Most employment contracts or offer letters state that the employee is “at will”. So what does this mean?

If you are an “at will employee” you can be fired from your job for any reason, provided that the reason for your termination does not violate any laws. Thus, unless the employee has an employment contract that says otherwise, your employer can terminate the employee’s employment without just cause and without giving the employee a warning. Similarly, an “at will” employee can depart from employment without any reason or warning or notice to the employer.

As an at will employee, an employer can terminate the employee for good cause, bad cause or no cause at all.

Today many employees will receive offer letters that clearly set forth that the new employment relation is “at will”. This “at will” relation is typically reaffirmed in an employer’s handbook or policies distributed to its employees. The majority of employees at most companies are “at will” employees, as contracts with fixed employment terms are commonly reserved for the high level executives of the company.

Exceptions to the “at will” relation do exist. An employer cannot terminate an employee’s employment, even if the employee is an “at will” employee, if doing so would violate the law. Thus, the employee cannot be terminated so that the employer does not have to pay the employee an earned bonus, because the employee filed for workers’ compensation, because the employee appeared in court under a subpoena for jury duty, because the employee refused sexual advances of the employer, or because the employee reported the employer’s illegal acts to authorities, or if the decision to terminate the employee was based on the employee being a member of a protected class, among other reasons.

There are pros and cons to the “at will” relation. One pro is that it is easier for an employee to depart from the company. Some cons being that employers are quicker to fire employees and not to modify the work environment, if needed.

Donath Law, LLC can help you understand the “at will” relationship. For more information or to have your offer letter/ employment contract reviewed prior to your accepting employment or if you are thinking of departing from your employment, contact Sheree Donath at Sheree@DonathLaw.com to schedule a consultation.

Some executive contracts contain a provision that allows the executive to resign from the job for “Good Reason”. Contracts that contain a “Good Reason” provision for resignation will also contain a definition of what constitutes good reason.

The definition of Good Reason may include some or all of the following:

(a) a change in Control;

(b) a material diminution of the executive’s job responsibilities;

(c) a change in reporting structure

(d) a material reduction in the executive’s compensation

(e) a material breach in any of the terms in the executive’s employment agreement;

If an executive resigns for “Good Reason” the contract generally requires the executive to provide written notice of the resignation for Good Reason as well as the specific reason the executive is resigning for “Good Reason”. Most executive contracts then allow the company a set period of time to “cure” the “Good Reason”. This may be 10, 20, 30 or even 60 days. If the company cannot cure or chooses not to cure the “Good Reason” then the executive’s termination/ resignation for “Good Reason” moves forward.

Many “Good Reason” provisions are also tied to a severance component for the executive.

In negotiating executive contracts, it is important to ensure that the terms specific to the employee’s employment are set forth within, including, among others: the employee’s title; reporting structure; office location; a specific definition of “Good Reason”; any severance or payments the executive would be offered for resignation for “Good Reason”; and whether the employee’s non-compete/non-solicitation provisions will continue if there is a resignation for “Good Reason”.

Contact Sheree@DonathLaw.com to schedule a consultation to review or negotiate the terms of an executive employment agreement or to obtain assistance in resigning for “Good Reason” under your contract.

Earlier this week, the U.S. Supreme Court ruled that employees who agreed to arbitrate their claims and not to join a class action could not join together to enforce wage and hour claims. The Court determined that arbitration agreements, as written, should be upheld. The negative result of the Court’s decision is that many employees will not raise claims against their employers.

Arbitration clauses require the employee (or former employee) to resolve their claims in Arbitration rather than in Court. Employers like the arbitration process rather than Court because arbitration is confidential. Employers also like Arbitration because many employers feel that the cost of arbitration may result in less employees raising claims.

Many employees who have signed an arbitration agreement are concerned about the cost of raising claims against their employer in Arbitration. Where in Court, the employee is not required to pay the Judge for the Judge’s time, in Arbitration, the employee must pay an hourly rate for the Arbitrator’s time. Therefore, an employee bringing wage and hour claims may be prevented from doing so by the large cost the employee may have to incur to bring such claims. If employees were permitted to ban together to bring such claims, then it is more likely that the overall payout (if the employees are successful) would outweigh the costs incurred by the employee. It may not be cost effective for employees to raise claims on an individual basis. Specifically, the employee may be successful in obtaining damages, but still be out of pocket for the costs of the Arbitrator.

If an employee is asked to sign an arbitration agreement or an agreement with an arbitration provision, the language should be reviewed carefully. The employee should understand what is being agreed upon, what rights are being given up and what that may mean if the employee raises claims in the future. These provisions, like all other contract provisions, should be reviewed and negotiated.

To have your arbitration agreement or provision reviewed, contact Sheree Donath, Esq. at Sheree@DonathLaw.com. 

