Connecticut Employment Law Blog : Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Suppose you've drafted a fairly lengthy agreement entitled "Employment, Non-Solicitation, and Confidentiality Agreement" for an employee to sign. And suppose that among the provisions is a paragraph entitled "Agreement Not to Solicit". And now suppose that the language details various items that the employee is prohibited from doing.

What's the issue, you may ask? Well, suppose as well that  the paragraph is missing "operative language". In other words, it's missing a few key words about the employee's responsibility under the agreement such as "I shall not" or "I will not" do those prohibited tasks. 

Is the agreement (and the specific paragraph prohibiting solicitation) still enforceable?

According to an Appellate Court decision released this morning (and officially released June 16, 2009), the answer is a most definite "yes".

In Hilb Rogal & Hobbs Co. v. Randall (download here),  the court held that

despite the missing language, it is clear from the title of the employment agreement, the title of paragraph six and the language found under paragraph six that the parties intended that the defendant would be prohibited from engaging in solicitation for two years. ...  The fact that the employment agreement imposes remedies for violations of paragraph six further evidences that paragraph six was intended to prohibit certain conduct.

From a legal perspective, the case is important because the Appellate Court reached this conclusion without having the "reform" (or rewrite) the contract:

Contrary to the trial court, we do not believe that the contract at hand needed to be reformed for the court to be empowered to supply an obvious missing term consistent with the clear intent expressed in the balance of the contract language. ... Because the intent of the nonsolicitation agreement is plain from an objective reading of the contract, a request for reformation is not necessary to enforce the provision.

Why is this case important for employers?

There are several takeaways from this decision. First, employers should never overlook the importance of proper drafting.  Just a few missing words here has caused lots of grief for this employer.  Even agreements that seem perfunctory (and perhaps borrowed from other agreements) should be scrutinized to ensure that no language has been lost in the drafting and revisions.

Second, the Court seems to approve of the contract even though the only consideration for the agreement was a promise of continued employment by the employer. In addition, the Court tacitly approves of the non-solicitation clause's two-year prohibition without any consideration of whether the scope of that provision is overly broad.  Employers should keep this in mind as they draft future agreements.

Overall, the decision is a sensible one and elevates substance over form. That doesn't mean that employers should draft their agreements in haste; but it does mean that if there is a clerical errors or inadvertant omissions, employers can still try to enforce that agreement.

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Employment law is quite the hot topic among various blogs. So much so that it's time for the next installment of Quick Takes -- a quick summary of what's new and noteworthy.

• Don't miss the Ohio Employer's Law Blog's post on how NOT to fire an employee. In the post, Jon Hyman describes how an employer took an already difficult situation and made it worse.  Lesson from Jon: Do not do layoffs or firings via e-mail. Period.
   
• World of Work continues the focus on the new COBRA subsidies with a link to FAQ by the Department of Labor.  A new blog, Compliance Building, has information from the IRS also about the new COBRA subsidies. 
   
• The Employee Free Choice Act is expected to be introduced into Congress soon. For what its worth, one union leader is predicting passage by August, according to a post by the Pennsylvania Labor & Employment Blog.   And although the EFCA has been recapped extensively by this blog and others, the Labor & Employment Law Blog has one more here. 
   
• If there was really a remaining question about whether a plaintiff's Facebook postings were discoverable, a recent court finding out of Canada suggests the answer: Yes.  (Delaware Employment Law Blog)
   
• Richard Hayber, over at the Connecticut Employee Rights Blog points out a recent case by a federal appeals court that holds that releases of future claims in last chance agreements are invalid.   While the case isn't binding in Connecticut, Richard clearly believes that the same concepts could be applied by a Connecticut court.
   
• My former colleague, Richard Tuschman from the Florida Employment Law Blog, highlights a case in which a common question is raised: Does hiring an employee who has a non-compete agreement from a competitor constitute "tortious interference" (and subject that new employer to a claim)? The answer? Maybe not, but there are still other claims to worry about.

And on the lighter side, don't miss this fun post by the Delaware Employment Law Blog recapping the top 10 excuses for being late to work.

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I'm not sure where I heard it first, but I was once told that there federal employment laws to worry about, and then there are California's employment laws to worry about.  Indeed, California acts like a country of its own when it comes to several laws.

