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In This Issue
June 2018 – August 2018 | Volume 6 Issue 3

 

Supreme Court Roundup: A Look Back – and Ahead – for Employment Law

by Donna M. Glover & Elizabeth Liner, Baker Donelson

As the Supreme Court ended its 2017-18 Term, Justice Anthony Kennedy announced his resignation; the Court did away with “agency fees” for public employees; and in other decisions favorable to employers, the Court solidified the use of class waivers in arbitration agreements and eased up on the standards for analyzing exemptions under the Fair Labor Standards Act (FLSA). This roundup summarizes the Court’s decisions during the 2017-18 Term that impact employers and previews employment cases upcoming in the 2018-19 Term.

 

2017-18 Term – Decided Cases

Epic System v. Lewis, Ernst & Young v. Morris and National Relations Board v. Murphy Oil USA (consolidated cases)
This group of cases posed the question as to whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration and waive class and collective proceedings is enforceable under the Federal Arbitration Act (FAA), notwithstanding the provisions of the National Labor Relations Act preventing employers from limiting employees’ rights to engage in “concerted activities” in pursuit of their “mutual aid or protection.” In an “epic” decision, the Court held that class action waivers in employee arbitration agreements are enforceable. For an in-depth analysis of that holding, read our recent article found here.

Janus v. American Federation of State, County, and Municipal Employees, Council 31
In 1977, the Supreme Court held in Abood v. Detroit Board of Education that a union representing government employees could require non-members to pay an “agency” fee, which is a percentage of full union dues, generally because the non-members benefited from the union’s efforts. The Janus case raised the following question: Should Abood be overruled and public-sector agency fee arrangements be declared unconstitutional under the First Amendment?

Mark Janus works as a child support specialist employed by the Illinois Department of Healthcare and Family Services. Janus is represented by, but not a member of, AFSCME Council 31. Janus did not want to join the union because he opposed various public policy positions that it took. Nonetheless, the union required that Janus, as a non-member, pay an agency fee as a condition of his employment with the State of Illinois. Janus sued, alleging that requiring him to pay an agency fee violated the First Amendment. Chief Justice John Roberts and Justices Samuel Alito, Anthony Kennedy, Clarence Thomas, and Neil Gorsuch agreed with Janus’s argument. Justice Alito, who authored the majority opinion, opined that “[c]ompelling individuals to mouth support for views they find objectionable violates [a] cardinal constitutional command…” and “measures compelling speech are at least as threatening” as those that involve restrictions on what can be said.

The Janus decision is expected to have a significant impact on public sector unions. No doubt, public sector employees who are non-members will take advantage of the Janus decision and will likely stop paying agency fees to the union that represents them. Unions may also begin “marketing” to enforce non-union members to continue their financial support. We may also see state legislatures entering the fray to enact laws to protect unions from being forced to offer full benefits to non-members. Janus applies only to public sector employees. Therefore, unless an employee works in a state with a right to work law, private sector employees can still be required to pay union dues as a condition of employment.

CNH Industrial N.V. v. Reese
In CNH Industrial N.V. v. Reese, the Supreme Court explained in a per curium opinion and without hearing oral argument, that collective bargaining agreements (CBAs) between employers and unions are interpreted under ordinary principles of contract law, including when determining whether a contract is ambiguous. Before the Court issued its decision in M&G Polymers USA, LLC v. Tackett, 574 U.S. (2015), the Sixth Circuit had applied “Yard-Man inferences,” relying on evidence beyond the language of the contract, to determine that the CBA at issue in the case provided for the union members’ insurance benefits to be vested for life. In Tackett, the Court had rejected the Yard-Man inferences because their application “distort[ed] the text” of CBAs and conflicted with the traditional rule that contracts must be construed according to their plain language. As such, in CNH Industrial NV, the Supreme Court reversed the Sixth Circuit’s decision because it could not be “squared with Tackett.” The Supreme Court explained that Yard-Man inferences are not ordinary principles of contract interpretation and that the CBA’s silence regarding the issue of vesting meant that, like the other benefits of the union members, those insurance benefits terminate when the CBA itself terminates.

China Agritech v. Resh
In China Agritech v. Resh, the Supreme Court issued a unanimous decision on June 11, 2018, holding that individuals cannot stack class action lawsuits one after another. In American Pipe & Construction Co. v. Utah, the Court held that the timely filing of a defective class action suspends the applicable statute of limitations as to the individual claims of purported class members. The Supreme Court opined that while its decision in American Pipe means that the statute of limitations in a class action case is tolled as to individual class members, this tolling does not extend to the filing of a subsequent class action based on the same facts and circumstances.

