“You Can’t Take It With You:” Another Lesson in the World of Non-Compete Agreements
Wednesday, March 29, 2017
“You Can’t Take It With You:” Another Lesson in the World of Non-Compete Agreements
We have cautioned before in our blogs and on our website that one of the worst mistakes an employee can make when leaving a job is to email information of any sort from a work computer to a home computer in the weeks leading up to the last day of employment. If you do so, even if you think the information you’re sending home is purely personal, your employer will inevitably suspect that you are attempting to steal a trade secret, customer lists, product information, or some other kind of information the employer may label as “proprietary or confidential.” And the result, particularly if you’ve signed a non-compete or confidentiality agreement, can be very ugly.
This lesson was recently highlighted in news reports about a Pfizer marketing executive against whom a Pennsylvania federal court issued a “temporary restraining order,” in the days immediately after she left her job with Pfizer. In the legal action brought by Pfizer against this employee, it accused her of having sent “at least 42 emails containing confidential information to her personal email account and copied 600 files to a USB drive before her departure, violating an existing employee agreement she signed regarding sensitive company information,” according to a March 1, 2017 report by Law360.
Upon being presented with these accusations, presumably supported with some evidence of the electronic transmissions and downloading by the employee, a Pennsylvania federal judge, without giving the employee notice that he was doing so, entered a temporary restraining order against her, finding that, “there is a real danger that, if given advance notice, defendant will either disclose or destroy the confidential information and trade secrets at issue.”
Employees should also be forewarned that employers will often leave no stone unturned – and spend enormous amounts of money –in searching for every potential communication containing company information that a departing employee may have sent to herself or others prior to leaving employment. In a case we recently handled for an employee, his employer undoubtedly spent far more than $100,000 in retaining attorneys, filing suit, and hiring a very expensive “forensic” computer search firm to search every email, text message, and phone message our client sent in the months preceding his leaving the company. While it ultimately found nothing and had to dismiss its case, it was a harrowing and expensive procedure for our client who had to defend himself against the company’s legal action and turn over access to all of his personal computers, cell phones, iPads, etc. to be searched by the forensic experts in order to be vindicated.
In fact, just as this blog was about to be published, I learned, again from Law360, that this Pfizer employee’s case had been settled as a result of an agreement reached that would allow Pfizer to bring in an independent computer forensic specialist to examine all of the employee’s computer and other electronic devices. The agreement also provides that the judge in the case will retain jurisdiction over it for the next three years to resolve any disputes that may arise. While this Pfizer employee was able to “settle” this dispute, I am sure that she has incurred and will likely continue to incur substantial legal fees and costs in conjunction with the litigation and its ongoing resolution.
So, if you are contemplating leaving your employer and seeking alternate employment, a word to the wise: think twice before hitting that “send” key.
Richard M. Schall, Esq.
Schall & Barasch LLC
110 Marter Ave, Ste 302
Moorestown, NJ 08057
On March 15, 2016, I had the pleasure of appearing before the New Jersey Supreme Court on behalf of the National Employment Lawyers Association of New Jersey in the case of Cuevas v. Wentworth Group. The case involved two brothers, Ramon and Jeffrey Cuevas, who alleged that they had been subjected to a hostile work environment on account of their national origin and then were terminated from their employment when they raised complaints about how they were being treated. This past month, on September 19, 2016, the Supreme Court issued its decision – upholding a $1.4 million award of emotional distress damages to the two brothers.
The New Jersey Supreme Court’s decision, written by Justice Barry Albin, constitutes not only a terrific vindication for the Cuevas brothers but also a sweeping victory for all employees in the State of New Jersey, as the Court recognized not only the grievous harm that can be caused by employment discrimination, but also the essential role of juries, not judges, in determining the fair amount of damages to be awarded in these cases.
