Boston Employment Lawyer Blog

Claims for unlawful workplace discrimination are typically proven through two types of evidence: direct and circumstantial. Direct evidence is often referred to as "smoking gun" evidence where, for example, a company informs an employee that he or she is being terminated because of his or her age. Circumstantial evidence is much more subtle. As a great trial lawyer once said, "We better know there is a fire whence we see much smoke rising than we could know it by one or two witnesses swearing to it. The witnesses may commit perjury, but the smoke cannot." Abraham Lincoln, Unsent Letter to J.R. Underwood and Henry Grider, October 26, 1864. Thus, in an age discrimination case, circumstantial evidence may take the form of an older employee (who is at least 40 years old) who is terminated without explanation.

This is exactly what occurred in Vélez v. Thermo King de Puerto Rico. There, the employer terminated a 56 year old employee without explanation. The company finally provided a reason for the termination one month later only after the employee filed a claim for age discrimination with the Equal Employment Opportunity Commission. The employer changed its reason thereafter. The First Circuit found the employer's initial silence to constitute circumstantial evidence of discrimination:

Thermo King did not initially provide Vélez with any reason for firing him. One month later, Soto told the ADU and the EEOC that Vélez had been fired for violating the company's policy on receiving gifts from suppliers. It was not until over a year later that Thermo King, responding to this lawsuit, first said that Vélez had been fired for stealing and selling company property. The fact that the employer gave different reasons at different times for its action surely supports a finding that the reason it ultimately settled on was fabricated.

In my interview with Massachusetts Lawyers Weekly, I discussed the significance of the Thermo King decision:

It appears to be the first time the 1st Circuit has held that an employer's failure to articulate the reasons for a termination before litigation equals pretext for discrimination.

Our prediction is that the Thermo King decision will encourage more transparency. Employers are now incentivized to articulate a clear reason as to why an employee is being terminated from the outset or risk an inference of discriminatory motive.

Non-compete agreements must be reasonably limited in time and geographic scope and supported by consideration in order to be enforceable (among other factors). In many circumstances, the "consideration" equals a job. As an employee's job changes, however, a new non-compete may be required. In 2004, three separate Massachusetts Superior Court decisions made clear that a restrictive covenant is likely unenforceable where it was entered into prior to material changes -- such as a promotion -- in an employment relationship.

• Lycos, Inc. v. Lincoln Jackson, 18 Mass. L. Rep. 256 (2004) (Aug. 24, 2004) (Houston, J.) (denying request for a preliminary injunction "[b]ecause a material change in the employment relationship between [defendant] and [plaintiff] voided the previous Agreement, and because defendant did not sign the Offer Letter incorporating the old Agreement, no written nondisclosure, noncompetition and developments agreement now exists between the parties")
  
• R.E. Moulton, Inc. v. Lee, 18 Mass. L. Rep. 157 (June 17, 2004) (Kottmyer, J.) (denying request for a preliminary injunction where employee's position and compensation changed, but no new non-compete agreement was signed and the employer did not notify the employee that he was still subject to the non-compete clause)
  
• Cypress Group, Inc. v. Stride & Assocs., Inc., 17 Mass. L. Rep. 436 (Feb. 11, 2004) (Burnes, J.) (denying request for a preliminary injunction because employees did not sign new restrictive covenant after their promotions to new positions at company)

Recently, the First Circuit's decision in Astro-Med v. Nihon, called this principle into question. The case originated out of the District Court of Rhode Island. In Astro-Med, Kevin Plant signed a non-compete in 2002 when he joined the company as a Product Specialist, which prohibited from working in all of North America and Europe for a period of one year after his employment ended. In 2004, the company promoted Plant to a sales role in which he served the state of Florida. The non-compete agreement, as written, was unenforceable because the geographic scope was far too broad. The District Court revised the non-compete agreement for the employer so that it could enforceable. In doing so, the court curtailed its territorial reach to Florida and certain customers.

