Articles Posted in Employment Agreement and Non-Compete Clause

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Non.Disclosure.Agreement.Lawyer.DPC.3.17.16.jpgIn a recent report, it was uncovered that the Donald Trump campaign has been requiring all volunteers to sign a contract forbidding them from criticizing Trump, his family members, Trump’s businesses or products, or his campaign for the entirety of their lives. While it is common to include non-disparagement and non-disclosure provisions into employment and severance agreements (and setting aside for the moment that these types of provisions don’t generally apply to volunteers), overbroad provisions, such as the ones that the Trump campaign are using, may be deemed unenforceable and have gotten some employers into difficult situations. Our Award Winning New York Employment Agreement Lawyer is often asked to review employment and severance contracts, and discusses some recent developments regarding non-disclosure agreements (“NDA”). (For other discussions related to NDA’s and employment contracts, see our previous blogs here.)
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Private.Employee.Personnel.File.Access.jpgYou are hoping to get a promotion. Or maybe you were just passed up for one. You’re thinking about getting a new job, or maybe you don’t remember if you signed a non-compete agreement sometime during your employment. Maybe you are not sure what disciplinary records are contained in your file. Whatever your reason, you may want to access your personnel file. You have some idea of what’s inside – employment documents, payroll information, contact information, performance appraisals – but what else is in there and what haven’t you seen before? Do you have any rights to see it and/or make copies? As our Award Winning New York Employment Attorney has noted before it all depends on where you work and your workplace.
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above-the-bar-logo-no12As a business owner, you work hard to first build and then protect your business. As part of the process, some business owners will ask their key employees to sign non-competition agreements and confidentiality agreements to minimize damage if a former employee joins a competitor or starts a competing start up. But this is not always bullet proof. Depending on the facts, a non-competition agreement may not enforceable. Each case is fact specific – some agreements are written too broadly in scope, seek to protect items that are within the legal boundaries and others are simply cut and pasted from online without regard to the specific issues at hand. In addition, while New York courts will enforce non-compete agreements in certain circumstances, California will not except in limited circumstances. Contact our Award Winning Employment Lawyers to learn about your options whether you are an employee (current or former) or an employer – disputes between former employees and their former employers can be complicated and fraught with legal exposure. If a non-competition agreement is not at play for whatever reason, some businesses try to bring in other claims including a fiduciary duty or theft intellectual property. This blog post will briefly discuss a new battle in such a situation between two large players in the technology space in California.

Cisco, a well established Fortune 100 Company that sells networking equipment, recently sued a new start up called Arista. In short, the complaint alleges that “Arista was founded by former Cisco employees, many of whom are named inventors on Cisco’s networking patents. Among others, Arista’s: 1) founders, 2) President and CEO, 3) Chief Development Officer, 4) Chief Technology Officer, 5) Senior Vice President for Customer Engineering, 6) Vice President of Business Alliances, 7) former Vice President for Global Operations and Marketing, 8) Vice President of Systems Engineering and Technology Marketing, 9) Vice President of Hardware Engineering, 10) Vice President of Software Engineering, and 11) Vice President of Manufacturing and Platform Engineering all were employed by Cisco prior to joining Arista. Moreover, four out of the seven members of Arista’s Board of Directors were previously employed by Cisco.” The Complaint further alleges that the crux of its case is “Arista’s deliberate inclusion in its products of 12 discrete and important Cisco features covered by 14 different U.S. patents. All of these features are being used by Cisco currently and in products we ship to our customers. None of the implementations are incorporated in industry standards. They were patented by individuals who worked for Cisco and are now at Arista, or who at Cisco worked with executives who are now at Arista. These Cisco-created features and implementations are incorporated by Arista in their entirety into Arista’s products.” Further, Cisco alleges that Arista copied its user manual includes the typos.