In recognizing the harms caused to New Jersey employees by discrimination, the Supreme Court wrote as follows:
The Legislature intended victims of discrimination to obtain redress for mental anguish [and] embarrassment,” even when their emotional and physical ailments cannot be characterized as severe. Because of the special harm caused by willful discrimination in the workplace, “compensatory damages for emotional distress, including humiliation and indignity . . . , are remedies that require a far less stringent standard of proof than that required for a tort-based emotional distress cause of action.” Specifically, in a [Law Against Discrimination] case, a plaintiff is not required to provide “expert testimony or independent corroborative evidence . . . to support [an] award of emotional distress damages.” Plaintiffs in this case were entitled to “recover all natural consequences of [defendants’] wrongful conduct, including emotional distress and mental anguish damages arising out of embarrassment, humiliation, and other intangible injuries.”
Perhaps even more significantly, the Court in its Cuevas decision restored a fundamental precept of law in New Jersey that some of its prior decisions had begun to erode: that is the role of juries, not judges, to decide the amount of damages to be awarded to plaintiffs who are harmed by the conduct of a wrongdoer in all kinds of cases – not just employment cases – that come before the courts.
In this regard, under New Jersey law, a judge has always been permitted to reduce a jury award in the event he or she finds the award “shocking to the judicial conscience” or a “gross miscarriage of justice” – a very high standard that was intended to be used only sparingly. However, in recent years, it had become more and more common for judges to reduce large jury awards based either on their own “personal experience” or by comparing a jury’s award to other awards that had been issued in supposedly “comparable cases.”
In its Cuevas decision, the Supreme Court has now slammed the brakes on this trend and made clear that it is only in the very rare case – a truly “runaway jury” – that judges may interfere with a jury award. It wrote as follows:
The preeminent role that the jury plays in our civil justice system calls for judicial restraint in exercising the power to reduce a jury’s damages award. A court should not grant a remittitur except in the unusual case in which the jury’s award is so patently excessive, so pervaded by a sense of wrongness, that it shocks the judicial conscience. . . .
A judge’s personal knowledge of verdicts from experiences as a private practitioner or jurist is information outside the record and is not subject to the typical scrutiny evidence receives in the adversarial process. The cohort of cases within a judge’s personal knowledge may not be statistically relevant and the reliability of the judge’s knowledge cannot be easily tested. A judge therefore should not rely on personal knowledge of other verdicts. The standard is not whether a damages award shocks the judge’s personal conscience, but whether it shocks the judicial conscience.
We also disapprove of the comparative-verdict methodology that allows parties to present supposedly comparable verdicts based on case summaries. The singular facts and particular plaintiffs in different cases that lead to varying awards of damages are not easily susceptible to comparison. That is especially so because the information about other seemingly similar verdicts is very limited. A true comparative analysis would require a statistically satisfactory cohort of cases and detailed information about each case and each plaintiff. That information is unlikely to be available, and therefore any meaningful comparative approach would be impracticable to implement.
The Court’s decision in Cuevas constitutes a great victory for all the citizens of the State of New Jersey, and in particular, New Jersey’s employees. On behalf of the National Employment Lawyers Association of New Jersey, we are grateful that we at Schall & Barasch had opportunity to help bring about his wonderful result.
In 1963 Congress enacted the Equal Pay Act, which requires that women receive equal pay for equal work. While, over the past 50-some years, thousands of lawsuits have been filed alleging violations of the Act, with varying degrees of success, five members of the United States Women’s National Soccer Team, in filing their recent complaint with the Equal Employment Opportunity Commission (EEOC), have acted to bring this law back into the national spotlight. Although prior cases brought under the Act by female sports figures – most often coaches – have generally not fared well, there are good reasons why I think the Women’s National Soccer Team may well prevail in their case.
Congress enacted the Equal Pay Act “recognizing the weaker bargaining position of many women and believing that discrimination in wage rates represented unfair employer exploitation of this source of cheap labor.” In response to evidence of the many families dependent on the income of working women, Congress included in the Act’s statement of purpose a finding that “the existence . . . of wage differentials based on sex . . . depresses wages and living standards for employees necessary for their health and efficiency.” And Congress declared it to be the policy of the Act to correct this condition.
The Equal Pay Act prohibits an employer from paying different wages to employees of the opposite sex for equal work on jobs the performance of which requires “equal skill, effort, and responsibility” and which are performed under “similar working conditions.” Notably, to qualify as “equal work,” the work female employees perform need not be identical to that of their male comparators; rather the work must merely be “substantially equal.”
