About once a month I get a call from an attorney or a client asking me to get my scorched earth battle gear on because they want to go after an employee/former employee who is competing against them in business after having signed a non-compete agreement.

Sometimes, their stories are compelling and the facts are clear that action must be taken.  Sometimes, however, the battle is one of principle that, ultimately, will cost the business owner more in heartache, time away from their own business, and legal warfare fees than the fight is worth.

Whenever the situation is such that the fight is one of pride and principle rather than of solid legal merit, I point my client or colleague to Jay Shepherd’s (Shepherd Law Group) excellent blog post “Eight Ways to Lose a Non-Compete Case.”

His bottom line advice: If you’re truly wearing the white hat (i.e., are the “good guy”), and your agreement is narrowly drafted, and your secrets or customer relationships are indeed  in imminent peril, then you’ve got a fighting chance of winning. Otherwise, wave goodbye to the former employee and get back to work.

Take a look at his 8 excellent tips and then ask yourself if you really want to saddle up that horse:

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Last year, at just about this time, we were telling you about the new FMLA regs.

Nearly one year ago, the regulations implementing the Family and Medical Leave Act (FMLA) were substantially revised. Those revisions imposed certain new obligations on employers and created military leave entitlements for family members of military servicemembers who were injured in the line of active duty and for “qualifying exigencies” arising from a call to active duty.

Guess what, there’s now even more newness to catch up on!

Read more to find out what employers should do to ensure compliance…

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The Equal Employment Opportunity Commission (EEOC) recently approved a notice of proposed rulemaking regarding its regulations interpreting the Americans with Disabilities Act (ADA). A copy of the proposed regs can be found here (hat tip to @HR Hero).

Among other things, the proposed changes would:

• Expand the list of major life activities to include things like bending, reading, reaching, sitting, interacting with others and communicating. The expansion enables individuals to more readily meet the threshold requirement of demonstrating that they are substantially limited in a “major life activity.”

• Direct courts to apply a “common sense” comparison of the impaired employee’s limitations to those of the average person in the population, applying the standard that a condition need not significantly or severely restrict performance of any major life activity to be substantially limiting. Many courts (5th Circuit included) require a plaintiff to prove a substantial limitation in working by establishing statistics on the number of jobs the plaintiff could not perform due to impairment. Under the proposed regs, it appears that a statistical analysis as to the extent of a person’s limitation is not necessary to establish a substantial limitation in a major life activity.

• Establish that specific medical conditions (autism, cancer, cerebral palsy, diabetes, epilepsy, HIV or AIDS, multiple sclerosis and muscular dystrophy, and individuals with depression, bipolar disorder, obsessive compulsive disorder, post-traumatic stress disorder, or schizophrenia) per se disabilities under the ADA — even if they are in remission or treated with medication — so long as they would “substantially limit” a major life activity when active.

• Add “surgical intervention” to the list of mitigating measures (such as medication and assistive devices) that can no longer be taken into account when determining whether an individual’s medical condition rises to the level of disability.

• Add “work” to the list of what is now identified as a major life activity.

These proposed changes are big and if unchanged after the public comment period will likely lead to litigation as employers sort this out and employees seek reasonable accommodation.

The public has 60 days to comment on these proposed regulations (pages 1-2 of the download provide instructions on how/where to comment). Final regulations will likely be issued in the first quarter of 2010.

When the 60-day period for public comment ends, the EEOC may revise its proposal in response to the comments it receives or adopt the regulations as issued. Meanwhile, because the ADA Amendments Act went into effect in January 2009, employers should exercise caution and take into account the proposed regulations when deciding whether someone is disabled under the ADA.

A helpful Q&A may be found here.

Since its passage in January, the Lilly Ledbetter Fair Pay Act has caused concern for employers and we’re routinely asked - “how long do I need to keep compensation records on file?”

The Act resulted from Ledbetter’s claim against Goodyear Tire Company. She sued and claimed that her salary increases over a 20-year period had been based more on her gender than her work performance, in violation of federal law.

She was victorious in her jury trial, but the 11th Circuit Court of Appeals reversed. Ultimately, the US Supreme Court agreed after finding that the discrimination had happened too long ago to be the basis for a claim.

Because their finding was based on the statutory 180-day time limit after the discrimination occurred, the Court issued a challenge to Congress to rectify the wording of Title VII, asking Congress to reconsider which events could trigger the time limit.

The Ledbetter Act solidifies the position that discrimination actually recurs with each discriminatory paycheck. Thus, the period of time during which an employee or other affected person can file a lawsuit begins when the discriminatory practice is adopted; when the individual becomes subject to the decision or practice; or when the individual is affected by the application of the decision or practice. As a result, the issuance of each paycheck falls within the new definition, so the statute of limitations begins anew with each subsequent discriminatory paycheck.