Arista has denied any wrongdoing and responded by stating that the lawsuit is merely an “attempt by a legacy vendor that is falling behind in the marketplace to use the legal system to try and slow a competitor who is innovating and winning.” Clearly, both sides have different viewpoints on the lawsuit. Cisco may be relaying on the fact that many of these types of lawsuits settle but it will be a battle on both sides and affect both businesses until any resolution in reached in court or otherwise. That is a key factor in these types of cases. Both business operations will have to dedicate resources to focus on this lawsuit instead of just competing in the marketplace. It is important for business owners and former employees to get counsel from experienced attorneys if faced with a similar situation. Call our office at (800) 893-9645 our office for a confidential consultation to learn your rights.

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above-the-bar-logo-no12Did you sign a non-competition agreement when you were hired and now want to go to a new employer? Is your employer threatening to use the agreement against you after you left your job? Can the agreement even be enforced? Our award winning New York Employment Lawyers have over 25 years of combined experience and have helped transition many employees with lateral moves. Call now at (800) 893-9645 to confidentially learn your rights and options. Previously, such agreements were only used by large companies and were only enforced against their more senior executives. However, this is no longer the case today and many companies have many of their employees sign these agreements as a condition of their employment or severance from the company. If your transition is not handled correctly, you could lose your new job offer and/or get sued by your former employer. These cases are highly specific and require individual analysis by an experienced lawyer.

The Law: General Background

Initially, generally it should be noted that there is no applicable stature or regulation governing non-compete agreements in New York. Generally speaking, New York disfavors non-compete agreements and sees them as an unreasonable restraint on trade [(See, Reed, Roberts, Assoc., Inc., v. Strauman, 40 NY2d 303 (1976)]. Some courts (but not all) in New York state that non-competition agreements are not enforceable if you were fired without cause [See Arakelian v. Omnicare Inc., (735 F. Supp. 2d 22 (2010)). Of course, there are exceptions, since each case is fact specific and you should seek experienced employment law counsel for your specific situation. The idea behind the enforceability of these agreements, also known as restrictive covenants. is based on the assumption that an employer would be willing to hire the dismissed employee (because he/she was let go without cause) and is sometimes referred to as “mutuality of agreement”. Moreover, some professions have their own rules regarding non-compete laws. For instance, the legal profession is governed by Rule 5.6 of the New York Rules of Professional Conduct. Rules 2140 and 11870 of the Financial Industry Regulatory Authority Rule governs the financial industry.

Enforceability

A. Who Bears the Burden of Enforceability?

The party seeking to enforce the agreement (usually the employer) has the burden of proof.

B. Can My Non-Compete Agreement Be Enforced Against Me?

While non-compete agreements are generally disfavored in New York, they will be enforced where the restriction is deemed “reasonable”, which is determined on a case-by-case basis. Enforceability is determined by looking at some of the following factors:

1. Does not impose undue hardship on the employee;
2. Causes no injury to the public;
3. Is no broader than necessary to protect the employer’s legitimate business interest;
4. Is reasonable in its duration and geographic scope.

So what actually qualifies as a “legitimate business interest”?

1. Trade secrets or confidential information;
2. The employer’s goodwill; and 3. Preventing a competitor from hiring an employee with “special” “unique” or extraordinary” skills.

Can The Non-Compete Be Enforced If I Quit?

Regardless of whether you quit or were fired the general rules discussed above still apply. However, if you were fired “for cause”, the agreement may be enforceable but in some situations, the employer for practical reasons may not seek to enforce it. But, if your employer breaches the employment contract, it is possible to argue that the non-compete clause will not be enforced against the breaching employer, [see, Cornell v. T.V. Dev. Corp., 17 NY2d 69, 75 (1966].

Also, New York law permits courts interpreting non-compete agreements to modify the agreement if it is found to be overbroad. However, they are not required to do so. If you are not sure if your agreement has such a provision, call one of our attorneys.

What Effect Do Choice Of Law Provisions Have On The Non-Compete Agreement?

