New York Appellate Court Declines to Enforce Noncompetes Against Employees Terminated Without Cause

bigstock-New-York-Stamp-14516816A recent decision by the New York Supreme Court, Appellate Division for the First Department, Buchanan Capital Markets, LLC v. DeLucca, 144 A.D.3d 508 (1st Dep’t. 2016), suggests that noncompetition restrictions against employees who have been terminated without cause are unenforceable.  The court stated that “covenants not to compete in employment agreements … are not enforceable if the employer … does not demonstrate continued willingness to employ the party covenanting not to compete.”

Buchanan Capital Markets, LLC (BCM), a financial services firm, terminated several employees who were financial and operations principals in connection with the sale of the company, but gave the employees the option to reapply to the successor firm. The employees had signed employment agreements with BCM’s predecessor company that contained two-year post-employment noncompetition and customer nonsolicitation restrictions. Following their terminations, the employees went to work for a competitor, and several BCM clients left BCM to do business with the competitor. Subsequently, BCM sought a preliminary injunction to enforce the noncompetition and customer nonsolicitation restrictions and to order the former employees to return to BCM its proprietary business information. To obtain a preliminary injunction under the state laws of New York for a violation of a noncompetition restriction, an employer must demonstrate a likelihood of success on the merits, irreparable injury, and a balance of equities in its favor. The trial court concluded that BCM had not met these factors and denied BCM’s application for a preliminary injunction. Continue Reading

Joint Employment Update: What’s The Status of Browning-Ferris and the NLRB?

Employment_186440912In August 2015, the NLRB rewrote the book on joint employment, declaring in the Browning-Ferris case that the right to exercise minimal control, even if not actually exercised, was enough to create a joint employment relationship.  (Read more here.) Previously, joint employment under the National Labor Relations Act (NLRA) required the actual exercise of a meaningful level of control.

But what’s happened since then? What happens next? What should employers expect in 2017 regarding joint employment under the NLRA?

Let’s start by looking at the case itself. Browning-Ferris is on appeal, with oral argument scheduled in the D.C. Court of Appeals on March 9, 2017 (that’s also National Crabmeat Day, for you crustacean lovers). So that decision should clear things up, right?  Wrong.

First, the Court of Appeals is unlikely to reverse the NLRB.  The Court of Appeals must generally defer to the Board’s interpretation of the NLRA, unless it determines that the Board acted arbitrarily or contrary to the facts. Continue Reading

Probationary Periods: A Window Worth Closing

Time To Evaluate TypewriterProbationary periods are a tool long used to test the viability of job candidates. They can provide a window into an employee’s suitability and qualifications for a position. In an economy that continues to have high unemployment, recent graduates, those looking to change careers and those interested in a specific company may be particularly open to a probationary period that lets them get their foot in the door. However, without adequate protections, when completed, a probationary period may create an expectation on behalf of the new employee – and, more importantly, in the eyes of a court – that the employee cannot be fired at will. This is just one of several reasons you might consider eliminating probationary periods as a hiring tool, unless your company has a unionized workforce.

This is not to say that probationary periods cannot serve a useful purpose, particularly when an employer has a unionized workforce. Under most collective bargaining agreements, employers can terminate employees only if they can demonstrate “just cause” and exhaust the grievance or arbitration procedures. But when an employer has negotiated for a probationary period for new hires as part of its collective bargaining agreement with a union, a new hire can be terminated during that period consistent with the employment-at-will standard, meaning that the employer can terminate the employee for any legal reason or no reason at all. Given how difficult it can be to terminate a union employee, negotiating a probationary period clause into a collective bargaining agreement can be an extremely valuable tool to ensure that you are hiring the right employees for the job – especially if you may have to live with them for a long time.

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New Year, New Minimum Wage (Orders) in New York

bigstock-New-York-Stamp-14516816As most employers are likely aware, effective Dec. 31, 2016, new minimum wages went into effect in New York. The rates vary for employers, depending on size and location. For those who may have missed this change, the new minimum wages are listed in the table below.

