No one likes exit interviews, well most folks don’t.  The employee is departing  the interviewer is checking off the boxes.  But, from the employer’s perspective they can be invaluable if handled correctly and I recommend them. Some considerations:

  1. Who handles the interview?  It doesn’t always have to be someone from HR.  If the departure is unpleasant perhaps there is someone that does have a good relationship with the employee that handles the discussion.  The goal is to get information.  Just make sure the interviewer asks the appropriate questions, listens to answers/tone, and follows up appropriately.
  2. What information should the employer be seeking?  To start with find out the who/what/where/when/and why of the departure.  If there are issues with the atmosphere at the company let’s here them.  The employer should be looking to improve things and avoid departures and turnover.  Would also be nice to know where they are going, how they can facilitate transition, will they be available for questions if need be.  The employee may want to vent, let them, ask open questions that seek information.
  3. Besides extracting information this is also the opportunity to provide the employee with information.  This includes any benefits they are entitled to, final paycheck information, and other nuts and bolts information.
  4. Use the interview to retrieve any company property.
  5. Most importantly – remind the employee of any post-employment covenants they have signed.  This could be non-disclosure agreements, non-competes, non-solicitation agreements etc.  Provide them with copies of the agreements if need be.  If appropriate get a written acknowledgement.  Remind the employee the company takes these agreements seriously and will enforce them.
  6. Finally, find out if they have any questions.

 

 

We need to reset the way we consider  non-compete duration and scope.   Instead of conceptualizing the duration of a non-compete in terms of “how long” the better approach is “how short.”  The same is true for the subject matter of the non-compete – make it narrow.  What is the objective of a well written non-compete?  To draft it in such a way that a departing employee will abide by it without legal intervention.  Now if a lawsuit is necessary, the objective is for the court to enforce the non-compete as written.  This rarely happens because of drafting mistakes.

The unfortunate thing is businesses often times don’t consider non-compete terms until the time of enforcement.  Instead of putting in a little more time and money up front, we generally spend the time and money actually considering non-compete terms at the time of enforcement, years after the non-compete is prepared.  Discussions between lawyer and client at the time of drafting about the length of a non-compete may go like this:

Client:  What do Texas courts say about the length of a non-compete?

Lawyer:  It’s always dependent upon the circumstance, but Texas  courts have enforced them between a year and 2 years.

Client:  Well if we can get two years let’s go for two years.

The client’s approach makes practical sense, but  in terms of actual enforcement it does not.  In situations where there are multiple individuals who are subject to the same non-compete, having a non-compete “busted” or modified can have dramatic consequences. The same rationale applies to the scope of the non-compete:

Client:  We do business throughout the United States?  Can we put in a US wide non-compete?

Lawyer: In some circumstances courts have upheld nationwide non-competes but no situation is the same.

Client:  Well, let’s go as broad as possible.

This is the wrong approach.  There are a number of audiences that a non-compete will be considered by: (1)  employees; (2) the lawyer for a departing employee; (3) the judge; and (4) appellate courts.  I have been a party to numerous discussions between employees who have left or are considering leaving in the face of a non-compete.  A narrowly tailored non-compete that has been thought through can be intimidating.  Why?  Because a non-compete that avoids fluff, e.g. too long and overly broad, eliminates the position that the agreement should be narrowed by the court.  If the time/scope argument is taken out of the equation, the employer is in a much better position to enforce and looks reasonable to the judge.  That means the lawyer providing advice to the departing employee has less to argue. Spend some time considering your non-compete terms, the objective is to enforce it as written, not to have it rewritten by the court.

As the New Year begins a couple of things to consider:

  1. Is the company employee manual up to date – any changes necessary? – The beginning of the year is always a good time to review those policies and procedures and see how they worked in 2019. Often the year will show some deficiencies or problems with policies as they are applied.
  2. Are employee files up to date? Make sure all employees have acknowledged receiving the most recent HR manual or any changes to the manual.
  3. Are company employment agreements up to date? Make sure any employment agreements are updated or amended to reflect changes in ownership or term expiration. Quite often those agreements are forgotten about and there is no agreement in place.
    Make sure employees have signed off on all non-compete, non-solicit, or confidentiality agreements. Make sure you have signatures
  4. Frequently the end of the year involves reviews. Make sure those reviews are acknowledged by the employee and make it to their employment files.Do you have job descriptions for your employees? Do you even need them?
  5. Are your independent contractors really employees?
  6. Is it time for some employees to move elsewhere?
  7. Is there a troublesome employee our there that might benefit from a performance improvement plan?
  8. Get your lawyer to take you out for lunch so they can update you on any new employees issues coming in 2020 and so you can pick their brain about any other issues.

All the best in 2020!