New York courts will enforce Choice of Law provisions if the forum selected has a substantial relationship to: 1) the parties, or, 2) the jurisdiction. and, 3) where application of the selected forum’s law is not at odds with fundamental policy considerations of a state that may have a potentially greater interest. But, employees should always remember that they have a duty of loyalty to their employer while they are working for them, which means they can not compete with their employer while employed by them. Violation of this duty may result in termination, fines and/or other penalties. You should contact one of our attorneys should this issue ever arise. Related to the duty of loyalty are non-solicitation, non-disclosure, and, confidentiality agreements, which may be enforced even if the non-compete clause is not enforceable. Our attorneys can explain the differences and how they may affect your agreement.

Can My Non-Competition Agreement Be Voided?

Abuse of these agreements has become more prevalent and has resulted in litigation surrounding their enforceability. You should call one of our experienced employment law attorneys if you find yourself subject to one of these agreements.

4 common ways to argue that the non-compete agreement should not be enforced.

1. Argue the Agreement is Too Broad:

Non-competition agreements must be reasonable in terms of their
time, activities, and geographic scope. For example, if an employee works for a New York company, a non-competition agreement that is international or even national in scope may be stuck down as too broad:

2. Argue That Your Employer Breached The Agreement:

A valid non-compete agreement may not be unenforceable against the employee by the employer if the employer violated another provision of the agreement. A typical example would be where the employer failed to pay the employee his/her severance or bonus as required by the agreement.

3. Show That Your New Position Does Not Compete With Your Old Position:

You may be able to avoid your non-compete agreement if you can
prove that your new position is sufficiently different in its nature so that you are not competing with your old company.

4. There is No Legitimate Business Interest to Protect:

You may also be able to argue there is no legitimate business interest to protect, obviating the need for the agreement. Presumably an employer is trying to protect confidential information such as trade secrets, client lists or other private, proprietary information. On the other hand, if you were not privy to sensitive information at your old job, you may be able to successfully argue the agreement is unenforceable as an unreasonable restraint on your ability to work.

Conclusion

If you, or anyone you know, has been terminated from your job and you signed a non-competition agreement, you should seek legal counsel immediately, since not doing so could cost you significant amounts of money, and/or result in an undue hardship on you seeking new employment. Call one of our award-winning NY Employment Law attorneys at (800) 893-9645 who can advise you on how to best protect your business and assets.
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above-the-bar-logo.jpgThe New York State Attorney General’s Office recently settled a qui tam whistleblower case with Cayuga Medical Center (“Cayuga”) for $3,576,056. The allegations charged Cayuga with violating the federal Stark Act and the state’s False Claims Act by entering into illegal physician recruitment agreements with various medical practices.

In 2007, Dr. Daniel Jorgenson, a plastic surgeon with admitting privileges at Cayuga, filed this whistleblower lawsuit. Jorgenson alleged that Cayuga recruited physicians into the local area under a recruitment agreement and paid for expenses, which violated federal law. Cayuga then submitted claims for payment under Medicaid and Medicare, which were not in compliance with federal law.

Cayuga used to offer loans to new physicians to help them start their private practice and to recruit them into the Ithaca area. However, a regulatory change in 2004 made it so that these loans to the physicians joining an existing practice could no longer include any portion of that practice’s overhead, unless new staff or space was added. All contracts entered into before 2004 had to be changed, as the regulation did not “grandfather” prior recruitment contracts. In 2007, Cayuga discovered that 4 recruitment contracts signed prior to 2004 had not been corrected due to oversight and reported this to the Office of the Inspector General. During the investigation, Dr. Jorgenson filed his whistleblower lawsuit alleging that 2 additional contracts were in violation of the Stark Act. Although Cayuga disagreed that these 2 contracts were in violation, it settled the matter to avoid the high cost of lengthy litigation.

Of the settlement amount, New York State will receive over $426,000 and $3.1 million will go the federal health care programs. As the whistleblower for reporting the fraud and for cooperating with the investigation, Dr. Jorgenson will receive 18% of the settlement which is $567,000.

The Stark Act makes it illegal for a doctor to refer patients to a hospital or other provider of health care with which it has a financial relationship. It also prohibits hospitals from billing Medicaid for a referral if that referral was in violation of the law. The Stark Act is one of the most important laws affecting the compensation relationship between hospitals and its employed physicians. What makes it difficult to accept is that it is a strict liability statute so that your intent does not matter. In other words, even if you didn’t intend or mean to violate the law, you will still be held liable. There was no finding of fraud or abuse by Cayuga but just plain old administrative oversight which has now cost it millions.