Plant argued that, even with the District Court's revisions, the non-compete was still unenforceable due to material changes in his employment when he was promoted to a sales role in 2004 and assigned a territory. Although the non-compete agreement was governed by Rhode Island law, Plant cited to Massachusetts law as persuasive authority. Noting the employer's complete lack of effort to have Plant sign a new non-compete agreement following his promotion, the First Circuit rejected this argument:

Assuming that Rhode Island would adopt Massachusetts' material change rule, the evidence in this case is insufficient to generate its application. Plant's job change from product specialist to district sales manager does not reflect a mutual abandonment and rescission of the non-competition provision; there is no suggestion that Astro-Med approached Plant with a new employment agreement; and, there is no evidence of intent on either Astro-Med's or Plant's part to revoke or supersede the employment agreement.

Unfortunately, the First Circuit ignored language in F.A. Bartlett Tree Expert Co. v. Barrington, which makes clear that a material change in employment, by itself, can be evidence that a prior non-compete has been abandoned:

The defendant worked under the 1948 contract for twelve years. In 1960, the defendant's rate of compensation and sales area were changed. Such far reaching changes strongly suggest that the parties had abandoned their old arrangement and had entered into a new relationship.

F.A. Bartlett Tree Expert Co., 353 Mass. 585, 587 (1968).

As other courts interpreting the Massachusetts "material change" rule have recognized, whether an employer has requested a new non-compete following a change in the employment relationship is not dispositive. Rather, "such efforts constitute additional proof that a new employment relationship was forming ...." See Iron Mountain v. Taddeo, 455 F. Supp. 2d 124, 134 (EDNY 2006) (emphasis added). Management-side attorneys will likely use the Astro-Med decision to argue in favor of the enforceability of non-competes that pre-date an employee's promotion. A careful reading of each Massachusetts case addressing the "material change" doctrine, however, makes clear that a promotion by itself can (under certain circumstances) constitute sufficient evidence that a new employment relationship was created -- requiring a new non-compete.

Non-competes in Massachusetts have been a hot topic in 2009. On October 7, 2009, the Joint Committee on Labor and Workforce Development held a public hearing on proposed non-compete legislation, entitled An Act Relative to NonCompete Agreements, sponsored by Representatives William Brownsberger (D-Belmont) and Lori Ehrlich (D-Marblehead). The experience of Caroline Huang, whose career was negatively affected by a broad restrictive covenant that kept her out of her field, encouraged Representative Brownsberger to focus on non-compete legislation. Ms. Huang's website, Prohibit Restrictive Employment Covenants, provides many resources and updates regarding the proposed bill.

I was fortunate to be in the position to provide commentary on the drafts that led to the final proposed bill. I also testified at the public hearing with a client, who years prior found her livelihood in jeopardy when her former employer tried to enforce an overly broad non-compete agreement. Although we were successful in opposing the employer's Motion for Preliminary Injunction, the cost in doing so sometimes prevents employees from properly asserting their rights. Employers know this and, unfortunately, often attempt to leverage the disparity in spending power. This creates a perverse outcome in which an employee is forced to abide by an otherwise unenforceable non-compete in order to avoid legal fees.

One of the highlights of the proposed legislation is a clause that entitles employees to attorneys' fees "if the court declines to enforce a material restriction or reforms a restriction in material respect." This will discourage employers from pursuing tenuous claims and help to preserve scarce judicial resources. Notably, the bill also limits non-competes to employees earning an annual salary of more than $75,000. Finally, the proposed legislation creates a presumption of enforceability for non-compete agreements that span up to 6 months.

Employees who receive commissions based on their work performance may face difficulty in securing payments from employers in this tough economy. Under certain circumstances, however, legal recourse exists to secure payment from unscrupulous employers who attempt to cut corners by depriving employees of legally earned commissions.

The Massachusetts Wage Act, namely M.G.L. c. 149, §148, explicitly defines the term "wages" to equal "commissions" where certain parameters are satisfied:

This section shall apply ... to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee ....

