Michael J. Davey, Esq. mdavey@eckellsparks.com 610.565.3700

Tuesday, September 22, 2015

When Non-Competes are Non-Specific, Bad Things Happen

There are not many things in business as bad as a former employee setting himself or herself up in direct competition with his or her former employer. It's worse, however, when the former employee is permitted to do so in the face of a non-compete agreement that the employer originally thought was air-tight. 

Such was the scenario that Boyds clothing store recently found itself in, when it tried to prevent one of its former men's and women's footwear floor managers from opening up his own shoe store in Philadelphia. That former employee had previously signed a non-compete agreement with Boyds, which prevented him from:
"directly or indirectly, individually or as a partner or as an agent, employee or stockholder of any corporation or otherwise. . . [s]olicit or accept a job offer from another men's and or women's retail clothing company who engages in the sale of men's and/or women's clothing that is within a (50) mile radius,"
of any Boyds' store, following the end of his employment.

Pretty straightforward, no?

Not quite. 

The Pennsylvania Superior Court disagreed with Boyds' contention that the language above prevented the former employee from starting up his own shoe store. Distilled to its core, the Court held that by going into business for himself, the former employee had not "solicited" or "accepted" a job offer from a competitive retail clothing store. Not willing to accept form over substance, the Court rejected Boyds' argument that the former employee's own shoe store—a separate legally incorporated entity—had, in effect, "offered" him a "job," upon its creation, which the former employee then "accepted," placing him in violation of the non-compete agreement. Instead, the Court found that the plain language of the non-compete agreement simply did not prevent or preclude outright ownership of a competing business; rather, it prohibited only soliciting and accepting a job offer, not staring up one's own establishment. Those are two different things. 

The lesson of this case should be obvious; non-compete agreements (like all legal contracts, for that matter) should say what is meant and mean what is said. That maxim, unfortunately, is often elusive in the the world of highly-convoluted, grammar-strained legal writing, which attempts encompass all known scenarios and possible outcomes by employing broad, generic, and occasionally obtuse language. But it doesn't have to be that way. Just because a legal document—whether a non-compete agreement, employment contract, or independent contractor agreement—carries with it binding obligations and requirements under the law, doesn't mean that it needs to be written like dusty law textbook. Contracts such as these should employ simple, non-technical language that is capable of being both easily read and easily understood, and is not subject to questionable interpretations. Similarly, over-arching concepts and descriptive scenarios should be espoused in favor of plain-English statements of intent and direction. 

If Boyds had truly wanted to prevent its former employees from starting up their own clothing businesses down the block and siphoning away potential customers, it should have written its non-compete agreement to say exactly that. For example, "after termination of employment with Boyds, the employee agrees not to own, control, or manage any men's or women's retail clothing business located within 50 miles of any Boyds' store," is easy-to-understand language that could have accomplished Boyds' intent, protected its legitimate business interests, and avoided the exact scenario it now finds itself it. 

Oh, and it probably would have saved Boyds a lot of money in attorneys' fees, as well. 

Tuesday, September 15, 2015

Tip of the Day: If You Are a Teacher, Don't Go Online and Call Your Student a "Lazy A**hole."

Sounds like self-evident advice, no? Well, to Natalie Munroe, it wasn't. 

Munroe was an English teacher at Central Bucks School District who, in 2009, began writing her own personal blog, which was intended to be maintained primarily for her friends, not the public at large. 

In 2010, Munroe took to her blog and wrote an article in which she identified a list of suggested comments she believed teachers should include on their students' report cards in order to more accurately reflect what those teachers "really want to say to [those] parents." Her suggestions included comments such as:"has no business being in Honors," "dunderhead," "rat-like," "liar and cheater," "unable to think for himself," "tactless," and "lazy asshole." 

A few months later, Munroe composed another blog post where—in the midst of also complaining about the temperature her classroom was kept at and which musical artists she found loathsome—she griped about "an obnoxious kid" in her class, and about another child whom she referred to as a "jerk," for missing an assignment after being out of school for 3 days because his family went on vacation.

The content of Munroe's student-related blog postings came to light following an investigation by a local newspaper. After word of Munroe's blog posts made the rounds through the student body, the parents, and the administration, Munroe was eventually fired. 

Big shocker. 

Following her unceremonious dumping by the School District (some might call it "karma"), Munroe sued, arguing that the School District had unlawfully violated her First Amendment right to free speech by firing her because of the contents in her blog

The Third Circuit Court of Appeals recently disagreed, holding that the First Amendment provided Munroe no protection from termination due to the contents of her blog.

Unlike private-sector workers, employees of a public employer (like a school district) continue to enjoy a First Amendment right to free speech, and do not surrender that right simply because they choose to work for the government. That right, however, is not absolute. As an employer, the government has legitimate interests in maintaining the efficient administration of the workplace, and ensuring that public employee speech does not interfere with the performance of employee job functions. So, a public employee's speech only finds protection under the First Amendment if it: (1) involves a matter of public—as opposed to private—concern; and (2) the government lacks an adequate justification for treating the employee differently than the general public based upon its needs as a employer. 