If you are a physician or a health care provider, make sure you are in compliance with all state and federal laws regarding physician compensation. The Stark Act is easily implicated if you are using referrals with some type of financial compensation unless you fall under an exception. If you’re in doubt, call our Physician Employment Agreement Attorneys at Villanueva & Sanchala at (800) 893-9645 to help review your system and policy of referrals to ensure that you are not violating any state or federal laws.
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above-the-bar-logo.jpgAfter careful consideration, negotiation, and expense, your practice hired a new physician who you thought was going to work out perfect. Your practice spent considerable time and resources getting him admitting privileges to your hospitals, introduced him or her to your network of physicians, and your practice may even have sent all its new patients to him or her. It turns out that after evaluating your new recruits performance, your practice realized that he or she is not the right fit. For whatever reason, his or her one year employment agreement ends this summer and you need to discuss termination.

Terminating a physician’s employment contract can get as ugly as a divorce. As much time and effort as you may have spent, remember that your departing physician may also have made significant changes in his or her life when joining your practice. The departing physician may not be too happy having to search for new employment again. He or she may have started establishing roots in the community, purchased a home, and joined various organizations.

The employment contract is the best place to start. Refer back to the employment agreement and discuss what responsibilities each party must carry out to fulfill their contractual obligations. Most importantly, stay professional and keep it honest. Keep in mind that your patients’ medical care has to come first. Also keep in mind your practice’s reputation. A departing physician with an axe to grind can cause a lot of damage. Our attorneys can help you interpret the employment contract and make sure that its terms are complied with in a professional manner.

The non-solicitation provision in a physician employment agreement is one of the most important clauses which will impact the terminating physician’s future practice. The non-solicitation provision is put in by the basically to stop the leaving physician from taking any patients with him or her to the new practice. It’s purpose is to stop the physician form persuading, coercing, or influencing a patient to leave the current practice to obtain similar services from a competing practice.

A non-solicitation clause will not be enforced if it stops a doctor from soliciting any patient in any manner that he or she has seen in the practice. For example, it is solicitation where a physician knows that he is going to be leaving his current practice in 4 months and begins persuading every patient he sees in those last 4 months that he is leaving this practice because it doesn’t have state of the art equipment but his new practice located at Z Town in 4 months will have everything there as well as much better treatment there. However, it is not solicitation if a departing physician places an advertisement in the local paper advertising his new practice or sends out a mailing to a certain town.

Our attorneys have helped many practices minimize conflict and ensure a smooth and professional transition when they have decided to terminate their physician employment contract within a year. If things have not worked out the way you anticipated with your recent physician hire, call our Physician Employment Agreement Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you discuss your options.
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top.lawyers.arrive.mag.2011.jpgRepublican front runner Herman Cain is on the hot seat this week for allegations that he engaged in sexual harassment with one to possibly three female employees who worked for him while he was head of the National Restaurant Association. Cain has stated that in his “40 years of business experience,” he has “never sexually harassed anyone.” Cain has also responded that he has been falsely accused. One of the women signed a non-disclosure agreement (“NDA”)where she agreed to keep all the facts and details regarding the settlement confidential.

Confidentiality Agreements or NDAs are often used during settlements as well as mediation to resolve disputes between employees and employers. Both parties basically agree not to speak or disclose to any person any of the terms used in making the agreement or the facts or circumstances related to any asserted or potential claims against the employer. In exchange for the employee not bringing a lawsuit against the employer and not speaking about the charges, the employer usually agrees to a monetary payment. For example, if an employee had alleged that he was discriminated against because of his race, he would be agreeing to never file a lawsuit based on those allegations. Our attorneys have reviewed and drafted many such agreements to ensure that our clients’ rights are protected and that they received the highest possible settlement.

