Separations, Layoffs & Terminations

It generally is a defense to a breach of contract claim if the defendant proves that the plaintiff was the first one to materially breach the parties’ agreement. As a recent case from the Business Litigation Session of the Massachusetts Superior Court confirms, however, a plaintiff seeking to enforce a post-employment restrictive covenant can avoid falling victim to such a defense – if, that is, the company has a carefully crafted agreement is in place.… Keep reading

Many companies try not only to be profitable, but also to be good employers.  Some employers still fear, however, that praising employees too much for good work may create some workplace liability. Fortunately, the U.S. District Court for the District of Massachusetts clarified just before the Thanksgiving holiday in Cagnina v. Philadelphia Insurance Companies, that it is, in fact, okay for employers to give thanks (and even unabashed praise) to their employees.… Keep reading

In Part 1 I shared with you five commonly overlooked terms in executive separation agreements. Here are five more.

6. Release Timing. If the executive is excused from performing work or coming to the office well before her last day of employment, the company may want to have the executive sign an agreement close to the day the executive is notified about her separation because the company will remain exposed to liability for the period of time between the executive’s signing the separation agreement and her actual last day. In addition, I recommend having the executive sign a second release on her actual last day of employment – and make signing that second release contingent upon receiving any post-termination severance benefits.

7. Post-Termination Restrictive Covenants and the Integration Clause. Many agreements contain a boilerplate integration provision, reciting that the agreement is the entire agreement between the parties and that the executive is not relying on anything not contained in the written document. If the executive has signed a prior agreement containing restrictive covenants which are intended to survive termination of the executive’s employment, such a general integration clause could void the prior post-termination restrictive covenants. An alternative … Keep reading

Executives in this market are moving in and out of companies with greater frequency.  With the myriad legal claims that an executive could assert against an employer, whether meritorious or not, more companies are opting to give executives some compensation or other benefits on the way out the door in exchange for a release and other post-employment obligations to ensure that the executive will be a “good leaver.”  While the concept of a separation agreement is pretty straightforward, multiple devils can lurk in the details.  Here are the first five of my top 10 often overlooked terms in executive separation agreements.… Keep reading

Last week I had the pleasure of being a panelist at the Association for Corporate Growth (Boston) and the Turnaround Management Association (Northeast) joint conference on “Challenges and Opportunities in US Manufacturing.” A theme common to all of the speakers was the need to address workforce issues, whether with respect to training, engagement or transition. 

The challenges posed by human capital can often propel or derail improvement strategies, yet certain employment law issues are often overlooked or only addressed at the last minute. If in-house counsel are aware that an improvement plan that requires the exit of employees is being considered, the following issues in advance may help alleviate some last minute problems.

  1. Be sure that all employees have up-to-date, enforceable post-employment restrictive covenants. After implementing a layoff or termination of employees, the last thing that a company needs is to be surprised by a former employee’s attempt to use the company’s confidential information or goodwill to give a competitor an advantage. Reviewing existing confidentiality, non-solicitation and non-competition agreements for enforceability under applicable state laws, and even considering the company’s plan (and costs) for enforcement of post-termination restrictive covenants, will go far to help avoid unpleasant surprises.
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Many companies have bonus plans that require the employee to be employed through a certain date before the right to be paid vests.  If such a plan is in place, any employee terminated reasonably close to the vesting date is likely to demand payment of the bonus, claiming that his termination was a ruse designed to avoid the company’s obligation to pay him.  Unfortunately, employers who legitimately terminate employees near such a vesting date often get leveraged into paying monies that they legitimately should not have to pay because a contingent fee attorney has threatened to sue.  In Weiss v. DHL Express, Inc., however, the First Circuit implicitly gives employers a road map as to how they may be able to avoid such issues.… Keep reading

In a June 13, 2013 decision, the Massachusetts Supreme Judicial Court clarified that managers of Limited Liability Companies (LLCs) can be individually liable for violations of the Massachusetts Weekly Payment of Wages Act, and, thus, be personally responsible for treble damages and attorneys’ fees.

In Cook v. Patient Edu, LLC, the lower court had originally dismissed claims asserted against the two managers of the defendant LLC for failure to pay more than $68,000 in compensation owed to the plaintiff under an employment contract.  In dismissing the claims, the lower court reasoned that because the Wage Act, by its plain language, only imposes liability upon the “president and treasurer of a corporation and any officer or agent having the management of the corporation or entity;” it does not impose liability on “managers of a limited liability company.”  The SJC, taking the case from the Appeals Court on its own motion, reversed the lower court’s decision, ruling that “… a manager or other officer or agent of an LLC, limited liability partnership or other limited liability business entity may be a ‘person having employees in his service,’” and thus may be civilly or criminally liable for violations of the … Keep reading

Employees not at work

Although there are many occasions when an employer may lawfully terminate a non-performing or absent employee, if the reason for the non-performance or absence is based on a physical or mental condition – or a perceived physical or mental condition – employers are well-served to carefully scrutinize the facts before deciding to terminate an employee.  Here are a few examples of where further scrutiny is well worth the effort:

 Employees not at work1.  Where the basis for termination comes only from a single source.

Assume, for example, that a line manager recommends the termination of an employee because she is “unreliable.” In reality, and unbeknownst to the employer, the line manager actually wants the employee fired because he feels inconvenienced by having to cover her authorized, intermittent leave hours.  If the employer takes the line manager’s word that the employee is simply “unreliable” and terminates the employee taking intermittent leave, the employer will potentially be liable for disability discrimination or a violation of the Family and Medical Leave Act.  Thus, when the basis for making an employment termination decision comes only from one person, in-house counsel should advise the company to do whatever it can to verify the facts through one … Keep reading

Hiring: Getting it Right from the Start

Many a day, I answer phone calls and emails about non-performing or even “toxic” employees who must be terminated.  After grappling with the legal “dos” and “don’ts,” about half of the time the employer asks, “Why did I ever hire this person?” 

The answer is not purely a legal matter.  Marc Andreessen, a very successful entrepreneur, venture capitalist and software engineer, suggested his answer in a blog post entitled, “How to hire the best people you ever worked with,” several years ago.  Simply stated, he recommends that employers take time to look at their criteria and their process.  There are certainly many smarter and wiser than I who have written on the topic of the “perfect hire,” but after years of advising clients on terminating employees, I’d like to share a few tips that I’ve learned about hiring employees, in part, inspired by Andreessen’s sage advice.… Keep reading

In my previous post, I shared three best practices for preparing for a potential employee termination.  Here are two additional steps to consider in the termination process:

1. Prepare for possible exit interview scenarios.

Terminations are never easy and often become very personal.  In most situations, the key is to conduct the termination meeting as respectfully as possible.  In order to do so, it is advisable to have a plan addressing the following points:

a.  Who will be at the meeting?  Whenever possible, have two company representatives present, even if one is simply there to take notes.  Consider security outside the room in those situations where the employee may become volatile.

b.  What security measures will be taken while the employee is in the termination meeting?  Consider placing limitations on or completely shutting off access to company e-mail, company credit cards and company computer systems.  If the termination will not occur until a few weeks later, or transition is required from the employee, then completely shutting off access may not be the best course.  Limiting access to certain areas of the computer systems may be appropriate.

c.  What will be said?  Have a very short introduction, convey the … Keep reading