Michigan Municipalities Barred from Regulating Salary History Questions in Job Interviews

Wage discriminationMichigan municipalities won’t be able to enact local legislation championed as one way to eliminate the wage gap between men and women under a bill heading to Gov. Rick Snyder.

Specifically, legislation (SB No. 353) restricts municipalities from regulating what information employers must request, require or exclude during job interviews passed the Republican-controlled House on Wednesday. This law includes questions about an applicant’s salary history. It cleared the Michigan GOP-controlled Senate months ago.

The Detroit Free Press reported it was sent to Gov. Rick Snyder on March 8 for his expected signature. However, his office noted as of this morning the Governor had yet to be presented the Bill. Perhaps the optics of signing a bill restricting the enactment of legislation intended to combat gender-based wage gaps on the same day as International Women’s Day contributed to the delay.

Current Michigan Employment Law

State law already prohibits local rules on what information is required or excluded in job applications. But the Bill amends that law to extend those restrictions to the interview process. The current law and proposed amendment (in all caps and bold font) reads:

A local governmental body shall not adopt, enforce, or administer an ordinance, local policy, or local resolution regulating information an employer or potential employer must request, require, or exclude on an application for employment OR DURING THE INTERVIEW PROCESS from an employee or a potential employee. This section does not prohibit an ordinance, local policy, or local resolution requiring a criminal background check 8 for an employee or potential employee in connection with the receipt of a license or permit from a local governmental body.

While there are no local governments in Michigan are considering ordinances regulating job interviews, the preemptive legislation is an obvious response to limit interview questions about salary history. Critics argue such questions perpetuate gender-based wage gaps.

In this regard, in 2016 Massachusetts was the first state to pass a law preventing employers from asking job candidates about their salary, including Oregon, Delaware, California, and New York City. Numerous states and cities followed by passing similar legislation banning salary history compensation as a means to close the wage gap between men and women and minorities.

What this means for employers and the wage gap

The Michigan Chamber of Commerce and other business organizations supported the legislation.  From an employer’s perspective, asking about someone’s past or current salary is a standard business practice. And (assuming the Bill is signed), local government regulations can’t be enacted to interfere with that practice. It also avoids employers having to navigate a patchwork of local government regulations with the hiring process.

But, prohibiting an employer from asking about salary history could even the playing field for those who have experienced compensation gaps. On this point, a study from the American Association of University Women found the pay gap between men and women begins at college graduation (even for the same degrees). And this discrepancy leads, on average, to women working full time receiving only about 80 cents for every dollar a full-time male worker earns.

What’s your experience or thoughts, whether it is based on hiring or interviewing, with salary history questions?

Jason Shinn is a Michigan employment law attorney. He routinely advises business clients about workplace legal issues. Since 2001, he has focused on companies and HR professionals to comply with federal and Michigan employment laws, and defending against alleged violations of such employment laws.

Learning From a Trade Secret Misappropriation Suit Against Former Employees

A trade sMisappropriationecret misappropriation lawsuit was filed on March 3, 2018 (Bankers Life and Casualty Co. v Knox) against two former employees. The suit, among other issues, raises two points important to individuals looking to start a new business and for business owners interested in protecting their company’s competitive interests.

The plaintiff, Bankers Life, provides seniors with various insurance and financial products. The defendants are two former high-ranking managers (Knox and Prior). They worked in Bankers Life’s Lansing and Ann Arbor offices. It claims while employed, both Knox and Prior were working together to: (a) recruit others in their office to join them in leaving for a competitor and (b) they download policyholder information to use once they joined the competitor.

Bankers Life asserted this downloading of policyholder information violated the individual Defendants’ contractual agreements with it, the Federal Defend Trade Secrets Act, and the Michigan Uniform Trade Secrets Act. However, the lawsuit filed in Michigan federal court is limited to the request for emergency injunctive relief to retrieve misappropriated policyholder information and attorneys’ fees and costs for such retrieval. Bankers Life is pursuing a separate arbitration claim against the defendants for breaches of fiduciary duty and breach of contractual prohibitions against inducing employees and agents to leave Bankers Life.

Starting or Joining a Competing Business – Beware of Digital fingerprints

I’ve represented clients in pursuing or defending against trade secret misappropriation claims since 2001. Based on this experience, one of the first areas of investigation is whether there are any “digital fingerprints” to evaluate in relation to the misappropriation. On this topic, assume any files, databases, emails, client lists, CRMs, etc. that were alleged to have been misappropriated will leave digital evidence. This is true whether the misappropriation involved copying, downloading, thumb drives, file transfers, or forwarded emails.