Digital Realty Trust, Inc. v. Somers
In Digital Realty Trust, Inc. v. Somers, the question at issue was whether the anti-retaliation provision for “whistleblowers” in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) extends to individuals who have not reported alleged misconduct to the Securities and Exchange Commission and thus fall outside the Act’s statutory definition of “whistleblower.” In a favorable decision for employers, the Court held that to sue for a violation of Dodd Frank’s anti-retaliation provision (15 U.S.C. § 78u-6(h)(1)(A)), a whistleblower must first report a violation of the securities laws to the SEC. Section 78u-6(a)(6) defines “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission.” The Court opined that the clear statutory definition of “whistleblower” provides the answer.

Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights
In Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights, perhaps better known as the “baker case,” the Court held that the Colorado Civil Rights Commission’s conduct in evaluating a cake shop owner’s reasons for declining to make a wedding cake for a same-sex couple violated the Free Exercise Clause. This was a very narrow decision which focused on the Commission’s conduct when investigating the charges of discrimination that Charlie Craig and David Mullins filed after Jack Philips, the cake shop owner, declined to make their wedding cake on the grounds that he does not create wedding cakes for same-sex weddings because of his religious beliefs. The Commission found in favor of Craig and Mullins, and the Colorado Court of Appeals subsequently affirmed the Commission’s ruling.

The case wound its way to the Supreme Court where the question at issue was: does the application of Colorado’s public accommodations law to compel a cake maker to design and make a cake that violates his sincerely held religious beliefs about same-sex marriage violate the Free Speech or Free Exercise Clauses of the First Amendment? In the Court’s narrow holding, the court found that a commissioner’s remarks during the administrative proceedings relating to the discrimination charge evinced a bias against religion that violated the First Amendment’s Free Exercise Clause. “To describe a man’s faith as ‘one of the most despicable pieces of rhetoric that people can use’ is to disparage his religion in at least two distinct ways: by describing it as despicable, and also by characterizing it as merely rhetorical – something insubstantial and even insincere,” Justice Kennedy said. “This sentiment is inappropriate for a commission charged with the solemn responsibility of fair and neutral enforcement of Colorado’s antidiscrimination law – a law that protects discrimination on the basis of religion as well as sexual orientation,” Justice Kennedy wrote in the majority opinion. But the question all court watchers wanted answered was this: Does the First Amendment protect the baker’s right to deny services to same sex-couples? That constitutional question went unanswered in Masterpiece Cakeshop; thus, it is unlikely that the decision will have any far-reaching impact.

Encino Motorcars, LLC v. Navarro
In Encino Motorcars, LLC v. Navarro, the Court considered whether service advisors at car dealerships are exempt under 29 U.S.C. § 213(b)(10)(A) from the FLSA’s overtime pay requirements. In a tight 5-4 decision, the Court held that service advisors at car dealerships are exempt from the FLSA’s overtime pay requirements because they are “salesm[e]n . . . primarily engaged in . . . servicing automobiles” under 29 U.S.C. § 213(b)(10)(A).

The exemption ruling is not that memorable, but the Court’s reasoning may have far-reaching impact on courts’ interpretation of FLSA exemptions. The Court rejected the Ninth Circuit’s conclusion that FLSA exemptions should be construed narrowly in holding that service advisors were not exempt. The Court explained that the Ninth Circuit had used a “flawed premise that the FLSA pursues its remedial purpose at all costs.” The Court noted that the FLSA has more than two dozen exemptions, and the court said that those exemptions are as much a part of the FLSA’s purpose as the overtime pay requirement and that courts must read the exemptions, fairly not narrowly.

The Court also rejected the Ninth Circuit’s reliance on a 1966-67 Department of Labor Occupational Outlook Handbook and the FLSA legislative history, both of which the Court found unpersuasive; thus, the Court abandoned the position held for more than 70 years that the exemptions to overtime under the FLSA must be narrowly construed for a “fair interpretation.”

 

2018-19 Term – Cases Pending

The 2018-19 Term begins on October 1, 2018. We can look forward to another banner year of interesting employment-related cases pending before the Court that employers should keep an eye on in the coming months. The Court has granted certiorari in the case of Varela v. Lamps Plus, Inc. to determine whether the FAA forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.

