Can social networking affect trade secrets?

Do you want to try to protect your customer list as a trade secret? Then you better think about limiting your employees’ use of social networks like Facebook, LinkedIn, and Twitter for businesses purposes. One of the key elements in any trade secret claim is the efforts taken to maintain the secrecy. It will that much harder to claim that the identity of a customer is a “secret” if your employees are publicly communicating with your customers via social networks for the whole world to see.

For more on social networking and its implications for your workplace, see Drafting a social networking policy: 7 considerations.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? Garden leave contracts

Last week I attended the ABA’s Labor & Employment Conference. Over the next several weeks, I’ll be sharing with my readers some of the best and most interesting nuggets of information I took away from the meeting. We start today with garden leave contracts.

There is nothing more frustrating for a company than a court refusing to enforce a noncompetition agreement, permitting an employee to work for a competitor. Courts have been historically skeptical about the enforcement of such agreements. In today’s economy it has become even more difficult to enforce them. Judges simply do not want to enjoin a family’s breadwinner from working. At best, the enforcement of even the most narrowly drafted noncompetition agreement is a roll of the dice, dependent as much upon the personal whims of the judge hearing the case as the law of your specific jurisdiction.

So, how do you protect your employees, confidential information, customers, and good will without using a suspect noncompetition agreement? Think about using a garden leave contract.

The concept of “garden leave” originated in the UK. It describes the practice of an employer paying an employee to stay on the sidelines during a set period of time following the end of their employment (the garden being where a UK employee would spend free time). A typical garden leave contract requires a lengthy advance notice of resignation, prohibits certain competitive activities during the notice period, and requires that the employee be sent home but still get paid his or her full salary and benefits during the notice period. Alternatively, employers can modify a traditional noncompetition agreement to provide pay during the employee’s time on the sidelines. The latter, however, carries greater risk as it would still be subject to the same analysis as a traditional noncompetition agreement, albeit with less impact on the employee.

Provided that an employee has enough value, garden leave clauses provide many of the same benefits as a traditional noncompetition agreement – the employer is provided time to replace the departing employee, delay competition by the departing employee, cultivate relationships with clients and customers, and maintain good will. Also, because the employee remains an employee during the paid notice period, concepts like the duty of loyalty (which prohibits solicitations of customers and other employees, as well as the misuse of confidential information) remain in place and protect the employer.

Consider garden leave contracts. They are cost effective, at least as compared to the price of enforcing a noncompetition agreement, and a potentially less risky avenue to obtain the same goals.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Paying off a bet – What I learned from watching the World Series

So the Yankees are the World Champs of baseball for 2009. I’ve been struggling with what to write for this post. Honestly, it never entered my mind that I would be the one paying off this bet. I assumed, even when the Phils were down 3-1, that they would win and Dan would be extolling their virtues. But, a bet is a bet, and I promised to write a post praising the Yankees, with an employment law bent, if they won the World Series.

So here’s the lesson that I can draw for you from this sad outcome. The team with the most resources doesn’t always win, but it doesn’t hurt to have the best hand to start with. With an uncapped salary system, the Yankees spend money as they see fit, with no limits. Thus, their payroll for their top three players eclipses that of the complete rosters of most of their major league counterparts. Yet, their superiority of resources is only part of their ability of success. After all, they’ve outspent everyone for as long as I can remember, and yet this is only their first title in the past 10 years. And so, while they always have the best chance to succeed (and always assume that they will), it doesn’t always work out that way for them. This year, for example, they appeared to come together as a team, and not just play as an amalgam of superstars, which perhaps accounts for why they succeeded this year and failed in the decade prior.

For employers, the lesson is this – in many cases, you will assume that you should win. You may have better facts, better law, more money and resources, the better lawyer, and you may even have had past successes and a good rapport with the same judge. And yet, with all of these supposed advantages on your side, you could still find yourself on the losing end of big verdict. Advantages are just that, but they do not bring home the win. Hard work, teamwork, and even a little bit of luck are all needed to take advantage of your advantages.

Here’s to a great World Series and the Phillies getting back to the top of the mountain in 2010.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #102

I'm in Washington D.C. at the ABA's annual Labor & Employment Conference. Consequently, my post paying off my debt to Dan Schwartz genuflecting before the alter of the New York Yankees is delayed until Monday. In the meantime, enjoy the best of this week's posts from elsewhere around the web.

Thanks to Molly DiBianca for again including me in her yearly list of the top Employment Law Blogs. Her list (and her entire blog, for that matter) is an excellent resource for employers.

The U.S. Chamber of Commerce this week launched its Small Business Nation web portal. The Chamber describes it as a “community … founded on the open exchange of information and ideas, while creating the opportunity for small businesses to speak with a unified voice” to bring “together America’s small businesses” and “strengthen individual endeavors while amplifying the collective voice of business.” For my time, it’s best feature is its Toolkits, a bunch of informational mini-sites for small businesses. Spend 10 minutes clicking through the Employer Toolkit for general information on payroll, benefits, employment rules, and employee discipline and termination.

From Steven Greengrass at the New York Times – Lack of Paid Sick Days May Worsen Flu Pandemic. On the same topic, Dan Schwartz has info on recently introduced federal paid sick leave legislation.

Walter Olson’s Overlawyered reports on the ballsiest employment discrimination defendant of all time. And, he won.

World of Work offers some insight on how to avoid age discrimination.

Paul Secunda, at the Workplace Prof Blog, asks whether the EEOC is unfairly attacking employers.

