How many chances does an employee get under a "Last Chance Agreement"?

When is a Last Chance Agreement not a "last chance" agreement? When the 6th Circuit reviews it, apparently.

In Moore v. Coca Cola Bottling Co., the 6th Circuit held that an employee's last chance agreement, signed after the employee tested positive for marijuana, did not bar his subsequent discrimination lawsuit when terminated following yet another positive test.

The LCA stated, in relevant part, "Moore releases and forever discharges the Company … from any and all liability of any kind whatsoever, relating to his employment with the Company, arising prior to the date of this Agreement[.]"

YouTuber faces legal challenge against his overly broad severance agreement

"Employer and Employee agree to keep the existence and terms of this Agreement confidential and to not disclose its provisions to anyone.… Employer and Employee further agree not to take actions or make statements, written or oral, that would disparage or otherwise defame the goodwill or reputation of the other."

Those are the confidentiality and non-disparagement terms of the severance agreement that Steven Crowder, a popular right-wing YouTuber, provided to Jared Mittelo, his producer.

And they are why Mittelo has filed an unfair labor practice charge with the NLRB.

6th Circuit opinion guts the validity of e-signatures on employment documents

"I never saw that agreement and I never signed it." That's all that Andrew Bazemore said under oath in defense of Papa John's claim that he was required to arbitrate his FLSA claim relating to an under-reimbursement of vehicle expenses.

The 6th Circuit held that Bazemore's otherwise unsupported declaration was enough to create an issue of fact as to the arbitrability of his claim. 

NLRB General Counsel goes nuclear on severance agreements in her guidance on McLaren Macomb

NLRB General Counsel Jennifer Abruzzo just released her Guidance in Response to Inquiries about the McLaren Macomb Decision. 

Recall that McLaren Macomb held that garden-variety non-disparagement and confidentiality clauses in workplace severance agreements violate the National Labor Relations Act by unlawfully infringing upon the rights of employees to engage in protected concerted activity.

Just how far does Ms. Abruzzo push the limits of McLaren Macomb in her interpretation?

NLRB bans non-disparagement and confidentiality covenants in severance agreements. What now?

Is it time to rip up your stock severance agreement? Consider the following two clauses, which I bet your standard agreement contains in some form.

Pretext for termination ≠ cause for termination

Shortly after Elon Musk closed his $44 billion acquisition of Twitter, he cleaned out its C-suite. He fired CEO Parag Agrawal, CFO Ned Segal, CLO Vijaya Gadde, and general counsel Sean Edgett. 

This is not all that unusual. A new owner of a company should feel 100 percent comfortable with his executive team, and if Musk wasn't totally comfortable with that quartet running Twitter, then it's his prerogative to replace them. 

Employees who hold positions of authority such as CEO and CFO usually have employment agreements, and those agreements typically contain severance payouts if the agreements are terminated "without cause" prior to their natural expiration. This group of Twitter execs appear to be no different, and reports suggest that their agreements called for severance payouts totaling $122 million.

This is why I (almost) always recommend that employers provide terminated employees a reasonable severance package

Roosevelt Jointer worked as a maintenance supervisor at Tesla from September 2017 until last month. That was when his manager called him over the phone, during Jointer's vacation, to tell him that he had been fired. 

Business Insider quotes Jointer about what was said during that call:

I did not receive any advance notice that I would be losing my job. Up to that point, no one at Tesla ever raised any issues with me regarding my performance.

During this call, my manager told me that I would receive a severance offer over an e-mail and urged me to sign a separation agreement to get a severance payment of one week's salary [and two months of health insurance].

He did not sign the agreement. 

Federal appeals court rejects reliability of electronic signatures on employment agreements

During a webinar I recently conducted on employee handbooks, someone asked me a question about the best practice between wet signatures vs. e-signatures on handbook receipts. I answered that either was fine, but at least with the digital footprint of an e-signature you avoid the disingenuous "that's not my signature," or the "I don't ever remember signing that" we sometimes hear from plaintiffs in deposition. 