So what does this mean for your records retention policies?

Under Ledbetter, decisions you make today can be reviewed well into the future, even after the people making policy and reviewing decisions are long gone. As a result, you need practices in place that help you defend how decisions are made and compensation levels are set.

4 Tips to Ensure Compensation Record Retention Compliance

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I asked my brother to a Dallas Cowboys pre-season game last month in the new stadium.  50(ish)-yard line seats.  Right behind the squad.  Had to crane your neck at a 45-degree angle to see that gargantu-tron.  His response?  Can’t make it - I have Fantasy Football.

Since I know he’s a life-long Cowboys fan, I was shocked.  Aghast.  Even a little miffed.  So I did some reading…what is this fantasy league that has consumed the lives of professional colleagues, friends and family alike?

Here’s what I learned:

Fantasy football is a game that allows fans to take an active role in professional football by creating their own team and competing with teams built by others.  Fans create their own roster of players by drafting talent from actual NFL teams and compete based on those players’ real-life performances in NFL games.  Fantasy owners assume roles similar to that of NFL personnel — a combination of a scout, general manager and owner - drafting players and competing against friends and co-workers in a fantasy league for bragging rights as the best team.

The more I learned, the more I realized there are aspects of the game employers might incorporate into the workplace.

For example:

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I was asked to speak to a group of up and coming business owners recently through a great San Antonio organization, the South Texas Women’s Business Center, on HR Essentials for employers.  It was encouraging to see the turnout and the desire the group exhibited for wanting to “do the right thing” when it comes to managing employees.

We covered routine issues, such as “what types of posters am I required to maintain in the workplace,” and discussed the problems inherent in misclassifying an employee as an independent contractor or a non-exempt employee as exempt.

One take-away that I wanted to share here are the Top Ten Blunders employers want to avoid when it comes to documenting employment issues.  It’s been my experience that if employers can avoid the following, they’re on the right track:

Top Ten HR Documentation Blunders

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On Monday, President Obama announced his intent to nominate disability and gay-rights expert, Chai R. Feldblum, for one of the five Commissioner spots on the Equal Employment Opportunity Commission.  Feldblum is a Professor of Law at the Georgetown University Law Center where she has taught since 1991.  Feldblum previously served as Legislative Counsel to the AIDS Project of the American Civil Liberties Union.  In this role, she developed legislation, analyzed policy on various AIDS-related issues, and played a leading role in the drafting of the Americans with Disabilities Act of 1990 and, later as a law professor, in the passage of the ADA Amendments Act of 2008.  Feldblum has also worked on advancing lesbian, gay, bisexual and transgender rights and has been a leading expert on the Employment Nondiscrimination Act.  Feldblum clerked for Judge Frank Coffin and for Supreme Court Justice Harry A. Blackmun.  She received her J.D. from Harvard Law School and B.A. from Barnard College.

The National Law Journal reports today that the Department of Labor is stepping up its enforcement of wage and hour violations by hiring 250 additional wage and hour investigators.  To drive the point home, Labor Secretary, Hilda L. Solis, has vowed to “make use of the full weight of [her] authority to find and prosecute violators.”

The article reports that in a study of 4,000 low-wage workers,  76% had worked overtime for which they were not paid time-and-a-half, 26% were paid less than minimum wage, and front-line workers in low-wage industries lose more than $56.4 million per week as a result of employment and labor law violations.

The Law

The coverage of the Fair Labor Standards Act (FLSA) is very broad and almost every employee is covered.  The Act requires that covered employees in the US be paid at least the federal minimum wage for each hour they work and overtime pay at one and one-half the employee’s regular rate of pay for all hours worked over 40 in a workweek.

If an employee complains or participates in a legal proceeding under the FLSA, it is a violation for the employer to fire or in any other manner discriminate against the employee for engaging in such activity and, under certain facts, doing so can result in criminal prosecution and a fine up to $10,000.  A second conviction may result in imprisonment.

Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,100 for each such violation.

Such claims are popular with attorneys because the FLSA includes a provision for liquidated (or double) damages.  Thus, if an employee claims $5,000 of unpaid overtime compensation, the statute’s liquidated damages provision brings an employer’s potential liability to $10,000.  In addition, the Act provides for attorney’s fees and costs - regardless of the amount recovered!  In other words - while the employee may recover $5,000, the attorney’s fees may be in excess of that amount; and, under the FLSA he or she is entitled to that amount and any costs associated with the litigation.