For instance, in the Bankers Life case, it attached to the complaint various reports. It claimed that the reports showed defendants downloaded policyholder information shortly before they departed. There may be competing explanations for why company information was accessed. But the first step in supporting your narrative should be to understand the digital landscape.

Protecting Your Company’s Competitive Interests – Arbitration, Courts, or Both?

Another point this case raises is the use of arbitration or courts in resolving disputes. Here, Bankers Life had agreements that called for arbitration. However, and this is not uncommon, the arbitration provisions carved out proceedings for injunctive relief. So, as is the case here, you end up pursuing parallel claims that originate from overlapping facts.

First, pursue claims in court and in arbitration multiplies costs, e.g., filing fees, court/arbitration submissions, hearings, etc. There may be compelling reasons to incur dual costs or not. But before doing so, companies should evaluate whether it makes sense.

In this regard, in my professional experience arbitration has lost some advantages over court proceedings. And both sides in typical trade secret dispute are better served with a more precise and tailored resolution procedure than simply throwing the entire dispute into arbitration or relying exclusively on court proceedings.

Second, imprecisely drafted contracts can cause disputes over what is subject to arbitration, e.g., suit for the return of company property versus claim for arbitration of “any and all” disputes between the parties. And a judge may simply kick the entire matter into arbitration for resolution if there are contractual ambiguities. So make there are no surprises lurking in your company’s agreements when it comes to dispute resolutions involving arbitration or court proceedings.

For more information about protecting or defending against trade secret claims, contact attorney Jason Shinn. Since 2001 he has collaborated with business owners to create policies and procedures for protecting company confidential information. He has also litigated in federal and Michigan courts misappropriation claims under Michigan and the Federal Defend Trade Secrets Act. Mr. Shinn also frequently writes about trade secret issues important to business owners.

Failing to Provide Pregnant Employee Option to Telecommute Violated ADA

ADA and telecommuteAfter a recent court opinion, Michigan companies will need to carefully re-evaluate whether allowing an employee the opportunity to telecommute as a reasonable accommodation under the Americans with Disability Act (ADA).

The case, Mosby-Meachem v Memphis Light, Gas & Water Division, involved an in-house attorney for Memphis Light, Gas & Water Division. She was denied a request to work from home for ten weeks while she was on bedrest due to complications from pregnancy.

Telecommuting where attendance was not essential function job function.

Memphis Light had a job description for the attorney position. However, “attendance” was not an essential function of the job. Also, Memphis Light had no formal telecommuting policy. But the evidence showed in practice employees often telecommuted. Prior to her pregnancy, plaintiff had worked from home for two weeks while recovering from neck surgery.

In January 2013 during her 23rd week of pregnancy, plaintiff’s doctors discovered a problem, which required hospitalization and bed rest. On January 7, 2013, plaintiff made a request for an accommodation to work remotely (either at the hospital or at home) for 10 weeks. Her request, however, was denied on January 30, 2013. Memphis Light asserted a “physical presence was an essential function of [plaintiff’s] job, and teleworking created concerns about maintaining confidentiality. But from the time of her request on January 7 until she received the denial letter on January 30, plaintiff continued to perform her work remotely, and no one from Memphis Light ever told her to stop working during this time.

Jury Finds Employer Violated ADA

F0llowing trial, a jury found in favor of plaintiff on her claim for disability discrimination and awarded her compensatory damages. The district court also granted Mosby-Meachem’s motion for equitable relief and awarded her backpay for the period in which Memphis Light did not permit her to telework.

Memphis Light moved for judgment as a matter of law or, in the alternative, a new trial, asserting that the evidence produced at trial and binding Sixth Circuit precedent precluded any reasonable jury from determining plaintiff was a qualified individual while on bedrest because in-person attendance was an essential function of her job. The district court denied the motion and Memphis Light appealed.

But this appeal also failed because plaintiff produced sufficient evidence for a reasonable jury to conclude that physical attendance was not an essential function of her job for the 10-week period in which she requested to telework and the Sixth Circuit precedent relied upon by Memphis Light materially differed from the facts.

