Proposed Changes Affecting Employment at Michigan Home Help Care Agencies

Regulations and Red Tape When it comes to establishing basic terms and conditions of employment, such as hiring someone as an independent contractor or as a W-2 employee, business owners generally enjoy significant leeway. But this could change for certain Michigan businesses providing home help care services under proposed changes by the Michigan Department of Community Health (MDCH). This is because the MDCH is proposing to radically intrude into a company’s employement operations by prohibiting the hiring of independent contractors and restricting the hiring of certain family members.

Specifically, the MDCH in a notice of proposed policy changes bulletin advised that the following restrictions will be implemented beginning October 2, 2014:

  • No Independent Contractors – The use of contract employees (1099 subcontractors) will no longer be allowed in the Home Help program. Thirty days prior to this deadline, MDCH will notify the beneficiaries served by the agency, the beneficiaries’ DHS Adult Services Specialists and the provider agencies so that beneficiaries can make alternative arrangements, if necessary.
  • Restricted Use of Family Members - Members of a beneficiary’s immediate family (parents, adult children or siblings) will not be able to provide Home Help services to the beneficiary as an employee of an agency. A beneficiary’s family members (excluding legally responsible adults) can provide services to that beneficiary as individual Home Help workers.

The deadline for submitting a response to these proposed changes is August 31, 2014. As noted above, if these changes are implemented, they would become effective October 2, 2014.

For background purposes, the Home Help program is administered by the MDCH in cooperation with the Michigan Department of Human Services (DHS). The Home Help program provides in-home personal care services to individuals who need hands-on assistance with Activities of Daily Living (ADLs) and assistance with Instrumental Activities of Daily Living (IADLs). MDCH is responsible for approving agency providers for participation in the program.

A number of our law firm clients would be affected by these proposed changes and we are currently evaluating the appropriate response and possible legal challenges if the regulations are actually implemented. If you are a home help care service provider with questions about this article or these proposed regulations, feel free to contact attorney Jason Shinn.

Common Mistakes that Derail Enforcement of a Noncompete Agreement

Common Mistakes that Derail Noncompete AgreementsOur law firm was recently hired to represent clients – former employees – being sued for allegedly violating a noncompete agreement, trade secret misappropriation, and other business related claims.

As is typical with these sorts of cases, the Plaintiff, the former employer, was seeking injunctive relief in the form of a temporary restraining order (TRO) to shut-down the former employees’ competing business. Our law firm filed an opposition to the Plaintiff’s motion for TRO and argued the motion before the judge.

After the legal dust settled, the judge agreed with our position that a TRO should not be issued and “strongly” encouraged Plaintiff to consider settling due to issues we raised about the noncompete agreement. While the case is far from over, winning this initial TRO “battle” goes a long way towards winning the noncompete war. 

Common Mistakes in Enforcing a Noncompete Agreement

Each noncompete and business dispute is certainly unique, but our law firm’s recent defense against the above noncompete violation relied upon common fact patterns in such disputes. And these issues should be a cautionary tale for employers and individuals.

  • First, noncompete agreements need to be consistent within the agreement itself and also in the larger context of other employment agreements and policies. This point is especially critical for employers who, under basic contract law, should expect to have any ambiguity construed against the employer. 
  • Second, noncompete agreements are going to be enforceable only to the extent they are reasonable. And what is reasonable in one business context is not necessarily reasonable in another.

In our experience, this is a point of frustration for both employers implementing a non-compete agreement or advising entrepreneurs looking to start a competing business; Both want a bright-line conclusion of whether the noncompete agreement is or is not enforceable.

Seldom will an attorney be able to give such a conclusion. Our response to this issue, however, is to provide a client with a range of potential outcomes, identify where the client is comfortable in terms of being on this range, and then working to understand  the clients business to maximize the factors for enforcing a noncompete agreement or distancing and/or distinguishing why the new business or former employee is not in violation of the noncompete agreement.

For more information about Michigan noncompete law, as well as drafting, enforcing, or defending against a noncompete violation, contact attorney Jason Shinn. Since 2001, his practice has focused on noncompete legal issues involving both employers and employees.

Michigan Experiments with Business Courts

Michigan Noncompete LawsuitsIt is not often that the legal system and innovation are used (positively) in the same sentence.

However, Michigan has implemented a statewide innovative “business court” system to handle legal disputes that fall into a number of categories associated with business matters.

I’m currently sitting in Wayne County Circuit Court’s Business Court for a breach of contract, non-compete, and related claims. This court includes Detroit and surrounding metro areas. The Michigan Supreme Court appointed Judge Daniel Ryan, Judge Susan Borman, and Judge Brian Sullivan as the designated Business Court Judges for Wayne County.

