Supreme Judicial Court Suggests the State’s New Non-Compete Statute can Apply to Agreements Created Before the Law Takes Effect

A decision issued today by the Massachusetts Supreme Judicial Court is likely to strengthen employees’ hands in noncompetition enforcement disputes even more than is already presaged by the law set to take effect October 1. In a case that suggests how courts will handle conflicts between old and new law in noncompetition cases, the SJC affirmed dismissal of a suit brought by an employer who sought to drag its California employee to a Massachusetts courtroom. The decision is significant both because it struck down the parties’ contractual election of Massachusetts law and relied on public policies stated in an inapplicable statute in doing so.

The issue presented in Oxford Global Resources, LLC v. Hernandez is one commonly encountered in noncompetition litigation: where and under what law are disputes to be litigated? It’s now common for employees to work in states other than the ones where their employers are based, and non-compete agreements normally provide for enforcement only in the employer’s home state. This often means severe hardship for workers, who are prejudiced by the distance they are forced to travel, an inability to obtain relevant witness testimony, and extreme expense. While Massachusetts law will eliminate those issues by requiring all noncompetition agreements entered on or after October 1, 2018 to be enforced in the employee’s home county, the law will not apply to the numerous non-competes that already exist.

Hernandez is helpful to employees with such existing agreements on three distinct levels. First, the SJC concluded that the employer’s choice of Massachusetts law was invalid for public policy reasons; California, it held, has a distinct policy against restrictive covenants that should govern the activities of employees who work within its boundaries. Second, the SJC held that, despite the parties’ agreement that disputes be resolved in Massachusetts, the employee could move to dismiss the suit based on an inconvenient forum. And third, the Court looked to a public policy expressed in a California law that was enacted after the noncompetition agreement at issue.

It is this third point that may prove most significant in future noncompetition litigation in Massachusetts. The new law set to take effect next month includes several statements on public policy. Though the law won’t apply to non-compete agreements entered before October 1, 2018, Hernandez suggests that the policies it states are applicable to disputes that arise under preexisting law. Included among them are those addressed in Hernandez and others, including the new statute’s requirements for advance notice of noncompetition agreements, employer inability to enforce them when workers are fired without cause, and rules requiring that employees be paid in exchange for requirements that restrict their future employment.

Taking Action to Eliminate Sexual Behaviors at Work is Crucial for Avoiding Sexual Harassment Lawsuits

For those who have yet to grasp the significance of the #MeToo movement, which is encouraging women to complain about sexual mistreatment at work, here’s a bit more help. In late 2017, a poll by ABC News and the Washington Post found that 54% of women believe they received “unwanted and inappropriate” sexual advances at work, and 95% of them think such behavior normally is not punished by employers. About 80% of these women called the conduct sexual harassment. That means, according to the poll, about 33 million women think they were sexually harassed at work.

That, of course, is a lot of potential litigation, and there’s little doubt it’s being unleashed on employers who fail to take steps to address it. Fortunately, doing so effectively isn’t particularly complex, though it does require a firm commitment. Employers should begin by implementing or re-issuing, as the case may be, strong anti-sexual harassment policies, then follow them up with a concrete and sustained message that no sex talk or behavior will be tolerated at work or at work events. Here are a pointers for employers in this areas. Their goal should be to encourage employees to complain about perceived sexual issues so that employer’s action can follow and risks are thus minimized.

  1. Decide that an anti-harassment program is worthwhile and commit to it at the highest managerial levels. If top leaders don’t buy in and mean it, what follows will likely be a waste of time.
  2. Evaluate workplace interactions to see how employees talk with each other and behave on the job. A good baseline understanding here is important so that potential threats are exposed and employees can be asked to make specifically required changes.
  3. Be sure appropriate anti-harassment postings exist. Update or re-post them as needed.
  4. Train key personnel and consider training others. At the very least, be sure all employees get an in-person overview of the company’s anti-harassment policy and have the chance to ask questions. Key managers should be present when this is done to deliver the message that the company means what it says.
  5. Designate and train a key human resources person to answer questions and address complaints. Strange though it may seem, complaints about sexual behaviors are an employer’s friend, not its enemy. When workers believe the company will take them seriously and act, sexual harassment is normally dealt with internally. When they don’t, victims tend to remain silent and consider filing suit at the Massachusetts Commission Against Discrimination.

