Smooth Transitions

Smooth Transitions

addressing the Legal issues arising from the departure of employees & Business breakups

Texas Non-Competes – The More Things Change…

Posted in Injunction, Non-Compete Agreements, Non-Solicitation Agreements

It’s been 3 and a half  years since the Marsh opinion that redefined what could constitute consideration for a Texas non-compete and courts have bee relatively quiet on non-competes since then.   That’s not surprising from the Texas Supreme Court as Marsh was the third of a trilogy of opinions dealing with the subject.  Appellate courts have continued to address the enforceability of non-competes from time to time but there have not been any cutting edge opinions.

Frankly, I thought we would see cases where employers were using signing bonuses, stock options (like Marsh), or other financial incentives to support non-competes.  Those types of things may be happening out in the field but have not made their way to appellate courts, yet.  Employers should definitively be considering them.  From an anecdotal standpoint (my view from the courthouse and discussions with employers/employees) it appears that folks in Texas are more resigned to the fact that the non-compete that was signed at the outset of employment is enforceable but the new employer or former employee is willing to take the risk of breaking it.

My high level thoughts on non-competes haven’t changed and were most recently covered in a Texas Lawyer article last summer that you can read here.  Some highpoints:

  1. The Texas non-compete statute has not changed in years – follow it;
  2. Make sure the non-compete is reasonable in time and what it covers;
  3. Remember that at some point the former employee is going to be able to compete;
  4. If the employer is going to put in the time to draft a non-compete then enforce it;
  5. Think about items such as jury trial waivers, forum provisions, choice-of-law provisions, and even arbitration;
  6. Courts like to enforce non-solicits over non-competes because they are “fairer” – you’re not putting the employee out of business, but they can’t contact your customers; and
  7. If you are an employee remember you can never “unsign” a non-compete.

We’ll continue to monitor the non-compete front here in Texas.

Some Good Non-Compete Stories

Posted in Non-Compete Agreements, Uncategorized

A little light reading for everyone:

  1. Here’s an analysis of a recent Nike/Adidas dispute.  Nope, not over signing the latest basketball phenom to a shoe contract.  Instead, a lawsuit against several Nike designers who bolted for Adidas.  Nice breakdown by Florida lawyer Jonathan Pollard.  The link.
  2. A quick blurb on a Kentucky court’s refusal to enforce a non-compete against car dealers.  The link.
  3. Another Jonathan Pollard discussion of a non-compete fight between two staffing agencies.  The link.
  4. A lawsuit against four former Gillette employees alleging trade secret misappropriation.  The link.
  5. Finally, state legislatures are in action so we have the requesite non-compete legislation.  The link.

We’re off to a busy year in 2015 and the non-compete/trade secret lawsuits aren’t going away.

 

 

So, is non-compete litigation on the rise?

Posted in Uncategorized

Sales-Drop

 

Determining whether non-compete litigation is on the rise or declining is a tough question to answer.  There is certainly anecdotal information – a lot of people have called me about enforcing a non-compete, but that’s not accurate.  A lawyer from Boston named Russell Beck puts together a nationwide chart every year that addresses this issue based on decisions from state and federal that involve non-compete and trade secret cases.noncompete-and-trade-secret-cases-survey-graph-201501171 Without getting into how his analysis works, his conclusion is that non-compete litigation has remained about the same the last few years and trade secret litigation has continued to increase.  Of course there is a mix between the two types of cases so there is some overlap.

Russell’s review is the closest thing I have seen to a real analysis of this issue.  We’ll never really know because a significant amount of cases are resolved without and opinion and could be decided at the temporary restraining or temporary injunction level or may just settle.  But Russell’s approach at least gives us some information in terms of trends.

So to answer the question, non-comepte litigation is not on the rise on a national basis.

 

Tatoos and Potential Employees

Posted in HR Issues
The pain tatoo.

The pain tatoo.

I read an interesting article in the Dallas Morning News about folks getting tatoos and bias against tatoos in the workplace. Some of the highlights:

  • a lot more younger people are getting tatoos and piercings;
  • some employers have outright bans on tatoos on the neck or face;
  • some of the older folks that run companies and hire people don’t like tatoos; and
  • by excluding potential employees based on tatoos, employers risk lawsuits and are excluding a large portion of applicant pools.

First, I haven’t run into any companies that exclude persons simply based on having a tatoo but I’m sure it’s something that might be considered or at least contribute to an interviewer’s impressions about a potential employee.  Second, employers have a lot of leeway in terms of hiring foks based on their appearance as long as it is not discriminatory.  For instance, I might make the decision not to hire you becasue you don’t dress appropriately or that hot pink dyed hair is not appropriate for the workplace.  Now if a tatoo is tied to religion we’re talking about an entirely different situation.