Where commissions are "due and payable" and "definitely determined," the caselaw in Massachusetts makes clear that the Wage Act applies to highly paid executives, and not just hourly workers. In Wiedmann v. Bradford Group, Inc., the Supreme Judicial Court upheld a claim of pay to a professional who had earned an irregular commission which had been held, by the trial court, to have been unprotected. Thereafter, the Massachusetts Appeals Court in Okerman v. VA Software Corp. followed the Wiedmann decision, and explicitly held it was reversible error to dismiss wage claims of highly paid executives claiming irregular, contingent commissions, above and beyond a “healthy” base salary. The Appeals Court further opined that to exclude the recovery of such commissions would "vitiate the entire paragraph in the Wage Act addressing commissions,” and render the commissions paragraph meaningless.

It is illegal for an employer to in any way penalize an employee who attempts to recover unpaid commissions. The Supreme Judicial Court in Smith v. Winter Place, LLC has interpreted this provision to cover internal complaints: “Complaint made to an employer (or a manger of the employer) by an employee who reasonably believes that the wages he or she has been paid violate such laws readily qualifies as" protected conduct.

When seeking to recover unpaid commissions, its important to determine first whether the commissions can be construed as "wages" under the Massachusetts Wage Act, and second to ensure that you are protected from retaliation.

Don't be fooled: Non-compete agreements are enforceable. I say this because the following exchange has been all too typical over the past several months:

Client: "I just landed a new job, with better pay and more room for growth. Can you look at my new employment agreement?"
Me: "Sure. Did you happen to sign a non-compete with your old employer?"
Client: "I think so, but I've heard that non-competes are pretty much unenforceable in Massachusetts."
Me: "Unfortunately, that's not the case. Non-competes are enforceable in Massachusetts, albeit under limited circumstances."

In Massachusetts, non-competes are in fact enforceable where they protect a legitimate business interest and are reasonably limited in both temporal and geographic scope. If your employer has asked you to sign a non-compete, its a safe bet that the company's counsel has crafted the agreement to give it the best chance of standing up in court.

One of Apple Inc.'s newest executives, Mark Papermaster, recently fell victim to the non-compete he signed with his former employer, International Business Machines Corp. (IBM). After leaving for Apple in October, IBM sued Papermaster, claiming that the move violated his non-compete agreement in which he agreed not to work for a competitor within one year after leaving his job.

On October 22, 2008, IBM filed its Complaint in the Southern District of New York in which, among others requests for relief, it petitioned the court for a preliminary injunction preventing Papermaster from working at Apple. In particular, IBM claimed that the agreement is enforceable because it protects a legitimate business interest since Apple is a competitor.

In his Affidavit, Papermaster challenged IBM's assertion that Apple competes with its business. Specifically, Papermaster noted that "IBM focuses on high-performance business systems such as information technology infrastructure, servers and information storage products, and operating systems software" (Para. 13). Papermaster went on to state that "Apple, on the other hand, is in the business of designing, manufacturing and marketing consumer-oriented hardware and related products" (Para. 14). In the end, IBM's argument resonated with U.S. District Judge Kenneth Karas, who ordered Papermaster to immediately "cease his employment with Apple Inc. until further order of this court."

Non-competes have fueled a growing debate in Massachusetts over the last year. As reported in Boston.com's article entitled, Why 'noncompete' means 'don't thrive ', making non-competes illegal in Massachusetts could greatly benefit the local economy:

The partners at Spark Capital, a Boston venture capital firm, began a campaign ... to get rid of noncompetes in Massachusetts. They sent a letter to Governor Deval L. Patrick in which they predicted that the result would be "more start-ups originating in the Commonwealth, a reduction in the exodus of talented people, and the ability for Massachusetts to better compete nationally and globally as a hub of innovation."

While businesses may oppose such a move, such a position could be short-sighted. Its not unreasonable to assume that IBM has found itself in Apple's shoes before, hoping to a hire a key employee whose talents and ideas could be fully realized. In the long run, promoting the free flow if ideas and labor is good for employees and employers alike. Some companies seem to be catching on. As reported in the same article, Google's Cambridge office does not require its employees to sign non-competes. Hopefully, this mindset will continue to gain traction.

