Answers to our Clients’ Most Frequently Asked Questions
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Long-Term Executive Just Resigned, Joined Competitor, and Contacting our Clients & Employees. What Do we Do?
There are a number of immediate actions that should be taken but only at the direction of counsel to protect your Company’s most valuable assets, its information, employees and clients. However, before doing anything though, it is critically important that no one touches the employee’s electronic communications until they have been properly preserved, collected and reviewed because digital footprints are the most important evidence in these types of matters. Retain experienced employment counsel immediately to issue cease and desist letters to the executive and new employer that among other things will demand immediate return of all Company information and work with you to preserve all relationships and properly collect the executive’s digital footprint.
Company's High-Revenue Salesperson is Suspected of Preparing to Leave. We Want to Prevent Unfair Competition, but How?
Covenants not to compete are generally unenforceable in California, however, lesser restrictions, such as promises not to disclose proprietary “trade secrets” or non-public confidential information generally will be upheld, if the employer has implemented reasonable measures to protect the secrecy of the proprietary trade secrets and confidential information.
In addition, during the time an employee is working for your Company, they are compensated for performing work for your Company, and should not be preparing to compete, or performing work for another Company. Even before an employee resigns, the employee may notify customers that he is severing his business relationship with you and “announce” his new employer, address and contact information. However, pre-resignation, the employee is not entitled to solicit the customer because as an agent, the employee owes a duty of loyalty and diligent and faithful service to his current employer. Post –resignation, announcement is not unlawful, however, if the identities of the clients are protected as trade secrets, then the employee may be held liable for misappropriating trade secrets under California and federal laws.
California does not permit “no-hire” arrangements between employers, and more recently no poaching agreements were also held to be unlawful. Certain post-termination contractual restraints upon soliciting co-workers are valid and have been held to not amount to unlawful covenants not to compete.
If the competitor uses unfair or deceptive means to hire away your employee, such as disrupting your business, deleting and destroying information, etc., your Company may recover for the competitor’s interference with the employee’s at-will relationship with your Company.
Unfair competition claims may arise if your employee misrepresents or disparages your products or services; secretly diverts business to the competitor; solicits only the preferred or your most profitable accounts or clients; or interferes with your current contractual relationships or prospective ones that you are pursuing.
There are a number of recommended actions that should be taken but at the direction of counsel to protect your Company’s most valuable assets, its information, employees and clients. Before doing anything though, it is critically important that no one touches the employee’s electronic communications until they have been properly preserved, collected and reviewed because digital footprints are the most important evidence in these types of matters.
Why Does our Company Need to Retain an Outside Workplace Investigator?
Anytime an investigation is conducted by an internal employee who is compensated by the Company, the investigation is likely to be challenged, although it does not hold much weight if the investigator is qualified, well-trained in conducting workplace investigations, has no involvement with the issues raised or key persons involved, and the documentation of the investigation is legally-compliant.
While retaining outside unaffiliated trained investigators is highly recommended in all investigations to best refute attacks, the examples below, are the most frequently encountered circumstances in which we strongly recommend retention of an outside investigator:
- The employer is notified of anticipated litigation (i.e., notice of an administrative charge, lawsuit, secondhand rumors that an employee is suing, an attorney letter, or reporting by an employee, where it is suspected that an attorney has been retained);
- No one employed by the Company is qualified and trained in conducting legally-compliant workplace investigations and the legal issues raised;
- Any of the key persons involved include high-level executives, the internal employee was involved in conduct previous investigations;
- The issues raised involve high-specialized, confidential and/or significant issues and/or potential corporate, criminal and/or personal liability; and
- Review of documentation related to prior workplace investigations conducted by internal employees evidence deficiencies.
While the time and cost of retaining an outside investigator is never loved by employers, the benefits are significant anytime the employer is on notice of anticipated legal action.
The qualified investigator who has no prior affiliation with the parties is the best person to testify about the investigation and findings, establish the employer’s affirmative defenses that can defeat certain claims, and even limit liability. Most importantly, a well-documented investigation conducted by an outside trained investigator may discourage attorneys from pursuing legal actions, or quickly resolve them.
Company's High-Revenue Male Producer is Punishing Female Employees believed to Complain. What Do We Do?
You have stated: "We don’t know what to do. All but one of the female employees in our office has complained to us that our number one male sales executive is highly abusive, offensive, “touchy feely” and embarrasses them while openly joking around with other males in the office. We have spoken to him repeatedly, and it now seems he is punishing the ones he believes complained. No one will dare speak to any of us about it for fear of having to endure even worst conduct, such as staying late, doing menial tasks, etc. We are worried about liability, but our revenues depend on him."
The high revenue producer who has loose lips is one of the most common calls we receive. No matter how many times the employer counsels the accused, the conduct either does not stop, or, as in this example, adds an additional claims of retaliation, failure to prevent unlawful harassment and retaliation, and negligent supervision/retention, to name just a few. The employer is right to worry about liability here, because this is the type of fact pattern that causes California juries to award high punitive damages award.