 

The above is a fuzzy map of the city limits of Dallas with zip codes – you get the point. The recently enacted Dallas Paid Sick Time Ordinance applies to the areas in green.  Here is our previous discussion on the details of the ordinance.  In a nutshell, employees who work work at least 80 hours a week in the geographic boundaries of Dallas are entitled to paid sick leave

Today, I took a look at the City of Dallas “Frequently Asked Questions” regarding the Dallas Paid Sick Time ordinance.  Here some of the more obscure/interesting items that caught my attention:

  • Employee has to be working in the geographical boundaries of the City of Dallas;
  • Number of employees is determined by those that have done at least 80 hours of compensable work within the City of Dallas in the last 12 months – if the number of employees has varied use the highest number – part time employees are considered one employee;
  • Enforcement of provision (except retaliation) with employers that have six or more employees begins April 1, 2020 – 5 or more August 1, 2021;
  • There is a fairly lengthy discussion about how to properly front-load hours (employee has immediate access to sick time as opposed to accruing the hours over time);
  • Employers must provide employees a monthly statement about the balance of their paid sick time hours;
  • Records related to use of sick time hours must be maintained for 3 years;
  • Employees must provide notice of FORESEEABLE sick time notices;
  • Employees must be paid for sick time on the pay period for which the sick time was used;
  • A terminated employee is not entitled to payment for unused sick leave;
  • The ordinance will be enforced by the Office of Fair Housing and Human rights (no details as of yet); and
  • A complaint can be filed on a complaint form but does not have to be.

From my perspective the enforcement details will be very interesting and raise a lot of questions.  What type of investigation process will the Office of Fair Housing employ?  Will it be similar to an EEOC investigation where the is a complaint filed by a response?  What type of appeal process will there be of the Office of Fair Housing’s initial determination?  The devil is always in the details.  We’ll keep you posted on any developments.

 

Here’s a smattering of cases/disputes that are out there:

  1. Interesting article about two cases from Ohio involving a cookie entrepreneur and taco restaurant chain owner;
  2. Not in the employment world – but a Michigan judge shut down the construction of a hotel after determining it violated a non-compete;
  3. The typical pharmaceutical sales rep case – this one from Kansas City (paywall);
  4. A non-compete case from East Texas where a doctor sued a group of nurses over a non-compete; and
  5. A lawsuit by six veterinarians in Washington challenging a non-compete contained in a shareholders agreement.

Non-competes aren’t going anywhere for now but Presidential Candidate Elizabeth Warren has promised to ban them if elected.

 

We’ve been following the overtime rule changes since 2016.  The changes stalled out for various reasons but the US Department of Labor under the Trump Administration has delivered its new regulations which are effective January 1, 2020.

Some of the key points:

  • the minimum base salary for exempt employees moves up from $455 a week to $684 a week ($23,660 annually to $35,568 annually)
  • the total annual compensation for “highly compensated employees” increases from $100,000 to $107,432 (annual salary)
  • there are no automatic increases to salary levels.

To put it in perspective, the Obama era base salary increase would have been $47,476 as opposed to $35,568 number.  Put another way, those that make below the $35k number are entitled to overtime under the Fair Labor Standards Act.

The same suggestions the DOL circulated in 2016 still hold true:

  • Raise salary and keep the employee exempt from overtime: Employers may choose to raise the salaries of employees to at or above the salary level to maintain their exempt status, if those employees meet the duties test (that is, the duties are truly those of an executive, administrative or professional employee). This option works for employees who have salaries close to the new salary level and regularly work overtime.
  • Pay overtime in addition to the employee’s current salary when necessary: Employers also can continue to pay their newly overtime-eligible employees the same salary, and pay them overtime whenever they work more than 40 hours in a week. This approach works for employees who work 40 hours or fewer in a typical workweek, but have occasional spikes that require overtime for which employers can plan and budget the extra pay during those periods. Remember that there is no requirement to convert employees from salaried to hourly in order to calculate their overtime pay!
  • Evaluate and realign hours and staff workload: Employers can ensure that workload distribution, time and staffing levels are all managed appropriately for their white-collar workers who earn below the salary threshold. For example, employers may hire additional workers.

Employers still need to consider state and local laws that impact this issue.  Regardless, action is necessary now to avoid collective FLSA overtime exposure beginning in 2020.

Employers don’t spend enough time considering their non-competes.  That’s an overly broad statement, but it is usually the rule not the exception.  The reason that happens kind of makes sense. Most employers haven’t been down the road of enforcing a non-compete.  The provision at issue may be a one-off that’s included in one employment agreement or one that has been altered over time.  Point is there is no judicial experience with the non-compete.  The employer hasn’t actually seen the non-compete in action so there is no history.

What I seen in most cases is an attempt to make the non-compete as broad as possible, which kind of makes sense as well.  The scenario is the execution of a new employment agreement with a new employee.  The employer want the agreement to be as broad as possible and the employee may not be focused on the actual details – just the existence of the non-compete itself.  Employees don’t usually negotiate the terms of a non-compete – the real negotiation is usually over whether the employment agreement is going to contain the provision or not.  So there’s really not much dickering over the terms – which actually might help the employer.