The Court has also granted certiorari in BNSF Railway Co. v. Loos to determine whether a lost wages damages award to a former railroad employee is subject to withholding or taxation under the Railroad Retirement Tax Act. In New Prime, Inc. v. Oliveira, the Court will once again take up an issue related to the Federal Arbitration Act (FAA). Section 1 of the FAA provides that the FAA does not apply “to contracts of employment of seaman, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. The questions at issue are: (1) whether a dispute over the applicability of the Section 1 exemption must be resolved by a court or an arbitrator; and (2) whether Section 1 of the FAA applies to independent-contractor agreements.

In Mount Lemmon Fire District v. Guido, the Court will consider whether, under the Age Discrimination in Employment Act (ADEA), the same 20-employee minimum that applies to private employers also applies to political subdivisions of a state, as the Sixth, Seventh, Eighth, and Tenth Circuits have held, or whether the ADEA applies instead to all state political subdivisions of any size, as the Ninth Circuit held in this case.

We will keep you apprised as the Court considers these other questions in the coming session, and we will analyze the impact such decisions may have on your business.

*Original article

 

California Passes New Privacy Law with Far-Reaching Implications

By: Alexander F. Koskey, CIPP/US, Baker Donelson

On June 28, the California legislature passed AB 375, the California Consumer Privacy Act of 2018. The impact of the law reaches far beyond California. Much like the European Union’s General Data Protection Regulation (GDPR), which went into effect on May 25, the California Consumer Privacy Act echoes the recent trend of providing a greater degree of control to consumers over their personal information. California’s new law is the most rigorous privacy measure in the United States in decades and may trigger other states to follow suit in the future. Businesses collecting personal information from consumers in California should be proactive in reviewing their current procedures and implementing new protocols to ensure compliance with the Act. Given the broad reach of websites, it seems likely that most businesses in the U.S. (and many abroad) have consumer information on a California resident and therefore must comply with the law.

The law protects “consumers” which are defined as California residents or individuals domiciled in California who are outside the state for a “temporary or transitory purpose.” A “business” subject to the law is classified as one that does business in California and (a) has gross revenues in excess of $25 million; (b) annually buys, receives, sells, or shares the personal information of 50,000 or more consumers, households, or devices; or (c) derives 50 percent or more of its revenue from selling the personal information of consumers. The law is slated to go into effect on January 1, 2020 and it will take almost as much time for businesses to put together a compliance program.

The key takeaways from the Act include:

  • Prior to or at the time of collection, businesses are required to inform consumers the categories of personal information that will be collected and how the personal information will be used;
  • Businesses will be required to disclose whether they sell personal information to third parties, including the specific personal information that is sold along with the identity of those third parties;
  • Consumers can object to the sale or sharing of their personal information. As part of this directive, businesses will be required to include a conspicuous option on their website where consumers can select “Do Not Sell My Personal Information” in order to opt out;
  • Consumers have the right to request a complete record of the personal information collected by businesses and whether that information is shared with third parties;
  • Businesses must implement a verification process so consumers can prove their identity when requesting their personal information;
  • A consumer has the right to request that a business delete any personal information which the business has collected from the consumer;
  • The sale of the personal data of children will require an express opt-in authorization. If the child is between 13 and 16, the child can provide the opt-in. If the child is younger than 13, the parent must provide the opt-in; and
  • The law provides for a private right of action for unauthorized access to a consumer’s unencrypted or unredacted personal information with a fine of up to $7,500 per violation. It will also be enforced by the California Attorney General.

If you have any questions on the California Consumer Privacy Act and its impact on your organization, please contact Alex Koskey or any member of Baker Donelson’s Data Protection, Privacy, and Cybersecurity Team.

 

*Original article

 

NLRB’s New Guidance Loosens Reigns on Handbooks

By: KrisAnn Norby-Jahner, Attorney, Vogel Law Firm

Earlier this year, we predicted that the National Labor Relations Board (NLRB) would be “loosening the reins on employer handbook rules.” We can finally tell you exactly how much the reins have been loosened because the NLRB’s General Counsel has outlined the standards the Board will follow when assessing employers’ personnel policies. Overall, you will have much greater leeway in drafting and enforcing workplace rules and, in particular, any rules related to civility, insubordination, disruptive behavior, photography/recordings in the workplace, confidential information, defamation, disloyalty, or media contact on behalf of the company.

