Apparently, an employee doesn’t need to sign a noncompete for an employer to enforce it

I’ve always thought that for an employer to enforce a non-competition agreement against an employee, the employee actually had to sign the agreement. Two recent cases, however, suggest otherwise.

In Newell Rubbermaid Inc.v. Storm (3/27/14), a Delaware Chancery Court enforced a “clickwrap agreement”—that is, the employee only received an electronic copy of an equity compensation agreement, which included a non-competition agreement buried within. Instead of signing the agreement, she clicked an “Accept” button on a pop-up on her computer monitor. According to the court:

Newell’s method of seeking Storm’s agreement to the post-employment restrictive covenants, although certainly not the model of transparency and openness with its employees,  was not an improper form of contract formation…. Storm admits that she clicked the checkbox next to which were the words “I have read and agree to the terms of the Grant Agreement.” This functions as an admission that she had the opportunity to review the agreement (even if she now states she did not read it despite her representation that she did) upon which Newell was entitled to rely. Her actions of clicking the checkbox and “Accept” button were manifestations of assent…. It is not determinative that the 2013 Agreements were part of a lengthy scrolling pop-up. Storm’s failure to review fully the terms (on a 10-page readily accessible agreement) to which she assented also does not invalidate her assent.

In PharMerica Corp. v. McElyea (5/19/14), an Ohio federal court went one step further, and enforced a non-competition agreement that the employee had never signed at all. Shortly before resigning to work for a direct competitor, McElyae, a salesperson, copied all of her PharMerica files—including client lists, pricing information, and contracts—from her PharMerica-owned computer to a thumb drive. Under those circumstances, the court had no problem enjoining the employee from working for the competitor, even though she had never signed the non-competition agreement PharMerica presented to her.

Defendants also argued that unless Plaintiff can prove a non-compete agreement exists, the Court may not enter an injunction unless McElyea has already disclosed trade secrets. But some Ohio courts do permit injunctions in the absence of a non-compete agreement and without a prior instance of disclosure when “the former employee possessed timely, sensitive, strategic, and/or technical information that, if it was proved, posed a serious threat to his former employer’s business or a specific segment thereof.” The Court finds that PharMerica has shown its confidential information, if disclosed, would pose a serious threat to its business.

Often, non-compete cases are more about the equities than the law—did the employee act in a way that makes it unfair for he or she to compete against a former employer. As these cases illustrate, when an employee acts egregiously (takes a whole bunch of stock as consideration for a non-compete, or steals a whole bunch of documents on her way out the door), courts are willing to overlook things like as whether a non-compete was conventionally, or even actually, signed.

Two cups, one termination

Cause for a termination is often in the eye of beholder. Or, to put it another way, what might seem trivial to one can be a big enough deal to another for a termination.

Case in point? Stine v. Central Ohio Gaming Ventures (Ohio Ct. App. 5/20/14) [pdf], in which the court concluded that an employee caught stealing two inexpensive plastic cups was fired for cause, and therefore not entitled to collect unemployment. 

Stan Stine worked for one of Ohio’s new casinos. During his employee orientation, he was given an inexpensive plastic drinking cup (with lid and straw!), bearing the casino’s logo. When his cup broke, he asked an employee in the HR department for a replacement. After HR advised Stine that it’s policy is one cup per new hire, he took matters into his own hands. He removed two cups from the training room and stashed them in his locker. Security discovered the theft, and the casino terminated him following an investigation.

The casino, and the court, relied on the following policy to support the termination:

Theft (unauthorized removal) or misappropriation (unauthorized storage, transfer, or utilization) of the property of guests, Team Members or Hollywood Casino Columbus.… Any unauthorized property found in a Team Member’s possession will be considered theft and grounds for immediate separation.

You might think that the taking of few plastic cups is trivial. To this employer, a casino, I can assure you it is not. To a casino, a no-theft rule is its lifeblood. This employer cannot set a precedent that it is acceptable to take anything without permission, no matter how small. If a casino is going to overlook this offense, how can it enforce a no-theft rule when a dealer pockets a $1 chip? What work rules do you have that are specific or unique to your business? Think about it next time you are considering firing someone. What’s trivial to someone else might be life-or-death to your business. 

