Calif.), chairman of the Workforce Protections Subcommittee. The bill was referred to Miller’s committee.

Under the legislation, employees who follow their employer’s direction to stay home because of contagious illness could not be fired, disciplined, or made subject to retaliation for following directions. Employers who fail to provide the leave or retaliate against employees would be subject to penalties under the Fair Labor Standards Act.

“Sick workers advised to stay home by their employers shouldn’t have to choose between their livelihood, and their co-workers’ or customers’ health,” Miller said. “This will not only protect employees, but it will save employers money by ensuring that sick employees don’t spread infection to co-workers and customers, and will relieve the financial burden on our health system swamped by those suffering from H1N1.”

The bill would guarantee a sick worker up to five paid sick leave days a year if an employer “directs” or “advises” a sick employee to stay home or to go home.

The legislation would cover full- and part-time workers in businesses that have 15 or more workers and do not currently provide at least five days of paid sick leave.

The bill would allow employers to end paid sick leave at any time by informing the employee that the employer believes the worker is well enough to return to work. Under the bill, employees could continue on unpaid leave under the Family and Medical Leave Act or other existing sick leave policies.

The legislation defines “contagious illness” as “influenza-like illnesses such as the novel H1N1 virus.”

The bill would take effect 15 days after being signed into law and would sunset two years after enactment.

Hearing Expected Week of Nov. 16
The House Education and Labor Committee is expected to hold a hearing on the legislation the week of Nov. 16.

“To help control the spread of the H1N1 flu virus, workers who are sick should stay at home,” Woolsey said. “This bill will ensure that workers who are directed to stay home by their employers can do so without paying a financial penalty.”

The Centers for Disease Control estimates that a sick worker will infect one in 10 co-workers, according to Miller.

Debra L. Ness, president of the National Partnership for Women and Families, said her group wants the bill to allow workers to decide when to take the leave.

“The paid sick days law America needs will go further than this initial bill,” Ness said. “The Emergency Influenza Containment Act is a first step, and we look forward to working with Congressman George Miller to ensure that this legislation provides workers with the right to decide when to take a paid sick day, allows working parents to care for sick children, and protects workers’ jobs when they are sick.”

Ness’s group estimates that the economy loses $180 billion in productivity a year when sick employees show up to work.

Victims’ Economic Security and Safety Act (VESSA)

On May 27, 2009, the Illinois legislature approved a significant overhaul to the Victims’ Economic Security and Safety Act, also know as VESSA, which requires covered employers to provide leave and other accommodations to employees and their family members who are victims of domestic abuse or sexual violence.  Once signed into law by the Governor, which is expected to be within the next several weeks, VESSA will be significantly broadened, not only increasing the protections offered to eligible employees, but also expanding coverage of the Act to include small private employers.  This article will outline some of the significant amendments of VESSA and will also provide employers with guidance on what to do in response to the new law.

Small Businesses are Now Covered Employers

Perhaps the most significant modification to VESSA is the fact that it expands coverage of the Act to include employers with 15 or more employees.  In the past, VESSA applied to private employers with 50 or more employees, as well as public employers.  As a result, many small employers in Illinois will now be required to comply with VESSA for the first time.

Reasons for VESSA Leave are Expanded

The reasons an eligible employee can take leave under VESSA has also been expanded.  VESSA grants unpaid leave rights when an employee or the employee’s “family or household member” is the victim of domestic or sexual violence.  VESSA leave may be taken for such things as: (1) relocating from the household, (2) seeking medical or psychological care, (3) participating in safety planning to increase the safety of the victim, (4) obtaining victim services, and (5) seeking legal guidance or remedies to ensure the victim’s safety (such as time off for relevant civil and criminal court matters).

However, who constitutes a “family or household member” has been greatly expanded in the new law, thereby broadening the circumstances when an employee can take leave pursuant to VESSA.  Specifically, the new amendments to VESSA expand the definition of a “family or household member” to include “any person who is related by blood or by present or prior marriage, and any other person who shares a relationship through a son or daughter.”  The current definition is limited to the employee’s spouse, parent, son, daughter and any person who jointly resides in the same household.

Length of VESSA Leave Depends on Size of Employer

The unpaid leave entitlement for an eligible employee working at a company employing 50 or more employees remains the same at 12 weeks in any 12-month period.  However, employees working for an employer with between 15 and 49 employees are now entitled to 8 weeks of unpaid leave during any 12-month period.

And, unlike before, employers may not require employees to substitute available paid or unpaid leave for VESSA leave.  Therefore, employees can take their full allotment of unpaid leave under VESSA and then also take any earned paid time off, such as vacation or paid time off.  This is a significant deviation from the old VESSA, as well as the FMLA, where employers can require employees to use accrued paid time during FMLA leave.

Expanded Protections Under VESSA

Similar to the FMLA, VESSA requires than an employee be restored to the same or equivalent position upon their return from VESSA leave.  Employee benefits, pay and terms of employment must also be restored.  In this regard, health care coverage must be provided to the eligible employee while on leave.  The amendments also expressly prohibit retaliation by the employer, as well as discrimination against any employees who either exercise their rights or oppose any acts protected by VESSA.

Additionally, like the Americans with Disabilities Act, VESSA mandates that employers must reasonably accommodate the protected employee unless the employer can prove an undue hardship, taking into account exigent circumstances and any danger facing the employee.  Reasonable accommodations under VESSA now include such things as job restructuring, transfer, reassignment, modified work schedules, implementing safety procedures, as well as providing assistance in documenting domestic or sexual violence that occurs at the workplace or in a work-related setting.

