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

To Jury or Not to Jury

It is always interesting to hear people talk about the runaway jury and risks of letting a jury determine the fate of a business/employer.  Most jury members, like most people, are not employers but are employees.  It's a fair statement that they are likely to have some bias against the employer whether they admit it during jury questioning or not.  That natural bias can be overcome, but it is not easy.  For all intents and purposes, employers are the "Man".

In the context of employment agreements two popular alternatives to juries have developed - the arbitration and the jury trial waiver.  Though arbitrations are a good alternative, they can be expensive and impractical for the typical employment agreement.  Opting for a judge as opposed to a jury can be a good alternative.

The Typical Waiver

Waiver of Trial by Jury. Seller and buyer knowingly and conclusively waive all rights to trial by jury, in any action or proceeding relating to this Contract.

The Texas Supreme Court ruled that the provision above was enforceable.  Though this provision was in a business transaction, it can be amended for use in the employment context. 

Yes or No.

First, the waiver eliminates any potential jury bias (of course Judges have their own biases).  Second, in most cases a trial date for a non-jury trial will be earlier than a jury trial setting because the cases take less time.  Finally, a non-jury trial is typically shorter and as a result less costly.

Waivers make sense.  They are  easy to use, enforceable, and probably a better alternative to arbitration these days. 

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

Today the Texas Supreme Court again made non-compete agreements easier to enforce in the state of Texas.  In Marsh USA v. Cook, the Texas Supreme Court ruled that a stock option agreement could serve as the basis for a non-compete:

The stock options are reasonably related to the protection of this business goodwill. Thus, this covenant not to compete is ancillary to an otherwise enforceable agreement.  And, in the Legislature’s apparent judgment, reasonable noncompetes encourage greater investment in the development of goodwill and employee training.

More details to follow and analysis of the case.  The questions now becomes can other forms of consideration form the basis for non-competes, like a signing bonus?  We previously considered this issue, but the answer seems to be yes.  The bottom line is that the Texas Supreme Court continues to make non-competes easier to enforce in a trilogy of opinions culminating in Marsh. 

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

Back in April I addressed the Supreme Court's review of City of Ontario, California v. Quon et al and the implications it might have on employer access and review of employee electronic communications.  A few weeks ago the Court's opinion was delivered and did little to shed light on the Court's view of privacy rights in text messages for private employees.

As you may recall, the opinion dealt with a police department that decided to review the personal text messages of one of its officers that were made with a police owned phone.  Justice Stevens upheld the search of the phone noting that Quon:

should have understood that all of his work-related actions–including all of his communications on his official pager — were likely to be subject to public and legal scrutiny

He also wrote:

The Court must proceed with care when considering the whole concept of privacy expectations in communications made on electronic equipment owned by a government employer.  Moreover, agencies and officers should explore whether state privacy laws might create a different standard. Some states have statutes that require an employer to notify an employee when electronic communications are being monitored.

So the Court was unwilling to go beyond the public employee domain, not surprising.  So questions remain:  Is the employee that uses a company owned phone subject to having his text messages reviewed?  What if there are personal emails on the company owned phone through a yahoo or gmail account?  What if the phone is owned by the employee but the service is paid for by the company?  These questions remain unanswered but employers should have policies in place that address these situations. 

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

You've probably seen friends, coworkers, family members, and strangers glued to their "smart phone" of choice as if it is somehow an appendage.  The use/addiction to these items is increasing as we become more and more mobile.  A couple of interesting stats courtesy of CNN:

A Pew study found in January that 80 percent of American adults have cell phones and 30 percent of them access the internet on their phones. In 2000, 50 percent of American adults used cell phones, according to a Gallup Poll, and phones rarely supported access to the web.

More than 28 percent of employers fired a worker for e-mail misuse in 2007, compared to 14 percent in 2001, according to the American Management Association.

We can text, email (from both work and hotmail accounts), tweet, and post on Facebook from these devices.  Some of the devices may actually be provided by our employer or the employer may pay for data/wireless service.  So does an employer have the right to see those texts, posts, or emails? 

The United States Supreme Court is considering a California case where the Ontario, California Police Department reviewed sexually explicit text messages that a police officer sent from a police owned electronic device.  The Ninth Circuit previously held the police department's actions violated the officer's privacy rights because its actions constituted an illegal search and seizure.  The case was argued before the Supreme Court on Monday. As usual, SCOTUSBLOG has an excellent analysis of the case and play-by-play from the oral argument.   

