Archives for April 2014

Court Enforces Arbitration Clause in Employment Manual

Forcing arbitration of employment disputes is getting easier, at least under one federal judge’s reading of Massachusetts law. Ignoring an employer’s express statements that its employment manual was “not a contract of employment” and was “intended for informational purposes only,” the court found that an arbitration clause in the manual was contractually enforceable. It ordered arbitration of the former employee’s discrimination suit even though the arbitration clause was added to the manual well after he was hired.

The court relied in large part on a 1996 Massachusetts case that permits an employment manual to become an employment contract under some circumstances. Creating contract rights requires a review of the circumstances that existed when an employee began working. In most cases since 1996,  employees and not employers have sought to enforce the terms of employment manuals. It has proved extremely difficult for them to do so, since most employers include strong disclaiming language in their manuals and most judges look skeptically on manual-as-contract claims.

Amid this backdrop, the most interesting aspect of the U.S. District Court’s decision in Daniels v. Raymours Furniture Company, Inc. ,issued on March 31, 2014, is the conclusion that a contract existed for arbitration purposes despite the sort of express disclaimer language often held up by employers to defeat employees’ claims to contractual manual rights. The Daniels decision may thus represent another example of the general policy in favor of arbitration over other forms of dispute resolution. In 2009, e.g., the Massachusetts Supreme Judicial Court held that discrimination suits under Mass. Gen. L. ch. 151B can be forcibly arbitrated. In 2013, it concluded that an employee can waive his/her right to pursue class action litigation in an arbitration clause. Both decisions and the one by the U.S. District Court are helpful to employers, who often prefer the relative simplicity and finality of arbitration over trials at the Massachusetts Commission Against Discrimination (MCAD) or in courtrooms.

Knowledgeable and dependable

“Jack has assisted my company in several capacities, including general counsel, resolving employment issues and reviewing corporate policies. He is very responsive and has provided thoughtful recommendations to handle some challenging situations. As a small business, I appreciate being able to contact him for advice on a wide array of matters.”


Governor Patrick’s Proposed Ban on Noncompetition Agreements Maintains Business Protections

Governor Deval Patrick has entered the fray surrounding the enforcement of noncompetition agreements in Massachusetts. Apparently concerned about the effects the commonly used contracts have on growth and productivity in the Commonwealth, the Governor this month submitted a bill that would ban their enforcement. While that may sound drastic, the terms of the Governor’s plan seem more an attempt to strike a fair balance between competing interests than to effectuate free movement of employees among competitors in the same industry.

Mr. Patrick proposes that contract terms that restrain a former employee or independent contractor from working be considered void. In defining what this means, however, the Governor is careful to exclude from the proposed ban restrictions against soliciting or entering into contracts with employees or customers of a former employer. He also exempts from the ban nondisclosure agreements and noncompetition agreements connected with the sale of a business, as well as any non-compete “outside of an employment relationship.” In addition, Mr. Patrick seeks to allay the concerns businesses may have over illicit uses of their private business data by asking the Legislature to enact the Uniform Trade Secrets Act. It is already in effect in most states and provides remedies such as injunctions, damages, penalties and legal fee awards for the for the misappropriation of trade secrets.

The Governor’s proposal was submitted on April 14 and referred to a legislative committee. It is part of a bill that includes other proposals under the caption, “An Act to Promote Growth and Opportunity.” His noncompetition proposal may be workable for employers, many of whom already seek to protect their customers/trade secrets without unduly restricting former employees from working. Mr. Patrick’s plan joins other noncompetition bills already pending in the current legislative session, including one that would impose presumptions in favor of enforcing restrictions for less than 6 months and denying those that last longer. It is unclear what if any action may be taken on any of the proposals.

Positive experience

“Jack patiently explained my case in terms that I could understand, answered all of my questions (I had many questions throughout the process), was clear about what to expect and helped me feel more confident. In court Jack is a very talented, adept professional and it was obvious to me and I think everyone else that he excels at what he does. I had a positive experience and if I find myself in need of representation in the future, I would not consult with anyone else.”

Nancy, employment client


Massachusetts Poised to Raise Minimum Wages

As a minimum wage hike at the federal level remains mired in the pit of political mud through which Congress forces virtually all legislation to pass, Massachusetts appears almost certain to increase the state’s rate in the near future. It won’t be the first state to take action on the issue, and Massachusetts employers will be wise to track the current debate at the State House and prepare in advance to make necessary adjustments.

Both the state Senate and House of Representatives have now passed minimum wage hikes. The Senate was the first to act. Late last year, it approved an increase from the current $8 per hours to $11 over three years. Future increases  would come with inflation, and the Senate bill would also increase the minimum amount that must be paid to tipped employees from $2.63 to one-half the amount of the minimum wage. More recently, the House voted to increase the minimum wage to $10.50 over two years. Its bill increases the tipped employee hourly rate to $3.75. There’s no automatic future increase built into the House bill. [Read more…]