Additionally, New York employers may or may not know that the New York State Department of Labor (NYSDOL) had several proposals pending that would affect employees’ pay. For instance, the NYSDOL had a proposal to raise the minimum salary threshold in order for an employee to qualify as exempt from overtime under New York law. There had been little to no conversation about the progress of the recent proposal on the NYSDOL website, but the proposal has in fact passed, and has been implemented by the new wage orders, making the new salary thresholds (and other requirements contained in the proposal) effective as of Dec. 31, 2016. Below are some highlights of the provisions of the wage orders; however, employers should be cautioned to consult with an employment attorney prior to implementing any of the changes provided below, as different requirements or restrictions may apply to a specific industry. Please feel free to contact a member of the BakerHostetler employment team, who would be happy to guide you on this process. Continue Reading

Los Angeles Joins Ban the Box Movement

Los Angeles has become the latest city to ban private employers from asking job applicants about their criminal histories before offering a job. With its Fair Chance Initiative for Hiring, the city joins San Francisco, New York, Chicago, and about two dozen other cities, counties and states in enacting Ban the Box measures to promote better employment opportunities for ex-offenders.

The ordinance applies to employers doing business in the city if they have at least 10 employees, including owners, managers and supervisors, who perform an average of at least two hours of work each week in the city and who qualify as employees entitled to California’s minimum wage. The law’s protections extend not only to applicants for traditional employment, but also to those seeking temporary, seasonal or part-time work; contracted work; contingent work; work on a commission basis; and work obtained through a temp agency or employment agency, as well as to vocational or educational training with or without pay.             Continue Reading

Trump Names Fast Food CEO As Labor Secretary

labor law developmentsPresident-elect Donald J. Trump on Thursday named Andrew F. Puzder, chief executive of the company that operates the fast food outlets Hardee’s and Carl’s Jr. to be the DOL’s new secretary of labor.

As widely reported by The New York Times, The Wall Street Journal and other major media outlets, Mr. Puzder is a critic of the Affordable Care Act, has argued against raising the federal minimum wage, and is against the variety of executive orders that the Obama Administration passed, including the Overtime Pay Rule that is currently under appeal.

Additionally, and relating directly to employers’ pockets – it is unlikely that employers will see a hike in the federal minimum wage in this administration, and it is likely that, if confirmed, Mr. Puzder will not fight to enforce the Obama administration’s new Fair Labor Standards Act exemption rule, which was supposed to go into effect December 1, 2016, and would have raised the minimum salary threshold to be considered an exempt employee.  In general, it appears, Mr. Puzder’s appointment could result in a more flexible approach to the federal laws and regulations than employers experienced under the current administration.  This flexible approach could ultimately lead to fewer lawsuits and fines directed at employers who are attempting in good faith to follow the rules and regulations.

 

Navigating Through the Smoke: The Intersection of Marijuana Legalization and Employment Law

LaborPublic approval for medical and recreational marijuana is at an all-time high. In November 2016, four states voted to legalize recreational marijuana: California, Nevada, Massachusetts and Maine (although, at the time of this posting, the vote in Maine is subject to a recount). These states join Alaska, Colorado, the District of Columbia, Oregon and Washington, which previously legalized recreational use. When these changes take effect, it is estimated that one in five Americans will have access to entirely legal marijuana.

In addition, four states voted to allow or expand medical marijuana use. Those states are Florida, North Dakota, Arkansas and Montana. A total of 42 states now permit medical marijuana in some capacity.

Given the changing landscape, employers may wonder what their rights are when an employee is legally using recreational marijuana or using medicinal marijuana to treat a disability under the Americans with Disabilities Act (ADA) or a serious medical condition under the Family and Medical Leave Act (FMLA). Continue Reading

EEOC Issues New Enforcement Guidance On National Origin Discrimination

Discrimination underlined with red markerOn Nov. 21, 2016, the United States Equal Employment Opportunity Commission (EEOC) issued updated enforcement guidance on national origin discrimination for the first time in 14 years. Some may speculate whether this has anything to do with increased ethnic tensions in the wake of the presidential campaign and election results. Some also recognize that in 2015 alone, approximately 11 percent of the 89,385 private sector charges filed with the EEOC alleged national origin discrimination, claiming a wide variety of Title VII violations, including unlawful failure to hire, termination, language-related issues and harassment. Regardless of the reasoning, its issuance may have widespread implications for employers who fail to vigorously enforce their anti-discrimination and harassment policies.