New Pregnancy Law Takes Effect April 1; Employers should have Written Policies in Place by Now

Effective on April 1, 2018, Massachusetts will institute its new pregnancy statute. The law brings broad new protections for pregnant employees, some of which benefit women after a child is born, and imposes important obligations on employers. Among them is a written pregnancy policy, which all employers should have already put into place.

The Pregnant Workers Fairness Act was signed last summer by Gov. Charlie Baker. It generally requires employers to treat pregnant employees in the same manner as disabled workers. This includes obligations to implement reasonable workplace accommodations and engage pregnant women for purposes of identifying modifications that will allow them to remain on the job. The specific commands of the new pregnancy law instruct employers to do the following.

  • Provide private, non-bathroom space for lactating mothers.
  • Allow extra leave time as needed beyond the 8 or 12 weeks required by current law for mothers to recover from the effects of childbirth.
  • Restore women to their prior or an equivalent job, with no loss of benefits, when the need for an accommodation ends.
  • Do not penalize women by denying them opportunities based on accommodations for pregnancy or lactation.
  • Do not force pregnant or lactating women to accept accommodations they do not want, unless it’s necessary to allow a woman to perform the essential functions of her job.
  • Do not require women to take a leave of absence for pregnancy or lactation unless it’s required to avoid undue hardship on the employer.
  • Do not refuse to hire an otherwise qualified woman due to her pregnancy or related needs.

Written employer policies should cover these issues as they generally inform employees about their rights under the Pregnant Workers Fairness Act. It makes sense for employers to review hiring and other practices to ensure that the rights of pregnant employees are not inadvertently infringed. Training is likely wise for certain employers, particularly larger ones. Penalties for violating the new pregnancy law can be steep and include lost wages, emotional damages and legal fees incurred by affected employees.

Hiking of Minimum Wage to $15/Hour Makes its Way toward the Ballot Box for November 2018

Dissatisfied with the recent increase of the Massachusetts minimum wage to $11/hour and its failed efforts to get the state legislature to move the hourly rate to $15, a coalition of community, religious and labor groups has submitted the issue for referendum vote. Assuming the question moves through the process to the November 2018 ballot, Massachusetts voters will decide whether to increase the hourly rate to $15, a move that surely won’t go over well with some business people.

Proponents of the hourly wage increase are unmoved. They believe $15/hour is necessary to allow low paid workers to afford basic necessities such as groceries, housing and heating. As it is, they say, full-time workers earning the current minimum of $11/hour make only about $22,000 per year. About a million Massachusetts workers will benefit if the rate increase is approved, they contend, and most are above the age of 20. They include nursing assistants, childcare providers, and teachers’ aides, the group says. Anticipating objections to the wage hike, the coalition points out that, despite the increase in the minimum wage from $8 to $11 in recent years, the Massachusetts economy continues to grow strongly.

If approved at the ballot box, the minimum wage will increase by $1/hour each year for four years, beginning in 2019. The measure will also increase the minimum tip wage from $3.75 to $9/hour during the same 4-year period. Under Massachusetts law, tipped employees may be paid less than minimum if their hourly rate plus the tips they receive are equal to or exceed the minimum hourly wage. On December 21, 2017, the Massachusetts secretary of state confirmed that enough signatures were submitted to support the ballot measure. The proposed wage increase now moves to the state legislature, which will have the option to approve it prior to any voting by the public. If that does not occur by May 2, 2018 or if the governor fails to sign a passed measure into law, proponents of the minimum wage increase will need to obtain another roughly 11,000 signatures from Massachusetts voters by July 4 to place the question on the 2018 ballot.

2018 Ballot Question Proposes up to 26 Weeks of Paid Family and Medical Leave to Massachusetts Employees

If a coalition group called Raise Up Massachusetts gets its way, the Commonwealth will soon have a comprehensive new law that provides paid leave to employees for a variety of personal reasons. At the recent deadline for 2018 ballot questions, Raise Up submitted a voter-supported initiative it calls a Family and Medical Leave law. If approved at the polls next November, the new law will provide up to 26 weeks of paid leave annually to Massachusetts employees.

