Employment Law Articles

Changes on Horizon for Noncompetition Agreements?

As he Prepares to Leave Office, Gov. Deval Patrick Hopes his Second Proposal to Restrict the Use of Restrictive Covenants will One Day become Law

By Jack K. Merrill, Esq.

If the governor gets his way, his legacy will include restrictions on noncompetition agreements that, he hopes, will give an economic boost to the Commonwealth by removing impediments to growth. The question is whether Deval Patrick’s current proposal will fare any better than the first one he filed, which died without a vote this summer.

Mr. Patrick’s current bill is, he says, adjusted by lessons he learned during a legislative go-round that followed a noncompetition bill he filed earlier this year. Then, the governor proposed a ban on the agreements. Now, he’s hoping to simply enact what he sees as a balanced approach that would allow restrictive covenants when certain conditions are met.

Buried within the proposal – which is unlikely to be enacted during Mr. Patrick’s final term as governor because the legislature is not formally in session – is the underlying question, “why?” The governor’s answer is that non-competes impede economic growth by restricting employee movement. But while it’s easy to see how banning them might affect this perceived problem, it’s less clear whether procedural limits on them will do so.

To be sure, the governor’s current plan will not eliminate non-competes in Massachusetts. Indeed, it appears unlikely that it will even curtail their use. While Mr. Patrick would ban restrictive covenants for some employees – anyone who is not exempt from overtime laws – those affected by the exemption will likely be lower-level workers who are not often the subject of enforcement actions anyway. For others, non-competes will be allowed, just as they are today, if employers comply with a few simple rules. [Read more...]

Minimum Wage Increases Are on the Way

The Legislature made Quick Work of Conflicting Bills to Increase the Massachusetts Minimum Wage, which will Rise Annually and Reach $11 per hour by 2017

By Jack K. Merrill, Esq.

For the first time since January 2008, the Massachusetts minimum wage is rising. This time, legislation signed in June by Gov. Deval Patrick will hike the rate more substantially than in the past, from the current $8 per hour to $11 as of January 1, 2017.

The new baseline appears to be part of a nationwide trend to increase minimum wages. More than 30 states have considered rate increases in 2014, and Massachusetts is among 10 to enact them so far. When the $11 threshold is reached, the state’s minimum wage may be the highest among all states, though Washington D.C., which also raised its rate in 2014, will be at $11.50/hour by mid- 2016.

A minimum wage rate increase movement has developed amid protests by low wage earners across the country. In Boston, fast food workers led 2013 demonstrations that sought a rate increase to $15 per hour. While politics continues to prevent the federal government from moving its rate from $7.25/hour, state governments do not face the same problem. In Massachusetts, the minimum rate must remain at least 50 cents higher than the federal rate under the recently passed bill.

The Massachusetts increase begins to take effect on January 1, 2015, when the minimum rate increases to $9/hour. The rate will go to $10 on January 1, 2016, then to $11 a year later. In addition, the minimum hourly rate for tipped employees will increase from the current $2.63 to $3.75 by 2017. That class of employees, who are common in restaurants and other service businesses, must receive enough tips to bring their wages to the applicable minimum rate. Any deficiency must be made up by their employers. [Read more...]

Massachusetts Employment Law Review, 2013

The Year’s Most Important Employment Decisions in Massachusetts Resulted in a Broad Expansion in Application of the Wage Act, Adoption of the Principle of Associational Discrimination, and a Nugget for Employers: Power to Enforce Class Action Waivers

By Jack K. Merrill, Esq.

2013 brought a slew of important employment law decisions in Massachusetts that largely favor the employee’s side of legal arguments. While employers continue to hold broad power to deal with workers, they will face  broader application of wage and other rules going forward.

The most significant decisions concern the Wage Act, which mandates the timely payment of earnings to employees. Cases under the Act and other wage laws, such as ones governing overtime pay and tips, are among the most common of all employment lawsuits. Plaintiffs and their lawyers commonly use the Act’s triple damages and legal fee provisions to wrestle big settlements from employers, even when they think they did nothing wrong. [Read more...]