As to the first point about evidence, the Court reasoned,

… while [Memphis Light] is correct that there is some evidence showing that inperson attendance was an essential function of Mosby-Meachem’s job, Mosby-Meachem proffered other evidence at trial, including testimony from coworkers, from which a jury could reasonably conclude that she was otherwise qualified to perform her job from home for ten weeks without being physically present in the office.

As to the Sixth Circuit precedent, Memphis Light pinned its hopes on E.E.O.C. v. Ford Motor Co. Our blog discussed this decision when it first came out in 2015 (Is Telecommuting a Reasonable Accommodation Under the Americans with Disabilities Act?). In that case,  the Court of Appeals concluded, “[r]egular, in-person attendance is an essential function—and a prerequisite to essential functions—of most jobs ….” In discussing the Ford case, we specifically cautioned that the “opinion did not rule out telecommuting as a reasonable accommodation in all cases.” And here, the Court reached the same assessment in finding against Memphis Light. The Court also found Memphis Light’s reliance on another telecommuting case involving ADA accommodation was misplaced.

ADA, Leave, and Telecommuting as Reasonable Accommodations

This decision significantly complicates leave and accommodation issues for employers. This is especially true as technology makes it increasingly easy to work remotely without sacrificing productivity or security. Accordingly, the decision and its implications should be understood by your HR professionals. Here are a few points to consider:

First, before this opinion, a string of cases relied upon by Memphis Light suggested plaintiffs would find it difficult to win an ADA claim based on telecommuting as an accommodation. But this case makes clear employers can’t dismiss telecommuting as a reasonable accommodation.

Second, your company’s job descriptions will be a critical piece of the puzzle when it comes to whether telecommunicating may be a reasonable accommodation. On this point, Memphis Light’s job description on which it relied upon was based on a 20-year-old questionnaire that did not reflect changes in the job that have resulted from technological advancements since that time.

Third, plaintiff had worked for Memphis Light for about 8 years when she made her request for an accommodation. There was no indication from the opinion that plaintiff’s work was deficient. And she was simply looking for a 10-week accommodation to work remotely due to pregnancy complications. So unless there was more going on behind the scenes, the decision to deny the accommodation and terminate came across as short-sighted.

For more information about complying with the ADA and other employment law questions, contact attorney Jason Shinn. He’s focused on federal and Michigan employment law matters since 2001.

Michigan Hospital Sued for Failing to Accommodate Religious Belief over Flu Vaccine

Sincere Religious BeliefsHow far does an employer have to go to accommodate an employee’s religious beliefs? That is an issue raised in a lawsuit filed by the EEOC against Memorial Healthcare on February 13 (EEOC v Memorial Healthcare).

The suit claims the Michigan hospital failed to reasonably accommodate Yvonne Bair’s religious practices when it rescinded its job offer after Bair claimed her religious beliefs prevented her from getting a flu vaccine.

Faith versus Flu Vaccine

In the suit, the EEOC says Memorial intentionally deprived Bair of equal employment opportunities based on her religious beliefs in violation of Title VII of the 1964 Civil Rights Act. Specifically, Bair applied and received a job offer to work as a medical transcriptionist for Memorial. Memorial informed Bair of its policy that all employees had to receive a flu vaccine. However, Bair claims as a “follower of Jesus Christ,” she has a sincerely held religious belief that prohibits her from ingesting or injecting foreign substances into her body (irrespective of its divine origin, maybe wine ingested at a certain party Jesus hosted is considered “natural.”).

In response, Memorial offered a vaccine via nasal spray, which Bair refused. The complaint alleges Bair also believes she must rely on only “natural methods for health.” Memorial then withdrew its job offer. The EEOC also alleges that Memorial allows persons whose medical conditions don’t permit them to receive vaccines to wear masks. And Bair offered to wear a mask during flu season.

The EEOC’s suit is pending in the U.S. District Court for the Eastern District of Michigan. It seeks monetary damages and injunctive relief prohibit Memorial from engaging in any employment practice that discriminates based on religion.

Workplace policies and exemptions for religious beliefs.

In representing employers, we can say this case highlights one of the challenges employers face in balancing their business objectives with employees’ religious beliefs.

Here, the hospital’s general vaccination policy is rationally related to patient health and safety, i.e., preventing the transmission of and complications from the flu. Whether an individual’s religious belief – nuanced or otherwise – is enough to receive an exemption from a workplace policy remains to be seen. But this case also underscores the importance of carefully responding to an employee’s request for a religious accommodation. We’ll continue to monitor this case.