The ballot question divides paid leave into two general categories – “family” and “medical.” Under the former, employees will be entitled to up to 16 weeks of paid family leave each year to care for ill family members, bond with their children, or address military-related emergencies. They’ll be allowed up to 26 weeks to care for a covered service member, as that term is defined by the proposed law. For an employee’s own health condition, he/she will be allowed up to 26 weeks under the medical leave portion of the proposed new law. An employee who uses either family or medical leave will generally need to be restored to the same or a similar job without losing pay or other benefits. Pay will be capped at $1,000 per week.

Wage payments will not come directly from employers under the proposed Family and Medical Leave Law. Instead, a new agency called the Department of Family and Medical Leave will be created to collect employer contributions equal to .63% of employee and independent contractor payrolls. Half of the amount paid by employers can be recouped from workers. The Department of Family and Medical Leave will create regulations to implement and administer the new law. It will make eligibility decisions, pay benefits, and adjust contribution rates periodically as needed.

If voted into law next November, the Family and Medical Leave Law will take effect 18 months later. Contributions to the trust fund, however, will begin on July 1, 2019, roughly a year before the law takes hold. As with other employment laws, the proposed statute bars retaliation against employees who take advantage of its benefits. Any negative change to the terms and conditions of employment within six months of using paid leave will be presumptively retaliatory. Punishment can include up to three times the amount of any lost wages, damages as may be incurred, and reimbursement of legal fees.

Massachusetts Law Continues to Protect against Gender Identity Discrimination Despite Federal Pronouncment

When Attorney General Jeff Sessions recently announced that his Justice Department rejects the idea that transgender people are protected under Title VII, the federal workplace discrimination statute, it received quick condemnation from a variety of sources. Significant as the proclamation may be at the federal level, however, Massachusetts residents need not be concerned, or pleased, as the case may be. Under Mass. Gen. L. ch. 151B, transgender and gay people remain well protected against employment discrimination based on their gender identities. They can continue to file complaints based on it at both the MCAD and in state courts.

The federal action comes at a time when Mr. Sessions’ justice department has been hostile to Title VII protections of the broader LGBT community. His Justice Department has argued that civil rights laws do not protect against sexual orientation discrimination. Under Title VII, which was passed by Congress in 1964 as part of the Civil Right Act, discrimination based on “sex, ” among other things, is illegal. The Obama administration and others, including the Equal Employment Opportunity Commission (EEOC), have interpreted “sex” as covering individuals based on gender identity and sexual orientation.

Under the Massachusetts anti-discrimination statute, it’s unlawful for an employer, “because of the race, color, religious creed, national origin, sex, gender identity, sexual orientation, which shall not include persons whose sexual orientation involves minor children as the sex object, genetic information, ancestry or status as a veteran of any individual to refuse to hire or employ or to bar or to discharge from employment such individual or to discriminate against such individual in compensation or in terms, conditions or privileges of employment, unless based upon a bona fide occupational qualification.”

Pregnant Workers will Enjoy Broad New Job Protections under Recently Signed Massachusetts Law

Massachusetts recently took another step to protect members of its workforce. Late in July, Gov. Charlie Baker signed the Pregnant Workers Fairness Act, which provides broad new rules for pregnant women. The law will take effect on April 1, 2018. Under it, employers must grant reasonable accommodations for pregnancies or any condition related to then, including “lactation, or the need to express breast milk” for children after they are born. Employers will be prohibited from the following:

  1. Taking adverse action against an employee who uses or requests a pregnancy accommodation;
  2. Refusing to reinstate an employee to her job after a reasonable accommodation period ends;
  3. Denying a pregnant employee workplace opportunities because of her pregnancy-related accommodation needs;
  4. Requiring an employee to accept pregnancy accommodations that are “unnecessary to enable the employee to perform the essential functions” of her job; or
  5. Knowingly refusing to hire a pregnant woman due to her pregnancy or a related condition, including her lactation needs.

Just as in other handicap accommodation situations, the Pregnant Workers Fairness Act exempts employers from compliance when doing so will cause an undue hardship. It also requires employers to engage in an interactive process to determine whether and what sorts of accommodations may work for pregnant employees who require them. Among the accommodations the Act suggests are required in all but unusual circumstances are more frequent restroom, food and water breaks; seating adjustments; and limits on lifting 20 pounds or more.

Though the Pregnant Workers Fairness Act does not take effect until April 1, 2018, employers must notify their employees about it by January 1, 2018. A new policy should be created and placed in employee handbooks and distributed to existing employees and all new hires.