A few of the requirements for business court cases in general include:

  • All Business Court cases must be eFiled and will be assigned by blind draw to one of these judges.
  • If the case involves a business or commercial dispute as defined in the Business Court Act, MCL 600.8031, pursuant to MCR 2.112(O), parties must verify that the case is subject to being assigned to the Business Court. Breaches of noncompete and employment agreements fall into this category.
  • When filing a Business Court case, the party filing a complaint must give written notice with the initial pleading that the case qualifies for the Business Court. 
  • Parties are required to attach a Notice of Assignment to the Business Court form to the complaint (or responsive pleading if the case qualifies for the Business Court but was not noticed as such in the initial complaint, or if the counterclaim qualifies the case as a Business Court case.
  • Effective September 1, 2014, if a Business Court case is not identified as such using the Notice of Assignment or otherwise verified, and it is later identified as such, a sanction of up to $100 may be assessed after a hearing pursuant to MCR 2.114 as set forth in the Business Court Eligibility/Show Cause Order.

For more information on what criteria to use in determining whether a case qualifies as a business Court Case see this link – Notice of Business Court Implementation. For more on the Wayne County Circuit Court’s E-Filing Guidelines, please see Wayne County Circuit Court’s website.

Closing Thoughts on Michigan Business Courts

My law firm has represented clients in all three major Metro Detroit Business Courts: Wayne County, Oakland County, and Macomb County. These matters involved non-compete disputes, breach of contract claims, and related business disputes.

Based on this experience, the common focus businesses will find is on early settlement discussions and an expedited (comparatively speaking) litigation schedule. For example, in one noncompete dispute pending in Wayne County Circuit Court, the judge ordered dispositive motions presenting any questions of law to be filed prior to a settlement conference that was scheduled shortly after the complaint and answer being filed. While such an aggressive approach is not always successful, it was in this instance in that the case settled for something close to nuisance value and an amount well short of the cost of conducting discovery.

In another business court case in Oakland County, the parties were given a shortened discovery schedule and the case settled at mediation approximately 8 months later – a time frame equivalent to a competitive 100 yard dash time.

Litigants in business courts will also find that judges are more active in trying to resolve discovery disputes. In another matter, in Macomb County Circuit Court, our judge told the attorneys that before any motions could be filed, to first contact his office with the intent being to first try and resolve the matter without the need for preparing, filing, and appearing at a hearing on the motion.

Responding to Employee Absences Following Historic Metro Detroit Flood

Natural Disaster and Employment Leave of Absences

Flooded Metro Detroit Highway

This past week Metro Detroit was hit with a record rainstorm. After it was all said and done, many of the area freeways and streets were literally underwater and homes and basements were flooded with water and sewage.

It was also days before some of the affected roads were fully reopened. An understatement to say it was not a good day for the “D.”

What is also not good following a natural disaster like this is not understanding how employment laws may be implicated. For example, in Lane v. Pontiac Osteopathic Hosp., (2010), a case filed in the Eastern District of Michigan, an employee claimed it was medically necessary to clean the flooded basement because his mother had hepatitis and the stagnant water was a “breeding ground for the disease.” 

In response, the the employee took off eight days of work without prior employer approval. He conceded that four of the days were “probably” not covered by the applicable employment statute (the Family Medical and Leave Act). But the employee claimed three days should have been covered because he was working to clean up flooding at his mother’s home.

The court, however, disagreed and concluded that the absence was not medically necessary. In this regard, plaintiff had previously obtained medical certification showing that he needed to assist his mother with meals and to transport her to doctor’s appointments. But that certification did not extend to the clean up activities due to the flooding and, therefore, was not covered by his statement of medical necessity.

The court also believed that the plaintiff employee’s leave did not qualify for FMLA leave because there was no showing that his mother’s basement had to be immediately cleaned for her basic medical, hygienic, or safety needs and that he had to do it because she could not. Accordingly, the court granted summary judgment on the employee’s FMLA interference claim.

Closing Thoughts

Employers, especially small businesses, are often torn between two competing interests: Employers often want to help their employees to recover following a natural disaster. But this motivation can run up against the reality of running a business, e.g., business continuity and continued revenue. 

But by planning ahead and recognizing the responsibilities under the applicable employment laws following a natural disaster, employers can help employees to understand what options exist and do not exist. An important step for employers to take is making sure to provide employees with information on how to report to work following an emergency. It is equally important, however, for employees to make sure to communicate with their employers and understand their options. 