Wage And Hour Audits

Employers are Effectively Powerless to Prevent State or Federal Authorities from Accessing Employee Work Schedules, Pay Histories and other Records, and Unprepared Companies are Vulnerable to Hefty Back Pay Orders and Penalties

By Jack K. Merrill, Esq.

It could be triggered in a variety of ways. A disgruntled employee complains. The government is concerned with industry practices. A stray remark reaches the wrong ears.  However a wage and hour audit starts, it forces employers to open their books and exposes them to potentially large back pay orders and fines.

Audits aimed at enforcing a plethora of wage and hour rules are common. They pose huge risks for unprepared employers, who may be hit with damage orders in the tens of thousands or higher. Defending against damage orders requested made by state and federal investigators is difficult and, in many cases, simply not practical. The best defense against an audit, then, is compliance with all wage laws.

Auditors cannot, after all, find fault with employers who properly pay their workers and maintain their records. Ensuring that wage laws are followed can thus immunize a business from audit risks. Doing so should be part of every company’s regular business practices.

To illustrate this point, a review of governmental authority and a look at the experiences of others are helpful. Here’s an overview of how audits work and where they may lead. [Read more...]

Discrimination At Job Interviews

To Avoid Discrimination Lawsuits, Employers Should Be Familiar
With the Types of Questions They Can and Cannot Ask Their Job Applicants

By Jack Merrill
Most employers know it is illegal to discriminate against workers based on age, gender, race, disability or other characteristics. What some don’t realize is that asking the wrong questions on job applications and in interviews can also lead to charges of illegal discrimination.

Trouble in this area is easy to find. Even innocent questions are sometimes off limits. Asking the wrong ones can lead to discrimination lawsuits, even when the hiring decisions at issue are based on legitimate qualifications.

“What is your maiden name?” “What languages do you speak?” “Do you have children?” “Can you send a photograph with your job application?”

These questions and many others elicit information that employers cannot seek from applicants. Though an interviewer may not be thinking about discriminating when asking them, the questions suggest otherwise. They can, then, lead to an MCAD or other suit in which an employer will be forced to justify its hiring decision against a claim that it was discriminatory. [Read more...]

Employers Must Abide Data Security Laws

The Massachusetts Data Security Law is in effect. Its Broad Protections of Private Data Reach Employers of Virtually all Sizes and Types.

By Jack Merrill     

Massachusetts’ cutting edge data security law is in effect at last, and its reach is nothing if not broad. Though aimed at protecting private information in the wake of major security leaks, the new law applies to everyone who stores personal data of any sort, no matter how small the stockpile of information may be.

After several delays, Chapter 93H of the general laws took effect on March 1, 2010. It requires that all personal information about Massachusetts residents be protected through written security protocols, encryption of data, and notice procedures. Given the potentially stiff penalties for violations, all employers should already have new policies and security systems in place. Those that don’t should correct that oversight promptly.

The law’s purpose is to protect personal data that is stored in either paper or electronic form. It applies whenever a person’s first and last name (or first initial and last name) along with either a social security, driver’s license, or financial account/credit card number are in a company’s possession. Since virtually every employer stores this type of information about its workers, at the least, all must comply with the law. [Read more...]

Protection Against The Competition

Small Businesses that Enjoy a Competitive Edge from Unique Products, Marketing Approaches, or Customer Relationships should Carefully Protect their Key Assets

By Jack Merrill
Starting a successful business isn’t easy. It may require financial risk, long hours at the office, and maybe a bit of luck. The last thing a small business owner needs is to be damaged by the disclosure of its trade secrets to the competition.

Protecting the information that helps make a business successful, then, should be a central part of every business plan. Employees, after all, become former employees, sometimes with an aim of starting a competing enterprise. Through this route, by accidental disclosures, or as the result of careless use of secrets, key inside information can be revealed. The damage such disclosure can cause to profitability can be substantial. At times, it may even threaten a company’s survival.

Preventing a crisis like that requires careful planning. By first identifying critical inside trade information, then taking steps to control its dissemination, small companies can minimize their exposure in this area. The process should include several steps.