Among other things, the EEOC’s lengthy guidance addresses topics such as the definition of national origin discrimination, related unlawful employment decisions, related harassment, language-related issues and citizenship status. It offers various examples of what is lawful versus unlawful among these various topics, and also provides guidance to employers with regard to permissible practices.

So, what is national origin discrimination? According to the new guidance, it is “discrimination because an individual (or his or her ancestors) is or perceived to be from a certain place or has the physical, cultural, or linguistic characteristics of a particular national origin group.” In unpacking that definition, the EEOC explains that a “certain place” may mean a country, like Russia, a former country, like Yugoslavia, or somewhere that is associated with an ethnic group, but is not a country, like Tibet. Furthermore, a “national origin group” is a “group of people who share a common language, culture, ancestry, and/or other social characteristics,” like Hispanics. Importantly, the EEOC noted that it is possible for someone from the same ethnic or national origin group to discriminate against or harass someone in his or her same group. Likewise, it is also possible for an American to suffer national origin discrimination. Further, one may also suffer from discrimination based on his or her association with a person of a particular national origin. Continue Reading

Texas Judge Halts December 1 Implementation of Department of Labor’s “Overtime Final Rule”

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UPDATE:

As anticipated, the Department of Labor has filed its Notice of Appeal with the Fifth Circuit Court of Appeals, asserting that Judge Mazzant’s Nov. 22, 2016, Order enjoining the enforcement of the Department of Labor’s Final Overtime Rule “rests on an error of law and should be reversed.” The DOL has also requested that the court enter an expedited briefing schedule for the appeal that would require all briefing to be completed by Feb. 7, 2017, with oral argument to be scheduled for the first available date thereafter.

Giving the court a preview of its opening brief, the DOL declared that the District Court’s ruling directly contravened the Fifth Circuit’s prior ruling in Wirtz v. Mississippi Publishers Corp., 364 F.2d 603 (5th Cir. 1966), which found that the DOL had “broad latitude to ‘define and delimit’ the meaning of the term ‘bona fide executive … capacity.’” The DOL also asserted that the updated salary level under the Final Rule is commensurate with salary levels that the DOL has set over the past 75 years, explaining that the original ratio between the minimum salary level and minimum wage is roughly the same under the Overtime Final Rule (3.15) as it was under the 1938 regulations (3.0).

The DOL has requested that the Court issue a ruling on the expedited schedule by December 8, 2016. Plaintiffs/Appellees, consisting of a group of 21 states led by Texas and Nevada, oppose the expedited scheduling and have indicated their preference to wait until after the District Court has ruled on the motion for summary judgment currently pending in a companion case brought by the U.S. Chamber of Commerce and over 50 other national and Texas business groups on September 20, 2016. Continue Reading

Nationwide Permanent Injunction Bars Implementation of DOL’s “Persuader Rule”

LaborAs we explained in our client alert and blog posting on June 30, 2016, a Texas federal court on June 27 enjoined the United States Department of Labor (DOL) from implementing its new interpretation of the “Persuader Rule.” In a sweeping 86-page rebuff to DOL, the court opined that the DOL’s new interpretation of the “Advice Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act” (“New Rule” for short) is “defective to its core,” and thus it preliminarily enjoined implementation of the New Rule nationwide.

On Nov. 16, this same federal court converted its June ruling to a permanent nationwide injunction that prevents implementation of the New Rule. Senior Judge Sam R. Cummings also granted the motion for summary judgment by Texas, nine other states and various business groups. This decision is critically important to employers because it preserves their right to confidential legal representation without government interference. Prior to this decision, the DOL’s New Rule (totaling 127 pages) and its significant reporting obligations were set to take effect on July 1, 2016.

By way of background, the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA, or the Act) has long contained provisions requiring persons engaged in persuading employees concerning the exercise of their rights to organize and engage in collective bargaining pursuant to an agreement or arrangement with the employees’ employer to report the details of those agreements and arrangements. These provisions are known as the “Persuader Rule.” Traditionally, a person engaged in reportable persuader activity only if he or she had direct contact with employees. The work of labor consultants, including law firms, that had no direct contact with employees but assisted employers in advising them on how to run their union avoidance campaigns was considered exempt from reporting under the “advice exemption” found in Section 203(c) of the LMRDA.

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