Category Archives: Litigation Issues

Question #273: Crafting a Concrete Non-Compete

Question: Our company uses non-compete and non-solicit agreements that bar former employees from having contact with any client of our company after they leave. One former employee who recently left is now claiming the agreement is invalid because it is “overly broad” in that it bars him from soliciting not only those clients of ours he used to work with, but clients he never had any dealings with.  I can see his point, but at the same time, how are we supposed to know when he signs the agreement which of our clients he will end up working with?

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Quirky Question #268: E-Sign Away!

Question: We have our electronic handbook and arbitration agreement online, and all employees sign both electronically.  I saw a news blurb that a California court last year refused to enforce an arbitration agreement that was electronically signed.  Can’t we use electronic signatures in California?

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Quirky Question #200, Reporting Payments Under Settlement Agreements

Question:

We try and settle threatened lawsuits with lump sum settlements which include wages, tort damages, reimbursement of medical costs and attorneys’ fees. We pay the lump sum to the employees’ attorneys (Trust fund), issue a 1099 to the employee for the amounts paid, not including attorney fees, and a 1099 to the attorney for the attorney fees. We require the ex-employee to indemnify us in the event taxes are not paid. Is that a best practice? Answer→

Quirky Question # 196, Obligation to Indemnify Executive Accused of Criminal Conduct

Question:

I am the general counsel of a corporation in the medical device industry. Our company has its corporate headquarters in Minnesota, but we are incorporated in Delaware and have operations in 30 of the 50 states. Recently, I received a grand jury subpoena to produce documents — and learned that the Food and Drug Administration, the FBI, and the Department of Justice are each investigating whether our company violated criminal laws by shipping a medical device that the government believes had not been approved for use by the FDA.

After contacting the Assistant United States Attorney handling the case, I learned that one of our executives is a subject of the investigation. The government has contacted that executive and wants to interview her. She intends to retain counsel to represent her interests. She asked me whether the corporation will pay for her counsel. Does the company have to pay for her counsel? Even if the company does not have to pay, may the company do so anyway? If so, under what terms and conditions? If we decide not to pay for the attorney’s fees, can the executive challenge our decision? Is there anything else I should consider before we make a final decision? Answer→

Quirky Question # 195, Uniform Policies for Nationwide Employer — Which State’s Law Applies?

Question:

Our company does business in all 50 states. To the greatest extent possible, we like to have uniform employment policies for our employees, wherever they may be located. As you know, this goal is frustrated somewhat by the differences among state employment laws.

We have been considering using a standard employment agreement for all of our exempt employees. Our plan is to include a choice of law provision identifying Minnesota as the state whose law applies. We also want to make Hennepin County our choice of venue. It strikes us that the inconvenience of litigating in Minnesota may deter some disgruntled ex-employee from bringing suit. Will this approach fly? We’d appreciate any guidance you can provide. Answer→

Quirky Question # 167; Who Has the Burden of Proof When Terminating an Executive For Cause?

Question:

Our company is considering terminating a C-level executive for cause pursuant to a provision in his employment agreement. I mentioned this to a friend of mine who is an attorney and she said the company will be obligated to prove our actions were justified. This does not make sense to me. I thought that, like nearly all plaintiffs, if our executive sued, he would have to prove his claims. Can you enlighten me? Answer→

Quirky Question # 163, Accessing Mental Health Records in a Physical Disability Case

Question:

One of our employees recently claimed that he is entitled to a reasonable accommodation of his physical disability (a serious back problem). We were unable to work out an accommodation for the employee (we probably did not do as much as we should have during the negotiation phase) and we terminated his employment. He then sued us under the Americans With Disabilities Act.

We’re now involved in discovery. We’ve asked for all of his medical records – both physical and mental. His lawyers have authorized us to obtain access to all the medical records relating to his physical infirmities but have refused to provide us access to his mental health records.

Aren’t we entitled to this information? What if the mental health records demonstrated that he is not really capable of performing the essential functions of the job? Moreover, given the close relationship between physical and mental health, shouldn’t we be able to get access to this information? What if his maladies really are psychosomatic? Answer→

Quirky Question # 159, Non-Competes and Choice of Law Provisions

Question:

Our company’s headquarters is located in Seattle, Washington.  We want to hire someone to start up our company’s new location in another state.  Because of the competitiveness of our industry, we would like our new employee to sign a non-compete agreement applying Washington law.  Although we are familiar with the non-compete laws in Washington, we are unsure what the law is regarding non-compete agreements in the new location.  We are concerned that we will enter into a non-compete agreement with this employee and it will turn out to be unenforceable in the new location.  Is there anything we can do to make the Washington law focused non-compete agreement enforceable outside of Washington state? Answer→

Deposing a Company’s CEO, Quirky Question # 157

Question:

An employee recently filed a Charge of Sex Discrimination against our company, with both the EEOC and the parallel state agency. Her lawyers want to depose our company’s CEO. This seems to be little more than a tactical ploy to force our company to expend undue time and resources on this dispute. We have more than 10,000 employees. Will our CEO have to sit for depositions any time a disgruntled employee sues our firm? Answer→