For more information about complying with federal or Michigan employment law, contact attorney Jason Shinn. Since 2001, Mr. Shinn has focused on representing clients in employment matters in state and federal courts, and before the EEOC.

If Only Losing Pounds Were as easy as Losing a Weight Discrimination Lawsuit

Discrimination against overweight employeesCompanies employing individuals in Michigan are often surprised to learn Michigan law specifically prohibits weight discrimination.

Specifically, Michigan’s anti-discrimination statute, the Elliott-Larsen Civil Rights Act (ELCRA), prohibits an employer from failing or refusing to hire, discharge, or otherwise discriminate against an individual in employment because of weight. MCL 37.2202(1)(a).

But employees still must meet their evidentiary obligations to present a weight discrimination claim. If this burden is not satisfied, the suit will often be decided for the employer by way of motion rather than trial.

Plaintiff claims employer made repeated weight discrimination comments

This scenario recently played out in a suit involving a claim of weight discrimination. A dental hygienist sued (Harris v Hutcheson) claiming she was discriminated against and terminated due to her weight. To support her claim, she testified that the owner of the dental practice and co-defendant (Dr. Hutcheson) “always” commented about weight and health. She contended these comments showed his bias against overweight people:

  • Dr. Hutcheson discussed diet as a means of weight loss, including telling plaintiff she should eat only fruit before noon if she wanted to lose weight;
  • He commented that plaintiff was “waddling down the hall;
  • Dr. Hutcheson commented the weight around plaintiff’s neck caused her to have stripes around her neck when she tanned; and
  • He expressed surprise that plaintiff worked out, which plaintiff inferred was a criticism of her weight.

Employer responds with non-discriminatory reason for termination

However, the Court did not find plaintiff was discriminated against due to her weight. Instead, the Court noted that plaintiff had been employed for 22 years. And in October 2012, a female dentist (Dr. Dyras) began working with defendants. Dr. Dyras repeatedly disagreed with plaintiff over patient care. These disagreements continued into August 2013. Dr. Dyras advised Dr. Hutcheson plaintiff should be terminated for insubordination. Plaintiff was later terminated at the end of August 2013.

With this background, the Court reasoned that even if a jury believed that defendant-Hutcheson made the statements identified by plaintiff, they did “not require the conclusion that unlawful discrimination based on plaintiff’s weight was at least a motivating factor in Hutcheson’s decision” to terminate her. Absent direct evidence of discrimination, plaintiff had to rely on what is referred to as the McDonnell Douglas framework.

McDonnell Douglas is – to simplify – like an evidentiary tennis match; a plaintiff must “serve up” evidence to establish a prima facie case of unlawful discrimination. The defendant then must respond to the evidence by returning a “legitimate, nondiscriminatory reason for their employment decision.” At that point in the volley, a plaintiff must respond to defendant’s evidence and show the reasons are not valid, but merely pretext for discrimination. Here, the plaintiff failed to win the point:

… there is no reasonable basis to infer that, after 22 years, Hutcheson suddenly decided to terminate plaintiff because of her weight or even in part because of her weight. Rather, it is plain that what had changed, and what motivated plaintiff’s termination, was Dyras’s arrival at the practice and her disagreements with plaintiff regarding patient care. While plaintiff maintains that insubordination was a mere pretext, there is nothing but her subjective claim of discrimination to establish that weight-related animus motivated Hutcheson’s termination decision.

Closing Thoughts

This case, like a sex discrimination claim suit we recently covered, illustrates the difficulty plaintiffs have in bringing a successful weight discrimination claim.

It also highlights the role a judge’s common-sense plays in resolving discrimination lawsuits. It was evident from the Court’s opinion that the weight discrimination claim simply did not make sense; Plaintiff presented no evidence her weight changed or fluctuated upwards toward the end of her employment. So the court was left asking why after 22 years of employment would defendant now decide to unlawfully discriminate against plaintiff.

Further, understanding what is prohibited under state and federal anti-discrimination workplace laws is critical to both employment law compliance and a successful defense. Simply put, the closer you get to the fault-line, the more likely it becomes an adverse employment decision or statement will cross the line and become evidence to show bias against an overweight employee.