So when women are performing essentially the same job functions as men, under similar working conditions, and handling a similar amount of responsibility, the Equal Pay Act requires that their employer pay them equal amounts of compensation. At first blush then, when one compares the “job functions, working conditions, and responsibilities” of the women playing for the Women’s National Soccer Team with those of the men, playing on the men’s National Team, it seems clear that there is no difference, and that the women’s team should have an easy go of winning their case.
However, the Equal Pay Act does contain a major “escape clause” for employers: if an employer can show that the pay differential between what it is paying its female and male employees is based on a “factor other than sex,” then the pay differential is permissible. Acceptable factors “other than sex” include experience, prior salary, education, skills which the employer deems useful to the position, and “a proven ability to generate higher revenue for the employer’s business.”
It is the last of these factors – “the ability to generate higher revenue” — that has typically doomed the efforts of female coaches to obtain equal salaries to those of their male peers. One of the most frequently cited of such cases is that of the former women’s basketball coach at the University of Southern California, Marianne Stanley. who, in 1993, filed suit over the lesser compensation she was receiving compared to the coach of the men’s team. In finding against her, the court cited, among other reasons, the fact that the men’s basketball team, at that time, produced 90 times greater revenue than the women’s team.
But, in the case of the women playing soccer for the Women’s National Team, which has enjoyed incredible success and popularity in recent years, it may be difficult for their employer, U.S. Soccer, to argue that it is revenue generation that justifies the enormous disparity in pay received by these women, when compared to that paid to the men on the Men’s National Team. According to the figures filed with the EEOC by the five women players, the Women’s National Team, which won the World Cup in 2015, generated $20 million more in revenue than the men’s team in 2015. The 2015 women’s World Cup final was viewed by some 25 million television viewers – a record for a men’s or women’s soccer game on English language television in this country. The women’s team is favored to win its fifth Olympic Gold medal this summer in Brazil. Yet, despite the success – and the financial benefits that result — the women are paid only a fraction of what the men get paid. For each of the minimum of 20 “friendly” matches each team plays every year, the top five women are guaranteed only $72,000 per year, whereas the top five male players earn $406,000 from these games. If a male soccer player for the U.S. team were to win the World Cup, he would receive a bonus of $390,000. By contrast, for winning the 2015 World Cup, star player Carli Lloyd received a bonus of only $75,000. As Ms. Lloyd stated in her April 10, 2016 op-ed piece in the New York Times, “simply put, we’re sick of being treated like second-class citizens. It wears on you after a while. And we are done with it.”
My prediction: Not only will the women’s team win an Olympic gold medal in Brazil, but they will ultimately win their Equal Pay Act case.
Calling a waitress darlin’ and shamelessly flirting (and annoying) her for hours on end may be an amusing gimmick in films and television, but these days it just won’t fly in the workplace – or, at least, it shouldn’t. Unfortunately for many women, as well as men, in the food service industry, sexual harassment is a pervasive part of their work environment.
Under New Jersey employment law, what exactly constitutes sexual harassment? According to the New Jersey Supreme Court, in the leading case of Lehmann v. Toys ‘R Us, to successfully make out a hostile work environment claim, you must be able to show that (1) you were treated in a certain way on account of your gender; (2) the conduct that you were subjected to was “severe and pervasive;” and (3) that a reasonable person would find that, as a result of the unwanted conduct, his or her working conditions were altered.
While we often think of sexual harassment as involving explicit sexual references being made, the courts interpreting the New Jersey Law Against Discrimination have held that any sort of hostile conduct can constitute sexual harassment, as long as the reason you are being singled out for the treatment you are receiving is on account of your gender.
One of the key requirements that you must show, however, is that the conduct is either “severe” or “pervasive.” The question under New Jersey employment law becomes, “At what point is the line crossed” between a few innocuous comments that may reflect on a person’s dress or appearance and comments that become “severe or pervasive” harassment. Many employers, fearful of getting sued, adopt “zero tolerance” policies, and so employees generally should be very conscious of what they are saying, how they are saying it, and how the person hearing it might perceive the comment.