In its decision, the Third Circuit first found that the contents of Munroe's blog failed to qualify as speech involving a public concern. Even though portions of her blog discussed the education of her students and the operations of the Central Bucks School District in general, the majority of its contents—when viewed as a whole—addressed merely private issues, such as what types of musical artists Munroe disliked, pie recipes, and movie reviews. Hardly the stuff of vigorous public debate. Moreover, even if Munroe's blog contents had satisfied the "public concern" requirement, the Court held that her First Amendment retaliation claim still failed, inasmuch as the School District had established that the notoriety garnered by Munroe's now-infamous online rantings had disrupted the work of both the student body and the administration. As the Court put it: "Munroe's various expressions of hostility and disgust against her students [disrupted] her duties as a high school teacher and the functioning of the School District." Because the Court determined that Munroe could not satisfy either element identified above, it held that she enjoyed no First Amendment protection from termination due to the contents of her blog.

The take-away for governmental employers here is that while claims of First Amendment protection by public employees are never cut-and-dry, speech that may appear on its face to touch on a matter of public concern does not automatically entitle the speaker to constitutional job security, nor does it eliminate any disciplinary recourse by the employer. 

The moral of Munroe's story for employees (whether public or private) is: be extra, extra careful about what you put online, even if what you post is only intended for a selective audience. The Internet is not "private" by any stretch of the imagination, even if you label something as so. Basically, if someone other than you can read what you wrote, then chances are your employer might read it some day, as well. So, if you cannot resist the urge or temptation to write something online, edit it thoroughly, and err on the side of omission rather than inclusion. You may also want to take the time to have someone else read it before you click "post," just to be sure.

Unless, of course, you are just a "lazy asshole."

Friday, September 11, 2015

Federal Contractors Required to Provide Paid Sick Leave Starting in 2017

This past Monday, President Obama signed an Executive Order that, beginning January 1, 2017, mandates all federal contractors and subcontractors to provide up to 30 hours of paid sick leave for their employees. Workers for contractors subject to this Executive Order will be entitled to earn 1 hour of paid sick leave for every 30 hours of work performed, up to a maximum of 56 hours (7 days) of paid sick leave per year. 

Workers who earn paid sick leave will be entitled to use that time to cover absences resulting from: 
  1. illnesses, injuries, or medical issues; 
  2. the need to obtain diagnoses, care or treatment from a healthcare provider; 
  3. the care for a child, parent, spouse, domestic partner or "any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship" [read, non-adopted step-children, step-parents, etc.], who is seeking a medical diagnosis, or is in need of medical care or treatment; or
  4. domestic violence, sexual assault, or stalking.
If a federal contractor already has a collective bargaining agreement in place, or is subject to a state law that provides greater mandatory leave entitlements than this Executive Order, then the provisions of the collective bargain agreement or state law will govern. 

If you are an employer who does any contract work with any federal agency, these requirements will start appearing in your contracts after January 1, 2017, so plan accordingly as that date nears.

Remember also that the provisions of this Executive Order do not supplant or supersede a qualifying employer's obligations to provide reasonable accommodations to a disabled employee under the Americans with Disabilities Act, or provide eligible workers with FMLA leave when necessary. Beginning in 2017, these new paid sick leave requirements will need to be incorporated into federal contractors' existing legal leave obligations. For example, even though federal FMLA leave is not mandated to be paid, if an employee of a federal contractor accrues 56 hours of paid sick leave time under this Executive Order, then takes FMLA leave for his or her own serious health condition, the first seven days of the FMLA may have to be paid. Federal contractors will have to decide whether they want to implement new policies to address these types of issues, such as requiring employees to exhaust all accrued paid-sick-leave under this Executive Order while on an FMLA-qualifying leave. 

Wednesday, September 2, 2015

Federal Judge Allows Uber Drivers to Sue as a Class

Yesterday, Judge Edward Chen of the U.S. District Court for the Northern District of California partially certified a class of potentially thousands of Uber Drivers in a wage and hour suit where four plaintiffs—all current or former drivers for Uber—claimed that they were misclassified as independent contractors and were not permitted to keep all tips given to them by customers. Full story here: Uber Drivers' Labor Lawsuit Granted Class Action Status in California.

This case (although on a large scale), coupled with the recent Administrator's Interpretation by the U.S. Department of Labor Wage and Hour Division that declares "most workers are employees," under the federal Fair Labor Standards Act, illustrates the importance of making sure workers are properly classified as employees or independent contractors, depending upon their job duties, responsibilities, and the level of control over them exercised by the business. 

Are your workers properly classified? When was the last time you engaged in a full-spectrum classification review of all workers? Given the potential liabilities at stake, you might want to be "Uber" sure.