For more information about complying with federal or Michigan employment discrimination laws, contact employment attorney Jason Shinn. Since 2001 Mr. Shinn has addressed state and federal employment law issues on behalf of clients, responded to discrimination complaints filed with the EEOC and state agencies, and litigated these disputes and federal and Michigan courts.

Plaintiffs Face Many Pitfalls in Employment Discrimination Suits

To be blunt, employment discrimination claims are challenging lawsuits for plaintiffs to win. A recent employment discrimination lawsuit explains this point.

Trial Court and the Appeal – A tale of two discrimination findings

In the case, Patten v City of Ann Arbor, the plaintiff sued her former employer and supervisors for discrimination under Michigan’s Elliott-Larsen Civil Rights Act (ELCRA) & Title VII of the Civil Rights Act (CRA). She made two claims:

  • Discrimination against her on the basis of her sex in making several decisions about her employment status; and
  • They retaliated against her for complaining that their “promotion process inherently favored males and discriminated against females.”

The trial court denied the defendants’ motion for summary disposition and they appealed. On appeal, the Court reversed in favor of the defendants.

No discrimination or retaliation on Appeal

In reaching this decision, the Court went through all the reasons why the trial court erred and defendants were entitled to summary disposition on the sex discrimination claim. These reasons included:

  • Assuming plaintiff established a prima facie “case of discrimination, [she] failed to rebut defendants’ evidence of legitimate non-discriminatory” reasons.
  • “The trial court erred by not shifting the burden back to plaintiff to prove that defendants’ legitimate, nondiscriminatory reasons were a mere pretext for sex discrimination.” Further on this point, the Court noted, the plaintiff failed to show that defendants’ “reasons had no basis in fact.”
  • Plaintiff failed to rebut defendants’ legitimate, nondiscriminatory reasons for their adverse employment decisions, and the trial court simply substituted its speculation regarding defendants’ motives to infer that sex discrimination motivated defendants’ decisions.”

The court also found that defendants were entitled to summary disposition on the retaliation claim. The Court concluded there was no evidence linking her protected activity to defendants’ adverse employment actions.

Also, the Court noted that even if she had made out her prima facie “case of retaliation, [her] performance record, which included multiple concerns by several officers regarding plaintiff’s ability to fulfill the duties assigned her in various positions, provides a legitimate, non-discriminatory reason for defendants’ employment decisions, which plaintiff has offered no evidence to rebut.”

Closing thoughts on employment discrimination claims.

As this case illustrates, there are numerous ways in which an employer can successfully defeat an employment discrimination claim. It also illustrates the significant hurdle a plaintiff must overcome. Specifically, the employer’s reasons for the adverse employment decision were not the actual factors motivating the employer’s decisions or that the reasons lacked sufficiency to justify their decisions.

For more information about federal or Michigan employment law, contact attorney Jason Shinn. Since 2001, he has represented businesses and individuals in employment discrimination lawsuits.

Learning from this Company’s Mistake: Don’t Mishandle Employment Agreements

Noncompete mistakeAn interview with a successful CEO offers business owners a chance to learn from a costly mistake involving employment agreements. This mistake could have doomed her company before it became a billion-dollar business.

Specifically, Therese Tucker is the CEO of BlackLine, which provides automated finance and accounting software. She also founded BlackLine and brought it public. It was recently valued in excess of $1.5 billion. So Ms. Tucker knows a thing or two (times multiples of 10) for what it takes to run a successful company. But equally important is what can be learned from the mistakes Ms. Tucker’s business made in its early start-up days.

In this regard, Ms. Tucker recently gave an interview to Russ Banham, a contributing writer to Chief Executive. Excerpts of the interview appear in Mr. Banam’s article, Biggest Mistake: No Employee Non-Compete Clause, Says BlackLine CEO Therese Tucker. Ms. Tucker explained how a mistake gave rise to a competitor:

I learned a really valuable lesson about the critical importance of legally sound contracts with employees, one that I will never forget … In California, you’re not allowed to ask an employee to sign a non-compete contract, which are banned. The mistake we made was not having specific clauses in our employment contracts regarding confidentiality and reusability. Regrettably, an employee in our sales group had access to our source code in her laptop. She outsourced the code to India, created a competing product, and sold it.

