Source: https://slphrbenefitsupdate.com/category/employers/non-competition-agreement/
Timestamp: 2019-04-19 14:20:25+00:00

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The Internal Revenue Service is warning human resources and other business leaders about a growing wave of identity theft and W-2 scams targeting sensitive tax data employers collect on their employees. The warning highlights one of the many growing data breach exposures businesses must manage as identity thieves become ever more sophisticated.
Such data like Form W-2 data – is highly valued by identity thieves. While identity thieves use a variety of tactics to steal this information including hacking into the IRS’ own systems, the IRS this week is warning about one scheme that the IRS says has become one of the more dangerous email scams.
All employers are targets for the W-2 scam, according to the IRS.
Generally, the criminals are trying to quickly take advantage of their theft, sometimes filing fraudulent tax returns a day or two.
Notify employees. The employee may then take steps to protect themselves from identity theft. The Federal Trade Commission’s www.identitytheft.govprovides guidance on general steps employees should take.
The IRS alert reminds businesses again about the growing challenges they face guarding sensitive tax, health and other employee benefit plan and other data about employees, customers, business partners and others. Aside from the disruptions businesses incur to organizations and relationships with employees, customers, business partners or others and often tremendous costs of investigation and mitigation, breaches also commonly trigger substantial legal liability under a myriad of federal and state laws and regulations, contracts, and common law tort claims. Businesses generally and Human Resources, tax and other systems and operations should take well documented steps to prevent and prepare for a potential breach.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving and author of “What To Do When Your Employee’s Personal Life Becomes Your Business@ and a multitude of other highly regarded works on data protection and breach, her work includes career-long, leading edge involvement counseling and representing human resources, employee benefit, insurance and financial, tax, healthcare and other businesses about data and other sensitive information privacy and breach.
Employers beware of potential National Labor Relations Act unfair labor practices risks that may arise from their adoption or enforcement of overly broad or restrictive workplace recording, acceptable use, workplace conduct, commitment-to-integrity or other policies that might be construed to prohibit or deter employees from exercising protected organization or other collective bargaining rights under the National Labor Relations Act (NLRA) in light of the Fifth Circuit’s July 25, 2017 T-Mobile United States, Inc. v. Nat’l Labor Relations Bd. decision.
In T-Mobile v. NLRB, the Fifth Circuit upheld and ordered the enforcement of a National Labor Relations Board (NLRB) ruling that telecommunications industry employers T-Mobile and MetroPCS (T-Mobile) engaged in unfair labor practices in violation of Section 8 of the NLRA by maintaining a policy that prohibited all photography and audio or video recording in its workplace without the employer’s prior permission (“Recording Policy”).
The Fifth Circuit’s ruling arose from an appeal filed by T-Mobile with the Fifth Circuit, challenging a NLRB ruling that the Recording Policy, a workplace conduct policy, a commitment-to-integrity policy and an Acceptable Use Policy included in the T-Mobile employee handbook violated the NLRA because “employees would reasonably construe the language to prohibit Section 7 activity and therefore constituted unfair labor practices prohibited under Section 8 of the NLRA. (Note: T-Mobile did not appeal the NLRB’s findings that 7 other policies also violated the NLRA).
While the Fifth Circuit’s decision only upheld the unfair labor practice determination based on the Recording policy, the decision makes clear that its findings concerning each of the four employment policies subject to the appeal as well as other employment policies could come out differently in other cases based on the contextual evidence reflected in the factual record concerning the particular employment policy and the context in which it is implemented and enforced. Employers maintaining or administering similar workplace rules will want to scrutinize carefully their own policies to assess their potential for exposing the employer to unfair labor practice charges and take appropriate action to minimize these risks.
Section 7 of the NLRA protects workers’ right “to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. NLRA § 8(a)(1) makes it an “unfair labor practice” for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights” protected by NLRA § 7.
Employees would reasonably construe the language to prohibit Section 7 activity even if the rule does not explicitly prohibit or has not been enforced to prohibit or restrict Section 7 protected activity.
A careful analysis of the Fifth Circuit’s decision makes clear that its decision about each of the four challenged policies covered by T-Mobile’s appeal turned upon the Court’s careful analysis of the surrounding context under which the applicable policy was implemented and administered reflected in the factual record. While the Fifth Circuit overruled as erroneous the NLRB’s findings that three other challenged policies violated the NLRA under this analysis, it agreed with and ordered enforced the NLRB’s ruling that T-Mobile’s Recording Policy violated the NLRA by impermissibly chilling worker’s exercise of their Section 7 rights. Construing the Acceptable Use Policy as prohibiting all recording in the workplace without the employer’s consent, the Fifth Circuit concluded that the policy would “discourage” a reasonable employee from engaging in protected activity” because a reasonable employee would construe the Policy as prohibiting employee unionizing or other concerted activity protected by the NLRA.