For employers in Connecticut with California-based employees (whether in sales, manufacturing or otherwise) an important decision released earlier this month reinforces that notion.  In striking down a non-compete law, the California courts have re-emphasized that restrictive covenants in California are unlikely to be upheld.

Several blogs have the details including Wage Law, Employer Law Report and Labor & Employment Law Blog.   L&ELB has the concise summary:

In Edwards v. Arthur Andersen LLP, the California Supreme Court reaffirmed California's strong public policy against covenants not to compete.  The primary issue in the case was whether the Ninth Circuit's "narrow restraint" exception was a proper interpretation of California law.  Under the narrow restraint exception, employers could enforce non-competition agreements that did not "entirely preclude" an employee from practicing his or her trade.  The Supreme Court summarily rejected this exception.  The lesson for employers is that unless a covenant not to compete falls squarely within one of the statutory exceptions, it is not likely to be upheld by a California court.

Connecticut employers with California employees would be wise to review their restrictive covenants again in light of this decision.

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Give us Dirty Laundry! --- Don Henley, "Dirty Laundry"

The Eagles singer may have been talking about the media over 25 years ago when he released his hit single, "Dirty Laundry", but the lyrics and message could be applied just as easily today to online message boards. 

They have all the same criteria that Henley alluded to in the song: Innuendo, Gossip, and even Mean-Spiritedness. 

Indeed, a series of posts in the New York Times' Shifting Careers blog over the last week or two discusses the consequences of the online postings for the workplace and suggests that restrictive covenants on employees (like non-disclosure agreements) may be one way to cut down on such postings.

But people being people, there will always be those who will complain anonymous online.  What to do about it? In some cases, ignoring it may be the best solution.  But if the posts reveal confidential information or make false or disparaging remarks, particularly about the ethics or legality of a business decision, legal action may be needed.

Here's the truth though about online message boards: while some have popped up, they have also been all over the place. There really hasn't been any key websites that have taken root with such information. (Yes, I know people get worked up on the Yahoo! Finance Boards, but it's not as widespread as you might think.)

Until, perhaps, now. A new website, launched in beta mode last month, promises to take employee grievances (and praises) to a whole new level.

It is called Glassdoor.com and its founders have impressive and well-known resumes from websites such as Hotwire and Zillow. 

What is it? In their own words:

Glassdoor.com is a career and workplace community where anyone can find and anonymously share real-time reviews, ratings and salary details about specific jobs for specific employers — all for free. What sets us apart is that all our information comes from the people who know these companies best — employees. In the spirit of community, we ask our users to share with each other. That is, before you can access all of the information shared by others in the Glassdoor community, we first ask that you post an anonymous review or salary of your own. By working together to offer an inside look at companies, we can open access and bring greater transparency to information in one of the most important parts of our lives — our work.

What types of information does the website already have online?  Detailed company reviews;
Employee ratings on workplace factors and leadership; Real-time salary/compensation details by title and company.

For companies, this website ought to be a wake-up call.   It was only a matter of time before someone created the tools to allow employees to communicate with each other and the outside world in a seamless fashion.  And wishing it away will not change anything -- the Internet is obviously here to stay.

The only path now for companies is how to address this issue.  Because companies will address these issues in multiple ways, seeking some guidance on how others have handled this issue and seeking sensible solutions may be a good start. But central to all of this is that companies must understand what is already out there -- in terms of technology  and in terms of what is written about their company.

And a peek at Glassdoor.com may not hurt either.

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October.  Here in New England, it brings to mind pumpkins.  Besides being carved up (made into pumpkin pie), pumpkins also hold a place in story lore -- you'll recall from Cinderella that a pumpkin could be magically transformed into a beautiful carriage (which of course, you can buy on Amazon.) 

In Connecticut, October also brings about new laws, which go into effect on this date.  Which laws will blossom into beautiful carriages, with meaning and true purpose, and which ones will remain pumpkins?  It remains to be seen.  But here are some of my early contenders on the employment side of things:

Carriages (Laws that should run smoothly -- relatively easy to interpret, apply and understand):

• The laws regarding discrimination on the basis of sexual orientation and civil union status have been evolving this year.  Before this year, Connecticut just prohibited discrimination on the basis of sexual orientation.  In July 2007, Connecticut prohibited employment discrimination based on a person's civil union status.  Now, effective today, however, the laws are broadened even further on sexual orientation grounds. 