The article’s main point is that as social norms change so must workplace policies.  I don’t disagree with that, but we’re just not to a point where tatoos have reached total acceptance in the workplace, especially the more traditionally conservative occupations (doctors, lawyers, bankers, consultants etc.).  If a potential employee was really talented and qualified and had a tatoo that was on the wrist and not noticeable, it’s probably not a big deal.  Of course if it’s a tatoo with letters “pain” across the knuckles we have a different situation.

There are no hard and fast rules on tatoos and hypothetically an employee’s or applicant’s tatoo could invoke the protection of some state, federal, or local laws.  Of course this would be in very limited situations.  The point is it probably doesn’t make sense to have per say rules that exclude applicants becasue of a tatoo these days.

Recruiter Checklist for 2015

Posted in Placement Professionals

 

Here are a few thoughts for placement professionals to consider going into 2015:

  1. Be familiar with the Texas Occupations Code and all it requires and its implications.  Here is a link.  There are number of little nuggets there that should be considered.
  2. How do your contracts look?  I’ve written at length over the years over basic contract terms that should be considered including arbitration, venue, choice of law, and jury trial waivers.  Though no one is looking for a dispute – be prepared.
  3. What does your guarantee provision look like (if one is included)?  Make sure it is clearly written.
  4. If you handle searches on behalf of candidates, consider the same contract items. Are your compensation terms clear?
  5. How does your website look? Is it up to date and accurate in its representations?
  6. Does your business have the appropriate business entity?  Is it in good standing with the Texas Comptroller?

Good luck in 2015!

Respect for a Well Written Non-Compete

Posted in Non-Compete Agreements

I really enjoyed an article about Madison, Wisconsin based Epic Systems’s non-compete agreement and the comments of those former employees who were abiding by it.  There was some scuttlebutt about whether Epic was going to extend the term from 1 to 2 years.  Epic is big in the healthcare IT world and its ex-employees go on to consult for other companies on Epic software and make good money.

Based on the article it appears that most Epic employees respect the enforceability of the non-compete.  I would guess that some have tried to challenge it in the past and have been unsuccessful.  There is a signficant amount of time in the article devoted to Epic’s seriousness in protecting its intellectual property and the training it invests in its workers – hence the non-compete.  It’s not often you see an article focusing on the merits of a non-compete.  It seems like every story or article out there is about a non-compete that doesn’t make any sense.  Probably because a lot of them do not – see Jimmy John’s for example.

The point is a well-written, well-thought-out, and enforced non-compete agreements can go a long way to protecting a business. Too many times I see agreements that meet none of the cited criteria.  But when I am evaluating a well written agreement that I know the employer has a history of enforcing it goes a long way to informing my opinion on the enforceability of the agreement.  Most employeees and prospective employers don’t want to get into litigation over a non-compete.  If a business is going to use them, put the time and money necessary into preparing and if need be enforcing the agreement.  Once a company develops the reputation, like Epic, of enforcing an agreement it goes a long way towards thwarting a possible breach of the agreement.

Here is a link to the article I wrote for the Texas Lawyer earlier in the year providing non-comepte reccomendations.

Sports Employment Issues Vol 1

Posted in HR Issues

I like sports.  Some more than others.  The great thing about professional sports is that they provide us high profile and in some instances highly scrutinized employment situations.  Just look at the NFL this year.  We have had: (1) a suspension/reinstatement for Ray Rice related to domestic violence; (2) the suspension/appeal of Adrian Peterson for taking a switch to his son; and (3) the suspension of Cleveland wide receiver Josh Gordon for drug use.  These things run the gamut.  In addition to the employment relationships between the player and team, there is the overarching supervision of the National Football Leauge.  To make matters even more complicated there is the player’s union.

So I am going to attempt to identify some interesting anecdotes/stories from the world of sports.  Let me know your thoughts.

1.  Marshawn Lynch plays running back for the Seattle Seahawks.  He is very good.  He also doesn’t like giving interviews.  After a few fines from the NFL Lynch spent one week simply answering questions with the word “yea” and went with “nope” this past week.  No one knows what to do with him.  Obviously the intent of the league and team is to get players to provide information to the media and promote the game.  I’m not sure how you can force a player to provide better answers but we shall see.

2.  Liverpool striker Mario Balotelli is in hot water again over an instagram post.  Though the post was titled “Don’t Be a Racist!”  It went on to provide some racist commentary below.  Here is a link.  Seriously though, has something good ever come from an athlete’s social media post?  Balotelli has apologized but is being investigated.

3.  Coaching changes are in full swing now in the college ranks.  Bo Pelini was ousted at Nebraska over the weekend and others are to follow.  Firings aren’t always limited to head coaches to.  Case in point is Texas A&M letting go of its defensive coordinator.    This article has a great breakdown of the money college coaches make these days.  The interesting thing for Pelini and other high profile coaches is the buyout – Nebraska will have to pay him $7.65 million for the right to fire him.  Basically, these types of coaches have some serious serverance built into their agreements.

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