This week in racism (part 2): Macklemore

Last night, I caught up on Louie on my DVR. At the end of the episode, Louis CK made the following observation about love:

How do you know when you really love someone? When you can reveal your secret racism to them.

Well, damn, Macklemore must love us all, because at a concert Sunday night he performed dressed as a stereotypical Jew—wig, beard, and large, stereotypical hook nose—while singing a song about saving money (photos here).

For his part, the rapper denied any anti-Semitic intent, tweeting, “A fake witches nose, wig, and beard = random costume. Not my idea of a stereotype of anybody.” He later posted a half-hearted apology on his website, again claiming the getup was unintentional.

When you are conducting investigations in your workplace, let common sense be your guide. If it looks like a bigoted stereotype, and dresses like a bigoted stereotype, no amount of implausible deniability will make it anything other than a bigoted stereotype. Does anyone really believe that wearing a big hooked nose while singing about money was unintentional? Use your BS sensor to sift out the nonsense and reach the truth of the matter. It will make your workplace investigations that much smoother.

Until tomorrow:

 

This week in racism

If you’re a public figure and you’re caught calling the President “that f—king n-----,” do you:

1. Apologize profusely in a vain effort to save your job, or
2. Say, “I believe I did use the ‘N’ word in reference to the current occupant of the Whitehouse. For this, I do not apologize—he meets and exceeds my criteria for such.”

If you’re Robert Copelamd, the 82-year-old police commissioner of Wolfeboro, New Hampshire, the answer, sadly, is the latter.

According to CNN, the town is powerless to remove Copeland, who is adamant that he will not resign.

So, if you’re an employer, and one of your managers acts akin to Copeland, what do you do? After reading my blog for the past seven years, I hope you know that the only possible answer is to fire Copeland. You cannot have a manager going around spouting off racist nonsense. We lately seen a lot of old, white men spewing racist stuff (see Donald Sterling). Employers must be vigilant in rooting out, and stopping, these attitudes in the workplace, or face the consequences of potentially damaging, and expensive, discrimination lawsuits.

WIRTW #321 (the “quality vs. quantity” edition)

Are you too busy? Is the quality of your output suffering because of the quantity of your commitments (professional and personal)? This article from the Wall Street Journal offers some suggestions on how to (re)gain and keep balance in your life. 

Here’s the rest of what I read this week:

Discrimination

• Release of Claims Means Exactly What It Says – Even When It Doesn’t — from Suits by Suits
• Former Top Woman at Anheuser-Busch Sues for Sex Discrimination — from Workplace Fairness
• I Can Be There, Even If I’m Not There: More Support That Telecommuting May Be A Reasonable Accommodation — from Employment Law Lookout
• Dear Evil Skippy: Is It Harassment To Make Your Assistant Bring Coffee? — from Evil Skippy at Work
• Lawrence Mitchell Threesomes And Other Startling Allegations In Affidavit — from Above the Law
• Happy Mother's Day! Q & A on pregnancy and lactation accommodation Robin Shea’s Employment & Labor Insider
• Yes, Employers, Words Really Do Matter — from Next Blog

Social Media & Workplace Technology

• My employee deleted all of her work emails and quit. Can I sue her for that? — from Eric Meyer’s The Employer Handbook Blog
• The Role of a Distracted-Driving Policy in a BYOD Workplace — from Molly DiBianca’s Delaware Employment Law Blog

HR & Employee Relations

• Tips for Avoiding Liability for Trade Secret Misappropriation Concerning the Hiring and Departure of Employees — from Trading Secrets
• Yahoo Accuses Ex-Employee of Taking Patent, Trade Secrets to Startup — from Law.com
• Telecommuting dealt another blow — from Mike Haberman’s Omega HR Solutions
• ENGAGED EMPLOYEES AGREE: Your Offers of Additional Time Off..Well, They Suck — from The HR Capitalist, Kris Dunn
• First Amendment and the Workplace: An Update — from Dan Schwartz’s Connecticut Employment Law Blog
• Don’t Get Duped by Puffery: How to Recognize Résumé Fraud — from Evil HR Lady, Suzanne Lucas
• Corporate Employment Practices and D&O Liability Exposure — from The D & O Diary