Background

In its decision in The Boeing Company on December 14, 2017, the NLRB reassessed its standard for determining when a workplace policy or rule violates Section 7 of the National Labor Relations Act (NLRA). The NLRB established a new standard that focuses on the balance between (1) the policy’s negative impact on employees’ ability to exercise their Section 7 rights and (2) the policy’s connection to the employer’s right to maintain discipline and productivity in the workplace. The NLRB not only added a balancing test but also significantly altered its jurisprudence on the reasonable interpretation of handbook rules, severely criticizing the effects of the previous standard set forth in 2004 under Lutheran Heritage Village-Livonia.

Under the previous standard, almost any workplace policy could be interpreted as applicable to Section 7 activity. Under the new standard, ambiguities in workplace policies are no longer interpreted against the drafter of the policy, and generalized provisions will not be interpreted as banning all activity that could conceivably be included under the policy’s prohibitions.

On June 6, the NLRB’s General Counsel published a memorandum outlining general guidance and the standards the Board will follow when evaluating the lawfulness of employee handbook policies. The standards are organized in three categories:

  1. Rules that are generally lawful to maintain;
  2. Rules that demand individualized scrutiny; and
  3. Rules that are unlawful.

(See GC 18-04, “Guidance on Handbook Rules Post-Boeing” (June 6, 2018), available at https://www.nlrb.gov/reports-guidance/general-counsel-memos.)

Category 1: Rules that Are Generally Lawful

Category 1 rules are presumed to be lawful because when they’re reasonably interpreted, they do not prohibit or interfere with employees’ exercise of any rights guaranteed by the NLRA or because the potential adverse impact on protected rights is outweighed by the business justifications associated with the policy. Examples of policies or rules that are generally presumed to be lawful under the new balancing standard include rules that address:

  • Civility, including policies and prohibitions related to inappropriate conduct; rude, condescending, or otherwise socially unacceptable behavior; negative or disparaging comments about another employee or a visitor; rude, discourteous, or unprofessional behavior; disparaging or offensive language; or statements, photographs, video, or audio that could reasonably be viewed as disparaging to other employees;
  • No-photography/no-recording rules, including policies and prohibitions related to using camera-enabled devices; recording conversations, meetings, and images without approval; or recording coworkers’ conversations without approval;
  • Insubordination, noncooperation, or on-the-job conduct that adversely affects operations, including policies and prohibitions related to insubordination, unlawful or improper conduct, uncooperative behavior, a refusal to comply with orders or perform work, or other on-the-job conduct that adversely affects the employer’s operations;
  • Disruptive behavior, including policies and prohibitions related to boisterous behavior and other disruptive conduct, creating disturbances on company premises or creating discord with clients or fellow employees, or disorderly conduct on company premises or during working hours for any reason. (The no-disruption rule may not be used to discipline employees for a strike or walkout.);
  • Confidential, proprietary, and customer information or documents, including policies and prohibitions related to nondisclosure of customer information; nondisclosure of confidential financial data or other nonpublic proprietary company information; nondisclosure of confidential information to partners, vendors, customers, or other employees; and nondisclosure of business secrets or other confidential information;
  • Defamation or misrepresentation, including policies and prohibitions related to misrepresenting company products, services, or employees or sending defamatory e-mails;
  • Use of employer logos or intellectual property, including policies and prohibitions related to use of company logos or intellectual property for non-business-related purposes;
  • Authorization to speak on behalf of the company, including policies and prohibitions related to employees not being authorized to comment to the media and only designated spokespersons being able to respond to media requests for information; and
  • Disloyalty, nepotism, or self-enrichment, including policies and prohibitions related to conduct that is disloyal, competitive, or damaging to the company; illegal acts in restraint of trade; employment with another employer; and activities or investments that compete with the company, interfere with an employee’s judgment regarding the company’s best interests, or exploit the employee’s position with the company for personal gain.

