Smooth Transitions

Smooth Transitions

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

RG3 and the Employee Departure

Posted in Hiring and Firing, HR Issues

Capture

A few weeks ago Washington Quarterback Robert Griffin III left the Washington lockeroom for what all believe was the last time.  RG3, a Heisman winner at Baylor, will likely be cut.  It was only a couple of seasons ago that Washington fans believed he was their football saivor as he led them to a division win and playoffs.  Injuries, bad press, and the rise of quarterback Kirk Cousins put an end to that dream.  At the beginning of the season RG3 was benched in favor of Cousins and never set foot on the field this season.

So on his way out in what was obviously an orchestrated move, RG3 left the print out above on his locker for all to see and report on.  He did not talk to the press.

Which brings up employee departures, more specifically terminations.  Over the last couple of weeks I’ve assisted a few clients with depatures.  Yes, there is the legality behind the decision to let someone go, but there is also the mechanics behind how to do it.  My thoughts:

  1. Dignity – Employers have to be mindful that this is a traumatic event for someone.  It’s not fun and no one likes the process unless they are a psychopath.  Be mindful of the employees’ feelings.
  2. Timing – There is no one size fits all solution for this but letting folks go later in the day usually works better.  It usually doesn’t make sense to keep them working.
  3. Make sure the employee’s access to email and the office end immediately.  Forward their email to someone in the company if necesssary.  Also, make sure remote access is cut-off.
  4. Conduct an exit interview if that is part of the employer’s process.
  5. Collect all keys, access cards, phones, etc.
  6. Remind the employee of any post-employment covenants or obligations they have.
  7. If the departuer is going to be contentious, have security there.  No joke, this can be an issue.

These are just a few thoughts.  I am sure there are others.

You want to exclude my client from the courtroom?

Posted in Injunction, Recent Cases, Trade Secrets, Trial and Pre-Trial Procedure, Uncategorized

Imagine you are int he courtroom with your lawyer in a trade secret lawsuit.  Your company is accused of stealing trade secrets from a competitor.  Then imagine the Judge tells you you have to leave the courtroom because the other side does not want yout to hear what its trade secrets are.  This issue (though a little more complicated) is pending before the Texas Supreme Court.  The Plaintiff sued the departing employee and his new employer for stealing trade secrets and sought an injunction.  During the injunction hearing, the Plaintiff asked to exclude the corporate representative from the courtroom because they were about to talk about trade secrets.  The Judge said he wasn’t going to do that and now the parties are in front of the Texas Supreme Court.  It seems counterinuitive that a judge would exclude a party that is accused of stealing trade secrets from hearing what the trade secrets are.  The Plaintiff asserts the party can adequately defend itself with experts/lawyers and it shouldn’t have to share trade secrets with a competitor that doesn’t know what they are.  We’ll continue to monitor the case and let you know what the Texas Supreme Court decides.

Here is a link to the article I am quoted in from Law 360: Texas Trade Secrets Law Gets 1st Test In Schlumberger Fight – Law360

Recruiter Checklist for 2016

Posted in Placement Professionals

Here are a few thoughts for placement professionals to consider going into 2016:

  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 2016!

Texas Hand Gun Talk

Posted in HR Issues, Uncategorized

Texas-30.06-sign

 

A few months ago I highlighted the ins and outs of the new Texas Open Carry law here.  The short of it is Texas’ businesses need to strictly follow the open carry and conceal carry notice provisions if they want to prevent folks from bringing guns into their place of business.  That means two signs like conceal carry sign to the right.

Happy New Year!