Don’t Forget About the Posting Requirements

As before, every covered employer is required to conspicuously post and maintain documentation summarizing VESSA from the Illinois Department of Labor.  An employer’s failure to provide notice to its employees can now lead to monetary fines.  Once VESSA is signed into law, it is expected that the VESSA poster will be updated to incorporate the recent changes to VESSA and available through the Illinois Department of Labor website.

What Employers Need To Do Now?

Since VESSA has been greatly expanded, and since it will be effective immediately when signed into law by the Governor, covered employers (now, companies with 15 or more employees) are recommended to take the following steps immediately:

1. Review the new law, as amended, and become familiar with the new law.
2. Train your managers and supervisors on the new law so that they can be familiar with what to do, and how to respond, when circumstances occur giving rise to VESSA leave.
3. Review and modify your existing VESSA policies to incorporate the new law.
4. If you do not have a written VESSA policy (for example, because you were previously not a covered employer), you should have a VESSA policy drafted and distributed to your workforce, as well as incorporated into your employee handbook.
5. Once the updated VESSA poster has been finalized by the Illinois Department of Labor, you need to post the notice in a conspicuous location at your worksite, along with the other federal and state-mandated labor law posters.

We will provide additional notices and information regarding VESSA if there are any further developments.  In the meantime, if you have any questions regarding how to comply with VESSA, or any other employment-related questions, please contact your Arnstein & Lehr LLP employment law attorney.

Pending Legislation - FORWARN Act

Introduced just recently into the House and Senate, the Federal Oversight, Reform, and Enforcement of the WARN Act (“FOREWARN Act”) would dramatically amend the Worker Adjustment and Retraining Notification Act (“WARN Act”).  The FOREWARN Act was introduced in response to the significant rise in factory closings and mass layoffs currently being implemented in the United States.

Initially, the FOREWARN Act would require employers to give at least 90 days advance written notification, as opposed to current requirement of 60 days, of a covered plant closing or mass layoff.  In addition to the currently required recipients of WARN Act notices, new notices would also need to be sent to the Secretary of Labor and the governor of the state where the plant closing or mass layoff will occur.  Additionally, under the FOREWARN Act, employers with at least 75 full or part-time employees (down from 100 full-time employees) would be covered under the WARN Act.  Further, a covered “plant closing” would be one affecting at least 25 full or part-time employees (down from 50 full-time employees) and a covered “mass layoff” would be one that affects at least 25 employees (down from 33% of full-time employees amounting to at least 50 workers, or 500 workers).  A “mass layoff” would also no longer have to involve a single site of employment.

Among other significant changes, the FOREWARN Act would also modify the required contents of a WARN Act notice, obligate covered employers to post a WARN Act poster and increase the potential damages to an aggrieved employee to double back pay for each day the employer was required to provide notice, along with interest.  Finally, the FOREWARN Act would also prohibit an employee from waiving, deferring or losing any rights under the WARN Act without the approval of the Secretary of Labor or the attorney general of the relevant state or unless a private attorney on behalf of the affected employee negotiates the waiver/agreement.

The FOREWARN Act has been referred to the Senate Health, Education, Labor and Pension Committee and the House Committee on Education and Labor.

Arnstein & Lehr LLP Partner, E. Jason Tremblay, recently published the 2009 Edition of The Employment Law Toolkit.

Politicians don’t typically broadcast their defeat, and when they do it pays to watch for the blindside hit. That’s surely the case with last week’s reports that six liberal Senators are abandoning part of labor’s top priority, “card check” legislation.

The legislation to eliminate secret ballots in union elections has in fact been comatose for weeks, since Pennsylvania’s Arlen Specter and Blanche Lincoln of Arkansas declared their opposition. So the real purpose of this “concession” is to shift to Plan B, which is to repackage most of what labor wants with new ribbons and wrapping. The bill that Senators Tom Harkin (Iowa), Mark Pryor (Arkansas), Mr. Specter and others are now considering would still give unions the whip hand in negotiations with management.

One proposal would slash the time for an organizing vote, requiring that it be held within five or 10 days after 30% of workers had signed cards asking for a union. The median time today is 38 days. Organizers want the rush because they know the more time workers have to learn about a union, the less they usually want one. Once employees hear the other side of the story, support dwindles.

This also explains a Big Labor demand to bar companies from requiring their workers to hear management’s side during a union campaign. Labor supporters say this creates a “captive audience,” but these meetings are one of management’s few opportunities to address workers, since companies are barred from the sort of outreach allowed to union organizers — such as visiting employees at home. At the same time, Senators want to give union organizers access to company property.

Democrats also aren’t giving up on binding arbitration, which would let a federal arbitrator impose a contract if management and a newly established union at a work site aren’t able to agree within 90 days. The provision would encourage unions to make maximum demands and play for time, knowing that an arbitrator could force management’s hand. Binding arbitration also denies employees a vote on a contract.

Labor is desperate to rig the bargaining rules because most workers show time and again that they don’t want a union. Americans know unions promise higher wages and benefits and more job security. But workers can also see what has happened to such highly unionized industries as steel, autos, airlines and many others. Unions couldn’t save those jobs, and in fact they contributed to their demise with contracts that made the industries uncompetitive. Most workers would also rather not hand over a chunk of their paycheck in mandatory dues to finance the political agenda of labor leaders.

Democrats and the AFL-CIO are hoping that if they dump the unpopular secret ballot ban from card check, they can get to their magic number of 60 Senators. The business community and Republicans shouldn’t be fooled and let Democrats from swing states off the hook. Card check under any cover is still a job killer.

On August 19, Arnstein & Lehr’s Labor & Employment Law Practice Group is hosting a full day seminar entitled Taming Technology: Risks and Rewards of Workplace Blogs, Twittering and Social Networking.