Category 2: Rules that Require Individualized Scrutiny

Category 2 rules are not obviously lawful or unlawful, and must be evaluated on a case-by-case basis to determine whether they would interfere with employees’ NLRA rights and, if so, whether any adverse impact on employees’ rights is outweighed by legitimate justifications. Examples of policies or rules that must be evaluated on a case-by-case basis include:

  • Broad conflict-of-interest rules that do not specifically target fraud or self-enrichment;
  • Confidentiality rules that are not limited to restricting the use of customer or proprietary information;
  • Rules that restrict disparagement or criticism of the employer rather than disparagement of other employees;
  • Rules that restrict the use of the employer’s name rather than the use of its logo or trademark;
  • Media contact rules that generally restrict employees from speaking to the media or third parties about the employer rather than speaking to the media/third parties on the employer’s behalf;
  • Rules that ban off-duty conduct that might harm the employer rather than banning insubordinate or disruptive conduct at work; and
  • Rules that ban false or inaccurate statements rather than defamatory statements.

Category 3: Rules that Are Unlawful

Category 3 rules are generally unlawful, and you should ensure that you don’t implement any policies or practices that fall into this third category. Examples of policies or rules that are unlawful include rules that address:

  • Confidentiality of wages, benefits, or working conditions, including policies and prohibitions related to the disclosure of salary; employment contracts and terms of employment; wages, commissions, or performance bonuses; or information about an employee’s identity or disclosures to the media or any third party about any employee’s employment and working conditions; and
  • Membership in an outside organization or voting on matters that concern the employer, including policies and prohibitions related to general restrictions on an employee’s membership in any outside organization (because this may reasonably be interpreted to include union activity) or general restrictions on employee voting (because this may reasonably be interpreted to include voting on union matters).

Bottom Line

The General Counsel’s memo finally gives employers the necessary guidance to properly apply the revised standard for lawful workplace policies set forth in Boeing in December. The three categories enumerated in the memo include examples to help you ensure the proper balance between a policy’s negative impact on employees’ Section 7 rights and your right to maintain discipline and productivity in the workplace.

As always, you should continue to work with your employment lawyers to ensure your policies comply with the law, and keep performing annual policy audits and reviews. Categories 2 and 3 contain some “red flag” areas that you should scrutinize and use as guidance for revising your policies if necessary. On the other hand, you can look to Category 1 for some much-welcomed breathing room.

*Original article

 

 

It’s Hurricane Season Already: Are You Ready?

By Richard Morgan, McNair Law Firm, P.A.

Every year, many employers across the country face the question: “What do we do when a hurricane is upon us?” The real question should be whether the company has a plan in place, communicated to employees, to keep workers and their families safe and protect the business and its assets as much as possible. Read on for some suggestions.

Learn Weather Terms

Everyone should understand the difference between a tropical depression, a tropical storm, and a hurricane. You also should be aware that high winds accompanying these weather events can spin off tornadoes, localized flooding, and, for those along the coast, storm surges. Understanding the terms can help you as the employer and your employees to prepare for what to do. One key is to listen to your local government officials. If you’re directed to leave an area, it’s best to heed the warnings.

Hurricanes are based on a scale from Category 1 (least dangerous) to Category 5 (most dangerous). The higher the category, the greater the wind speed.  Each category can create havoc and damage, however, and none should be taken lightly. At any level, the wind and precipitation can damage businesses and homes, cause branches or trees to snap, and down power lines. Power outages are likely to occur, which can last for weeks, and the downed power lines can be another danger. Be smart and watchful, especially to ensure that children are kept at a safe distance.

7 Items to Include in Your Planning

Here are seven things employers and individuals should consider before, during, and after the storms move in:

Take inventory of your assets and belongings. You’ll be glad you did if you’re hit with any kind of catastrophic event (hurricane, fire, robbery, etc.). As a rule, your business should have off-site and secure backups for your electronic systems and data. That requires, at a minimum, daily backups and storage off-site.

Create or update your emergency preparedness plan, and spell out any special needs. Businesses such as nursing homes or inpatient medical facilities should know where they will need to move their residents or patients, which includes how those individuals will be transported. Individuals should make certain all necessary medications are accessible in the event you need to vacate your residence. If you own pets, make certain you include them in your emergency planning.

Zero in on reliable emergency information systems. Know which radio, television, and/or other emergency notification systems will be available in your area. You may have a preferred means to secure information, but whatever you decide, know where and how to keep informed about the weather developments.

Know how to get out. Be familiar with the evacuation routes in your area.

Figure out where you’re going. Know where the emergency shelters are located.

Check your insurance. Know what coverages you have and don’t have in case a weather event occurs. Have your agents’ contact information available so you can reach  them quickly after the storm hits.