Fortunately for Ms. Tucker and her business, the mistake was not fatal to BlackLine. But luckily for BlackLine, Ms. Tucker learned from this issue and re-focused on having employment contracts suitable for a national company. More specifically, BlackLine implemented agreements tailored to be enforceable with employees living in multiple locations across the U.S.

The Take-Away – Enforcing Employment Agreements Depend upon State Law.

For companies with national or international operations, having a “one-size-fits-all” employment or non-compete agreement runs the same risks BlackLine faced; it may not be enforceable where and when your company needs it most. For these reasons, in running a business it is essential to evaluate where your employees live and your business needs in relation to non-compete and similar post-employment provisions.

If you are responsible for your company, here are some questions to consider:

  1. Should your company use non-compete or non-solicitation provisions to protect its business?
  2. If so, what employees should be subject to post-employment restrictions?
  3. Can these restrictions comply with the law of one state or are individuals employed as residents of other states? If so, what does the law say about enforcing employment agreements in the employee’s home-state?

If you are an individual, similar attention must be given to what the employment agreements you are asked to sign:

  1. Specifically, what law applies to your employment agreement?
  2. If that law differs from where you live, is it more or less favorable to you?
  3. If it is less favorable, are you sufficiently compensated for giving up potential legal remedies or protections you would otherwise be entitled to?

For more information about this article or employment or non-compete agreements, contact employment attorney Jason Shinn. Since 2001, Mr. Shinn has focused on Michigan non-compete law, as well as non-compete disputes involving other state’s non-compete laws,  including California, North Carolina, Florida, Washington, Ohio, Delaware, New York, and Pennsylvania.

Untangling Confusion about FLSA Exemptions for Highly Compensated Employees

Confusion under FLSA and overtime payThe Sixth Circuit Court of Appeals recently issued an interesting Fair Labor Standards Act decision. The case focused on who is and is not exempt from overtime requirements. And the result – as the court noted – is likely to be counter-intuitive to many employers.

Case Background – FLSA and Highly Compensated Employees

The case, Hughes v Gulf  Interstate Field Services, involved welding inspectors for Gulf Interstate Field Services. In 2014, they and others similarly situated plaintiffs sued under the Fair Labor Standards Act (FLSA) and the comparable Ohio wage statute. The claim asserted the plaintiffs were entitled to overtime pay for weeks in which they worked more than forty hours.

Gulf Interstate argued that the plaintiffs were exempt from the overtime requirements because they qualified as “highly compensated employees” under the FLSA regulations. The lead plaintiffs made approximately $83,000 and $109,000.00. The district court agreed with Gulf Interstate and granted summary judgment in favor of the employer.

On appeal, however, the Court reversed the federal district court but noted the unusual result:

It may seem strange, on its face, that employees who earned an annualized rate of more than $100,000 did not necessarily qualify as “highly compensated employees.” But regardless of whether good reasons exist, we must follow the legal meaning of the terms rather than our intuitive sense of the meaning of the words. Because [the regulations] make clear that it matters whether Hughes and McDonald were guaranteed a qualifying weekly salary and because a reasonable trier of fact could find that there was no guarantee we REVERSE the district court’s grant of summary judgment and REMAND for further proceedings.

Making Sense of the Result – Highly Compensated & Overtime Pay

For qualifying employees, the FLSA prohibits employment “for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1).

But not all employees are covered. For example, under 29 C.F.R. § 541.601, an employee qualifies as an exempt “[h]ighly compensated employee[]” if three tests are met: “(1) a duties test; (2) a salary-level test; and (3) a salary-basis test.”

In the Gulf Interstate case, only the ‘salary basis’ test” was in dispute. And in resolving that dispute, the Court determined that questions remained whether “their pay was calculated more frequently than weekly[,]” and “whether what they received weekly was in fact guaranteed.”

Closing Thoughts

The FLSA and overtime is an area of employment law that frequently confuses employers. And as this case illustrates, determining FLSA overtime requirements is not straightforward or immediately apparent.

For more information about complying with federal or Michigan employment law, or to understand your rights under both, contact employment attorney Jason Shinn. He has represented employers and employees since 2001 in employment disputes, workplace investigations, and negotiating severance packages.

Geography Increasingly Complicates Resolution of Non-compete Disputes

On January 8, 2018, the U.S. Supreme Court declined to consider an appeal from a former Stryker Corp. sales representative. The appeal arose from a case involving a non-compete agreement between a Louisiana employee and a Michigan employer.