Then I read Barrows v. Brinker Restaurant Corp.

Who owns intellectual property created for a company?

Growing up in Philadelphia, there are few things more beloved than the Phillie Phanatic. Which is why I’m so intrigued by the lawsuit the Phillies recently filed against the people who claim to own the rights to the mascot the team contracted them to create in 1978.

Which got me thinking … what rights does a company have to intellectual property created by an employee or an independent contractor?

What does a valid jury waiver look like?

Earlier this year, the Senate took up the Forced Arbitration Injustice Repeal Act. It would, among other things, prohibit employers from requiring employees, as a condition of employment, to sign agreements submitting employment and civil rights claims to arbitration in lieu of filing in court. According to Vox.com, this legislation has some initial bipartisan support, and has some legit traction to perhaps become law.

I am on record as not being a fan of arbitration for employment disputes. I do not believe they are any less expensive or time consuming that in-court litigation. In stead, I've previously argued for tools such as contractually shortened statutes of limitations and jury waivers as tools employers can to limit risk instead of arbitration agreements.

NLRB continues to slam employers on mandatory arbitration clauses

Last week, the Huffington Post reported that Guitar Center was requiring all of its employees to choose between signing arbitration agreements or losing their jobs.

I have been critical of employers’ use of arbitration agreements because I do not believe that they provide employers with a quicker, cheaper, and less risky alternative to a judicial resolution of employment disputes.

The NLRB is also highly critical of arbitration agreements, but for a wholly different reason. The NLRB believes that such clauses unlawfully infringe on the rights of employees to engage in protected concerted activity.

Don’t call the whole thing off when negotiating IP rights with employees

Tomaydo-Tomahhdo is a local sandwich shop, and a purveyor of damn fine paninis and wraps. As for litigation, let’s say its lunches are way better. It sued one of its former chefs, claiming that he stole its book of recipes to open a competing catering business. Ultimately, the restaurant lost its lawsuit, which it had framed as a copyright infringement claim. The court concluded [pdf] that there is nothing original in a compilation of sandwich recipes that copyright law protects.

What could this employer have done differently to protect its intellectual property. It could have gotten in it in writing from the employee.

EEOC 0-2 on severance-agreement lawsuits … but does it matter?

Recall that in October, a Chicago federal court dismissed a lawsuit filed by the EEOC against CVS, claiming that the pharmacy retailer’s severance agreements violated Title VII by employing allegedly retaliatory language. That court, however, failed to reach the merits of the case, instead dismissing the EEOC’s claims on procedural grounds (the agency’s failure to engage in pre-suit conciliation), thereby depriving employers guidance on whether certain garden-variety provisions in employment agreements violate Title VII’s anti-retaliation provisions. I held out hope that the practical guidance employers seek on this issue would come from a similar lawsuit pending in Colorado.

Last week, a Denver federal court dismissed that other EEOC severance-agreement-as-retaliation lawsuit. Like the earlier CVS dismissal, however, the dismissal in EEOC v. CollegeAmerica Denver was on procedural grounds, and offers little practical import for employers moving forward on this important issue.

Perhaps if there is any solace for employers looking to sue separation agreements to halt future litigation, and not to buy a future lawsuit by the EEOC, employers can look to footnote 3 in the EEOC v. CVS decision:

The “covenant not to sue” provision prohibits an employee from “initat[ing] or fil[ing] … a complaint or proceeding asserting any of the Released Claims.” The general release of claims is set out in ¶ 7 of the Agreement, but that section also includes the caveat that the release does not limit “any rights that the Employee cannot lawfully waive.” However, there is a specific carve out for an employee’s “right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws”; and further provides, “nor shall this Agreement prohibit [the employee] from cooperating with any such agency in its investigation.” … The verb participate is defined as “to be involved with others in doing something” and “to take part in an activity … with others.” http://www.merriam-webster.com/dictionary/participate. It is not reasonable to construe “the right to participate in a proceeding with any appropriate federal … agency,” to exclude the right of the employee from filing an EEOC charge. And, even if the Separation Agreement explicitly banned filing charges, those provisions would be unenforceable and could not constitute resistance to the Act.