Start cleaning up. As quickly as possible after the event and as soon as law enforcement gives you the green light, secure your property and make whatever temporary fixes you can to prevent further damage to your business or home.

Be Prepared

The bottom line is to be prepared. Plan for the worst, and your business and employees should get through hurricane season in as good a shape as possible. With the season typically firing up between late August and early October, now is the time to pull out and update your emergency preparedness plan and talk with employees. Don’t wait until it is too late. For more information, the South Carolina Emergency Management Division, www.scemd.org, has published a user-friendly guide that can assist you during hurricane season.

*Original article

 

The Latest On State-Level Noncompete Reform

Earlier this year, Vermont legislators introduced House Bill 556, an outright ban on noncompetes and any other restrictive covenant that restrains an individual’s livelihood. This legislative overhaul of Vermont restrictive covenant law is one of several state-level reform efforts proposed in the wake of the White House’s 2016 “call to action” for state restrictive covenant reform. Indeed, since the call to action, over a dozen state legislatures from across the country have proposed and enacted legislation reforming employers’ use of restrictive covenants. As more and more states answer the “call” and alter an already inconsistent legal landscape, employers who use restrictive covenants should review their agreements to ensure compliance with the states’ laws in which they operate.

Federal Reform Efforts and the White House Call to Action

Federal restrictive covenant reform efforts began in 2015 with the introduction of the Mobility and Opportunity for Vulnerable Employees, or MOVE, Act. If enacted, the MOVE Act would have prohibited noncompete agreements between employers and low-wage earners.

Ultimately, the MOVE Act was not passed into law, but it did hasten the call for restrictive covenant reform, particularly by the Obama administration. The White House and the U.S. Department of Treasury analyzed the use of restrictive covenants across the country, and issued two reports on their “overuse.” In October 2016, these reports resulted in the White House’s call to action.

The call to action provided state legislatures with specific “best-practice policy objectives” aimed at curbing the misuse and overuse of restrictive covenants. The policy objectives suggested three potential areas of reform:

  1. Banning noncompetes for certain categories of workers (such as workers in public health and safety, low-wage earners and workers laid off or terminated for cause);
  2. Improving the transparency and fairness of noncompetes (through notice or consideration provisions or regulating the timing of execution); and
  3. Encouraging employers to draft enforceable agreements through the adoption of the “red pencil doctrine.”

Thereafter, state legislatures proposed restrictive covenant reform aimed at addressing these “best practices.”

State-Level Legislative Activity Since the Call to Action

Since the call to action was issued, eight states have enacted some type of restrictive covenant reform:

  • California enacted Labor Code Section 925, which prohibits employers from entering into choice of forum or choice of law agreements with California workers. The law does not apply to contracts entered into before Jan. 1, 2017, or to any employees represented by counsel when negotiating the agreement.
  • Colorado amended its noncompete statute, C.R.S. § 8-2-113(2), as it applies to physicians, and it now prohibits the recovery of damages against physicians who treat patients with “rare disorders.”
  • Idaho repealed, I.C. §§ 44-2701, et seq., thereby eliminating a rebuttable presumption of irreparable harm for departures of “key employees.” Under the amended law, employers must establish irreparable harm for all former employees subject to a noncompete agreement to obtain injunctive relief.
  • Illinois enacted the Illinois Freedom to Work Act (820 ILCS 90, et seq.,) which prohibits employers from entering into noncompetes with “low-wage workers,” defined in the act as employees making the greater of $13 per hour or the federal minimum wage.
  • With NRS § 613.200, Nevada enacted sweeping reform to its noncompete laws. Interestingly, Nevada law now requires employers to offer “valuable consideration,” an undefined term, in return for an enforceable noncompete. This amendment also rejected the “red pencil doctrine,” the doctrine by which courts could invalidate an entire noncompete where some portion of the covenant was unenforceable, and provided additional protections for laid-off employees and employees whose former customers choose to follow that employee to his or her new employer (in situations where the former employee did not solicit that customer).
  • New Mexico expanded the protection of its noncompete prohibition (N.M.S.A. § 24 1i-1) against medical professionals to include certified nurse practitioners and mid-wives. Perhaps more importantly, the amendment also prohibited the use of choice of forum and choice of law agreements with those workers to prevent circumvention of the prohibition.
  • Oregon expanded its noncompete protections, prohibiting noncompetes, no-raid agreements and customer nonsolicitation agreements for home care workers.
  • Utah expanded its noncompete protections to workers in the broadcasting industry implementing a salary threshold, and only allowing noncompetes that meet the threshold to apply to a term of employment less than four years, and against employees terminated for cause or who breach their contract.

