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

Does the Stored Communications Act Protect Me at Work?

Laws, such as the federal Stored Communications Act, prohibits, unless the employee provides consent, an employer from accessing non-public information from websites whose passwords and login information are stored on company property, including a company phone, tablet or computer. However, many employers take the position that there is no expectation of privacy on a company cell phone, tablet or computer and rely on their computer, phone and social media policies to access all information, emails, websites and an employee’s social media site.

Employees should err on the side of caution. Employees should keep their personal and work lives separated. If an employer provides an employee with a cell phone, the employee should utilize that phone for work related items only. The employee should not download any personal information or apps onto the work phone. While it may require an employee to pay for a personal cell phone, the employee should have their own personal cell phone to use for their personal email, texts, social media, etc. While it seems economical to use the company phone, the downside could be tremendous.

Don’t forget, that any texts that are not work related are generally a violation of company policy and could be grounds for termination. Employees should also err on the side of caution with any tablets, laptops or even desk tops either at the office or that the company provides to them at their homes.

Employees should presume that if they download or log into Instagram, LinkedIn, Facebook, Grindr, Pinterest, Tinder, Snapchat, Twitter, etc., their employer may have access to these sites.

While an employee may be able to raise a claim under the federal Stored Communications Act for their employer’s review of the employee’s personal social media and emails on the company phone, etc., keep in mind this would most likely occur after the employer has already accessed all of the employee’s personal and private information. Be mindful that it is better not to provide an employer access. Employees should not store personal information on their work phone, tablet or laptop and should not access any private information on any of these devices.

Are Your Posts Harming Your Employment?

You should presume that your current employer and prospective employers are following you into every site you go into on the internet; whether it be a chat room, group, blog, networking site, Instagram, Facebook, LinkedIn, YouTube, Google+, Pinterest, Snapchat, Twitter, etc. 

Many people do not realize the impact that their posts have on their future employability and employment. Specifically, a person may be denied employment because of what a prospective employer discovers on social media or an employee may be terminated due to comments and outside activities posted on public or private social media sites

Many employers have Social Media Policies setting forth what can or can’t be posted by its employees. All employees should review these policies in order to be in compliance. Failure to do so may be grounds for termination.

Employees and former employees must also be sure not to share confidential and/or propriety information and/or trade secrets on social media sites. Doing so can be grounds for termination or if already a former employee, grounds for a lawsuit.

An employer discovering an employee posing his/her involvement in illegal activity through a post on a social media site can also be grounds for termination.

Employees should assume that their employer or prospective employers are reviewing any posts that they put on social media and others posts that may be linked to them. If an employee would not say or engage in an activity in the workplace then he/she should not do so on social media.

Many employers and recruiters review social media to check out applicants. Employers look for, among others, provocative photos; bad mouthing of colleagues, former employers or friends; sharing of confidential information; misrepresentations made by the applicant on a resume or in an interview; illegal activities.

Employees should be mindful of what they are posting, their privacy settings and who they connect to in the workplace.

Comments and posts can follow employees and harm their employability.

Employers reviewing social media sites and making adverse employment decisions must be careful that doing so is not based on improper or illegal motives, as this may result in lawsuits against the company for their decision.

Severance packages are legal documents that must be understood prior to signing and returning them to your employer even if they appear simply written. They have been carefully written by your employer to provide you with certain benefits in exchange for you giving up certain rights. In reviewing a severance agreement, there are many items to consider. A few examples are: (1) How long do you have to sign the agreement? This time period may be dependent upon your age and also if the separation is considered a one-off (meaning just you) or a mass layoff (multiple employees). (2) Will the payments be made to you in lump sum or over time? (3) Are the payments mitigated by your receipt of unemployment benefits or new employment? (4) How long will your health benefits continue? Will the company pay for this? (5) Will you receive your bonus or a pro-rated bonus? (6) If you were relocated, will you be returned to your original location? (7) Does the severance package include provisions such as a non-compete, non-solicitation, non-disclosure, confidentiality? If so, what do these mean for your future employability? (8) Is their a mutual release of claims? (9) Are you or have you received your 401K matching contribution from the company? (10) Will you receive outplacement? (11) Are you going to be paid for your accrued vacation days? (12) Are you entitled to pay for unused sick days? Besides the above, if you have been selected for termination and are offered a severance package, there is a key question to consider – Why was I personally selected to be fired? Even if the company is undergoing a mass layoff, this question is still pertinent, as there may be a reason that you were selected for termination over another employee. Why? Did you report discrimination? Did you refuse to engage in impropriety? Was your selection based on an impermissible/illegal rationale? A severance package should be reviewed even if you think you are comfortable with the offer. It is important that you understand the obligations that are required of you in exchange for the pay you are going to receive. If you are interested in having your severance package reviewed to understand your rights and the document(s) itself, please contact our office. We understand that you must respond to a severance document in a timely fashion and are able to promptly review and respond to your concerns. The Firm is also available to assist you in requesting and/or negotiating different terms and/or language in the severance agreement. The goal of severance is that the parties are able to part ways. The employee receives some benefits (money, benefits, etc.) while the employer receives a release of claims and possibly a non-compete and confidentiality. Remember, signing a severance agreement may have an impact on your future and your ability to obtain future employment. It should not be taken lightly, but should be reviewed by a legal professional familiar with these documents. We have much experience in reviewing and negotiating these documents and are available to help you so that you do not have to try and maneuver this process alone.