With this information, both employees and employers will be in a better position to respond when disaster strikes, while at the same time minimizing exposure to liability and helping employees to recover. 

Discrimination Lawsuits Aren’t Rorschach Tests – They Should Not Be Subject to Interpretation

Employment DiscriminationThe Michigan Court of Appeals sent a strong message that employment lawsuits should not be analogous to a Rorschach test, i.e., subject to interpretation.

Instead, there are certain fundamental pleading requirements that must be alleged in order to state a claim; Failing to follow these requirements may result in a dismissal of the claim. The decision also highlights an important distinction between race-based discrimination and a hostile work environment based on race.

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Mismanaged Human Resources Can Derail Your Start-up Company

HR Issues derail start-ups Human resources and overall HR risk management is critical to any company’s success. Unfortunately, these matters often take a back-seat at start-up companies focused on getting to market. But overlooking HR issues is a surefire way to disrupt the business rather than the market.

This all too common story line recently played out at GitHub, a San Francisco-based start-up. As reported by the Wall Street Journal (by Evelyn Rusli) an unnamed employee using an anonymous messaging app sent a company wide message that, “The self proclaimed Queen of GitHub is leaving her throne. The masses cheer.” Shortly thereafter, the “Queen” a/k/a Julie Ann Horvath, unloaded a barrage of allegations that GitHub was a hotbed of gender based harassment. Among these allegations:

  • She felt harassed by the president, Preston-Werner, and his wife who was not a GitHub employee;
  • A developer altered/deleted software code Ms. Horvath developed in retaliation for rejecting the developer’s romantic advances;
  • GitHub generally fostered a hostile work environment towards women. 

These allegations made their way into the Twittersphere resulting in a 24,000 followers of Ms. Horvath boycotting GitHub. And the incident lead to the company’s president stepping down amid criticism that Ms. Horvath’s situation was mishandled.

The Take-Away

I recently finished up an employment investigation matter with a lot of similarities to the GitHub matter. The lesson to be learned from both is that human resource management is not a one-time event. It is a dynamic process. It is no longer sufficient to hand out a handbook to new employees and call it a day. Or wait for someone to come forward with a complaint. This is a recipe for disaster. 

Instead, HR management – whether at a startup or an established company – requires a proactive approach. And it requires a dedicated skill-set as opposed to handing it off to an administrative assistant or payroll manager with the expectation that he or she can become an HR expert on the fly.

Is Your Non-compete Agreement Enforceable? Not Without a “Reasonable Competitive Interest”

Non-compete agreementSticking feathers up your butt, does not make you a chicken.

Tyler Durden, Fight Club

Under Michigan law, one required element for having an enforceable non-compete agreement is a “reasonable competitive business interest.” But, like the chicken quote, business owners can’t expect to just stick the phrase “reasonable competitive business interest” into an employee agreement and, without more, expect to have an enforceable non-compete agreement.

A recent example illustrates this point: I was defense counsel  in defending against allegations that a former employee breached the employer’s non-compete agreement and the successor employer had tortiously interfered with the non-compete agreement by hiring the former employee. A major defense was that the plaintiff did not have a protectable reasonable competitive business interest.

Specifically, the plaintiff claimed that certain internal forms and agreements it used in the business were trade secrets, confidential, and proprietary to the plaintiff.  Many of these forms were provided to customers and other third parties without any restrictions.

Additionally, during the course of the litigation, we discovered that a company affiliated with the plaintiff and unrelated to the defendants had actually posted on the Internet many of the very forms at issue in the litigation. In other words, how could there be a “reasonable competitive business interest” to protect if the information was already freely available? 

This is certainly the Cliff-note version of what was actually complex litigation. But the end result speaks for itself: Plaintiff’s lawsuit, which had asked for $860,000 plus early on in the case, ended up settling for $8,500. And as part of the settlement, the former employee’s non-compete was voided in its entirety. 

Conclusion

There are many issues that need to be addressed when it comes to drafting an effective and enforceable non-compete agreement. But without a reasonable competitive business interest, an employer is going to have problems enforcing a non-compete agreement.

In addressing what makes for a protectable competitive business interest, examples include detailed customer list, confidential information, trade secrets, and business goodwill. The key, however, is to tailor your company’s non-compete agreement to the business interests that allow the company to be competitive. 

For more information about drafting and enforcing non-compete agreements, as well as defending against claims non-compete violations, contact attorney Jason Shinn.

Mr. Shinn routinely works with employers to draft enforceable non-compete agreements and since 2001 he has represented employers and individuals in non-compete disputes

Extending Family and Medical Leave Act to Same-Sex Couples?