This wave of activity is likely only the tip of the iceberg, as there is an abundance of proposed legislation working its way through state legislatures.

Potential State-Level Legislative Activity on the Horizon

Five states have proposed legislation that would have a significant impact on the use of restrictive covenants in their borders:

  • Massachusetts: House Bill 4419, the latest of a number of reform efforts over the years, is an amalgam of eight pending bills. If enacted, the bill would expand protections by: (1) with limited exceptions, capping noncompetes at 12 months; (2) requiring employers to sign noncompetes and to advise employees of the right to counsel; (3) requiring employers to disclose noncompetes at the earlier of a formal offer and/or 10 business days before employment; and (4) increasing consideration requirements.
  • New Hampshire: Senate Bill 423 would prohibit noncompetes with low-wage workers defined as the greater of $15 per hour or the minimum wage.
  • New Jersey: Senate Bill 3518 would require employers to: (1) disclose the terms of the noncompete in writing at the earlier of a formal offer or 30 business days before employment; (2) limit noncompetes to 12 months; (3) limit the geographic reach of noncompetes to areas where the employee provided services or had a material presence in the final two years of employment; (4) limit the scope of activities to the specific services the employee provided in the final two years of employment; and (5) prohibit employers from restricting employees from accepting customers who choose to follow the employee without solicitation. The bill also prohibits enforcement against certain types of employees, including low-wage employees; requires employers to pay employees 100 percent of their pay and benefits during enforcement if they pursue an action; and requires employers to provide notice of enforcement to employees within 10 days of termination or else the noncompete is void.
  • Pennsylvania: The Pennsylvania Freedom to Work Act, House Bill 1938, would ban the use of noncompetes, and would also void forum selection and choice of law agreements. It would not apply retroactively.
  • Vermont: House Bill 566 would ban noncompetes and any restrictive covenants that restrain an individuals’ livelihood defined as “agreement[s] not to compete or any other agreement that restrains an individual from engaging in the lawful profession, trade, or business.”

It is almost certain that more states will follow the White House’s call to action.

Conclusion

Unless a federal solution ultimately prevails, which appears unlikely, employers will have to continue to wade through these differing state-by-state reforms. To do so successfully, employers first and foremost have to know the law in the jurisdictions where they operate and stay current on the ever-evolving legal landscape. Second, once up to speed, they need to review their existing agreements for compliance with the law.

For instance, if a noncompete runs contrary to existing law, employers should consider alternate protections in their state, such as nonsolicit provisions, confidentiality agreements or trade secret protections, to safeguard their legitimate business interests.

Finally, employers have to consider substantive differences in restrictive covenant law from state-to-state in crafting their employment agreements. For employers operating in multiple states, this may result in using two or more different agreements to ensure compliance with the laws of the various jurisdictions in which their employees work. Ultimately, state-by-state restrictive covenant law compliance is a constant challenge, and one that unfortunately does not appear to be going away any time soon as more and more states answer the White House’s call to action.

This article was originally featured on Law360 on June 11, 2018. For more information on this topic, you can refer to these three articles by the authors:

State Legislatures Heed the Obama White House’s “Call to Action”: Part 1 of a 3-Part Series Examining State-Level Restrictive Covenant Activity

Part II: State Legislatures’ Initial Response to the Call to Action

Part III: State Legislatures’ Initial Response to the Call to Action – Proposed Legislation

*Original article

 

How to Market Effectively to Generation Z

By Katie Lundin, crowdspring

Generation Z will make up about 20% of the workforce and 40% of consumers by 2020. Here are 5 key differences between Generation Z and Millennials, and our perspective on how these differences will impact your business

  1. Generation Z is More Entrepreneurial

Entrepreneurship has been in decline in the US for several decades. Generation Z may reverse that trend. Generation Z is 55% more likely than millennials to start a business. What is driving this trend? Altitude’s Jeremy Finch explains:

Recent reports have labeled Gen Z the “entrepreneurial generation” and highlighted their desire to forsake the corporate grind for their own startups. We found that while Gen Z like the idea of working for themselves, the majority are risk-averse, practical, and pragmatic. Their supposed entrepreneurialism is actually more of a survival mechanism than an idealist reach for status or riches.