Most agreements will also prohibit both the employee and the employer from speaking about the charges and in the event that either party breaches the confidentiality clause, a well drafted agreement will contain a liquidated damages clause imposing penalties for violating the agreement. In other words, if the employee tells a friend, a co-worker, or the media about the circumstances pertaining to the confidentiality agreement, the employee would in breach of the contract and have to pay the amount called for in the contract.

The agreement will also contain a non-disparagement or non-interference clause which provides that both parties will not make any written or oral statements or remarks which are disparaging or damaging to the integrity, reputation or good will of the other. For example, if an employee had alleged that her supervisor had sexually harassed her, this clause would prohibit the employee from making any negative comments about the supervisor. The employee cannot sign this document and than tell her friends that her supervisor is a pervert who wouldn’t promote her because she didn’t sleep with him. Once you sign this, you cannot bad mouth or make any negative comments about your employer.

Cain first denied knowledge of the settlement, then admitted that there was an agreement which included payment, and also talked about one of the woman’s work performance as being “not up to par.” He has commented that these women made up the charges and that they were baseless. By speaking about the sexual harassment and the settlement payment, Cain may have violated the terms of the non-disclosure agreement. On the other hand, one of the women who claimed that Cain had sexually harassed her has not said anything. In fact, her attorney has stated that the NDA she signed is stopping her from speaking and has asked the Restaurant Association to waive the agreement so that she can tell her side of the story.

It is crucial to have an attorney represent you if you have suffered from any type of employment discrimination or sexual harassment and your employer is trying to settle the charges with you. Before you sign a settlement or a confidentiality agreement, you need to know what rights you are giving up. For example, it might be important for you tell a prospective employer why you left your old job, which an NDA might prevent you from doing. Before you limit your rights, call our attorneys at Villanueva & Sanchala at (800) 893-9645 to help you protect your rights.
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above-the-bar-logo-no12.jpgHooters of America restaurant chain (“Hooters”) filed a federal lawsuit in Atlanta, Georgia suing competitor Twin Peaks Restaurant alleging that it stole trade secrets and other confidential business information after several of its executives left the company to work at Twin Peaks Restaurants.

Hooters has alleged that its former vice president of operations and purchasing, Joseph Hummel, left Hooters to become partner and CEO at Twin Peaks, a chain of restaurants owned by La Cima. Hooters’ has alleged that Hummel stole “sensitive business” information that it had used to grow the business. The lawsuit also alleges that prior to the weeks before his departure from Hooters, Hummel downloaded and e-mailed a “substantial volume” of Hooters documents, which included plans related to management, marketing, recruitment, distribution and sales to his private account. The complaint alleges violations under the federal Computer and Abuse Act and the federal Electronic Communications Privacy Act which make it illegal to steal confidential data electronically. Our attorneys have counseled many companies on how to protect their trade secrets confidential information from departing executives and employees. Call our attorneys if you suspect a departing employee of stealing valuable company information.

Hooters is an Atlanta based company well known for its casual dining and “Hooters Girls” who dress in a white Hooters tank top and orange shorts. Hooters was started in Florida in 1983 and has 455 locations around the world with 67 in the southeast.

Hummel left Hooters for La Cima Restaurants, which owns the Twin Peaks restaurants, which are a mountain lodge themed chain with an all female waitress staff. Twin Peaks has 15 locations in five states where the waitresses serve chicken wings dressed in tan shorts and tiny flannel bikini tops. Twin Peaks’ motto is “Eats, Drinks, Scenic Views.” Twin Peaks recently announced that it plans to open about 35 franchises throughout the Southeast over the next 10 years. Over the next 7 years, it plans on opening 7 franchises in the Atlanta area, competing directly with Hooters.

Departing executives or employees with access to valuable company information can be disastrous for companies who rely on their trade secrets for their success. Make sure you have your executives and all employees with access to classified information sign a confidentiality agreement as well as a non-competition agreement. It is imperative that before any employees with sensitive information leave your company, they return all confidential documents. Given the ease of transferring information electronically, consider implementing electronic security measures. Once information is stolen and known by your competition, it can’t be given back. Limit the number employees you give access to confidential information and make sure your employees don’t leave your business premises with classified information or files.