A recent report by several restaurant worker advocacy groups revealed that 90 percent of female employees in restaurant settings said they had been sexually harassed at work. This harassment can come from managers, co-workers and customers. Disturbingly, many female servers said they were required by their employers to wear more suggestive uniforms than their male co-workers in order to generate better sales.
In this day and age, you should not have to worry about hearing lewd comments, being propositioned by your customers or experiencing other behavior on the job that makes you feel uncomfortable or unsafe. In this regard, New Jersey employment law is very protective of your rights. If bringing your concerns to your manager does not make the situation any better, you fortunately have legal options. Talking to the New Jersey employment lawyer at Schall & Barasch LLC can give you a better idea on how to protect your rights and get the harassment to stop for good. Contact us today!
The Philly Voice recently reported that a New Jersey mother, from a Pemberton Township claims that she was fired from her job because she needed to pump breast milk for her newborn daughter.
Ariana Gossard, a 21-year-old single mother explained that she has worked at the Hampton Inn located in Bordentown for the past two years. The distraught mother took to Facebook to express her concerns and discontent. She explained that she loved the job and was upset that she was let go due to the need to breastfeed. She left for maternity leave in May of 2015 with the plan to return to work on August 24, 2015.
Before returning to work, Gossard took the time to speak with the general manager and the assistant mangers at the Hampton Inn to explain how her schedule would need to change, as she was a new mom who was breastfeeding. According to Gossard, when she requested to have two 15-minutes breaks during the day to allow her to pump breast milk, the general manager told her that she would not be allowed to take those breaks.
Even after Gossard explained the importance of being able to pump throughout the day to avoid mastitis and clogged ducts, she was denied the breaks that she needed. She went as far as to offer suggestions to make sure that her desk was always covered. A week after this conversation, she received a text saying that the hotel had not available positions that met her requirements.
Under the Affordable Car Act, businesses are required to provide breaks and a private room for mothers to pump breast milk. Richard Schall explained that is was a blatant violation of the law.
Gossard has reached out to a lawyer as well as speaking out on Facebook. If you have questions regarding you rights as a new mother, contact Schall & Barasch today.
Read the full story on the Philly Voice.
Written by: Richard M. Schall
Schall & Barasch LLC
I had written many months ago about a case pending before the New Jersey Supreme Court, Lippman v. Ethicon, Inc., and had promised an update once the case was decided. Well, last week, the Court came down with its decision, and it’s a good one, putting to rest an evil doctrine that a number of lower courts had come up involving New Jersey’s Conscientious Employee Protection Act, more commonly known by its acronym CEPA.
CEPA is New Jersey’s “whistleblower” protection law, which provides that employers may not retaliate against their employees who decide (sometimes for noble reasons, but sometimes not) to do any of the following:
(1) report the employer’s illegal, fraudulent or criminal activity to the authorities;
(2) testify in court or before a public agency that’s looking into the employer’s alleged wrongdoing; or
(3) object to, or refuse to participate in, some employer conduct that the employee reasonably believes may be illegal, fraudulent or criminal, or “incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.”
It’s this last provision of CEPA which gave rise to the nasty doctrine that certain employers and their lawyers were able to convince some of the lower courts of New Jersey to buy into: That employees lose the protection of CEPA if what they were objecting to was something that they discovered in the normal course of doing their job. So, for example, if an auditor caught his boss stealing and reported the theft to higher-ups but then got fired, these courts were saying that he was not protected by CEPA because he was “simply doing his job” as an auditor. This dangerous distortion of the law threatened to eliminate all “watchdog” employees, not only auditors, but quality control personnel, safety inspectors, environmental monitors, etc. from the protection under CEPA.
In the Lippman case, the plaintiff was Dr. Joel Lippman, who was Ethicon’s vice-president for medical affairs. His job at the Company required him to provide his professional opinion as to the safety (or potential danger) of the Company’s products –medical devices used in surgical procedures in hospitals around the world. Dr. Lippman had claimed in his CEPA lawsuit that, after he voiced his objections to the safety of certain of Company’s products –asking that they be recalled or not sent to market – the Company fired him.