Your Take-Away

Gen Z is equally as likely to become your competition as they are to become your employee. Be prepared to offer autonomy, flexibility, and fair financial compensation as part of your terms of employment if you want to have any hope of enticing these workers to your business.

2. Generation Z is More Realistic

Millennials, fairly or not, are forever branded as the entitled generation of the participation trophy. But, Millennials didn’t choose this path for themselves. It was a by-product of their upbringing. Millennials grew up in a time of financial prosperity. As did their parents—the Baby Boomers.

Generation Z is coming to the workforce with a completely different perspective than their predecessors. Ryan Jenkins, an expert on the differences between Millennials and Generation Z, reveals:

Seventy-seven percent of Generation Z expect to work harder than previous generations.

Millennials became optimistic thanks to their encouraging Baby Boomer parents and growing up in a time of prosperity and opportunity. Generation Z will be realistic thanks to their skeptical and straight-shooting Generation X parents and growing up in a recession. According to Pew Charitable Trusts, during the Great Recession, the median net worth of Generation Z’s parents fell by nearly 45 percent.

Your Take-Away

Give these young employees space and autonomy to shine. They are driven to work hard, so let them do that in their most productive way. Marketers, Gen Z is pragmatic and careful with their money. Make the value you offer very clear if you expect to make a sale.

3. Generation Z Has a Shorter Attention Span

While Millennials grew up as modern technology took hold, Generation Z has been saturated in it from day one. Deep Patel explains:

Millennials are hard to keep engaged, but Gen Z’s attention is even more split. On average, millennials use three screens (and bounce between them intermittently). Gen Zers use five: smartphone, TV, laptop, desktop and tablet.

Knowing this, it will be essential to capture attention quickly and to be present on multiple platforms to ensure that you make it through these filters. Patel lays it out:

If you want them to click on your blog post, watch your video or like your Instagram photo, you need to help them understand what the content is about, why they should care and how it will help or entertain them.

And you need to do it in eight seconds or less. This is an art, and it’s not easy. It’s why today’s best content creators are in such demand.

Your Take-Away

Getting the right message on the right platform at the right time will be key. And keeping those messages consistent will also be important. Consistency starts with strong branding, including the company name and logo design, and continues with delivering on your brand’s promises.

Employers will need to present interesting challenges as well as opportunities to learn and evolve in their roles to keep Gen Z engaged in the workplace.

4. Generation Z Grew Up With Personal Brands

Millennials tend to splash every detail of their lives on their social media accounts. Generation Z takes more care in curating the content they share and the image they present on social media. Jeff Fromm describes this phenomenon:

Through social media, they meticulously curate their personal brand to reflect how they want to be perceived. Unlike the millennial generation, Pivotals [Generation Z] only share specific stories, to specific people, on specific channels.

Your Take-Away

Understanding and respecting this desire for privacy will be important when it comes to connecting with and managing Gen Z. And, if marketers hope to reach this audience, they need to be just as savvy in curating targeted appropriate content for specific channels.

5. Generation Z has Higher Expectations

Millennials value authenticity in the brands with which they do business. This is true for Generation Z as well. But, Gen Z take it one step further. Like their older cohort, Gen Z is vigilant against ads and being “sold.” But, they also expect to be a part of something bigger.

This new generation is bringing high expectations and a sense of social responsibility with them. Generation Z has opinions and they want to make an impact. Patel explains:

Gen Z is open minded, and believe there’s plenty of room for everyone to thrive together.

This is important for big brands to note. Now more than ever, consumers are eagerly looking to the big brands and companies of the world to facilitate these major changes…

Your messaging needs to be intelligent, thoughtful and inclusive. It’s not about proving that you’re right and someone else is wrong. It’s about including everyone together.

Gen Z is already tired of the status quo. They want their role to make a difference for the better. And they’re not waiting—they already have a strong influence on purchases:

Your Take-Away

If you’re looking to snag these young visionaries as employees, be prepared to show them how your business is making the world a better, more inclusive place.

And, if you want to sell to them, be ready to create an authentic brand with values they can get behind. For example, if you sell physical products, consider sustainable strategies when creating products and packaging design for those products.

The Future is Here

Millennials have already conquered the workforce. And, shortly, Generation Z is poised to make an equally significant impact. Your business needs to adapt. Or it will become obsolete.

*Original article