Changes-Ahead.jpgThe U.S. Department of Labor (DOL) is accepting comments on extending coverage of the federal Family and Medical Leave Act (FMLA) to same-sex couples.

This extension is in response to the Supreme Court ruling that federal benefits cannot be limited based on a definition of marriage as a union between one man and one woman, which was reached last year in United States v. Windsor, 133 S. Ct. 2675 (2013). That case found the federal Defense of Marriage Act’s definition of marriage unconstitutional for treating same and opposite-sex couples differently under federal law.

The full text of the Notice of Proposed Rulemaking (NPRM) and additional information about the procedure for submitting comments is available at this link to DOL’s website.  Comments must be received on or before August 11, 2014.

Under the FMLA, eligible employees are entitled to unpaid leave for family, medical and military-related reasons. However, an employee in a same-sex marriage may not be eligible to take FMLA leave to care for a partner, a partner’s child or a partner’s parent with a serious health condition. This would change under the DOL’s proposed rule in that same-sex marriages are given equal access to FMLA benefits currently enjoyed by opposite-sex marriages.

Interestingly, in determining the legal status of “marriages” and qualification for leave benefits under the FMLA, the DOL’s proposed rule adheres to state law where the couple was married and not their current state of residence. The DOL’s reasoning for this determination is to ensure equal protection for all valid marriages under federal law. The rule change provides married same-sex partners with leave to care for a spouse or a child or parent of the employee’s spouse.

For more information about and complying with the FMLA, contact employment attorney Jason Shinn.

Why I Write: Reflections of the Michigan Employment Law Advisor

Last week I was pleasantly surprised when I was included in something called a “blog hop” which is sort of analogous to what people of a certain age call a “chain letter.” The blog hop, however, is focused on a common theme.  Also common to this particular blog hop is that the chain includes bloggers who I consider to be an elite group of writers. You could say I’ve made it to the blogging mountaintop.  2150845139_f6e6d28a1d_m (1)

In fact, the instigator of this particular blog hop, Dan Schwartz of the Connecticut Employment Law Blog, sealed the deal for me when it came to deciding to start my own blog. Specifically, I was on the fence about whether to blog and the law firm I was with was less than supportive of the idea (the head of the litigation department viewed it as a waste of time and – worse – giving away “free legal advice … That’s just dumb”). Nonetheless, I found Dan’s blog and what he was doing was not only informative and entertaining, but it just made sense. And about four years later, here I am.

What I’m working on

My pet project is the Michigan Employment Law Blog, which focuses on federal and Michigan employment law issues. I went live with the blog at the beginning of 2011.

Before settling on the focus of the blog, I really wrestled with whether I could add to the employment law “conversation.” At the time there were a number of solid employment law blogs that consistently published top-shelf information (e.g., Molly DiBianca’s Delaware Employment Law Blog, Jon Hyman’s Ohio Employer’s Law Blog, Robin Shea’s Employment & Labor Insider, and (obviously) Dan’s Connecticut Employment Law Blog). In a fit of delusional grandeur, I decided nothing ventured, nothing gained.

Why do I write what I write.

For me, writing about employment law issues on my blog brings together a number of the things that I really like about being an attorney and a way to avoid what I hate.

Certainly at the top of the list of “likes” is employment law and writing: Going back to law school and when I first started practicing in 2001, I enjoyed employment law. Also, I was fortunate enough to start my career with a law firm that placed a high premium on writing well. Also, I like learning and blogging has been a great way to stay on top of, or at least even, with employment law trends.

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As to why the focus on Michigan, I was born and raised in Michigan. I lived in Detroit (the city, not the suburbs) during law school and I’ve been in Metro Detroit ever since. I think Michigan is an incredible state and I believe it has so much to offer employers and start-up companies when it comes to creating a successful business and balancing it with a fulfilling personal life.

As to avoiding what I hate, I’ve never enjoyed the sales side of the equation when it comes to the law – euphemistically called “client development” or “rain-making.” Perhaps it is a distinction without distinction, but I’ve found it much easier and more my style to “sell” my knowledge and expertise by “educating” through my blog or sharing relevant content with a prospective client. Some have called this “dumb,” but it has worked for me.

How does my writing differ from others of its genres?

To be perfectly honest, if anything I’ve tried to emulate rather than stray from writers in the genre of employment law.  What I mean by this is that going back to the attorneys referred to above, these are not only great thought-leaders but incredibly effective writers. In reading their post they clearly understand why legal writing is often less than effective and aggressively go in the opposite direction. So I’ve never tried to shy away from that style.