The bottom line: If your employer asks you to sign a non-compete, YES it can be enforceable and YES you should have it reviewed beforehand to protect the career to which you have devoted countless late nights, early mornings, and weekends.

In Massachusetts, non-compete agreements are presumptively unenforceable as to certain professions: physicians; nurses; lawyers; broadcasters; and just recently, social workers.

Under M.G.L. c. 112, s. 12X, non-compete agreements are null and void as to physicians. In Falmouth Ob-Gyn Assocs., Inc. v. Abisla, the Supreme Judicial Court struck down a doctor’s contractual obligation to pay $250,000 in liquidated damages after leaving to compete against his former practice. In a similar vein, M.G.L. c. 112, s. 74D nullifies non-competes as to registered or licensed practical nurses.

Under the Massachusetts Rules of Professional Conduct, non-competes are unenforceable as to lawyers. However, in Pettingell v. Morrison, Mahoney & Miller, the Supreme Judicial Court considered the enforceability of a forfeiture-for-competition clause contained in a law firm’s partnership agreement. The clause required partners who withdraw from the firm, and who later compete, to forfeit certain payments. Although the Supreme Judicial Court ruled that the clause was unenforceable in that particular case, it noted that forfeiture-for-competition clauses are not per se illegal and may be upheld if a law firm could demonstrate that its survival and well-being justified such a clause.

In 1998, the Massachusetts legislature exempted individuals in the broadcasting industry, including television stations and radio stations. In particular, M.G.L. c. 149, s. 186, nullifies non-compete agreements in the broadcasting industry where: (1) the employer terminates the employee, (2) the employment relationship is terminated by mutual agreement, or (3) the employee’s contract expires. Notably, Section 186 does not prohibit the enforcement of non-compete agreements where the employee voluntarily terminates his or her employment prior to the expiration of an employment contract.

Recently, in 2008, the Massachusetts legislature made non-competes unenforceable with respect to social workers under M.G.L. c. 112, s. 135C:

A contract or agreement creating or establishing the terms of a partnership, employment, or any other form of professional relationship with a social worker licensed under this chapter that includes a restriction of the right of the social worker to practice in any geographic area for any period of time after termination of the partnership, employment or professional relationship shall be void and unenforceable with respect to that restriction. This section shall not render void or unenforceable the remainder of the contract or agreement.

Beyond these exemptions, a court will refuse to enforce a non-compete against any employee where the non-compete is not: (1) necessary to protect a legitimate business interest, (2) reasonably limited in time and geographic scope, (3) consonant with the public interest, and (4) supported by consideration. The burden of proof as to the enforceability of a non-compete agreement lies with the employer. For more information, please visit our previous blog post entitled, Massachusetts Non-Compete Agreements in a Nutshell.

One of the main purposes of the Sarbanes-Oxley Act ("SOX") of 2002 is to protect whistleblowers who speak out against a company's financial improprieties. Section 1107 of SOX states:

Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offence, shall be fined under this title, imprisoned not more than 10 years, or both.

Since its inception, however, whistleblowers have not fared particularly well before the Department of Labor, the agency responsible for interpreting and enforcing SOX claims:

The government has ruled in favor of whistleblowers 17 times out of 1,273 complaints filed since 2002 .... Another 841 cases have been dismissed. Many of the dismissals were made on the grounds that employees worked for a corporate subsidiary ....

Many cases hinge on whether SOX should apply to whistleblowers who work for subsidiaries of public companies. Department of Labor spokesperson, Sharon Worthy, doesn't think so: "The plain language of the statute only applies to publicly traded corporations." But Senator Patrick Leahy (D-Vermont), who helped draft SOX's whistleblower clause, sharply disagrees: "Otherwise, a company that wants to do something shady, could just do it in their subsidiary."