While one would think that Dr. Lippman’s conduct – objecting to the distribution of possibly unsafe medical devices that might seriously harm the public – would make him exactly the kind of person CEPA was designed to protect, the trial court threw his case out, stating that he could not be a “whistleblower” protected under CEPA because “he was just doing his job” in raising his concerns about safety.
Eventually, thanks to a decision by an appellate court disagreeing with the trial court’s view of things, the Lippman case made its way up to the New Jersey Supreme Court. Fortunately, the New Jersey Supreme Court threw the house down on this doctrine, crushing it once and for all.
The Supreme Court held that when our Legislature enacted CEPA, it did not carve out a special exception for “watchdog employees” like Dr. Lippman, and that it wasn’t the role of the courts to change the law as written by the Legislature, particularly given the principle that employment laws like CEPA are to be given a “broad, liberal construction.”
Not only did the Supreme Court overturn the trial court’s decision, but it went further, clarifying that the burden of proof required of “watchdog” employees in establishing their cases in court should be no different than that required of all other employees.
Yes, ding, dong, this witch is dead. But, there are still a few others that need to be killed off. More on that to come.
Written By: Richard Schall, Esq.
My First Uber Ride: Who Was Driving That Car? An Independent Contractor or an Employee?
A few weeks back, my wife and I were in Brooklyn and needed to get to a small folkie music club nowhere near any subway station. I had recently decided to download the Uber App onto my smartphone and thought this was a perfect time to give it a try.
Once I figured out how to summon a car on the App, the technology and service were amazing. I could watch on the screen of my phone an image of the car as it was approaching, with a message telling me how many more minutes (only a few) before the driver arrived. We got in, punched in the address to which we were headed on my smartphone, which sent that information to the driver’s smartphone, which then called up the directions to our destination.
When we arrived, no money had to change hands, as I had given Uber my credit card information, along with the amount of tip that it could apply. I just said, “thanks and goodbye” to the driver, and we hopped out. And it was cheap! Way cheaper than a taxi would have been. I then received a nice message on my phone from Uber confirming all the details and cost of the ride. So cool! So fast! So convenient!
During our trip, I had asked the driver how many hours he had been driving that day, and he told me he had been out for about 10 hours. He also told me he generally drove for Uber 6 days a week.
As an employment lawyer, I had read about some lawsuits being filed against Uber and also against Lyft, one of Uber’s competitors, claiming that these companies were “misclassifying” their drivers as independent contractors, when they should be treating them as employees. After my Uber ride, although I did give the issue a little more thought, I mostly just commented on what an incredibly impressive technology Uber had come up with.
I had a little time on my hands this past weekend and thought I would dig a little further into the issue. So, I called up on LEXIS one of the cases I had heard about – a class action — that had been brought against Lyft out in California, under the name, Cotter v. Lyft, Inc.
In that case, in its motion for summary judgment, Lyft tried to convince the judge that the facts proving its drivers were “independent contractors” were so strong that he should rule in its favor without even having to send the issue to the jury. At the same time, the drivers, in their cross-motion for summary judgment, argued to the judge that the facts proving that they were “employees” were so strong that he should rule in their favor, finding that Lyft had misclassified them as independent contractors and that they should have received all the benefits that employees are entitled to, including expenses (such as gas charges), as well as the minimum wage.
The judge in the case, the Honorable Vince Chhabria, of the United States District Court for the Northern District of California, ultimately granted neither side the victory it sought. Instead, because of the many factual issues in the case, he ordered that it be decided by a jury.
Nonetheless, in the course of his opinion, the Judge did an excellent job setting out the harms that both individuals and society will incur when those who should be treated as employees are instead treated as independent contractors. In his decision, he also shed a lot of light on how companies like Lyft exercise control over the working conditions and income of their drivers – treating them in many ways like employees, but without all the benefits that come with that classification.
The judge began his opinion by explaining the important consequences that result from whether a person is classified as an independent contractor or employee, writing follows:
Whether a worker is classified as an employee or an independent contractor has great consequences. California law gives many benefits and protections to employees; independent contractors get virtually none. Employees are generally entitled to, among other things, minimum wage and overtime pay, meal and rest breaks, reimbursement for work-related expenses, workers’ compensation, and employer contributions to unemployment insurance.