However, I have tried to inject my writing to some degree with my personality. I (try) to include a humorous comment or perspective and always incorporate visual content to bolster the content.

I have in the recent past started to venture into areas where I am willing to take more of a position. This is especially true when it comes to same-sex issues that arise in the workplace. As mostly an employer-side employment attorney, this stance is not necessarily where my clients’ interests always fall (what employer wants more regulations?). But in good conscience and as a matter of good public policy, I think employees should not be discriminated against simply because of their sexual orientation. See for example Sexual Orientation Discrimination and Michigan Law – Is it a Time for a Change? (the short answer is, “yes.”).

How does my process work?

For me, the process begins with just being curious and feeding that curiosity with a healthy dose of reading material. To that end, I use Twitter extensively to keep up on employment law issues. I also have a long-standing relationship with the Wall Street Journal and Businessweek. And it is still hard to compete with a well-written, thought provoking book. However, lately I have found TED Talks to be highly addictive.

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But just devouring information isn’t very productive if you can’t make sense of it and apply it. I try to take this perspective with my writing process, trying to answer the question of why does topic “X” matter and how can I use it in my own professional or personal life?

And my writing usually ends where my life begins – my wife (I know, cue the cheese). She is also an attorney, a better writer than I and (usually) a compassionate editor. In the early days I think almost every post went through her before being published.

Keeping the chain going.

I sincerely appreciate the opportunity to be included on this blog hop. It is definitely a quality group of bloggers involved and probably an even better group of people. But I’m going to need future verification on this last assumption, preferably over great dinner and/or at a fantastic bar – first round’s on me.

Returning to the original purpose of the blog hop chain, if the following were to join in on this loop I’m confident that readers would be fortunate to hear their insight:

  1. Kevin O’Keefe - He authors Real Lawyers Have Blogs. This is THE guy when it comes to blogging. And he happens to be the one who pointed me in the direction of Daniel Schwartz’s blog as an example of how to do it right. Kevin and his company are great to work with and have truly been great business partners since I started down this path. 
  2. Patrick Lamb - Patrick authors “In Search of Perfect Client Service.” I’ve never met Patrick, but I love the way he convincingly gives an intellectual middle finger to the dysfunctional status quo in the legal industry. Definitely someone to follow whether it is leading a revolution or simply writing about it.  
  3. Eric Goldman and his Technology & Marketing Law Blog. He is the thought leader’s thought leader when it comes to all things the Internet. He also has an uncanny ability to make extremely complex issues easily (or approximating) understandable.   

And thanks again to Robin Shea for inviting me to be a part of this chain. I really appreciate it.

Employer’s Social Media Policy Found Not To Violate Employees’ Rights

Social MediaA recent social media case involving the NLRB should be cause for celebration for employers. Specifically, in Landry’s Inc., Case No. 32-CA-118213 (June 26, 2014), an NLRB administrative law judge (ALJ) had found a social media policy concerning its subsidiary, Bubba Gump Shrimp Co. Restaurants, Inc., did not violate the National Labor Relations Act (NLRA).

Initially, the General Counsel argued that Bubba Gump’s social media policy infringed on employee’s rights under the NLRA because it would tend to prohibit employees from discussing terms and conditions of employment with coworkers or third parties. That social media stated as follows:

While your free time is generally not subject to any restriction by the Company, the Company urges all employees not to post information regarding the Company, their jobs, or other employees which could lead to morale issues in the workplace or detrimentally affect the Company’s business. This can be accomplished by always thinking before you post, being civil to others and their opinions, and not posting personal information about others unless you have received their permission.

The ALJ agreed that without “more,” the first sentence could violate the NLRA. But the ALJ noted that the social media policy did not outright restrict speech on job related issues – job related subject matters – but, instead, the manner in which such issues are being discussed and debated, i.e., being civil to others and their opinions:

Without more, it would be reasonable for employees reading this language to conclude that the Respondent generally frowns upon all job-related postings of any type. However, the cautionary language is modified by the language in the next sentences which may be understood to clarify that the 40 avoidance of morale problems may be “accomplished” by simply being civil to others and their opinions.

Employer Take-Aways

From an employer’s perspective this case is a good result. But it is also a reminder that the NLRB’s General Counsel continues to closely scrutinize employers’ social media policies. For this reason, it continues to be important to carefully draft social media policies that will give ALJs the opportunity to sensibly read the policies so as to not find a violation of employees’ rights under the NLRA.

For more information about employer social media policies or other workplace issues, contact employment attorney Jason Shinn.

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