 

 

Sarkisian Sues USC

Posted in Hiring and Firing, HR Issues, Uncategorized

 

A few weeks ago we discussed the firing of former USC football coach Steve Sarkisian.  Since then Sarkisan has filed his own lawsuit in California state court.  Deadspin has a great breakdown of the lawsuit and the lawsuit itself.  Sarkisian asserts he is an alcholic and USC failed to work with him with respect to his alcoholism.  We still haven’t seen the agreement between USC and Sarkisian that was in place prior to the filing.  As I mentioned previously, the assumption was the agreement was a “last chance” plan where there is a zero tolerance policy of any alcohol related incident.  The details surrounding the agreement and Sarkisian’s issues may come to light as part of the legal proceedings.  Of course, there is always a chance the case resolves early on, but with millions at issue that would seem unlikely.  We’ll continue to monitor the case.

The Fan Duel Update

Posted in Injunction, Recent Cases, Uncategorized

A few weeks ago we touched on the “insider trading” that was going on at the fantasy sites Fan Duel and Draft Kings.  It ended up being the subject of a Republican Debate and then the  the New York Attorney General got involved.  He claims the websites are nothing but betting and it trying to keep New Yorkers from using the site through a lawsuit seeking an injunction.  The sites have come back with their own filings trying to prevent an injunction.  Draft Kings even teamed up with high-profile lawyer David Boies who argues the state’s poisition is unconstituational.

The best take on the whole situation came from HBO’s John Oliver Show.  Warning there is some crude language in the skit, but it is right on target:

The Fifth Circuit Chimes In on Inevitable Disclosure

Posted in Recent Cases, Trade Secrets, Trial and Pre-Trial Procedure, Uncategorized

keep-calm-i-told-you-it-was-inevitable-We’ve discussed the inevitable disclosure doctrine in previous posts.  It’s a powerful claim and whether adoption of the uniform trade secrets act makes it viable in Texas remains to be seen.   What is it?  Assume that in your prior job you were exposed to certain trade secrets of your employer that you would “inevitably” use in new employment.  The argument goes from the former employer that you should not be able to work at your new  job because of inevitable use. In practice, the employer would not need an agreement to enforce this type of claim, only the existence and provision of trade secrets.  Wow.  Many courts are reticent to invoke such a doctrine.

Whether such a concept is enforceable in Texas remains an open question.  This is especially true with adoption of the Texas Uniform Trade Secrets Act.  It provides that “Actual or threatend misappropraiation may be enjoined.”  So, could a court use this provision to prevent a former employee from working somewhere else in order to protect a trade secret?  In theory, yes.  There is no reported case of a Texas court doing so.

Last week the Fifth Circuit Court of Appeals waded into the state of the law in Texas on inevitable disclosure.  The results were mixed, but the Court was clear to say that Texas has not adopted inevitable disclosure as a “categorical rule”.  Here is a really long but helpful quote from the case:

It is thus not surprising that more recent Texas case law has rejected the notion of a categorical rule. See Cardinal Health Staffing Network, Inc. v. Bowen, 106 S.W.3d 230, 242–43 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (observing that “no Texas case expressly adopt[s] the inevitable disclosure doctrine” and holding that it need not decide whether to follow Rugen and Conley’s “modified version of the doctrine” because the employee produced evidence that “raise[d] a reasonable inference . . . that disclosure and use [of former employer’s confidential information] was not probable”); see also M-I, L.L.C. v. Stelly, H-09-cv-01552, 2009 WL 2355498, at *7 (S.D. Tex. July 30, 2009) (stating that “inevitable disclosure” is not yet the law in Texas, and refusing to order an injunction due to lack of evidence that former employees “took any confidential informationwith them or that they are using such information” at their new employers); see also Troy A. Martin, Comment, The Evolution of Trade Secret Law in Texas: Is It Time to Recognize the Doctrine of Inevitable Disclosure?, 42 S. TEX. L. REV. 1361, 1376 (2001) (concluding that “the functional premise behind the doctrine itself is clearly at odds with Texas jurisprudence” and noting that “very few courts in Texas have advanced the theory”).

We’ll continue to montior the state of the law on inevitable disclosure in Texas.  The bottom line is our state courts have been quiet on the subject and the Texas Supreme Court has not addressed the issue.  Here is a link to the opinion.

First Uber – Now Amazon – Independent Contractor or Not?