This does not mean the employer should terminate the high producer on the spot, and in fact, should not, or face claims by the terminated high producer. At this point, the employer must immediately launch a confidential attorney-client privileged investigation of the female employees’ allegations. In these situations, we recommend that the client retain an experienced employment attorney trained in workplace investigations, to properly conduct the investigation under the attorney-client privilege. The investigator acts as a fact-finder. Upon conclusion of the investigation, we are in the best position to analyze the allegations, claims and recommend how to proceed as to all parties involved. The employer’s obligation is to end harassment, discrimination and retaliation. Depending on the allegations, the high producer’s responses, and conclusions reached, there are a variety of corrective actions that the employer may impose short of termination, so long as it stops the conduct.
While the time and cost of conducting investigations is not well-received by employers, the benefits are significant. Not only are investigations mandated by law, if not done right, creates additional liability for employers. Given the importance of the high producer to your Company, it is extremely important that the investigator have no affiliation with the Company.
How does our Company Terminate A Key Employee Who Could Hurt our Company?
You have asked us how to fire an inept employee who has been counseled repeatedly who also happens to perform a key position with access to highly confidential information. This is typically your bookkeeper/personal assistant/works in accounting/finance/IT/or has been privy to information that if revealed could hurt our Company. You have asked us how do you separate with this employee unscathed.
The most dangerous employee of them all is the employee who knows the most critical highly confidential information related to your Company and the executives personally. This employee is often times the trusted assistant or performs work in payroll, HR, or IT, where they have access to confidential accounting and employee matters, including, compensation, benefits, payroll, terminations, claims, lawsuits, severance and settlement agreements.
By virtue of the employee’s position, or relationship with high level executives, the employee knows about business decisions that if revealed, could result in corporate and/or personal liability. In other words, this employee knows where all the bones are buried.
Even if there are no bones to speak of, this employee can make the Company and executives’ life miserable by contacting state and/or federal agencies or equally bad, share “confidential” information that was not properly protected as proprietary trade secrets.
This by no way means that the most egregiously performing employees are given a free pass solely because they know highly-confidential information; only that careful planning, preparation and analysis is strongly recommended before taking adverse action. Even if your Company has strong non-disclosure policies, signed agreements and processes that limit authorization/access/use of your Company’s confidential information and legitimate, non-discriminatory reasons for termination, careful consideration must be given to the manner and method of achieving it, as these disgruntled former employees are the most dangerous and costliest of them all.
How To prevent Long-Term Elderly Employees from Suing
You have provided us with information that you employ a long-term (30 year) chronically underperforming Caucasian 63 year old male employee and want to finally get rid of and replace with a rock-star recent hire (6 months). The recent hire is a 22 year old female Hispanic employee who has been doing many of his duties already. You have asked how do you prevent him from suing you.
While anyone can file a lawsuit, obtaining a legally enforceable release of claims is the only way to fully protect the employer. The long term employee who is a member of at least one protected class is a common call we receive because the client recognizes the risk of terminating a long-term older employee and replacing him/her with a younger employee that may be attacked as age discrimination exposing them to significant damages because of the length of service and the likelihood of finding a similar job earning the same high income and benefits is minimal.
Often times, the challenge for employers is that even though everyone believes the long-term employee has chronically underperformed, the personnel file and other evidence suggest otherwise. Either the file is empty or it shows raises, bonuses, and either fails to properly document and counsel on all of the performance issues, or three inches of write-ups all concluding with further violations will result in disciplinary action, up to and including, termination – for the last 30 years.
Typically, the older employees lack technical skills, are resistant to change, and become the butt of jokes around the office that come back to haunt the employer. When we ask what is the straw that broke the camel’s back that has led you to this decision, the straw is insignificant in comparison to all of the past issues which were essentially ignored.
After analyzing exposure, employers often opt to offer severance packages to the affected long term employee in these situations. Because the employee is over 40, a waiver of the federal age discrimination claims require that the employee be provided with a set number of days to consider the agreement, and an additional 7 days to revoke it following execution. The manner in which a severance package is offered, the terms, how, when, where, the persons involved, and the meeting itself are all critically important in achieving resolution.
Receiving a Notice of Employment-Related Claim. What should you do first?
You will need to retain experienced employment counsel immediately. Before you do, it is always best to obtain as much information as you can on the matter before placing the call. However, before you do, it is important that:
- You do not touch any electronically stored information such as emails, texts, word documents etc.) because you want to preserve the metadata (information about the particular email, such as when it was prepared etc.). If there are paper copies of the personnel file, payroll/time records, notes or other paper documents (i.e., not electronically stored information such as emails, texts etc.) scan them so you can provide them to counsel.
- You do not communicate in writing regarding the substance of the matter or complainant because any writings are discoverable. This means if legal action follows, all written communications regarding the matter or complainant will need to be produced. If the communications are generic such as please copy and scan x’s personnel file, that’s fine. Once counsel is retained, all internal communications regarding the matter or complainant with counsel will be protected by the attorney-client privilege, to the extent that you are discussing legal strategies and seeking legal advice.
- You refrain from making any statements, oral, written or otherwise, regarding the complainant or the matter to anyone (except counsel), including, regarding the merits, because it may give rise to a claim for defamation, upon which personal liability lies.