Wage & Hour

• Are Employer-Mandated Anger-Management Counseling Sessions Considered Compensable Time? — from The Blue Ink
• The 20% Rule for Tips is Back in the News — from Wage & Hour Insights
• FLSA Violations Provoke Criminal Referral — from Wage and Hour Laws Blog
• NFL Cheerleaders Face Arbitration Motion — from Phil Miles’s Lawffice Space
• Employers May Move Workers With High Medical Costs to Exchanges — from TLNT

Labor Relations

• Are Student Athletes “Employees”?? — from The Emplawyerologist
• Goodbye Precedent, Hello Forced Speech? — from Social Media Employment Law Blog

A bird in the hand? Court refuses to compel lewd picture in harassment case

Laverne Battle claimed that her supervisor at the District of Columbia Metro Police Department texted from his cell phone to her cell phone, a picture of him holding his penis is his left hand. To support her sexual harassment claim, battle sought to compel seeks to compel the supervisor to produce a photograph of his left hand and penis for the purpose of comparison. 

In Battle v. District of Columbia, the court weighed the need for the photo versus the privacy interest of the alleged harasser. On balance, the court refused to order the production of a picture of his penis. The hand, however, was a different story. 

After in camera review of the grainy, poorly-lit photograph at issue, the Court is skeptical of plaintiff's confidence that a photograph of Sergeant Pope's penis would be of any comparative value. Nor is the Court satisfied that there is no less intrusive alternative to requiring Sergeant Pope to produce a photograph of his penis. The Court accordingly concludes that plaintiff's request is too speculative at this point to overcome defendant's privacy interests.

However, Sergeant Pope's salient privacy interests do not extend to his hand, which is routinely subject to public view. Accordingly, the Court will grant plaintiff's motion in part and order Sergeant Pope to produce to the plaintiff and submit to the Court for in camera review a photograph of his left hand (including thumb and forefinger) held in a similar position as that in the photograph at issue.

Bravo for creativity, but let me suggest a less intrusive, and more conclusive, alternative to the racy pic. How about a forensic exam of the phone that sent the photo? 

Should you check your employee's social media accounts?

Monday’s Wall Street Journal had a compelling counterpoint about whether employers should be checking their employees’ social media accounts. Nancy Flynn, the founder and executive director of the ePolicy Institute, presented the pro, while Lewis Maltby, the president of the National Workrights Institute, presented the con.

Ms. Flynn argued that keeping an eye on employees’ online activities helps companies help themselves.

Management has a right and responsibility to monitor how employees are using social media at all times. If companies don’t pay attention, they may end up facing any number of serious problems. It’s all too easy for disgruntled or tone-deaf employees to go onto social media and criticize customers, harass subordinates and otherwise misbehave. Sometimes that can bring workplace tensions and complaints, sometimes it can damage a company’s reputation in the marketplace, and sometimes it can lead all the way to lawsuits or regulatory action.

Mr. Maltby argued that examining employees’ online activities often results in an unreasonable fishing expedition.

Yes, employers have a legal right to monitor employees’ conduct on their work computers. But the only time employers have a legal duty to monitor employee communications is when the employer has reason to believe that the employee is engaged in illegal conduct.… The fact is, the vast majority of what employees do on the Internet has nothing to do with work, takes place during their private lives and is done on their personal computers. Once again, employers should get involved with employees’ private lives only when there is reason to be concerned.

Who’s right? Do employers have a right to monitor employees’ social media accounts, or is this an invasion of their personal lives? Is believe that there is nothing private about social media. Even outside of work, what employees say on their not-so-private social pages can impact their employer? Do they post racist, sexist, or other inappropriate statements? Do they divulge confidential information about their workplace? Are they engaging in conduct that would.make them unfit for employment (like illegal drug use)? 

The reality is that employees who believe that what they say on their personal social media sites, away from the workplace, is off-limits to their employer, operate under a grand misconception. Like it or not, we live in a world where, thanks in large part to social media, the line between the personal sphere and the work sphere no long exists (or if it exists it’s really blurred). Employees that fail to recognize this fact take a huge risk.