Based upon its review of the contextual facts shown in the record, the Fifth Circuit overruled the NLRB’s unfair labor practice orders with respect to T-Mobile’s workplace conduct, commitment-to- integrity, no argument or fighting and Acceptable Use policies. Employers should note, however, that the Fifth Circuit’s ruling does not give blanket enforcement to the defensibility of these policies in all circumstances. Rather, noting that “context matters” when determining whether a work rule violates the NLRA, the court found the policies read in the context of the workplace established common sense civility guidelines that a reasonable employee would not read as chilling or discouraging organization activities protected under Section 7. Accordingly, the Fifth Circuit declined to enforce the NLRB’s unfair labor practice orders against T-Mobile with respect to those policies in this instance. Employers considering the implications on this decision on their own policies should keep in mind, however, that the Fifth Circuit based its decision on the context reflected by the facts in the record. Accordingly, there remains a risk that these or other policies could be found to violate the NLRB if adopted or administered under circumstances that could chill reasonable workers from exercising their Section 7 organizational rights.
To prevent harassment, maintain individual privacy, encourage open communication, and protect confidential information employees are prohibited from recording people or confidential information using cameras, camera phones/devices, or recording devices (audio or video) in the workplace. Apart from customer calls that are recorded for quality purposes, employees may not tape or otherwise make sound recordings of work-related or workplace discussions. Exceptions may be granted when participating in an authorized [T-Mobile] activity or with permission from an employee’s Manager, HR Business Partner, or the Legal Department. If an exception is granted, employees may not take a picture, audiotape, or videotape others in the workplace without the prior notification of all participants.
Unlike the “workplace conduct” policy and the “commitment-to-integrity” policy, the recording policy forbids certain forms of clearly protected activity. We have earlier held that held those two policies would not be interpreted by a reasonable T-Mobile employee as forbidding protected activity. By contrast, a reasonable T-Mobile employee, aware of his legal rights, would read the language of the recording policy as plainly forbidding a means of engaging in protected activity.
The “Scope” section of the acceptable use policy explicitly states that the policy “applies to all non-public T-Mobile information.” Thus the policy only prohibits employees from sharing non-public information.
Thus the NLRB’s finding that a reasonable worker would construe the acceptable use policy to discourage protected activity is unreasonable, and we deny enforcement as to that part of its order.
Accordingly, the Fifth Circuit upheld enforcement of the NLRB’s order striking down the Recording Policy but denied enforcement and overruled the NLRB’s unfair labor practice finding with regard to the other three policies.
While the Fifth Circuit only enforced the NLRB’s unfair labor practice finding with respect to T-Mobile’s Recording Policy in T-Mobile, the opinion makes clear that similar or identical policies could be treated differently depending upon whether the contextual evidence reflects that the policy could be reasonably construed by employees as prohibiting or restricting conduct protected by Section 7 of the NLRA. Employers maintaining or administering similar workplace rules will want to scrutinize carefully their own policies to assess their potential for exposing the employer to unfair labor practice charges and take appropriate action to minimize these risks.
U.S. employers recruiting or employing workers with high demand skills or experience in the U.S. labor market should reevaluate existing employee retention and recruiting packages and policies and intellectual property safeguards to deal with the increasingly competitive job market reflected in June, 2017 employment data and trends reflected in U.S. Bureau of Labor Statistics (BLS) data released today (August 8, 2017). Employers relying on workers within these industries should re-evaluate and update as necessary their existing budgeting, hiring, recruitment and retention, trade secret, noncompetition and other policies and practices to proactively position their companies to effectively compete to ensure they retain and recruit the necessary workers to operate effectively.
The BLS statistics offer employers and others key insights into various workforce and employment trend, not the least of which are signs of growing competition among employers for high demand workers arising from the continued growth in job openings reported in the BLS statistics. See, e.g. Table A. Job openings, hires, and total separations by industry, seasonally adjusted and Job Openings and Labor Turnover Technical Note; Table 1. Job openings levels and rates by industry and region, seasonally adjusted; Table 2. Hires levels and rates by industry and region, seasonally adjusted; Table 3. Total separations levels and rates by industry and region, seasonally adjusted.
