What to do when you are threatened with a non-compete lawsuit.

I recently had two successful outcomes in a non-compete cases on behalf of employees either being sued or threatened with being sued. It got me to thinking what are the ways my clients should prepare for the first meeting with a lawyer in these circumstances. Here are my thoughts:

1. If you are served with legal papers call a lawyer immediately. Employers often ask the Court to grant immediate emergency relief in these cases. Time is of the essence. Bring the Court papers with you. Record the date you are served.

2. Bring a copy of the non-compete agreement to your first meeting with a lawyer.

3. Bring copies of your job descriptions at your old job and your new job. An employee's best defense is often that he or she is not the type of employee who can be covered by a non-compete agreement.

4. Did you advise your new employer in writing that you signed a non-compete with your previous employer? If yes, bring a copy of the document that proves this fact. If no, consult a lawyer.

5. Gather other relevant documents presented in an organized fashion, including:

• Evidence of affirmative claims you have against your former employer. Are you owed wages? Were you mistreated? Employees often can use their own claims to leverage their ways out of a non-compete agreement;
• Documents you believe your old employer might claim as evidence of your breach.
• Contact information for your new employer and any potential witnesses.

General Assembly Severely Limits Employees' Rights to Accrued Vacation Pay Upon Termination

The Maryland Wage Payment and Collection Law defines wages as including fringe benefits. Many plaintiffs' employment lawyers, like myself, argued that vacation pay is a fringe benefit earned just like any other wage. In August 2007, the Court of Special Appeals agreed with us ruling in Catapult v. Wolfe, that promised vacation constitutes a wage under the Law. Catapult was an important decision for Maryland employees. It gave them the right to sue to recover earned vacation pay and, possibly, three times the amount actually owed under the Maryland Wage Payment and Collection Law.

Employers were not happy with the Catapult decision. In a show of political force, the business lobby pushed through Senate Bill 797 as "emergency legislation.: The bill allows employers to require that their employee forfeit accrued vacation if the employer has a written policy to that effect. The Bill's fiscal note show that its intent is to undo Catapult.

The Governor signed the bill into law.

Court of Appeals Dismisses Hoffeld

As mentioned in a previous post, the Maryland Court of Appeals had agreed to review the most recent commissions case brought under the Maryland Wage Payment and Collection Law. The name of the case is Hoffeld v. Shepherd Electric. Our lower appeals court, the Court of Special Appeals, ruled that a salesman was not entitled to several commissions because the employer had not yet invoiced several deals. I helped draft a brief urging the Court of Appeals to review the decision to further define the rights that Maryland's salespeople have to their commissions in their pipeline when their employment terminates.

After oral argument, the Court of Appeals dismissed Hoffeld. The Court offered no explanation for its action. As a result the Court of Special Appeals decision is intact.

What does this mean?

1. Maryland salespeople still have the right to commission in their pipeline if they have completed the sales work necessary to earn those commissions.

2. The Court is likely to re-visit this area of the law when the right case comes around -- since Hoffeld was not the right case.

Q: My Employer Has Offerred Me Severance In Exchange for Signing a Waiver. What Should I Do?

Q: You have been fired. Your employer offers you a severance agreement. The agreement offers you money in exchange for signing a waiver. What should you do?

A: You should understand exactly what it is you are waiving. If possible, have a lawyer review the agreement. Some employers take advantage of their superior bargaining power and insert unfavorable terms in severance agreements. I have seen non-competition, non-solicitation, attorney fee-shifting, and arbitration provisions inserted into severance agreements.

You should protect your interests. Understand what your former employer will say to future employers seeking a reference. Will your former employer give you a positive, or at least, a neutral reference. Will your former employer contest your claim for unemployment benefits?

Lastly, do not leave money on the table. Understand your rights to earned wages under the Maryland Wage Payment and Collection Law.

Satisfied Client -- Commissions Case Under the Maryland Wage Payment and Collection Law

Last year I worked very hard for a client suing his former employer for commissions under the Maryland Wage Payment and Collection Law. We settled the case on the courthouse steps toward the end of the year. Because we worked so hard on the case last year I am posting with his permission my client's very kind testimonial.

To Whom it May Concern:

I am writing this letter in support of Mr. Jim Rubin. I will preface this letter by saying that I had very high expectations of the attorney I hired for my case. The amount of commission money I had at stake was substantial, and the company that I worked for was putting all of their resources into their legal machine to prevent me from collecting the money I earned. I interviewed several employment attorneys before selecting Mr. Rubin to take on my case, and am confident I made the right decision.

As a commissioned sales representative fighting for unpaid wages, I knew I needed an advocate knowledgeable in employment law. The selected attorney needed to guide me through the legal process, and counsel me throughout this stressful and emotional process.

Mr. Rubin was organized, knowledgeable, confident, and prepared for the legal onslaught we faced. After a long and hard fight, we settled the case with my previous employer. I feel very strongly that my previous employer was more amenable to settlement knowing I had a good attorney that was going to present a very persuasive case. I am thrilled with the result, but would have liked to see Jim present the case he worked so hard preparing. I have no doubt that if we had to go the distance we would have had a favorable result.