The non-compete agreement contained a forum-selection clause stating that any dispute arising out of the agreement must be brought in a Michigan court—state or federal. The former Stryker employee, Christopher Ridgeway, argued the Sixth Circuit was wrong to find Michigan law — and not Louisiana law — applied. Michigan law favors non-compete agreements; Louisiana, where the sales representative lived and worked, severely restricts them.

After applying Michigan law over Louisiana law, a jury found Ridgeway had violated the non-compete agreement and awarded Stryker approximately $745,000 in damages. Ridgeway appealed the decision to the Sixth Circuit Court of Appeals, which agreed with the trial court (Ridgeway v. Stryker Corporation).

Whose State has a materially greater interest in enforcing the Noncompete Agreement

In affirming this decision, the Court reasoned the sales representative had consented to jurisdiction in Michigan through the agreement’s forum-selection clause. The Court also concluded the Federal District Court properly enforced the agreement’s Michigan choice-of-law provision.

The Court rejected Ridgeway’s argument that Louisiana’s interest in protecting its employees from unfair non-compete clauses was materially greater than Michigan’s interest in protecting its businesses from unfair competition:

On balance, Louisiana’s interest in protecting its employee from unfair non-compete clauses is not materially greater than Michigan’s interest in protecting its businesses from unfair competition.

* * *

Absent such evidence that Louisiana’s interest was not just greater but materially greater, there is no reason to disturb the parties’ choice of Michigan law.

As the above case illustrates, non-compete disputes are complicated by geography. This is because non-compete law is state dependent. And some states favor non-compete restrictions, while others do not, with significant variations between these two extremes.

To eliminate – or at least reduce – the uncertainty about what law will control, a best practice is to specifically identify it. Also, for employers operating in multiple states, know what is the most favorable law for enforcing non-compete restrictions.

For employees, it is important to understand whether your employment agreement has a forum selection clause (it probably does). This sort of provision will identify what law and where a dispute must be resolved. As the above case illustrates, even if you work exclusively in your home state and have no real connection with an outside state, you still may be required to litigate a dispute across the country.

For more information about non-compete law, and defending or pursuing non-compete litigation, contact attorney Jason Shinn. He routinely works with individuals and companies in non-compete disputes.

Before Accepting a new Position, are you Required to Sign a Non-compete Agreement?

Closely examine noncompete restrictionsA former employee recently sued MedMar Inc. and its related companies. The suit, Greenswag v MedMar Inc., pending in the Cook County Circuit Court, alleges the defendants made misrepresentations about the employment opportunity to induce him to sign a non-compete restriction.

I haven’t reviewed the complaint, but these sorts of claims are often unsuccessful. This is because employment agreements will contain (and if yours does not, you need to update it) an “integration” or “merger” clause. These clauses are intended to nullify all prior agreements and representations not included in the final agreement. There may be exceptions or arguments to avoid an integration/merger clause, but they are just that – exceptions to the general rule.

Consider Non-compete Issues Before Joining a New Employer 

However, this suit is more important as a reminder for individuals who may be considering a change in employment. In this regard, consider these points:

  1. It is not uncommon for a new position to be oversold – especially by recruiters financially motivated to fill positions. But when this sales pitch is made, remember none of the promises, representations, etc. will likely mean anything if they are not included in the final employment agreement.
  2. Ask early in the recruiting process if a non-compete or other post-employment restriction is required. If so, get a copy as soon as possible. You will want to scrutinize the non-compete restrictions to fully understand your obligations. Often, we review post-employment restrictions that are too overly broad to the point it is a “deal-breaker” for our clients. Sometimes these issues can be negotiated. Other times, it comes down to deciding if the risks of being sidelined by a non-compete restriction are outweighed by the benefits of the job.
  3. Evaluate the new employer’s litigation history when it comes to non-compete enforcement. For our non-compete clients, we conduct a comprehensive litigation review of the prospective employer. This often provides insight into a company’s non-compete enforcment history and litigation tactics. There are some companies that will aggressively enforce a non-compete restrictions across the board. Other companies will look for compromises. Either way, it is just good to know what to expect.

For more information about non-compete restrictions or to have your non-compete agreement reviewed, contact attorney Jason Shinn. Since 2001, Jason has represented companies and individuals in all aspects of non-compete law, e.g., drafting, negotiating and litigating non-compete disputes, and drafting or responding to cease and desist demands.