While Section 806 does not expressly include subsidiaries of publicly traded companies, consistent with its intent, the law has been correctly applied to private subsidiaries of publicly traded companies in a number of cases:

• In Klopfenstein v. PCC Flow Technologies Holdings, Inc., the Administrative Review Board ruled that a Section 806 cause of action may proceed directly against a non-publicly traded subsidiary under an agency theory, reasoning that the subsidiary is an “agent” of the parent company.
• In Savastano v. WPP Group, PLC, an Administrative Law Judge adopted the reasoning in Klopfenstein, while also clarifying that the agency relationship must pertain to employment matters. In other words, the fact that the companies share an agency relationship for other purposes, such as collecting and reporting financial data, is insufficient to establish subsidiary coverage under SOX.

Other cases applying an “agency” theory to protect whistleblowers working for private subsidiaries of publicly traded companies include: Johnson v. Siemens Building Technologies, Inc.; Lowe v. Terminix International Co.; Gale v. World Financial Group; Mann v. United Space Alliance, LLC.

The Sarbanes-Oxley Act is a complex statute. Where used correctly, SOX can be an effective tool for protecting whistleblowers who are courageous enough to speak out against a company's illegal conduct. If you are or will soon become a whistleblower, finding an attorney to effectively represent your interests may require that you invest some time. To ensure that your rights are fully protected, choose a law firm that specializes in employment law.

For more information, please visit The Wall Street Journal article entitled, Whistleblowers Are Left Dangling.

The First Circuit's decision in Noonan v. Staples provides an informative example of how an employment contract should and should not be written. In that case, Staples discharged Noonan for allegedly padding his expense reports. In doing so, Staples refused to allow him to exercise his stock options, claiming that Noonan was ineligible because he had been fired for "cause." In particular, Noonan's employment contract stated as follows:

[I]f [Noonan's] relationship with Staples is terminated by Staples for "cause" ... the right to exercise this option with respect to any shares not previously exercised shall terminate immediately ...

The contract provided a definition for "cause," but gave Staples the discretion to ultimately interpret whether Noonan's alleged transgressions fit that definition. The question before the First Circuit was whether it could review Staples' interpretation.

In their respective arguments before the First Circuit, Staples argued that the court had no authority to review its "cause" determination, while Noonan argued that the court could review Staples' decision de novo with no deference to Staples' reasoning.

The court rejected both arguments and, relying on precedent, adopted a middle ground. In particular, the court held that while Staples' decision could be reviewed, it would only be overturned if it was arbitrary, fraudulent, or made in bad faith. This is an extremely high standard. Not surprisingly, in light of this standard, the First Circuit affirmed Staples' decision to terminate Noonan for "cause."

The lesson learned: Review your employment contract with counsel before you sign it. Where possible and necessary, revise the language to ensure that your employer does not enjoy total discretion to decide the definition of "cause."

The garden leave provision in your employment contract may be unenforceable. In Bear, Stearns & Co., Inc. v. Sharon, the U.S. District Court for the District of Massachusetts refused to issue a preliminary injunction to enforce a contractual provision requiring an employee to provide 90 days before resigning or retiring (aka "garden leave").

Douglas A. Sharon was a Broker and Managing Director of Bear, Stearns & Co., Inc.'s private client services group in its Boston office. According to Bear Stearns, Sharon was the Boston office’s top producer, generating $5.2 million annually in commissions and managing more than $867 million in assets. In December, 2005, the company distributed a memorandum to all of its Senior Managing Directors, including Sharon, which allowed recipients to accept a raise in their base salary, among other benefits, subject to the acceptance of the above-described garden leave provision. Sharon agreed to the garden leave provision.

On March 17, 2008, Sharon resigned from Bear Stearns, effective immediately. He began work for his new employer, Morgan Stanley, the next day. Following Sharon’s resignation, on March 26, 2008, Bear Stearns filed a Complaint, Motion for a Temporary Restraining Order (“TRO”), and a Preliminary Injunction to enjoin, among other things, Sharon’s continued employment at Morgan Stanley.