It is very common in New York employment for an employer to require an employee to sign a Non-Compete Agreement. However, not all non-compete agreements are enforceable. Enforceability of the agreement is dependent on the specific language in the agreement and the limitations on the person’s future employment. A non-compete agreement may also be negotiated, modified and limited. If you have received a non-compete agreement, you should have an attorney review it prior to your signing it so that you understand the requirements and the obligations on you upon your signing and in the future. Below are some questions Donath Law, LLC is often sked regarding non-compete agreements. To understand your non-compete agreement, contact Sheree Donath at Sheree@DonathLaw.com to schedule a consultation.

What is a Non-Compete Agreement?

–     Non-compete agreement is generally when an employee agrees not to work in the same or similar role in competition with its employer both during the employee’s employment and for a period of time afterwards.

How is “Competition” defined?

–     Some employers provide a detailed definition of this term.

–     Some employers specify a certain number of companies/organizations that they deem to be competitors.

–     Some employers intentionally leave this term vague so that broadly covers an infinite number of jobs in the industry and at times, covers jobs outside the industry.

What is the difference between a Non-Compete and Non-Solicitation Agreement?

–     Non-compete prevents you from working in competition with your employer.

–     Non-Solicit agreement prevents you from taking (poaching) employees and/or clients/ customers/ prospective clients or customers from your employer.

–     In some industries a non-solicitation agreement, (i.e. sale) is basically a non-compete agreement.

What are some documents that a Non-Compete Agreement may be found in?

–     Employment Agreement

–     Confidentiality Agreement

–     Relocation Agreement

–     Retention Agreement

–     Workplace Inventions Agreement

–     Severance Agreement

–     Deferred Compensation Agreement

–     Bonus Agreement 

Are Non-Compete Agreements enforceable in New York?

Generally, the answer is Yes. This may be dependent on the geographic scope of the agreement (i.e. global or within 10 miles of the employer); the time of the non-compete (i.e. 3 years vs. 1 year); and the breadth of the restrictions on your future employability (i.e. will you be prevented from doing anything for the company even being a janitor or prevented only from performing the same or similar job functions) 

How are Non-Compete Agreements generally enforced?

–     Court

–     Self-enforcement – i.e. job application; offer letter; employment agreement

–     Notification by former company to new company

Does my employer have to pay me to sign a Non-Compete before I am employed?

–     No. Your employment with the company is generally sufficient consideration for your signing a non-compete agreement.

Does my employer have to pay me to sign a Non-Compete if given to me once I start working?

–     No. Your continued employment is generally sufficient consideration for your signing a non-compete agreement.

What happens if I refuse to sign a Non-Compete agreement?

–     The employer may refuse to hire you or if you are already employed, you may be terminated.

Can I negotiate the terms of my Non-Compete?

–     A non-compete agreement is a contract. Like any contract, it should be reviewed by an attorney and negotiated, if needed. The terms of the non-compete should be limited to specific competitors, the duration should be shortened (or you may be able to get the company to pay for the time you are unable to work in the industry), and the geographic scope should be limited.

What is some problematic language in Non-Compete agreements that I should be aware of when reviewing a proposed agreement?

–     Words like “prospective”

–     Undefined terms in the agreement

–     Statements that are not clear or seem to be purposely confusing

–     Different time periods restricting your ability to compete or solicit

–     Inability to work at companies that do any kind of work that your employment may touch upon or may even be a separate and distinct part of the organization that you are not involved in

–     Inability to work doing a certain type of work at any company (i.e. advertising, marketing, sales, intellectual property, etc.)

As summer approaches many companies are now hiring summer interns. For years, many employers in for profit businesses would hire interns and not pay them. The thought being that the intern did not need to get paid because the intern was getting the benefit of experience and possibly a “foot in the door.” However, in most situations, failing to pay an intern is a violation of New York State’s Minimum Wage Act as well as the Federal Fair Labor Standards Act. Interns that meet the requirements of an employee, must be paid and must also receive, if applicable, overtime pay.

According to the New York State Department of Labor fact sheet, in New York an internship can be unpaid only if it meets ALL of the below 11 criteria:

1. The training, even though it includes actual operation of the employer’s facilities, is similar to training provided in an educational setting.

2. The training is for the benefit of the intern; any benefit to the employer must be incidental.

3. The intern does not displace regular employees and works under close supervision (i.e. job shadowing).

4. The activities of the intern do not provide an immediate advantage to the employer, but may actually detract from productivity for the employer.

5. The intern is not necessarily entitled to a job at the end of the internship and is free to work elsewhere in the same field.

6. The intern is notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.

7. Any clinical training is done under the supervision and direction of people with knowledge and experience in the activity.

8. The intern does not receive any employee benefits.

9. The training is general and qualifies the intern to work in any similar business; it is not designed specifically for a job with the employer.

