Blog

Employment Law

New Restrictions on Employment, Severance and Separation Agreements

Mark Schroeder

While most employers are not obligated to provide severance to properly terminated at-will employees, no improper discrimination, contract obligations or retaliation involved, they often offer some form of severance conditioned on the terminated employee signing a severance or separation agreement that includes a waiver of claims against the employer and a promise of non-competition and other protections of the employer’s business. Recently enacted state laws and National Labor Relations Board (NLRB) rulings, no longer limited to collective bargaining situations (unions), may make those employer protection and release provisions not only unenforceable but could expose an employer to liability.

No Non-Competition Requirements.

A recent Illinois law not only bars non-competition provisions in employment and separation agreements, but provides employees can sue for damages and attorney’s fees, while empowering the Attorney General to impose fines. Other states have similar restrictions and the NLRB ruled non-competition, non-disclosure, and non-disparagement provisions waiving employee rights are not only unenforceable but an unfair labor practice.

No Waiver or Release of Rights.

The NLRB ruled that severance or separation agreements that require departing employees to waive their statutory and common law rights arising from their employment or its termination are an unfair labor practice, rendering them unenforceable and subjecting employers to fines and sanctions. We await clarification of what rights cannot be waived.

Action Needed.

Review and reconsider your use and the content of severance and separation agreements, as well as protection of your business and its confidential and proprietary information from unfair competition.

This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting, or other professional advice.  If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.
business litigation

Evaluating the Costs of Litigation to a Business

Mark Schroeder

While Americans and their businesses are the most litigious in the world, lawsuits are often filed and defended without consideration of the costs to the litigants. Plaintiffs should consider these costs before suing, and defendants before responding.

Even if your attorney’s fees are on a contingent or some modified cost basis, as opposed to hourly, the cost of litigation for plaintiffs can still be substantial. Owners and employees are required to assist with the litigation, taking time away from the business. Parties may have to open their books and activities to scrutiny by defendants, proprietary and confidential information is exposed, and embarrassing information can become public. Counterclaims are also often brought, resulting in additional attorney’s fees and risks. Pending litigation also effects credit decisions and employee and third party relationships.

Even with insurance coverage, the cost of litigation can be substantial to a defendant. Litigation not only can cause uninsured or non-deductible expenses, but requires substantial involvement of employees at the expense of the operation of the business. Pending litigation can effect financing, employment, customer and vendor relations, business value and other critical business functions and decisions. Buyers and bankers often do not care about why a lawsuit is pending or your promises that it will not damage the business.

Before initiating or responding to a lawsuit, the parties and their counsel should consider alternative methods to resolve the situation, including mediation, arbitration or negotiating a settlement, reducing costs and avoiding the publicity, risk and delay of litigation. Involve appropriate third parties, insurance carriers and others to help reach a settlement and think outside the box. Including a dispute resolution mechanism in contracts can also minimize the risks and costs of a lawsuit.

If your business is confronted with the decision to sue or defend a suit, the attorneys at Brooks, Tarulis & Tibble can advise you on what to expect and counsel you on options to minimize the risks, costs, uncertainty, publicity and delay of litigation. If you have any questions or we can assist you in this regard, please contact me.

Mark W. Schroeder
Brooks, Tarulis & Tibble, LLC
(630) 355-2101
mschroeder@napervillelaw.com
http://www.napervillelaw.com

 

Confidential Information and Trade Secrets

Protection of Business Information

Mark Schroeder

While all businesses hope to maintain loyal and honest employees, your relationship can change dramatically when an employee is solicited or hired by a competitor.  With much of your business information stored, communicated or accessible remotely by electronic devices, every business should address protecting its information from unauthorized use or disclosure.

Policies and procedures should be implemented and acknowledged by your employees that your business information belongs to your business and that their access to it is solely for the purpose of conducting your business.  Even if their job includes accumulating, analyzing and storing business or industry information, it belongs to your business.  It is difficult to protect information if you fail to tell your employees its importance and ownership.

Your business should also take reasonable steps to protect its information.  Agreements with employees, policies and procedures acknowledged by your employees, using only business owned storage and communication devices, password protection, limited access to information, locked files and confidential stamped documents can go a long way to prevent the theft or misuse of business information and to obtain legal relief in the event of misappropriation.  This is particularly important when employees work remotely or from home.

Your business should also have clear rules on what electronic devices can be used to conduct business and, if the devices belong to the business, what personal business, if any, can be conducted on them.  Owning all electronic devices used, including smart phones and their phone numbers, is best.  At termination these devices can be retrieved, and tampering with, downloading or deleting business information can usually be determined.  All passwords and user names must be disclosed to the business.  By restricting personal use of business equipment, you can reduce liability for employees’ inappropriate uses.

My firm and I counsel and advise businesses on protecting confidential and proprietary information, and updating their protections.  Should you have any questions in this regard, please contact me.

Mark W. Schroeder
Brooks, Tarulis & Tibble, LLC
(630) 355-2101
mschroeder@napervillelaw.com
http://www.napervillelaw.com