It will now be "discriminatory practice for any person to subject any other person to the deprivation of any rights, privileges or immunities secured by the Constitution or laws of this state on account of sexual orientation."  This is clear and gives some greater consistency to the application of sexual orientation discrimination laws in the state.  A full background on these new laws is discussed during an earlier post. 

Pumpkins (Laws with limited application or may lead to unintended consequences):

• A new law prohibiting the use of non-compete agreements, in some circumstances, for security guards.  I've discussed this new law's background at length previously, but suffice to say that its an inartfully drafted statute.  At its core, the new law prohibits employers from requiring security officers to "enter into an agreement prohibiting such person from engaging in the same or a similar job, at the same location at which the employer employs such person, for another employer or as a self-employed person". (If the employer can "prove" that the employee received trade secrets, then a non-compete can be used.)
  
• Incidentally, this same new law also prohibits the use of non-compete agreements for broadcast employees (also known as television anchors).  Jonathan O'Connell, of the Hartford Business Journal, had this to say about the case over the summer and recalled the influence that WFSB Channel 3 anchor Al Terzi had on its passage. 

One can argue about whether non-compete agreements are a useful tool for business or harm an employee's right to work; when the legislature carves out exceptions for certain industries however, it passes up on the opportunity to set real boundaries for restrictive covenants. Instead, this statute would appear to affect just a handful of employees every year, if even that.

(Speaking of deadlines and new laws, yesterday was the deadline for filing new updated EEO-1 forms to comply with federal laws. The guidance from the DOL is publicly available.  Employers that haven't yet submitted the information should do so ASAP.)   

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When I first started practicing, each attorney used to keep their "form" files.  What were these? Copies of key documents that could be used over and over again.  Now, with the advent of computer databases, sharing information within a firm is routine and easy.

But suppose you wanted to find out what other attorneys or companies were doing; wouldn't it be great if you could see the work product of others for free?  Turns out you can --- you just need to know where to look.

Here are four websites that I routinely peek at to see what others are doing and for inspiration.

1.  Suppose that a client asks for a copy of the latest executive employment agreements.  Did you know that major corporations are required to file many of those agreements agreements with the SEC and are available for free?  In other words, you too can review contracts that were done by attorneys at all the largest US lawfirms.  One excellent (if slightly outdated) resource  that compiles such SEC filings is OneCLE.com. 

2.  Similarly, the Footnoted blog, routinely digs up nuggets from SEC filings.  On Friday, a new blogger for Footnoted, Wendy Fried, had an intriguing post about the employment agreement for Cosi's new president.  Wendy's other site, Proxyland, reviews other SEC filings, like Compensation Discussions and Analysis, such as this one for Gymboree.  Of course, you could just look up the SEC filings, but we're all a little stretched for time.

3.  Although not technically "free", court databases are a great resource for lawyers is to look at what other lawfirms are filing in federal court cases.  For example, suppose you'd like to see how a lawfirm drafted a winning summary judgment motion, how do you go about doing that without knowing the case name? Two straightforward steps. First, go to the Connecticut District court opinions website and browse recent decisions by topic.  Once you locate a name or number, go to the District Court's Electronic Court Filing system and type in the case name or number. (Registration and a nominal fee of 8 cents per page is required.)  You can easily find a motion for summary judgment in the docket listings for a case.  You can also look up exhibits that are filed as well.

4. One buzzword of late has been to set up "best practices" for employers. The EEOC issued a report a few years ago that is as valuable for ideas as ever, called, "Best Practices of Private Sector Employers".  For in-house counsel and outside counsel coming up with ideas for improving a corporations internal practices and policies, this document can provide a valuable head start. 

What are the websites that you use to get a head start on a contract or other form? Any other hidden treasures out there on the Internet?

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About a year ago, Guardsmark, a security company, lost its contract to provide services to ESPN. When employees from the old security company tried to work for the new company, Guardsmark invoked the non-compete agreements that these employees signed.  As Connecticut readers know, there are not many state laws that restrict the use of non-compete agreements, compared with other states.

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