As an aside, an important distinction exists between a TRO and Preliminary Injunction. Under Rule 65(a) of the Massachusetts Rules of Civil Procedure, a TRO does not generally exceed 10 days. In sharp contrast, a Preliminary Injunction will last until the case has been decided.

On March 27, 2008, the Court entered Bear Stearns' request for a TRO. After the TRO expired, Bear Stearns sought injunctive relief. To obtain preliminary injunctive relief, Bear Stearns was required to show: (1) a substantial likelihood of success on the merits, (2) a significant risk of irreparable harm if the injunction is withheld, (3) a favorable balance of hardships, and (4) accord with the public interest.

The Court denied Bear Stearns' request for Preliminary Injunction for three main reasons. First, the company could not establish that it would suffer irreparable harm because any alleged harm could be recompensed through a monetary award. Second, the harm to Bear Stearns was outweighed by the potential harm to Sharon’s “professional standing and the inability to advise his clients in times of economic turmoil.” Finally, the Court noted an inherent inconsistency in the garden leave provision. Specifically, Sharon's employment was at-will, which meant that Bear Stearns could terminate his employment at any time, for any reason or no reason. Likewise, because he was an employee-at-will, Sharon should be able to resign at any time. Accordingly, enforcing the garden provision would run afoul of the employee-at-will doctrine:

Because the effect of specific performance in this case would be to require the defendant to continue an at-will employment relationship against his will, it is unenforceable in that manner.

Although the court refused to issue the Preliminary Injunction, it is important to note that Sharon could still be held liable for monetary damages. This case, however, sheds much needed light on "garden leave" provisions.

WHDH-TV (Channel 7) is in the midst of defending an age discrimination claim. In a lawsuit filed in Suffolk Superior Court, former WHDH reporter, Michael Macklin, claims the station fired him last year after he complained of age discrimination. Macklin had been with the station for 13 years.

The suit alleges that the station's news director, Linda Miele, reduced Macklin's shifts beginning in January 2006 while simultaneously hiring several younger reporters. Just this week, WHDH announced that it would replace long-time anchor Jonathan Hall, who is in his late 40s, with Adam Williams, who is 27 years old. Hall will join the investigative unit.

Macklin's suit seeks reinstatement, compensation, attorney's fees, and court costs. To read more about Macklin's suit, please visit the Boston Globe article entitled, Macklin sues Ch. 7 for age discrimination.

Whistleblowers working abroad for American subsidiaries just scored a major victory. The Southern District of New York in O'Mahony v. Accenture et al. recently ruled that the plaintiff, Rosemary O'Mahony, states a valid claim under the Sarbanes-Oxley Act (SOX). O'Mahony, a British citizen, worked at Accenture in France for 14 years before being suddenly demoted after alerting her superiors in both the United States and France that the company failed to make more than $3 million in social security payments to France.

The main issue before the Southern District of New York was whether the Sarbanes-Oxley Act applies to employees, like O'Mahony, working overseas. The court held that SOX applied to O'Mahony because: (1) she was employed and compensated by a United States subsidiary of a foreign corporation; (2) the alleged retaliation and cover-up implicated Accenture employees working in the United States; and (3) the suit was being brought against a "foreign parent and its United States subsidiary for the alleged misconduct of the United States subsidiary in the United States."

To read more about the case, please visit Law.com's article entitled, N.Y. Judge Applies SOX Protections to Ex-Partner of Global Firm's French Office.

The subprime disaster has catapulted employment contracts, and the golden parachutes that sometimes come with them, into the limelight. While negotiating $100 million in severance pay that Countrywide Financial CEO Angelo Mozilo could receive is certainly not the norm, there are certain bases that every employment contract should cover.

Mike Hyatt, Chief Strategy Officer of N2Growth, provides a helpful overview of what every contract should include in his article entitled, Management Matters with Mike Myatt: 6 Tips to a Better Employment Contract. The article outlines 6 main points: (1) Job Description, (2) Term, (3) Compensation, (4) Indemnification, (5) Termination, and (6) Winding Up Provisions.