As with most serviced based occupations (real estate agents, lawyers, dentists, etc.) everyone seems to have “someone” to recommend. I am fully confident in Jim’s ability to take care of my friends, family members or colleagues that require the services of a skilled employment attorney. It is a situation that I never hope to be in again, but I am glad I now have a very good “someone” if the need arises.

Best Regards,
AJW
Former Outside Salesman

My comment on Hoffeld v. Shepherd Electric

In my prior post I reviewed the recent decision issues by the Court of Special Appeals in Hoffeld v. Shepherd Electric. After a bench trial (no jury), the Court held that the plaintiff was not entitled to several commissions because the employer had not yet invoiced several deals. The Court apparently reasoned in part that because Hoffeld knew that invoicing was part of the sale, he was not entitled to a commission on deals Shepherd had yet not invoiced by his last day worked.

After reading the decision, my feeling and the feeling of several of my colleagues was that it was not entirely consistent with the seminal case in the area, McCabe v. Medex. Medex holds that an employer cannot tie the payment of commission to a condition unrelated to the work necessary to earn those commissions. Because it appears from the trial record that Hoffeld had done all the work necessary to earn several commission, tying commission to the invoice date appeared to be arbitrary.

Hoffeld asked the highest Court in Maryland, the Court of Appeals, to review the Court of Special Appeals decision. The Metropolitan Employment Lawyers Association (MWELA) and Maryland Lawyers Association (MELA) filed an amicus brief supporting Hoffeld's request. I co-authored the brief.

I am pleased to report that Court of Appeals granted Hoffeld's request and will review the decision issued by the Court of Special Appeals.

New Commissions Case issued by Court of Special Appeals

The Court of Special Appeals recently issued Hoffeld v. Shepherd Electric Co. There, Mr. Hoffeld worked for a wholesale and retail electrical supplier as an outside salesman. Shepherd Electric paid Mr. Hoffeld solely on commission. Shepherd Electric did not pay a commission until an order was shipped and invoiced. Mr. Hoffeld had continuing responsibilities from the date a customer indicated its intent to purchase through the date of delivery and invoice. Specifically, business requirements for a customer’s particular project frequently evolved in terms of the nature, amount, and/or prices of the goods specified, inevitably requiring adjustments to the original purchase order. Such changes required Mr. Hoffeld to perform additional work throughout the order interval, continuing those duties until the order is actually shipped. When Mr. Hoffeld quit, Shepherd Electric transferred his accounts to a new representative who received the entire commission at issue.


Mr. Hoffeld contended he was entitled to commission on several purchase orders that were not invoiced and/or shipped until after his termination. Shepherd Electric contended the commission was not earned until invoiced and paid.


The Court of Special Appeals ruled that the trial court did not commit clear error in finding that sales were made and commissions were earned when the orders were shipped and invoiced. According to the Court, commissions were not linked to the arbitrary factor of employment, but to a reasonable job requirement, i.e., Mr. Hoffeld’s continuing service to a customer. Of particular importance to the Court of Special Appeals was the fact that Shepherd Electric did not keep the commissions at issue, but paid them to another salesperson who assumed Mr. Hoffeld’s accounts. Notably, in Hoffeld, the Court of Special Appeals stated Shepherd Electric’s policy was properly scrutinized to ensure that it has not been used to circumvent the MWPCL. Indeed, an employer may not terminate an employee as pretext to avoid paying commissions. Such act would violate the Wage Payment and Collection Law.

Triple Damages Under the Maryland Wage Payment and Collection Law

I frequently represent salespeople seeking unpaid commissions under the Maryland Wage Maryland Wage Payment and Collection Law. I have written about this area of the law many times.

One important part of the Maryland Wage Payment and Collection Law is the provision that allows the Court to award triple damages if the plaintiff successfully proves his or her claims. If the jury finds that an employer withheld earned commissions “not as a result of a bona fide dispute,” the jury may award the employee an amount not exceeding 3 times the wage. The Court may then also award reasonable counsel fees and other costs. Under the provision, a claim for $25,000 may represent $75,000 or more of potential liability.

What does a plaintiff need to prove to get triple damages?

• Here is a brief on when employees are entitled to triple damages under the Maryland Wage Payment and Collection Law.

• Here are suggested jury instructions on triple damages.

Top Five Ways Employers Violate Maryland's Wage Laws

I am amazed at how creative employers can be when it comes to violating Maryland's wage laws. However, as my law practice continues to grow, several consistent wage violations continue to recur. In no particular order, here is what I see.

1. Employers fail to pay their non-exempt employees overtime when they work more than 40 hours in a week.
2. Employers misclassify their non-exempt employees as exempt from receiving overtime.
3. Employers misclassify their employees as independent contractors.
4. Employers fail to pay salespeople commissions in their pipeline when their employment terminates.
5. Employers fail to pay accrued vacation at termination.