Common Pitfalls

With the DOL’s pledge to increase enforcement, employers must internally examine their pay practices to avoid the panic that a knock on the door from the DOL can bring!

The law can be confusing.  Here are some pitfalls to avoid:

• Calculate overtime correctly. The rate of overtime is one-and-a-half times the employee’s regular rate of pay.  It must be paid for hours worked beyond 40 in a workweek.  It must be paid in wages and not in equivalent time off or goods.
• “Off the clock” does not necessarily mean off payroll. The law requires that non-exempt employees be paid for work completed off the clock - even if it’s done voluntarily.
• Salaried Managers Don’t Get Overtime. Giving an employee a salary or high-sounding job title such as “director of production” or “development manager” makes no difference, if the employee’s job duties do not satisfy the criteria found in the DOL’s “duties” test for an exemption category.  A DOL investigator looks right past titles and focuses instead on the nature of the job and how the employee does the job.
• But we give Comp Time! Private employers may use an informal variety of compensatory time by adjusting the schedule within the same workweek to ensure that total hours worked do not exceed 40. However, overtime hours in most cases may not be averaged out over a longer period of time. Otherwise, any overtime worked within a workweek must be paid for that workweek.
• The Ubiquitous Blackberry The jury is still out on whether employers are required to pay hourly workers for responding to calls, e-mails, and messages at night and after hours.  Case law is revving up on this issue, though.  As a result, employers should set policy about the use of such technology to avoid the claims that are sure to come.

If your company is a (specific type of) Federal Contractor, take note that as of today (September 8, 2009) the United States Citizenship and Immigration Services is requiring you to use the E-Verify system to verify your employees’ (existing and new) eligibility to work in the United States.

The Federal Acquisition Rule; Case 2007-013; Employment Eligibility Verification extends use of the E-Verify system to covered federal contractors and subcontractors, including those who receive American Recovery and Reinvestment Act funds.  Applicable federal contracts awarded and solicitations issued after Sept. 8 will include a clause committing government contractors to use E-Verify.

What Federal Contractors are Subject to E-Verify?

If your company is awarded a prime contract with a period of performance longer than 120-days and a value above $100,000 (not including only COTS items or a contract performed outside of the US), then you must sign up for the program within 30-days.  In addition, if the prime contract includes the E-Verify clause, the requirement extends to any subcontract flowing from the prime contract for services or construction valued at greater than $3000.

E-Verify must be used to confirm that all new hires, whether employed on a federal contract or not, and existing employees directly working on these contracts are legally authorized to work in the United States.

The E-Verify requirement is triggered on the contract or subcontract award date.

The WSJ has an interesting story on the topic here (subscription may be required).

With the economy in the shape it’s in, I’ve seen a rise in disputes involving business owners wanting to enforce their non-compete agreements.  This year has provided them with some good case law to support the enforceability of properly-crafted non-compete agreements.

As we’ve learned over the years, a good non-compete contains reasonable limitations as to time, geographical area, and scope of activity to be restrained.  The Houston 1st Court of Appeals recently affirmed that position in Gallagher Healthcare Ins. Svcs. v. Vogelsang, even where there was disagreement about whether the company had actually given the employee confidential/proprietary information in exchange for her promise not to compete and where the agreement did not clearly identify a geographical area to be limited.

The appellate court found that the employer’s conclusory statements offered in an affidavit vigorously challenged by Ms. Vogelsang were enough to serve as proof that its confidential information was an interest worthy of protection and that such information actually had been given to Ms. Vogelsang so that she could perform her job.

As for the lack of a clearly identifiable geographical area to be limited, the Court recognized that a properly crafted non-compete covenant limited to an employer’s clients/customers can serve as a reasonable alternative to an express specification of a geographical limitation.  Since Ms. Vogelsang’s agreement restrained her from any and all activity with clients she had worked with while employed by the company,  the Court reversed the trial court and rendered judgment that the non-compete was enforceable.

Now…this is all well and good.  Do you want to take a wild guess, though, as to what the employer in this case spent defending its position through the trial court proceedings and up to the appellate court?  I can guarantee you it wasn’t chump change.  And that’s without even considering the time key employees had to spend gearing up for trial, depositions, etc.  Could you and your business afford such an expense?

I think the real take-away for an employer is to realize that cutting corners or using a cut and paste/boiler plate agreement that you’ve obtained from a friend is all fine and good - right up until the moment it gets challenged and you are sweating whether it’s enforceable or not and your critical client and proprietary information (indeed, your Company and your livelihood!) is at stake.

Don’t let yourself or your company get caught in that situation.