In other words, the CVS court, albeit in dicta, believes that the EEOC is chasing an unsupportable claim by arguing that covenants not to file charges violate Title VII’s prohibitions on retaliation.

Employers, however, should not lull themselves into a false sense of security. Neither employer won either of these cases on the merits. For whatever reason, this issue is on the agency’s radar, and it will likely seek another case to prove its point regarding these agreements.

For now, the prudent course of action is to make sure that your agreements clearly and unambiguously, in a provision separate and distinct from the release, waiver, and covenant not to sue, state that employees retain their federally protected rights. I am using something like the following:

Nothing in this Agreement is intended to, or shall, interfere with Employee’s rights under federal, state, or local civil rights or employment discrimination laws to file or otherwise institute a charge of discrimination, to participate in a proceeding with any appropriate federal, state, or local government agency enforcing discrimination laws, or to cooperate with any such agency in its investigation, none of which shall constitute a breach of any of the provisions of this Agreement. Employee shall not, however, be entitled to any relief, recovery, or monies in connection with any such brought against any of the Released Parties, regardless of who filed or initiated any such complaint, charge, or proceeding.

“Faithfully” considering performance obligations in employment contracts

Ken Adams, writing at his always insightful blog, Adams on Contract Drafting, comments on the use of terms such as “faithfully” to describe an employee’s performance obligations in an employment agreement. Ken concludes that terms such as faithfully, diligently, competently, industriously, etc., are too wishy-washy to be of any practical use. Instead, he suggests that you “be as specific as possible regarding an employee’s duties”—

For lack of anything more tangible, drafters throw in faithfully and the like. But I don’t think it does any good. In a contract you might well say that the employee is obligated to perform duties specified by the CEO (or, in the case of the CEO, by the board of directors), is obligated to work full-time, and can be fired for specific transgressions. Beyond that, you face the question of whether the employee will do a good job and be successful. Unless you come up with quantifiable targets, imposing on an employee an obligation to be successful wouldn’t work. So drafters make impotent gestures in that direction—that’s where faithfully comes in.

Even though I agree with Ken, terms like “faithfully” do serve a legal significance in employment agreements. They intend to impose a heighted (or fiduciary) duty of performance upon the contracting employee. Unless a contract provides otherwise, an employee might now not owe a fiduciary duty to his or her employer. In many circumstances, employers want to ensure that they impose this obligation on managers and other higher-level employees. Thus, they use terms like “faithfully” to legally bind the employee to a heightened performance obligation.

The, problem, however, is as Ken points out. Performance obligations such as “faithfully” are too vague and subjective to be of any practical use. Sure, a court might use that word to impose a fiduciary duty, but a court could just as easily strike it for vagueness. Instead of using these indefinite terms of art that do not provide the employer or the employee any practical on-the-job guidance, employers should tie the obligations to specific performance standards. Consider the following example:

Employee shall devote all of his/her working time, attention, knowledge, and skills to Employer’s business interests and shall do so in good faith, with his/her best efforts, and to the reasonable satisfaction of the Employer.

Employee agrees to refrain from any interest, of any kind whatsoever, in any business competitive to Employer’s business. The Employee further acknowledges s/he will not engage in any form of activity that produces a “conflict of interest” with those of the Employer unless agreed to in advance and in writing. 

The Employee understands that failure to reach benchmarks or performance terms provided by the Employer may result in reassignment, demotion, or termination. Employee further understands that reaching these benchmarks or performance terms constitutes a reasonable and substantial condition of employment, but does not in any way guarantee or promise continued employment.

As for “faithfully,” I recommend we stick to cheesy soft-rock ballads.