The judge then went on to lay out the considerations the courts have traditionally looked at in determining the difference between an “employee” and an “independent contractor,” and how those considerations played out in the case of the Lyft drivers involved in the lawsuit:
At first glance, Lyft drivers don’t seem much like employees. We generally understand an employee to be someone who works under the direction of a supervisor, for an extended or indefinite period of time, with fairly regular hours, receiving most or all his income from that one employer (or perhaps two employers). Lyft drivers can work as little or as much as they want, and can schedule their driving around their other activities. A person might treat driving for Lyft as a side activity, to be fit into his schedule when time permits and when he needs a little extra income.
But Lyft drivers don’t seem much like independent contractors either. We generally understand an independent contractor to be someone with a special skill (and with the bargaining power to negotiate a rate for the use of that skill), who serves multiple clients, performing discrete tasks for limited periods, while exercising great discretion over the way the work is actually done. . . . Lyft drivers use no special skill when they give rides. . . [and while] Lyft might not control when the drivers work, it has a great deal of power over how they actually do their work, including the power to fire them if they don’t meet Lyft’s specifications about how to give rides.
The judge also observed, as had been the case with the Uber driver who took my wife and me to the music club a few weeks back that some of these drivers are working full time for their companies, as he wrote as follows:
Some Lyft drivers no doubt treat their work as a full-time job—their livelihood may depend solely or primarily on weekly payments from Lyft, even while they lack any power to negotiate their rate of pay. Indeed, this type of Lyft driver—the driver who gives “Lyfts” 50 hours a week and relies on the income to feed his family—looks very much like the kind of worker the California Legislature has always intended to protect as an “employee.”
Since “control” over an person’s work is generally the key factor weighing in favor of finding a worker to be “an employee,” I was in fact surprised, in reading the judge’s opinion, to learn about the many ways that Lyft exercises control over its drivers. Thus, if a Lyft driver declines too many calls for service, Lyft will terminate him or her. Likewise, if a driver’s “ratings” from customers fall below a certain mark, termination results.
Moreover, there are a number of ways Lyft controls the work performed by its drivers, as pointed out by the judge in his decision:
Lyft instructed the [drivers] not to do a number of things—not to talk on the phone with a passenger present, not to pick up non-Lyft passengers, not to have anyone else in the car, not to request tips, not to smoke or to allow the car to smell like smoke, and not to ask for a passenger’s contact information. Lyft also affirmatively instructed the plaintiffs to do a number of things—to wash and vacuum the car once a week, to greet passengers with a smile and a fist-bump, to ask passengers what type of music they’d like to hear, to offer passengers a cell phone charge, and to use the route given by a GPS navigation system if the passenger does not have a preference.
Given the extensive discussion in his decision on the amount of control Lyft exercised over its drivers and the benefits and protections both the drivers and society would receive if the drivers were found to be “employees,” I felt Judge Chhabria was certainly leaning toward reaching that result. But because it is up to juries, not judges, to weigh evidence and decide factual issues, the judge has left this decision up to a jury. Trial, as far as I know, has not yet been scheduled.
* In every year since 2014, the law firm of Schall & Barasch has been included in the Tier 1 list of best law firms in New Jersey practicing in the field of employment law on behalf of individuals. This list is compiled by U.S. News & World Report. A description of the selection methodology can be found at www.bestlawfirms.usnews.com/methodology.aspx.
** The methodology for the Avvo ratings of Richard Schall and Patricia Barasch can be found at www.avvo.com/support/avvo_rating.
*** In every year since 2009, Richard Schall has been chosen to be included on the list of Best Lawyers in New Jersey practicing in the field of labor and employment law. The Best Lawyers list is issued by Best Lawyers International. A description of the selection methodology can be found at www.bestlawyers.com/about/MethodologyBasic.aspx.
**** In every year since 2005, both Patricia Barasch and Richard Schall have been chosen to be included on the list of Super Lawyers in New Jersey practicing in the field of employment law on behalf of plaintiffs. The Super Lawyers list is issued by Thomson Reuters. A description of the selection methodology can be found at www.superlawyers.com/about/selection_process.html.
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