Posted in HR Issues, Recent Cases

amazon_21708

A few weeks ago I placed an order with Amazon Prime and selected the option for same day delivery.   As promised, my order arrived late that afternoon.  To my surprise the delivery was made by a driver in what appeared to be their own private vehicle.  It was not a UPS or USPS truck.

It turns out that Amazon is using private drivers to handle some of its deliveries.  Kind of like Uber.  Also, similar to Uber, Amazon drivers have sued Amazon alleging they are employees, not independent contractors.  The Los Angeles Times offered the detail of the California state court lawsuit over the weekend.  In sum:

other drivers for Amazon Prime Now weren’t considered employees of Amazon or Scoobeez, its contracted courier company. Instead, they were treated as independent contractors — making them ineligible for overtime pay, mileage reimbursement, workers’ compensation and other protections given to employees under state and federal law.

We’ve discussed the tests for who is or is not an independent contractor.  There are strength in numbers in these types of lawsuits and most attempt to proceed as a class action.  It all comes down to money.  It is much more expensive to employ folks as opposed to treat them as independent contractors.  If these companies are forced to treat contractors as employees it will challenge the company’s business model.  As a result the companies are going to fight these types of cases to protect themselves and lawyers will continue to look for these types of claims to purse.  We will keep you posted on any developments but expect other cases to follow.

Breaking Down the Texas Non-Compete Case

Posted in Executive Compensation, Hiring and Firing, Injunction, Non-Compete Agreements, Non-Solicitation Agreements, Recent Cases

 

There is a good article from the Houston Chronicle this week outlining a non-compete dispute between two former compensation consultants and their former employer.  The facts are pretty standard fare for this type of dispute:

  • professionals have some type of non-compete agreement with former employer;
  • former employer finds out professionals are leaving in violation of agreements;
  • former employer sues to enforce the provisions of the agreement;
  • judge enters a temporary restraining order that prevents professionals from using trade secrets at new job; and
  • injunction hearing will take place in two weeks.

Though the terms of the non-compete and temporary restraining order are not clear from the article we can get the gist of the lawsuit and what the trial judge will be considering going forward.  Some questions everyone should be asking:

  1. Is there a true non-compete provision that prevents the professionals from working with new employer – most importantly is it likely the Judge will enforce it?
  2. Did one of the professionals recruit the other professional in violation of an anti-raid provision?
  3. Are there really trade secrets involved?
  4. Are the professionals soliciting former employer’s clients?
  5. What bad facts are out there for the professionals? Emails/Texat Messages/Dumps of confidential information through email or jump drives etc.
  6. What does former employer really want in terms of an outcome?

I expect there is probably some expedited discovery going on including depositions and document exchange.  It’s likely that parties will talk about a resolution before any injunction hearing.  But the bottom line is the former employer has won the first fight and set the framework for the dispute.  Harris County is an interesting place becasue the judge that entered the TRO is not the judge that will hear the injunction hearing.  From the lawyer’s perspective this means your operating from a clean slate to some extent.

Sarkisian’s Last Chance

Posted in HR Issues, Uncategorized

 

Yesterday, we wrote about the alchohol related firing of USC Head Coach Steve Sarkisian.  Since that time some more details have come out about the firing, including reports that Sarkisian’s latest alcohol incidents constituted a breach of an agreement he entered into in August with USC.

My guess would be Sarkisian signed a “last chance agreement”.  Bascially, it is a zero tolerance agreement where an employee acknowledges they have had drug/alchohol issues in the past, they can’t perform the essential functions of their job while impaired, and if they return to work imparied again they will be fired.  They come in various forms, but the point is to document previous use and avoid any future claim by the employee in the future for an impairment-related firing.

Still no word from Sarkisian’s camp and USC goes back to trying to find a new coach.  All employers should make sure to consult with an attorney before they go the “last chance” route.   They can be tricky and the past history of the employee has to be considered.  There is no “one size fits all”.

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