colorado noncompetition law · defense of trade secrets act colorado’s four exceptions...
TRANSCRIPT
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 1
Colorado Noncompetition LawThe Enforceability And Advisability Of Noncompetition, Nonsolicitation And Confidentiality Agreements
Chris Ottele and Emma Savory
TopicsOverview
Defense of Trade Secrets Act
Colorado’s Four Exceptions
Reasonableness: Duration and ScopeConsideration
Nonsolicits and Confidentiality
Drafting
Multistate Issues
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 2
What is a Noncompetition Agreement
Balance of Concerns
Legitimate Business Interests
Employee’s Right to Make
a Living
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 3
Defend Trade Secrets Act
Access to Federal Courts
Employee Protections
Ex Parte Order
Mandatory Language
States Still Have a Say
First Exception: Sale of Business
Greater Deference
Must Still Be Reasonable
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 4
Second Exception: Trade Secrets
Is it confidential?
Did the employer guard the
trade secret?
Does it confer an
advantage?
Third Exception: Education and Training
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 5
Fourth Exception: Executive and Management
Executive and management personnel and officers
Employees who constitute professional staff to executive and management personnel
Physicians
Noncompetes Prohibited
Liquidated Damages
Unless reasonably related to the injury suffered
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 6
Duration & Scope = Must Be Reasonable
Duration
What is reasonable?
• Necessary to safeguard the plaintiff’s business. • 6 months to perpetuity
Colorado federal district court once described a noncompete with a maximum term of __ months as “well within the terms approved by Colorado courts.”
18
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 7
Scope
Location the employer
actually does business.
Consideration
Noncompetition covenants require consideration.
Forbearance of terminating an at-will employee at any time constitutes adequate consideration.
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 8
Nonsolicitation Agreements
Coworkers: Limited to prohibiting active solicitation
Customers: Analyzed like a noncompetition agreement • Must fall into one of the exceptions:
• Purchase of a business • Protect trade secrets• Recover for education and training
expenses• Executive or management personnel
Confidentiality Agreements
Enforceable to the extent the information
is acquired during employment.
General information is not confidential.
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 9
Drafting
Interstate Issues
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 10
Life Cycle of an Employment ClaimBarbara Grandjean and Mary Stuart
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 11
Litigation
Hiring
Performance Management
Issues
Discharge
Claim
HIRING
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 12
The Basics: Hire Well
Job description
Clear expectations
Background complete
When in doubt—DON’T
Where we see problems
AccommodationsPotential
modifications
Background Learn after start
Consistency “I know, but”
Requisite qualifications
Mean what say
Expectations Job is full
time, schedule fixed
Pay or benefits Undefined
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 13
Performance
Hold Employee Accountable
• Does not need to be formalDeal with and
document
• Honest and specificAnnual reviews
• “Meets expectations” does not justify firingJuries believe what is in writing
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 14
It’s a two-way street
Policies
Apply non-discriminatorily
Notice
Consider PIP
Fairness
Never promise, always practice
Where we see problems
Due process
No chance to tell his
side
Favoritism No consistency
Complaints No response
Employee “surprise”
No warning
ADA No
interactive process
FMLA No “empathy”
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 15
Discharge
Only one chance to do it right
Complete investigation first • Collect documents• Review computer files
Give due process• No matter how clear cut• Have two people in meeting
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 16
Discharge meeting• Manager plus one• Prepare ahead, stick to script
Professional and direct
• Packing belongings• IT and property accessAfter the meeting
• Co-workers• References
Communications to others
Where we see problems
ConsistencyOthers did the same
thing
“Humiliation”Is security
escort necessary
Retaliation
Difficulty finding future
employment
Contradictions Engaging in arguments
Lack of honesty
Job restructuring
Adding reasons
Sounds like pretext
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 17
The Claim
What comes nextDemand
letter
Demands explanation
Demands money
Charge (300 days)
EEOC
CCRD or other
Agency
Notify
Attorney or risk manger
Insurance carrier
Preservation (Legal hold)
Employee’s computer
All relevant files and records
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 18
Responding to DemandInvestigate claims
Respond appropriately
Wage Act time limits
Decide if want to negotiate
Where we see problems
Disparaging employee
Inflames passion
Challenging attorney
“Bring it on”
Lack of empathy
Acknowledge job loss is
difficult
Don’t consider what said
Would two months of COBRA
resolve issue
Failure to respond
Didn’t take seriously
Incorrect response
Too much and not enough
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 19
Responding to EEOC or CCRD
Mediation
Consider pros and cons
Is attorney involved
Do you know employee
Assessment by a third
party
Responding to EEOC or CCRDPosition
statement
Take very seriously
Recent EEOC guidance
Tell a good story
Must be accurate
Memories fade, employees
leave
Get statements
Collect all documents
Don’t screen for “relevance”
Include attorney on all
communications
Don’t create new evidence
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 20
Where we see problems
Conclusory statements
only
Let the facts lead to the conclusion
Unnecessary statements
Often lead to problems
Failure to provide
requested info
OK to limit but don’t ignore
Blanket denial
Of course you didn’t
discriminate
“Employment at will”
Forget about it
Inflammatory words
Just the facts
Timing of Administrative Process
EEOC has no time limit• Can be years
CCRD is supposed to resolve in 270 days• May ask for extension
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 21
Results of EEOC Process• Will seek conciliation
• If fails, EEOC lawsuit (no time limit) or right to sue (90 days)
Probable cause
• CP must file lawsuit in 90 daysRight to sue at CP’s
request
• CP must file lawsuit in 90 daysNo basis and right to
sue
Results of CCRD Process• Usually writes decision and issues right to sue
• CP can appeal or file lawsuit in 90 daysFinds no probable
cause
• Will seek conciliation• Could hold hearing or issue right to sue
Finds probable cause
• CP must file lawsuit within 90 daysIssues right to sue
at CP’s request
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 22
The Lawsuit
Now whatFederal court or state court
Formal discovery process
Motions
Time to trial, 1-3 years
• Written discovery• Depositions
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 23
What to do
Designate a point person
Update legal hold
Do not discuss without counsel present
Update insurer
Discovery processIntensive and time consuming
Much greater burden on employer than employee
Electronically stored information (ESI)
Protocols in place before litigation
Discovery violations can overtake the merits
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 24
Depositions
Who Decision makers HR Rule
30(b)(6)
What does it mean
Usually a day
Must be prepared
Resolution before trial
• Offer of judgment (Rule 68)• Negotiations• Mediation
Settlement
• Facts don’t support a legal claim• Don’t count on it
Summary judgment
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 25
The Trial
Jurors Employees themselves and their situations shape their views
Employers negligent if don’t document problems
Justice more important than letter of the law
Corporations will lie to win
More likely to believe employee than supervisor
Often find against corporation rather than for employee
The Trial
Winning Case
Good story
Decisions made by individuals, not a corporation
Manager went above and beyond to help employee
Employee did not take advantage of Manager’s efforts
Decision necessary to protect customers, patients, co-workers
Decision-maker seen as honest, credible and likeable
Labor & Employment Seminar 5/18/2016
© 2016 Husch Blackwell LLP. All Rights Reserved. 26
Regardless of the Result