Baltimore Business Journal Article on Non-compete Agreements (Subscription Required)

The Baltimore Business Journal recently published a pro-non-compete piece directed at small businesses.  No surprise there:  the BBJ is a business oriented publication.  The reporter, Jack Lambert, called me for the employee perspective on non-competes.  Here is the part of the interview that made it into the article:

When drafting non-compete contracts, employers should consider how great of a burden to put on their employees, said Jim Rubin, a principal of the Rubin Employment law Firm in Rockville. He said some businesses include jury waivers. Those are clauses that dictate where the case can be litigated. They also include requirements that employees pay the company's legal fees if they lose the case."All sorts of provisions are put in there that are really unfair," said Rubin, who represents employees in non-compete contract matters.

I wrote about unfair non-compete contract provisions in my last post.

What to look for (and avoid) in a Maryland Non-Compete Agreement

Employers often use their economic leverage to force one-sided non-compete agreements on employees.  Below is a list of the top 5 unfavorable contract terms I  look for when I review non-compete agreements.

1.    One-sided attorney fee-shifting.  In a normal breach of contract lawsuit, each side pays its own fees.  Employers often get around this rule by including in a non-compete agreement, a clause that states the employee will pay for the employer's attorneys fees if the employer is successful in enforcing the agreement.  

2.   Over-broad restrictions on working.  An Employer  can only enforce non-compete agreement against a narrow class of employees and only when it can state a legally protectable interest.   Employers nevertheless  often define competition so broadly that, if enforced, the employer could not work in an  entire industry (even if the employee is not competing).   

3. Liquidated damages.  It is often very difficult to prove damages when an employee is accused of violating a non-compete agreement.  Employers sometimes attempt do away with the necessity of proving actual damages by stating  that amount of liquidated damages is presumed.  A Maryland Court decision suggests that liquidated damages provision are  invalid in most situations involving non-compete agreements.   

4. Court Selection and Choice of Law.   Parties to a contact are generally allowed to choose the Court that will hear their dispute and the law that applies to those disputes.  Employers often use their leverage to pick the Court and the Law believed to be the most favorable to them.   

5.  Jury-Waivers and Arbitration Clauses.  In non-compete litigation, employers generally prefer to be in front of judges (not juries).  As such, employers often use their leverage to make employees waive their right to a jury or require that all disputes be resolved in arbitration (and not Court).

 Here are a few articles that discuss  ways to combat one-sided contract terms:

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

Maryland Non-Competes: Things to Consider Before You Sign One.

Q: Can you leverage your way out a Maryland Non-Compete? A: Maybe.

A Non-compete Success Story.

  

Arbitration of Employment Disputes in Maryland

I am pursuing more and more employment law cases in arbitration right now than I ever have in my career.  Arbitration is an alternative to Court.  In arbitration, the parties "choose" to have their disputes heard by an arbitrator (often a retired Judge or an experienced lawyer), rather than a judge or jury.

I am certain that my personal experience of an uptick in arbitration is common among employment lawyers.  Several Maryland and U.S. Supreme Court decisions allow employers to make their employees "agree" to waive their right to a jury and to pursue class actions as a condition of employment.  Employers generally prefer arbitration because of a belief that it is private, cheaper, and more employer-friendly than the court system.

In my experience, arbitration is  more expensive than court for the employer because the employer often must pay the costs associated with arbitration.   Hence, the employer has to pay its own lawyer and the arbitrator's fee.  Also, arbitration is  not always private.  Also, I have had some good success in arbitration.   Finally, when the employee is the one being sued, employers either forget about an arbitration or regret having made the employee sign an arbitration agreement as a condition of employment.  


  

Terminated for Absenteeism? You May Still Be Entitled to Unemployment Benefits

An employer, of course, can terminate a Maryland employee for being absent too many times (so long as none of the absences are protected by the FMLA, ADA, or Maryland Flexible Leave Act).  But, are you entitled to unemployment benefits if you are terminated for excessive absenteeism?  The answer is:  it depends.  If your absences are not your fault and you timely notified your employer when you would be out, then you are likely entitled to unemployment benefits. 

I just represented an employee who found herself in exactly that position.  She was terminated for being out of work too often.  Each time she was absent she gave her employer proper notice.  It was undisputed that she was out of work for a chronic medical condition.   Over the employer's objections, the employee was awarded benefits. 

A summary in the Maryland Department of Labor's decision digest summarizes the law:

• The claimant was absent from work on an authorized maternity leave. Due to unexpected medical complications, the claimant was not able to return to work as early as anticipated. The claimant kept her employer informed of her medical condition. The employer would not hold the claimant's job until she could return to work after her six-week checkup. Absenteeism due to illness is not misconduct. The claimant was discharged, but not for any misconduct. DuBois v. Redden and Rizk, P.A., 71-BH-90.

Department of Labor Issues A New App to Track Overtime

Q:  What are the three most important rules in employment law?
A:   Document, Document, Document.

The Department of Labor issued an app to document overtime.  The app acts as a time clock. You press a button when you start working, then you press a button when you stop working.  You enter your hourly rate.  The app then calculates your wages and overtime.  You can email a report of your time to help you follow the three most important rules of employment law:  document, document, document. 

Maryland Health Care Worker Whistelblower Protection Act

   Maryland has a special lawthat protects health care workers from retaliation.  The Maryland Health Care Worker Whistleblower Protection Act protects an employee from retaliation if he or she discloses to a supervisor or board an activity that is in violation of a law, rule, or regulation.  

  The health care worker must believe in good faith that the activity poses a substantial and specific danger to public health or safety.  The health care must make his or her report in writing or follow the employer's compliance policy.

   In a recent case, the Maryland Court of Appeals (our highest court) ruled that the Act may protect a health care worker even if he or she only made an "internal" complaint to a supervisor.

Promise in Employee Handbook Can Become Enforceable Contract in Maryland

     Many employers issue employee handbooks.  The handbooks usually include disclaimers that state that the handbooks do not change the "at will" nature of employment. 

     But, the United States District Court of Maryland recently ruled that an employer's anti-retaliation provision can become the basis for an enforceable contract.    A pharmacutical representative alleged that her employer terminated her for reporting her supervisor's ethical violations.   The Company's handbook stated:

Retaliation and threats of retaliation against employees who raise concerns, or against individuals who appropriately bring important workplace and business issues to the attention of management, are serious violations of [the Company's] values and standards and will not be tolerated. . . . All directors, officers and employees are strictly prohibited from engaging in retaliation or retribution . . . which is directed against an individual on the basis of or in reaction to that individual making a good faith report to the Company . . . of suspected violations of law, regulation, policy or procedures, or Our Values and Standards.

     Despite several disclaimers, the Court ruled that the above language was sufficiently specific and definite to constitute an enforceable promise.  The Court held: "Given the unambiguous nature of the non-retaliation policy, the disclaimers that [the Company] relies upon are insufficient to defeat [the plaintiff's] reasonable expectation that [the Company] intended to limit its ability to terminate her for retaliatory reasons."