Our attorneys have prepared employment agreements with non-competition and non-solicitation agreements for many executives and employees from varying trades and professions.

If you are hiring or if any of your top executives or employees with sensitive, classified information is leaving to join a competitor, call our Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you prepare confidentiality and non-competition agreements to protect your business.
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Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for top.lawyers.arrive.mag.2011.jpgPurchasing a medical practice is probably one of the most important decisions that you will make in your life. The type of practice, location, and size are just a few factors that will influence the growth and success of your practice. Unlike many other professions, you can’t just change jobs after purchasing a medical practice. The medical practice you purchase will establish roots for you in that location, in the community and the hospitals that you send your patients to. Our firm has helped many doctors evaluate their options to negotiate the best possible medical practice to benefit their life and career.

Before you purchase or even begin to negotiate purchasing a medical practice, consider the following factors in your decision making process:

1) Type of Purchase. The purchase of a medical practice could take the form of stock purchase or an asset purchase. In a stock purchase, the purchaser is acquiring assets such as equipment, fixtures, accounts receivables as well as liabilities. It is important to note that liabilities include all accounts payables and any malpractice suits that may be ongoing against the practice. In most cases, a stock purchase occurs when a current employee of the practice, usually on a partnership track, becomes a full or part owner of the practice. He or she then also becomes liable for the practice’s liabilities. For example, if you purchase into a practice where one of the partners has a high number of malpractice actions named against him or her and the practice, you may also be sharing any liability not covered by insurance. Additionally, if that partner has a higher than normal rate of malpractice insurance because he or she has been sued more often, your income will be affected if medical malpractice insurance is a shared expense. In such a case, you may want to negotiate that each physician pay for his or her own medical malpractice insurance separately.

In an asset purchase, the buyer steps in and takes over the practice. The purchaser normally acquires the remaining inventory and office supplies. The purchaser does not take on the liabilities or the accounts receivables. You should make sure to get the seller’s patient list with telephone numbers and addresses. Since you are paying for the entire practice, make sure the telephone number, fax, and e-mail address stay the same. You should also have access to the website if there is one.

2) Purchase Price. The purchase price is the most difficult factor to determine. You must negotiate this price. In order to determine the purchase price, take the value of the assets that you’re acquiring such as furniture, computers, equipment, supplies and add it to the goodwill. Goodwill is a difficult number to measure as it is based on how well the practice is doing, its location, reputation, and how long it has been in business. Also obtain the financial statements from the past five years to see how the practice is doing and whether it is growing.

3) Non-Compete Agreement. A non-compete agreement is crucial to ensure that the seller does not take back the practice that he or she just sold you. A well drafted non-compete clause should ensure that the seller does not open up a practice across the street from you or anywhere in your targeted geographic location. This is extremely important because if the seller opens up a practice nearby, you will most likely lose your patients.

Purchasing a medical practice is an extremely complicated business decision that will affect you, your career, and your family. If you are considering purchasing a private practice, call our Physician Employment attorneys at Villanueva & Sanchala at (800) 893-9645 to help you evaluate, negotiate and guide you in your purchase.
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above-the-bar-logo-no12.jpgFAQ: I am a physician practicing in a cardiology group. The local hospital recently approached our group to discuss buying our practice. What factors should we consider before deciding if we should join the hospital?

Our office is seeing a rising trend in physician employment agreements with hospitals. Given the various economic and regulatory factors, more and more hospitals are buying out physician practices and employing the physicians. This trend is important to note because it is effecting physician compensation in all areas. In the past, it was a given that you would be compensated more if you joined a private practice specialty group than a hospital or a health system. However, hospitals are now matching or exceeding private practice compensation. Our laws firm has helped many doctors review and negotiate their employment contracts with hospitals as well as private practices. Our attorneys can help you obtain the best possible agreement to fit your career goals.

A few examples of this rising trend were evidenced in a survey conducted by the Medical Group Management Association (MGMA) last year which showed the following: