Severance Agreements

Since I represent employers and employees, I have mixed feelings about severance agreements. Originally, severance was a benefit that was offered to employees to reward them for their length of service and loyalty to the company. That original concept has evolved. Today, a severance agreement can include a number of things:

1. A financial payment to employees
2. A release of all claims
3. A confidentiality agreement
4. A non-solicitation agreement
5. A non-competition agreement
6. A non-disparagement agreement (i.e. you are not going to bad mouth the company)
7. A catch all for everything the employer didn't get around to having you sign before they decided to eliminate your position.

Too often, employees sign these documents without question. Their rationale is that it is a standard document as if there is a form severance agreement that every employer must use. There isn't, although the waiver of rights under certain laws may require the employer to include warnings or notices.

Virtually, every severance agreement includes something similar to the following language:

This Agreement constitutes the entire agreement between John Doe and The Company and supersedes any prior agreements or understandings, express or implied, pertaining to the terms of John Doe’s employment with The Company, the termination hereof, or any other matter related to any claim John Doe may have against The Company. John Doe acknowledges that in executing this Agreement he does not rely upon any representation or statement made by The Company or any representative or agent of The Company concerning the subject matter of this Agreement except as expressly set forth in the text of this Agreement.

In plain English, if it's not in the severance agreement it didn't happen and the employer does not have to do it because the severance agreement supercedes everything. In other words, if the employer promises to give you a glowing letter of recommendation, get it before you sign or address the issue in the agreement. If the employer owes you money for vacation and other accumulated PTO, that severance document should reflect you are receive that payment. If you are leaving on less than desireable terms, it may be advisable to address what information will be conveyed to future employers.

It's not my goal to create a negative impression about severance agreements. I think they can be a valuable tool that allows an employer to tidy matters up while providing the employee with a financial benefit that will help them in their employment transition. My goal in writing this post is to convey to employees that you should read what you sign, understand what duties you and your employer have under the severance agreement, and get legal advice from an employment attorney before signing the agreement.

Later,

Rod

Earthquake

This morning I woke up to find out we had an earthquake here in the Seattle area. Depending on who you listen to it was 4.5 or 4.6 magnitude earthquake. I slept right through it. Those of you that have been in an earthquake know that it's not that big a deal until it his a 5 plus magnitude. Then it gets your attention.

Often, in the workplace there is a similar phenomenon. You've know there are employee problems, but they really have not risen to a crisis level so you don't take action. It doesn't mean there isn't something serious going on, but it's just not a jolting event that will prod you into action. If left unattended, these small problems can become catastrophic to your organization. Sometimes, the small problem is a symptom of a larger and, ultimately, more costly issue.

Unfortunately, with so much of our day being controlled by what comes and goes through your email inbox, it is difficult to have face time with employees. Nevertheless, it is when you first learn of a small problem that you, as a manager, owner, or human resource representative need to be there to ask questions and listen. I have seen many instances where management believed that they were faced with a personality conflict between employees only to later find out, in a lawsuit, that the real problem was discrimination, harassment or retaliation. More often than not, the litigation could have been avoided if a company representative, after learning there was a problem, had asked the most powerful question in their arsenal: "Why do you think this is happening?" The "why" question places the ball squarely in the employee's court. They either have to admit they don't know why or tell you their real suspicions. If the former, you make an appropriate notation in the employee's file and you can use that as a defense in litigation. If the latter, you know know it is time to investigate and get to the root of the problem. Either way, you have probably saved your company a significant sum of money and provided it with valuable defenses it would not have had otherwise.

Later,

Rod

IBM and Papermaster settle

In my November 18, 2008 (Apple and IBM mix it up), I wrote about a lawsuit filed by IBM against Mark Papermaster, its guru of IBM’s Power Architecture and X-64 Blade Servers. The gist of the lawsuit was that Papermaster allegedly violated his non-competition agreement with IBM when he accepted a position with Apple that gave him oversight of the iPod and iPhone. Apparently, IBM felt that Apple really hired Papermaster to expand its server business by using confidential information Papermaster acquired while working at IBM. IBM won the first round by convincing a judge to issue a preliminary injunction that prohibited Papermaster from moving to Apple. As a condition of getting a preliminary injunction, IBM had to post a $3 million bond to protect Papermaster from financial loss in the event the judge would later determine the injunction should not have issued.

At the time I wrote the November 18, 2008 post, I suspected that this case would be “resolved to the satisfaction of the parties.” Translated into plain english that means that someone paid a lot of money to make the case go away. No one is talking money, although IBM has issued a statement outlining some of the parameters of the settlement. (To read about the settlement terms and get additional details of the litigation click here.) As a lawyer, I was selfishly hoping that this case would not have settled because it was fascinating to watch the tactics employed by the parties. Never the less, it is best for the parties to settle the case.

Take Away.

Employees:

Always, always, always think about what you are going to sign and get legal advice before you sign a non-competition agreement. There is no such thing as a “standard agreement.” Often employees sign a non-compete with no thought of what will happen in the future. While you may be excited about that job and the pay increase, life ain’t always gonna be a bowl of cherries. Once you sign, you are bound and you won’t get a do over. Management and the direction of the business may change and you may not like those changes. If that happens, you do not want to be out of a job, without an income and considering accepting a position making caramel apples at the local amusement park to make ends meet. Here are just a few things to consider before signing a non-compete:

1. Are you being compensated during the period in which you can’t compete?
2. Is the non-competition agreement valid in the case your company is sold/acquired?
3. Are there any circumstances under which the agreement will not be enforced?
4. If there is a dispute, what court will hear the dispute and what state’s law will apply?

Employers:

Don’t plagiarize a non-compete used by a colleague and don’t use a form you find on the web. Although courts will enforce non-competes, they are reluctant to do so. You need to have a non-compete that is narrowly tailored to your business needs. While it may feel good to prohibit an employee from competing with your business anywhere in the universe for the next 10,000 years, that type of over broad approach will not endear you with the judge. A judge, however, will enforce a tightly drafted agreement that is relatively finite in duration, limited in geographical scope, and supported by consideration. It short, have your lawyer draft the non-compete.

Employers and Employees:

When you approach a non-compete, remember the lyrics of the old song, “You can’t always get what you want, but if you try some time, ......(you know the rest)”

Later,

Rod

New U.S. Supreme Court decision

Folks, this one is hot off the presses.

This involves a lawsuit brought by an employee (Crawford) against the Metropolitan Government of Nashville (Metro). Crawford, in response to an internal investigation related to rumors of sexual harassment by her supervisor (Hughes), reported that Hughes had sexually harassed her. No action was taken against Hughes, but Crawford was terminated shortly thereafter on allegations of embezzlement. Crawford sued Metro alleging she was being retaliated against for her report of Hughes' conduct. The trial court dismissed her claim. The dismissal was upheld by the 6th Circuit Court of Appeals on the basis that Crawford had not initiated a complaint of discrimination but merely responded to questions in an investigation.

The Supreme Court reversed the 6th Circuit Court of Appeals and the trial judge. In so holding, it found that an employee can oppose sexual harassment by responding to questions during an internal investigation as well as by affirmatively reporting the conduct. The Court stated it would not countenance a "freakish rule" where one person is protected from retaliation because they reported it while another is not because they were asked a question.

THE BOTTOM LINE: This is a frequent concern of employees. Employees are fearful that if they respond to questions, in a harassment or discrimination investigation, that they will lose their job. If there was any doubt about the answer to that question, the Crawford case puts an end to it. Employers should bear in mind that if, during an investigation, employees confirm harassment and discrimination; those employees are most likely protected against retaliation.

For those of you interested in reading the Crawford decision, click here.

Paralegals and Executive Assistants
The unsung heroes....

I can remember my first paralegal. Her name was Rita. When I got out of law school she had been at her vocation for probably thirty years. Although I knew the theory of how to build a rocket, the truth was I never built rocket and certainly never launched a rocket. Rita on the other hand had built, launched and successfully rockets on the moon for years. She was awesome. This was a time when the personal computer was just going mainstream in small offices. Rita preferred to work on her IBM Selectric. She could make that IBM Selectric sing as she banged away on the keys with a lit Marlboro in her left hand. I'll never forget her because, through her actions, she taught me the importance of paralegals and assistants to the success of any professional.

I learned there can be two types of lawyers, those that use and abuse their staff and those that appreciate their staff. I like to think that I fall in the latter category. A good paralegal or executive assistant can make life easy for any business person. That's why when I read articles like the one recently published on a legal website (to read the article click here), I was disappointed to find that the top four problems paralegals say they face in the workplace are a failure to pay overtime, sexual harassment, family and medical leave issues and retaliation for whistle blowing. Once I reflected on the article, in light of several cases I recently concluded, a light came on. These are the same problems that are experienced by executive assistants every day in every part of this country. For those of you that are struggling with a company or boss that is not treating you properly, you have a remedy available to you. More importantly, you have a right to be treated fairly at work. For those of you that are mistreating your staff, stop it. If you don't think you can, here's some food for thought. A California appellate court just upheld a $2.4 million dollar verdict and a $750,000 attorney fee award against Vonn's in a sexual harassment and retaliation claim. (Click here to read more.)

More on this topic in a later post,

Rod

Congratulations President Obama

Since its adoption, our office has been closed on the Martin Luther King, Jr. holiday. This year, given the historic nature of the presidential election, our office is also closed on Inauguration Day. Regardless of whom you voted for, this past presidential election confirmed the American Dream.

As a lawyer, who over the years has represented individuals that have been the victim of discrimination, retaliation and workplace harassment, this day takes on a special meaning. That is not to say that we will never see this type of conduct in the workplace nor does it mean that the task is complete. What it means is we have taken a great step forward.

Hopefully, our new President will have the courage, wisdom, and discernment to lead our country through this difficult time. In reflecting on today, I am reminded of the words of the late Dr. King,

“An individual has not started living fully until they can rise above the narrow confines of individualistic concerns to the broader concerns of humanity….Every person must decide, at some point, whether they will walk in the light of creative altruism or in the darkness of destructive selfishness. This is the judgment. Life’s most persistent and urgent question is, What are you doing for others?”

Later,

Rod

Birch Bay Resort settles same sex harassment case

Worldmark by Wyndham, according to the EEOC, has just settled a same sex harassment claim for the sum of $370,000. According to the EEOC, a manager touched victims, commented on their appearance and created sexually charged situations. To read more click here.

Dentist settles sex harassment lawsuit.

A Chicago dentist was recently sued by the EEOC. According to the EEOC, the dentist sexually propositioned female employees, touched them in an unwelcome manner and required them, as part of their job, to attend Scientology seminars. To read more about this case click here.

As part of the settlement, the doctor agreed to pay $425,000. In addition to the $425K, the doctor will also have to pay an independent outside entity (probably a lawyer or former HR Director) to receive and investigate complaints of sex harassment and religious discrimination for the next three years.

Doc, I hope you had employment practices coverage because you are gonna have to fill a lot of teeth to come up with $425K. If your lawyer hasn't told you already, stick to the practice of dentistry and keep the other stuff outside of work.

Employer Alert

I don't know about you, but I have enjoyed taking some time off during the holidays. Rarely do you know how much you need rest until you get it. So I guess the good news, to quote the Governor of California, "I'm baaack!!!"

With the new year starting, Washington employers should be aware that the state minimum wage has increased to $8.55 per hour. In addition, the Department of Labor and Industries has issued a new poster that incorporates information concerning the new minimum wage. You can get that poster by clicking here.

I also want to remind those who may have missed my December 19, 2008 post, that the Department of Labor has issued new a new FMLA leave forms. To get those links, go to my last post.

Here's wishing that your 2009 will happy and prosperous.

Later,

Rod