The Word on Employment Law with John Phillips takes a look at David Letterman’s production company’s sexual harassment policy.

During the Bush administration, a two-member NLRB issues a lot of employer-friendly decisions. The Supreme Court had agreed to review the legality of those plurality decisions, as Michael Fox, at Jottings By An Employer’s Lawyer, reports.

Patrick Smith, at the Iowa Employment Law Blog, offers some timely information on what employers can do about H1N1.

Victoria Pynchon’s Settle It Now Negotiation Blog takes a look back to 1938, when it was legally to openly deny jobs to women because their gender.

The Washington DC Employment Law Update lists OSHA’s top 10 safety violations for 2009.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Context is key in employment cases

The Phillies stand on the precipice of elimination as they head into Game 6 tonight. And, if Pedro Martinez can turn back the clock 10 years for one more start, the Phils’s likely Game 7 starter, Cole Hamels, has some ’splainin’ to do. After the Game 4 loss, Hamels, who has failed to live up to the successes of his 2008 campaign, was quoted as follows: “I can't wait for it to end. It’s been mentally draining. It’s one of those things where, a year in, you just can’t wait for a fresh start.” What’s missing from all of the press coverage lambasting Cole for quitting on his team is that his quote was taken from a 20-minute interview in which he begged for the ball in game 7 to atone for his poor game 3 performance.

Folks, context is key. If we, as lawyers, are doing our jobs correctly, however, context is often missing, obscured, or spun beyond recognition. Take, for example, an age discrimination case in which an executive says, “I always take age into consideration when I make a personnel decision.” That’s a pretty damning statement for an employer. Yet, it’s easy to understand the harmlessness of that statement when it’s taken in context. Maybe that executive doesn’t intend any age-based animus, but, being 65 years old herself, equates age with experience and wants to make sure she hires the most experienced person. Thus, in the quest to testify honesty, she answered “yes” to a damning cross-examination question.

The problem for you, as an employer defending a discrimination lawsuit, is that you often will not have the opportunity to give the explanation and provide the context until much later in the case. The statement likely will be elicited during the plaintiff’s case through careful cross examination. You will not have the opportunity to rehabilitate that witness and have her explain the statement until you recall her as part of your case, likely several days or weeks later. By then, the damage is done. Employment cases often turn on one key fact. In an age case, such an admission by an executive can be that one key fact that results in a plaintiff’s verdict.

The lesson for you, the employer, is this – even the most innocuous statement, when taken out of context, can be perceived as a damning admission. When dealing with problem employees, we must carefully parse and choose our words. Those that are used carelessly will come back to haunt us, even if the intent means no harm.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? Promissory estoppel versus at-will employment

In Ohio, the default rule governing employment relationships is employment at-will. Under at-will employment, unless otherwise agreed, either the employer or the employee can terminate the employment relationship at any time and for any reason. Promissory estoppel is one exception to the general rule of at-will employment. It is defined as “a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” In layman’s terms, if it is unfair or unjust to permit a party to back out of definite promise because of some reasonable action taken by the other party on that promise, then the court will enforce the promise like a contract. To prevail on a promissory estoppel claim, a plaintiff must show:

1. the existence of a clear and unambiguous promise
2. upon which one would reasonably and foreseeably rely, and
3. the plaintiff actually relied on the promise
4. to plaintiff’s detriment.

According to Ohio law, to overcome the presumption of at-will employment, the promise not only must be sufficiently clear and unambiguous, but also must promise continued employment for a specific period. An employee cannot rely upon promises of an indefinite duration, promises of any otherwise nebulous nature, or generalized representations about the employee’s job performance.

Even if you avoid promising employees jobs for a definite period of time, a terminated employee can still try to claim reliance on some other statement or promise. The best defense against an employee claiming promissory estoppel based on some oral statement made by a manager is a clearly worded disclaimer in an employee handbook. Disclaimers should cover the following issues:

• Setting forth that all employees are at-will;
• Describing what at-will employment means;
• Stating that no one has the authority to enter into any agreement altering that at will-relationship; and
• That is not reasonable for any employee to rely on any statement by anyone to the contrary.

With such a disclaimer signed by an employee, any reliance by that employee on any promise or statement will likely be found to be unreasonable.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Million dollar verdict underscores the dangers of retaliation claims

Antonia Susel claimed that her employer, Dix & Eaton, fired her after she alleged that her boss wanted to replace her with a man nearly half her age. Ms. Susel pursued numerous claims, included age and gender discrimination. Last week, a Cuyahoga County jury ruled in favor of Dix & Eaton on four of the five claims. The sole count on which Ms. Susel won – retaliation – brought with it a $1,032,000 verdict. Even though Dix & Eaton replaced Ms. Susel (age 59) by a 32-year-old man after she informed her boss that she did not intend to retire until age 66, the jury did not believe that her age or her gender motivated her termination. According to Ms. Susel’s attorneys (as reported by Olivera Perkins at cleveland.com), she was fired five months after she “went to the human resources manager … and said she felt she was being set up for a wrongful discharge because of her age.” That allegation netted her a $1 million verdict.

This verdict illustrates the risk posed by retaliation liability. No employee is bullet proof; merely lodging a complaint about discrimination does not guarantee a job-for-life. But, if you plan on firing an employee who has complained about discrimination or engaged in some other protected activity, make sure that you are protected by having performance problems or other legitimate grounds for the termination documented before the internal complaint.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.