So, the employee departs and starts to complete.  The former employer tracks down the employment agreement that was signed potentially years before and was potentially drafted by a different in house counsel or outside lawyer.  The former employer goes to the trusty lawyer who is concerned the non-compete is overly broad and a judge in Collin County or Dallas County will not like it.

A lawyer trying to enforce a non-compete has a lot of challenges.  Yes they are enforceable, yes the law has improved in Texas over the years, but that doesn’t mean Judges like them.  A lawyer want a non-compete that is narrow – it covers the work the employee actually does and who he/she actually worked with.  It does not need to tie to all the things the employer does and all the customers it has or may ever have.

An employer is putting itself at a disadvantage and in a defensive posture when it comes to an overly broad non-compete.  At best, the court could reform the non-compete through a temporary restraining order or temporary injunction.  At worst, the court could deny the relief entirely.  Don’t play defense – think narrow and don’t be greedy when drafting a non-compete.

 

Last week, Google said it was no longer going to enforce its anti-poaching provision that includes in its employment contracts.  I don’t see them going anywhere as it relates to Texas employers/employees.

Under Texas law, an anti-poaching provision has to satisfy the Texas non-compete statute meaning it has to be ancillary to an otherwise enforceable agreement and reasonable in time and scope.  The provision will attempt to limit a departing employer from hiring a current or former (maybe within a couple of months of termination) of the employer to work in a competing business.  The thought behind such a provision is it prevents a mass exodus and a former employee from taking her team somewhere else.  The anti-raid is frequently seen in a sales based organization.  The provision usually lasts 1-2 years.

There aren’t many Texas cases on the anti-raid.  In most circumstances if an employer has taken the time to prepare an anti-raid there is likely to be a non-compete, non-solicit (customers related), and/or non-disclosure/confidentiality provision.  There’s a good chance that a departing employee violating accused of violating an anti-raid provision is also accused of violating a non-compete.  The focus in those situations is on the non-compete but poaching employees is another example of bad acts by an a departing employee that may lead to a judge entering injunctive relief that enforces both provisions.

Employers will look for evidence of an orchestrated raid.  This usually takes the form of emails and texts leading up to the departure.  The employee will argue they did not reach out to the employee, the employee called them, sort of like a non-solicit defense.  The court has to balance the right of an employee to work where they prefer versus the enforceability of the contract provision.  Often times the employer will sue the departed employee for tortious interference as well.

Employers will continue to use the anti-raid as another arrow in the quiver of post-employment covenants.  Employees will have to work within the confines of such an agreement to permit a move.  These provisions aren’t going anywhere.

 

 

Over the past few months we’ve been tracking the interplay between various Texas cities (San Antonio – Dallas – Austin) and the Texas legislature.  The aforementioned city councils adopted in similar form and fashion mandatory leave policies for employees within city limits.  The Dallas version provides for the following:

  • In effect August 1, 2019 for employers with 15 or more employees and August 1, 2021 for smaller businesses;
  • All for-profit and non-profit businesses required to provide paid sick-leave;
  • An employee is entitled to one hour of leave for every 30 hours worked; and
  • The number of hours that can be accrued is limited to 64 hours for employers that employ more than 15 employees and 48 hours for those with fewer than 15.

Mayors and legislators told us the ordinances would never happen because Texas state legislation would prevent the ordinances – or so they said.  Guess what?  The Texas legislature did not make it happen.  Come August we have mandatory leave in Dallas proper.

Other cities in the U.S. have passed similar ordinances and in some instances gone above and beyond.  For instance, the City of Minneapolis has a passed a quasi-FMLA ordinance with retaliation provisions.  A city agency can actually award damages with limited judicial review.  Think of it as arming the EEOC with the power to award damages – from an employer perspective that his scary.  The question becomes whether Texas cities will continue to expand these type of pro-employee provisions. We’ll see and keep you posted.

 

Following a number of other cities in Texas including Austin and San Antonio, the Dallas City Council approved an ordinance requiring paid sick leave for Dallas employees.  The highlights of the ordinance:

  • In effect August 1, 2019 for employers with 15 or more employees and August 1, 2021 for smaller businesses;
  • All for-profit and non-profit businesses required to provide paid sick-leave;
  • An employee is entitled to one hour of leave for every 30 hours worked; and
  • The number of hours that can be accrued is limited to 64 hours for employers that employ more than 15 employees and 48 hours for those with fewer than 15.

Employers and employee should tap the breaks right now.  There is currently legislation in Austin that will prevent the Dallas along with other city sponsored paid leave ordinances.  Multiple measures have already passed the Senate.  It seems unlikely the the ordinances will survive but we will continue to monitor the situation.