Smooth Transitions : Rob Radcliff : Texas Non-Compete Lawyer & Attorney : Langley Weinstein LLP Law Firm : Dallas Employment & Employee Departures : Smooth Transitions Law Blog

I know it's been a while since my last post, but a trial always gets in the way of blog posts.  So after the dust has settled on the trial I have a few thoughts  on what business owners and employers should always consider when considering the pros/cons of going to trial.  Hopefully these are things that you already knew but better to discuss now than later.  So, off we go:

1. Loss of Control - The judge and jury will be making the decision, not management.  Unfortunately you can't always predict what the fact finder will do.
2. Trials are expensive - That's not groundbreaking news, but think about all of the extra costs:  (a) multiple lawyers, paralegals, and support staff working around the clock on the case (depending on size of course); costs for courtroom presentation equipment (rentals); meals for all involved in the trial; and the costs involved in having you employers tied up in a trial.
3. Trials are a time-suck - Employee witnesses will have to be on call.  Lawyers can never quite tell when the employee will testify.  Of course, a client representative will have to be at trial the whole time.
4. Trials are stressful for all involved.
5. People (witnesses) don't always say what they should or what you think they will say;
6. Things go wrong during trials that you don't expect;
7. The trial is not the end - there are always filings after the verdict, maybe another mediation, maybe even an appeal; and
8. Did I mention trials are expensive?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Recently the IRS came forward with an amnesty program for workers who improperly classify their employees as contractors. There are a number of issues in considering the program.  These include the interplay between the IRS and the Department of Labor, the effect such an amnesty agreement would have on your business going forward, and whether the business actually misclassified its contractors. 

The Proactive Employer podcast considered the issue recently. I would recommend that discussion as a starting point for anyone considering this issue. It is complex and can have fairly significant ramifications. Please consult with an attorney before you make a decision one way or the other as to proceeding.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Medical device manufacture, Synthes Medical Company, has filed a number of lawsuits against former employees alleged to have violated non-compete and non-solicitation agreements.  The lawsuits illustrate the rise of litigation within the medical world over non-competes. 

Synthes, with whom I have firsthand experience, is very aggressive in prosecuting former employees who have violated non-compete agreements and non-solicitation agreements, against its former salespersons. A lot of this litigation has to deal with spinal implants, which are not surprisingly, very lucrative.

The medical industry is growing, and will continue to grow as our baby boomer generation ages. The projections are staggering:

By 2035, in the absence of change, spending for Medicare alone (which is more likely to be impacted by aging Boomers) will have more than doubled to 8 percent [of GDP], and by 2080 it will have grown to 15 percent.

The forecast for medical industry litigation includes more non-compete disputes between doctors and their medical groups as well as on the sales side of medical devices such as the Synthes lawsuits. As with any non-compete agreement, employers need to make sure that if they are using these agreements they will stick.  Meaning employers need to have a strategy in place to enforce them and not simply put them in an employment contract as an afterthought.  This is specifically an issue when you have sales persons in different state jurisdictions with different laws.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Happy New Year!

Last year the Texas Supreme Court altered the non-compete landscape in Marsh v. Cook.  As lower courts construe the opinion we will see what its impact is on employers and employees.  The takeaway from the opinion should be that employers will attempt to offer other forms of consideration, like stock options, signing bonuses, etc., in exchange for post-employment agreements like non-competes and non-solicits.  The days of limited non-competes/non-solicits based only upon the exchange of propriety information, trade secrets, or training appears to be over.  This means industries that typically do not use non-competes could.  That said, employers should be skeptical of the ramifications of the Marsh opinion until there is guidance from other courts.

Employers should be doing all they can to protect their business in 2012 from the departing employee.  The cold reality is in an economy short on jobs, potential employees will be more willing to sign non-compete agreements.  In addition to the run-of-the-mill non-compete, employers should also consider non-solicitation agreements, anti-raid provisions, and even a garden leave policy (all discussed here previously).

Besides post-employment covenants there are general day to day business practices that are a necessity.  True trade secrets need to be protected through restricted access that incorporates some type of password as well as protections that prevent the employee from emailing such information or putting it on a jump drive and walking out the door.  It routinely happens and employers need to be vigilant in protecting proprietary information.

Finally, have termination/transition policies in place.  Once an employee is fired or determines they are going to leave, cut off their email and end their access to the computer network or other sensitive information.  It also makes sense to audit any of their recent activity to determine if they have taken proprietary information through jump drives, email, or other storage devices.  It pays to be paranoid.

• Email This
• Print
• Comments
• Trackbacks
• Share Link