Employees may be Free to Speak their Minds, but Employers are Free to React

Free speech is not always free. That seemingly obvious point was apparently lost on Google employee James Damore, a man making headlines recently after he was fired for writing a memo that opined women are unsuited to work as engineers. Google’s efforts to promote them, he wrote, were unfair and divisive.

So, too, was Mr. Damore’s opinion. Not surprisingly, it rankled many inside Google, which reacted by terminating Mr. Damore’s employment on August 7. Mr. Damore, supported by the likes of Juilian Assange and other political conservatives, responded by threatening legal action. “As far as I know,” he reportedly wrote, “I have a legal right to express my concerns about the terms and conditions of my working environment and to bring up potentially illegal behavior, which is what my document does.”

There’s little question that Mr. Damore is correct. As far as he knows, he may say whatever he likes to whomever he chooses. What he doesn’t seem to know, however, is that those around him have rights, too. People who hear his views have a right to be offended. They may disassociate themselves from him if they choose. Google and other private employers have the right to decide who works for them. They are not restricted by free speech guarantees in the First Amendment to the U.S. Constitution. Like Mr. Damore, private employers have their own form of free speech rights, and it includes the right to say “you’re fired” to workers who, in their judgment, are disruptive, potentially damaging to their business, or in any other way unsuitable to remain employees.

It’s unclear whether Mr. Damore will actually file his lawsuit or how, if he does, what his legal theory might be. But he fears not, no doubt, as he garners support and job offers from those who agree with his missives about women and work. He’s now a hero of sorts at the likes of Breitbart News and reportedly has a job offer at Wikileaks. Good for Mr. Damore, if this is what he intended. If not, he has learned what he should have known all along. He is free to speak, and the world around him can react to what he says.

Noncompetition Agreement Legislation Appears No Closer to Passage in Massachusetts

The effort to regulate the use of noncompetition agreements continues to languish in a legislative committee, where most of several competing proposals were referred early in 2017. Alongside them – or, as it were, within the same proposed bills – sits the uniform trade secrets act, a law aimed at protecting the advantage businesses enjoy from confidential trade information.

No fewer than six bills are now being considered by the Massachusetts Legislature’s joint committee on labor and workforce development. One proposed law would void restrictions on post-employment competition contained in written employment agreements while permitting limitations on solicitation of customers or employees in those same contracts to be enforced. Another would permit noncompetition agreements under specifically prescribed conditions, including 10-day advance notice for employees, opportunities to consult with counsel, and payment of wages during any restricted period of time. Some versions of the proposed law would ban noncompetes for lower level workers and limit them to time periods of between three and 12 months. Two bills require renewal of noncompetition agreements at regular intervals, and some permit enforcement of them only in the county where an employee resides.

It’s unclear whether or when the state Senate and House of Representatives will agree on and pass a version of noncompetition legislation or, if they ever do, whether the governor will sign it into law. Given the long history of failed efforts to ban these contracts, it seems most likely that, if any legislation is ever to become law, it will impose conditions on noncompetition agreements while permitting businesses to continue to enforce them where they are essential. Such enforcement might very well require that employers pay at least a portion of the wages their former workers will lose as a consequence of a noncompetition restriction.

Employers Get Another Reason to Carefully Review and Comply with Wage Laws

It’s no surprise that the reach of Massachusetts’ wage laws is long, and most employers know they need to carefully abide them if they want to avoid potentially dire effects. Still, courts sometimes seem to extend the law’s reach in surprising ways. When that happens, employers to which such rulings apply might first shudder a bit, then step back and review policies to be sure they are doing things properly.

A recent U.S. District Court decision may have such an effect. In Chebotnikov v. LimoLink, the court ruled that a trial was necessary to determine whether limousine drivers are employees or contractors. It went on to also conclude that gratuities charged to customers must be remitted to the drivers under the Massachusetts tips statute. That law requires that service charges or tips from customers “shall be remitted only to the wait staff employees, service employees or service bartenders” who provide the customer service at issue.

What’s interesting here is the award of tips to individuals who may or may not be employees despite the fact that the statute involved appears to apply only to that group. The court seemed moved in large part by the clear intention of the law: to ensure that service workers get the tips that customers intend for them and not their employers to receive. Employers who collect tips or charge costs to customers that might be interpreted as gratuities need not shudder at this ruling, perhaps, but certainly should review their practices to ensure they don’t get caught in the same situation as LimoLink apparently has.