An ounce of prevention equals a pound of cure. Employment contracts protect an employee's professional and financial interests in the event that the employer has a sudden change in heart. Every contract will contain its own nuances. The more an employee understands the details of what his or her contract should include going into the negotiation, the smoother the transition down the road.

Non-competition agreements are more common today than ever before. I broach this subject because, a few months back, our Firm was successful in defending an employee against a Motion for Preliminary Injunction brought by her former employer. As we gear up for trial, I'd like to take this opportunity to review the nuts-and-bolts of non-competes.

Fortunately for employees and consumers, Massachusetts courts carefully scrutinize non-compete agreements and construe them against the employer. A covenant not to compete is enforceable only if: (1) it is necessary to protect a legitimate business interest, (2) reasonably limited in time and geographic scope, (3) consonant with the public interest, and (4) supported by consideration. The burden of proof as to the enforceability of a non-compete agreement lies with the employer.

What does all this mean? To address the first requirement, an agreement that attempts to merely prohibit ordinary competition does not satisfy a legitimate business interest. Employees may use the general skills and knowledge they acquired during their employment when they change jobs. Employees may not, however, use trade secrets or confidential information obtained from their former employer. The difference can be illustrated in the following hypotheticals using the (hilarious) TV sitcom, The Office:

(A) Michael Scott leaves Dunder Mifflin Infinity to work for a competitor, Staples, Inc., as a motivational speaker.
vs.
(B) Michael Scott leaves Dunder Mifflin Infinity to work for a competitor, Staples, Inc., in the same position. In doing so, Mr. Scott takes with him Dunder Mifflin's pricing models, confidential customer lists, vendor information, and (of course) his trusty side-kick, Dwight Schrute.

Dunder Mifflin's (DH) attempt to prohibit Mr. Scott from working for Staples in Hypothetical A would probably be construed as an attempt to stamp out ordinary business competition because, while Staples may be a competitor, Mr. Scott would neither be using any specialized training provided by DH nor confidential information to compete with Dunder Mifflin. On the other hand, Dunder Mifflin's effort to enforce a non-compete agreement in Hypothetical B would probably be interpreted as protecting a legitimate business interest since Mr. Scott would be poaching employees and using DH's trade secrets against them while in an identical role at his new job with Staples.

Continue reading "Massachusetts Non-Compete Agreements in a Nutshell" »

Employment contracts must be drafted with care. Paula Barran, an attorney specializing in employment law in Oregon, wrote a great article on the 8 areas that well-drafted employment contracts should address: (1) duties, (2) obligations, (3) timing, (4) payment, (5) extra benefits, (6) parting, (7) prenuptials, and (8) disagreements.

Unless otherwise specified, employment in Massachusetts is "at will." This means that employees can be terminated for any reason or no reason, so long as the termination is not motivated by the employee's status within a protected class such as age, race, gender, national original, or handicap. In other words, an employer can not fire you because you are female, 40 years old or older, require medical leave, or because you're black.

This also means that an employer can legally fire you for an arbitrary and capricious reason. To illustrate the concept of "at will" employment, suppose you are a Red Sox fan. You've been with Company A for 20 years. Unbeknownst to you, your new boss is a Yankees fan. You send out a company-wide e-mail celebrating the Red Sox second World Series Championship in just three years. Angered and embarrassed, your boss terminates your employment because you sent the e-mail. Illegal? Not if you're an "at-will" employee.

Employment contracts create the opportunity to leave behind the precarious world of "at will" employment, at least until the contract the expires. An employment contract should be seen as the equivalent to tenure. The employment contracts that I have negotiated, for instance, typically include a "cause" provision, stating that an employee can only be terminated for "good cause" or "just cause." As you've probably guessed, sending an e-mail celebrating a Red Sox victory would not meet the "good cause" standard.

Continue reading "Employment Contracts For Executives: 8 Things to Consider" »