Many think the Court will limit its opinion and any ruling will have limited implications.  Nevertheless, employers and employees should be cautious.  Employers have the right to look at company email in most circumstances, that seems to be accepted.  As previously discussed here, whether employers can review gmail or hotmail emails that emanate from a company computer or mobile device is unclear.  The same is probably true for texting or social media posting.  Now, the line becomes blurrier if the mobile device is owned by the employee but the service is paid for by the employer. 

Employers must proceed with caution and on a case by case basis before accessing these types of communications.  Of course, they could be very important in situations where an employee may be taking trade secrets or preparing to violate a non-compete agreement.  As is a recurring theme on this this blog, employees should assume that any electronic communication may ultimately be published to the world.  Though emails and texts are more convenient, phone calls and face to face meetings are still an option.

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

In a previous entry I addressed the Fifth Circuit Court of Appeals'  recent ruling making arbitration awards virtually impossible to appeal in Citigroup Global Markets Inc. v. Bacon. 

A few weeks later, the U.S. Supreme Court upheld an arbitration agreement that required employees who were parties to a collective bargaining agreement to arbitrate their age discrimination claims.  Michael Moore's discussion of the opinion in the Pennsylvania Labor and Employment Blog is worth a look on this decision.

So, it's a no brainer, arbitration is the way to go for all employment claims, right?  Not so fast.  Jon Hyman of the Ohio Employer's Law Blog offers a dissent.  Jon cites the escalating costs associated with arbitration as a reason to reconsider the process:

In my experience, however, arbitration can prove just as costly as court. More and more arbitrators are allowing plaintiffs to engage in discovery that is nearly as expansive (and expensive) as what is permitted by trial courts. Additionally, employers have to add into the equation the cost to file the claim, which the employer usually shares. With the American Arbitration Association, these fees can run anywhere from $950 to a cap of $65,000. These fees do not include the arbitrators’ time, which often exceeds $500 per hour, and includes all pre-hearing conferences, discovery and motion practice, the actual hearing time, and the drafting of the opinion. It is not hard to see how in many cases the defense costs associated with arbitration outweigh defense costs in a traditional court proceeding.

He goes on to suggest considering using  jury trial waivers in employment agreements.  Though waivers won't keep pre-trial and discovery costs down, they will make trial cheaper and avoid a runaway jury.  Having a judge as the finder-of-fact usually makes things more predictable.  Of course, make sure the jury trial waiver is enforceable in the jurisdiction where it is going to be used.

 I recently spoke with an employment arbitrator who told me he gives the parties wide latitude on the amount of discovery in arbitrations as long at there is agreement.  His ultimate concern is not so much the amount of discovery, but the length of the case.  He aims to resolve all cases within 6 - 9 months.  The less time lawyers have to work on the case, the less fees incurred.

As an aside, the Texas Legislature is considering legislation to limit arbitration in certain consumer transactions.

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

Recording phone conversations.

One issue that I frequently receive questions about is whether it's permissible to record phone conversations that you are a party to?  The answer varies from state to state.  In the absence of more restrictive state law, federal law permits an individual who is a party to the telephone conversation to record it. 

Some states require both parties to consent to the recording (two-party consent).  Texas does not (one-party consent).  The rub arises when there is an interstate call between a one-party state and two-party state. The California Supreme Court (.pdf) has held that in such a situation, two-party consent is necessary.

Recording a phone call can be a useful tool for avoiding misunderstandings and I have even used them in breach of contract cases where an oral agreement is disputed.  If you are going to record, the best practice is to get the consent of the other party.  If you're not going to do that make sure you know the law of your state and the state you are calling. 

Polygraph testing your employees.

Jon Hyman provided a primer on employee polygraph testing in the Ohio Employer's Law Blog this past week.  Frankly, I had never heard of the Employee Polygraph Protection Act of 1988 but it prohibits with limited exceptions:

• Requiring, requesting, suggesting, or causing an employee or prospective employee to take or submit to any lie detector test;

• Using, accepting, referring to, or inquiring about the results of any lie detector test of an employee or prospective employee; and

• Discharging, disciplining, discriminating against, denying employment or promotion, or threatening to take any such action against an employee or prospective employee for refusing to take a test, on the basis of the results of a test, for filing a complaint, for testifying in any proceeding, or for exercising any rights afforded by the EPPA.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link