Getting Organized

The starting point for key asset security is strong organization. Businesses must understand the types of information they need to safeguard and be certain they know precisely how and by whom the data is stored and used. Common items meriting protection are customer lists; purchase and sales histories; pricing material; product plans; and marketing strategies. Good organization means that only those who need trade data to perform their duties will have access to it. It should include rules for data use and mechanisms for tracking who touches it, when, and for what purposes. Whether, for when, and in whose hands key assets leave a business’s offices should be mapped out.
Confidentiality Agreements [Read more...]

Notable Developments in Employment Law

Notable Developments in Employment Law Include Rules on the Waiver of Wage Act Claims, Support for Individual Liability for LLC Managers, and a Reminder of the Substantial Damages that can Flow from Acts of Gender or other Discrimination.

By Jak Merrill
Massachusetts courts were again busy in the employment arena in 2012. They issued rules on the waiver of Wage Act claims by employees and reinforced the idea that LLC managers can be personally liable for failing to properly pay their workers. At the MCAD, there issued yet another reminder of the huge potential price to be paid for acts of sex or other discrimination.

The trend in the employment arena continues to favor workers. At the Commission Against Discrimination, whose mission is to seek out discriminatory conduct, as well as in the courts, warnings for employers continue to issue. It’s now more important than ever for companies to understand the myriad laws that may impact their relationships with employees. Even the 2011 bright spot – a superior court judge’s conclusion that LLC managers are not personally liable for Wage Act violations – was undermined. Today, that issue seems to be going employees’ way, too.

What follows is a summary of some important employment law decisions from 2012.

Waivers of Wage Claims
Ensuring that a departing employee waives claims for unpaid wages now requires specific release language. The state’s highest court ruled late in 2012 that, when it comes to the state’s Wage Act, a waiver won’t be enforceable unless “plainly worded and understandable to the average individual.” The decision calls into question past releases that were general in nature and did not “specifically refer to the rights and claims under the Wage Act that the employee is waiving.” The Act requires employers to pay all wages within specific time limits and covers commissions and unused vacation time. Violators can be punished by triple damages and legal fees. [Read more...]

2011 Employment Law – Greater Risk for Massachusetts Employers

State and Federal Courts had a Busy 2011 in the Employment Arena, Issuing Important Decisions that Broadened Damages Exposure for Employers

By Jack Merill
Massachusetts courts were busy in the employment arena in 2011. They issued important decisions on wages, independent contractors, and discrimination that make Massachusetts a riskier place for businesses that fail to comply with employment laws.

Indeed, it even seems that the one bright spot for employers won’t last long. A lower court ruled that decision-makers at limited liability companies are shielded from the individual liability that covers corporate managers under the Wage Act. That decision, however, places form over substance and is unlikely to withstand scrutiny by higher courts.

What follows is a summary of some important 2011 rulings in employment law.

Wage Act

Several important decisions under this busy statute were issued. As noted, one judge voided individual liability in suits against LLC managers. Other courts were less friendly to employers.

In one decision, the court found that taking deductions from an employee’s pay for retirement contributions but failing to make the deposits violates the Wage Act. In another, the court expanded the Act’s reach by concluding that an employer’s failure to pay an employee under a severance agreement violated the statute.

This latter decision is particularly surprising, since severance pay normally comes after work ends and, therefore, was not thought to be covered by the Wage Act’s severe penalties. Sanctions for violating the law include automatic triple damages and the mandatory payment of employee legal fees and costs. The already long reach of this tough law continues to expand. [Read more...]

Avoiding Noncompetition Enforcement in Massachusetts

Though the forms are Enforceable in Massachusetts, obtaining an Injunction is tough for Employers, who must clear several Hurdles

Most often, workers feel they have no choice but to sign a noncompetition agreement with their employers. They are frequently presented with the document, maybe as part of a broader contract, early in the working relationship, perhaps even the first day on the job. The boss says the non-compete is routine and must be signed, so the employee does so, often without thoroughly reading or fully understanding it. What, after all, is a new hire to do? Among the last things any employee wants is to test the limits of the boss’s patience on day one. That, after all, can lead quickly to the unemployment line, a place far too many Massachusetts workers are tired of waiting in.

[Read more...]