- You should prepare a timeline of events and known information regarding the matter addressed “To: Counsel, Attorney-Client Privileged Communications” that is only sent to counsel. Even if you are still interviewing counsel, any communications are still protected by the attorney-client privilege. Before your initial call with counsel, it is always best to send the attorney via email a scanned copy of the notice, relevant paper or hard copy documents along with a timeline so that the initial call is a productive one.
How much will it cost us/me to retain a Labor & Employment Attorney?
It really depends on the matter and a variety of other factors, including, who we are representing in the matter. We offer alternative billing arrangements (such as, flat fees that may include a set number of hours) for certain matters, such as, preparation of employee handbooks, audits and training. We traditionally bill by the hour for counseling, potential or actual representation in legal actions. Certain costs are easily estimated such as filing fees, while others, such as the costs of depositions will vary depending on whether or not it is videotaped, the number of exhibits that are marked, and pages of testimony, but we can provide an estimated range.
On hourly fee arrangements, we bill in increments of a quarter of an hour for the time spent by attorneys, paralegals and others who may aid in representation on a monthly basis and for any costs incurred (which are specified in our retainer agreement). We typically require payment of a retainer which is a deposit placed in our attorney client trust account and applied monthly to our bills, with any remaining amounts refunded to the client. Payment is due upon receipt. We accept all major credit cards, wires, PayPal, and business checks. Once the retainer is exhausted and applied to monthly bills, we reserve the right to require replenishment of the retainer.
What factors should we/I consider when we hire a Labor & Employment Attorney to represent us/me?
Like any other profession, not all employment lawyers are created alike. Even after over twenty years of practice, I am always surprised when I take over litigation from another law firm with the most highly educated attorneys how uninformed clients are as to the risks and benefits of employment litigation. Therefore, no matter how crappy an employee is, if the employer has legal exposure that may result in a windfall recovery, the client should be informed at the outset so that they can weigh the risks and benefits in determining the best strategy.
In hiring employment defense counsel, the following considerations are important:
- Who will be handling your matter on day-to-day issues, what is each person’s background, experience, how will time be billed for more than one person working on the case, and will that person(s) be available to answer your questions. Often times, the employer hires a law firm based on the reputation of a partner who rarely even touches the file, bills for review, and if they step in to take depositions or appear at Court to argue important motions, they often lack the detail of the attorneys who are working on the case and drafted the motions, which not only ends up as a disservice to the client, but can also become rather expensive with the partner’s higher hourly rate.
- How does the law firm bill? Nothing is worse than getting a bill for voicemails, inter-office conferences, the same tasks performed by various persons, etc. Hourly rates are negotiable, as well as how an attorney bills their time. Read the retainer agreement carefully before you sign it because it is a fully enforceable contract. It is important to make sure you understand every sentence and if there is any ambiguity to seek clarification before signing it. Make sure you understand what costs and fees you will be billed and at what rate, replenishing retainers, the date payment is due, the manner in which objections must be raised, interest rates applied on unpaid balances, and the manner in which disputes will be resolved.
- Do you have a connection with the attorney who will be handling your matter? Employment law is similar to family law. Relationships are personal, emotions run deep, and fees run high quickly when billing is based, for the most part, on time spent. Does the attorney understand your goals? Are they realistic based on the known facts? What can you expect in terms of responsiveness? What does the law firm expect you do to cooperate and aid them in representing you? Did the attorney review everything that you provided?
- Was the attorney knowledgeable on the law, and did not simply reassure you that the claim is frivolous and just respond to opposing counsel without conducting an investigation? Has counsel presented you with an initial game plan that includes factual and legal analysis, proposed strategies, and estimated costs? Can these claims be dismissed prior to a jury trial? If there is potential legal exposure, how will they be handled? Employment cases are expensive, no matter what an employer does. Upfront research, strategic planning to aggressively put the burden on the complainant who still has the burden to prove liability and damages caused by the violations, strategic representation is critical so you want to choose a firm who will spend your money as if it was their own.
What does a Labor & Employment Attorney do and why would I ever need one?
While it may seem obvious in fact it’s not for two main reasons: (1) employment laws are complex; they hold employers and individuals liable regardless of their intent or agreement; and (2) if the employee prevails on the claims pled the most often, the employee will get a windfall recovery that includes economic damages, penalties, and automatic recovery of their attorneys’ fees and costs.
We first address the pressing issues by asking the right questions, reviewing documents and talking to key persons to fully assess the allegations. We then educate the client on what the laws require, and the application of the facts to the law.
Lastly, we propose cost-effective strategies with an eye towards quick and efficient resolution. For example, if the employer unknowingly did not provide meal and rest breaks, we will propose resolving claims where there appears to be liability for the least amount of money and correct the problem going forward.
Second, we recommend implementation of what I refer to as an employer’s three deadly weapons: signed job descriptions, updated handbooks and critical policies, certifications and agreements. During this process, we are able to correct any misconceptions and firm up policies based on our prior litigation experience and the most recently reported hottest areas of litigation.