10. the screening process for an internship is different than a screening process for employment.

11. Advertisements, postings or solicitation for the program clearly discusses education and training and not employment.

For more information about the above criteria visit the New York State Department of Labor by going to the following website: https://www.labor.ny.gov/formsdocs/factsheets/pdfs/p725.pdf   

The U.S. Department of Labor (“DOL”) also set forth new guidelines in determining if an intern is really an employee under the Fair Labor Standards Act. The text is flexible and may depend on the “unique circumstances of the case”.  See https://www.dol.gov/whd/regs/compliance/whdfs71.htm

The DOL follows the 7 point primary beneficiary test. The seven factors are: The extent that the (a) intern and employer clearly understand that there is no expectation of compensation; (b) internship provides training similar to a classroom setting; (c) internship is tied to the intern’s education by coursework or academic credit; (d) internship accommodates the intern’s academic commitments; (e) internship is limited in duration to the time in which it provides the intern with beneficial learning; (f) the intern’s work compliments rather than displaces paid employees; (g) the intern and employer understand that the internship does not guarantee a paid job. If analysis of the circumstances reveals that the intern is actually an employee then the intern is entitled to minimum wage and overtime pay under the Fair Labor Standards Act.

A common question posed is: “Will I receive my commissions when I resign or am terminated from my employment?” The answer to this depends on (a) what your commission agreement states and (b) when the commission is concerned “earned.”

New York law requires that a commissioned salesperson’s pay must be in writing and signed by the employer and the salesperson. It must contain a description of how wages/ commissions / monies are calculated and considered earned; the frequency of when the salesperson will receive payment for the earned commission; the frequency of reconciliation, if applicable; and all details regarding what payments, if any, are to be made when the employment relationship ends and when the payment(s) will occur.

Upon written request of the salesperson, the employer must provide a detailed statement of earnings paid or due as well as those that remain unpaid.

When is the commission “earned”? This depends on what is written in the agreement. If the agreement is silent on this point, then it is deemed earned in accordance with past dealings between the employer and commissioned salesperson. If there are no past dealings to rely upon, then the commission is deemed earned when the salesperson produces someone ready, willing and able to enter into the contract upon the employer’s terms.

Once a commission is deemed “earned”, it is legally considered “wages” under the New York Labor Law.

All commissions that have been “earned” must be paid to an employee even if the employee has left employment. It does not matter if the employee has been terminated or resigns from employment.

If the commissions have not been earned at the time of termination or resignation, then the terms of the written agreement between the employee and employer will govern whether payment will be made and if so, when.

If you have left your employment, voluntarily or involuntarily, and believe you are owed commissions, contact Donath Law, LLC to determine your rights and options.

This law generally applies to most private employers with one or more employee.

Employees are eligible for this benefit after having worked for a Company for 26 or more consecutive weeks (six months) or if you are an employee who works less than 20 hours per week, on the 175ths day of working for the Company.

The law permits eligible employees to take job-protected paid time off to (a) bond with a child, (b) care for a close relative with a serious health condition or (c) assist family members when a loved one is deployed abroad on active military duty.

Benefits of this leave is that it is job-protected leave. Covered employees taking this leave will not lose employment benefits while taking this leave. They will continue on their health insurance benefits for the duration of the leave. Covered employees will be entitled to reinstatement to their position or a comparable position about their return from their job protected leave. Covered employees will not be retaliated for seeking a leave of absence under this law or for taking such leave.

Covered employees are able to take the leave all at once (if they meet proper certification requirements) or take intermittent leave.

The New York Paid Family Leave will phase in over a four year period. As of January 1, 2018, employees can receive up to eight (8) weeks of paid leave at 50% of the employee’s average weekly wage, capped at 50% of New York State’s Average Weekly Wage. Starting on or after January 1, 2019, eligible employees can take up to 10 weeks of paid family leave at 55% of their average salary, but capped at 55% of the state average salary. On or after January 1, 2020, eligible employees can receive up to 10 weeks of paid family leave at 60% of their average weekly salary, capped at 60% of the average state weekly salary. On or after January 1, 20121, eligible employees can receive up to 12 weeks of paid benefits at 67% percent of their salary, capped at the average state weekly salary.

For more specific information about the New York Paid Family Leave law and the payment schedule, follow this link: https://www.ny.gov/new-york-state-paid-family-leave/paid-family-leave-information-employees.

Employees are only entitled to utilize these benefits one time in a 52 week period. Eligible employees cannot use Federal FMLA and state family leave separately, but these two job protected leaves run concurrently.

These benefits are paid for from a small weekly pay deduction from the employee’s paycheck.

For more information about what you as an employer is responsible for, follow this link: https://www.ny.gov/new-york-state-paid-family-leave/paid-family-leave-information-employers