BLS statistics showing new hires lagging behind the continued growth in job openings signal that employers in impacted industries and regions should prepare to face growing competition for qualified workers.
According to BLS, the U.S. job openings level increased by 461,000 to 6.2 million openings as of the last day of June. Among these 461,000 new openings, the overwhelming majority – 417,000 openings were for private sector positions, with the largest increases occurring in professional and business services (+179,000), health care and social assistance (+125,000) and construction (+62,000) while job openings decreased for other services by 62,000.
Meanwhile, BLS statistics showing that hires and total separations did not keep up with the growth in job openings sends a strong message that employers employing workers from increasingly competitive talent pools should focus as much on their ability to retain existing workers as to recruit new workers to fill new positions or replace workers. Aside from the gap between job openings and hires generally, quit rate statistics reported by BLS merit special consideration. As quits are voluntary separations initiated by the employee, the quit rate can serve as a measure of workers’ willingness or ability to leave an existing position for a new opportunity. BLS statistics showing continued stability in the quit rate and number of quits during June suggests that as of the end of June, reflected that many employed workers in high growth industries had not yet decided to make the leap to a new position. See Table 4. Quits levels and rates by industry and region, seasonally adjusted. Table 10. Quits levels and rates by industry and region, not seasonally adjusted.
Amid growing competition for workers, however, it is foreseeable that employers seeking to fill open positions will turn their attention to employers already employed. Accordingly, in addition to evaluating their ability to recruit qualified workers away from other employers, employers should anticipate and prepare for the likelihood that other employers increasingly will target their workers for recruitment.
Adequate analysis and preparation now could help position their businesses both to retain valuable workers and recruit new or replacement workers to fulfill their staffing leads. Beyond considering the adequacy of current recruitment, compensation, benefits, work rules and culture to compete effectively amid the evolving labor market, business leaders also generally will want to evaluate the adequacy and enforceability of trade secret, noncompetition and solicitation, and other legal and operational controls to protect their organization’s workforce and intellectual property from turnover related threats and dilution both as they relate to new hires and potential departing employees.
Many Texas businesses view non-competition agreements as a critical component to their strategy to protect their trade secrets and other intellectual property. In its April 19, 2009 decision in Frankfort Stein & Lipp Advisors, Inc. v. Fielding (“Frankfort Stein”), the Texas Supreme Court gave a another boost to the ability of Texas employers to enforce non-compete agreements signed by existing at-will employees during their employment under the Texas Covenants Not To Compete Act (the “Act”) Section 15.50, which governs the enforceability of employee agreements not to compete in Texas. Despite this helpful ruling, however, Texas employers still must exercise care to comply with all requirements of the Act if they want to position their non-compete agreements for enforceability in Texas.
Building on its prior October 20, 2006 employer-helpful decision in Alex Sheshunoff Management Services, L.P v. Johnson (“Sheshunoff”), the Texas Supreme Court in Frankfort Stein clarified that an employer’s implied covenant to provide confidential information to an at-will may constitute adequate consideration to support enforcement of a non-compete under the Act.. The holding expands the Supreme Court’s prior holding in Sheshunoff to apply to both express or implied employer covenants to provide confidential information.
In Sheshunoff, the Texas Supreme Court previously ruled that that an employer’s express promise to provide confidential information to an at-will employee in exchange for the employee’s express promise not to disclose or use such information, may create an enforceable non-compete covenant under the Act. However, the Supreme Court made clear that employers that desire enforce non-competition agreements still must fulfill the Act’s requirement to provide access to confidential information, training or other appropriate consideration for the employee’s promise not-to compete and the other requirements of the Act before Texas courts will enforce an at-will employee’s agreement not to compete in Texas.
The Frankfort Stein decision further clarifies the Court’s interpretation of the Act in Sheshunoff by holding that an implied promise to provide confidential information to an at-will employee also can constitute the required consideration for the employee’s promise to disclose serve as the provision of confidential information required to support enforcement of a non-compete under Texas law.
ü To position the employer to be able to easily prove that it actually engaged in the sharing of confidential information that the Sheshunoff decision identifies as a necessary step to enforce the non-competition agreement under Texas law.
Employers also should position themselves to best investigate possible breaches of these protections by securing written background check consents in accordance with the Fair Credit Reporting Act and ensuring that their handbooks and employment agreements include appropriate privacy, investigations and other policies.
Cynthia Marcotte Stamer and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney. For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the www.cttlegal.com.
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