Walcheske & Luzi, LLC Employment Law Firm http://www.walcheskeluzi.com Walcheske & Luzi represents clients on employment-law related issues from discrimination, harassment, retaliation, disability, and FMLA Thu, 22 Feb 2018 17:10:07 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.19 U.S. Supreme Court Narrows Scope of “Whistleblower” Under Dodd-Frank http://www.walcheskeluzi.com/blog/u-s-supreme-court-narrows-scope-of-whistleblower-under-dodd-frank/ http://www.walcheskeluzi.com/blog/u-s-supreme-court-narrows-scope-of-whistleblower-under-dodd-frank/#comments Thu, 22 Feb 2018 17:10:07 +0000 http://www.walcheskeluzi.com/?p=4203 Yesterday, February 21st, the United States Supreme Court ruled in Digital Realty Trust, Inc. v. Somers that employees must complain to the Securities and Exchange Commission (SEC) in order to qualify as “whistleblowers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). In so doing, the Court rejected the majority opinion around the country that Dodd-Frank protected internal whistleblowers as well (those who only complained internally to the company, rather than externally to the SEC).

A little* backstory….

*It’s not little. Grab coffee and/or stretch before proceeding

Let’s start with the Sarbanes Oxley Act of 2002 (SOX). SOX contains a provision, 18 U.S.C. § 1514(a), that prohibits publicly-traded companies from retaliating against their employees for providing, causing to be provided, or assisting in investigating information:

[R]egarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, or any rule or regulation of the Securities Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to…a person with supervisory authority over the employee.

18 U.S.C. § 1514A(a)(1).

So far, so good, but now it gets messy.

Dodd-Frank added Section 21F to the Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq. (“Exchange Act”). 15 U.S.C. § 78u-6(a)(6) defines “whistleblower” as “any individual who provides…information relating to a violation of the securities laws to the Commission in a manner established, by rule or regulation, by the Commission.” However, 15 U.S.C. § 78u-6(h)(1)(A), which defines protected activity under Dodd-Frank’s anti-retaliation provision, is more broad, incorporates protected activity under 18 U.S.C. § 1514A(a), and states, in part:

No employer may discharge, demote…or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower…(iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002…, this chapter, including section 78j-1(m) of this title, section 1513(e) of title 18, and any other law, rule, or regulation subject to the jurisdiction of the Commission.

15 U.S.C. § 78u-6(h)(1)(A).

The “mess” is that 18 U.S.C. § 1514A(a) does not require an employee to report information to the SEC to be protected, but rather, in part, protects disclosures to “a person with supervisory authority over the employee.” 18 U.S.C. § 1514A(a)(1).

The vast majority of courts that tackled this issue recognized ambiguity in the statute and gave Chevron deference to the SEC’s final rule (essentially deferring to the SEC’s opinion) regarding Dodd-Frank’s anti-retaliation provision. In its comments to that final rule, the SEC stated that Dodd-Frank protected internal whistleblowers as well, not just those that complain to the SEC, so that was good enough for them.

For its part, the Ninth Circuit in Somers v. Digital Realty Trust Inc., 850 F.3d 1045, 1049 (9th Cir. 2017) (the case decided on appeal by the Court), cut a different path by finding that Dodd-Frank was not ambiguous in reaching the same conclusion that Dodd-Frank applied to internal whistleblowers.

At the circuit level, only the Second, Ninth, and Fifth Circuits had addressed the issue prior to the Court’s ruling yesterday. The Second Circuit shared the majority’s view that Dodd-Frank’s anti-retaliation provision contains ambiguity warranting Chevron deference to the SEC’s final rule. If you were paying attention and read this whole thing, you know the Ninth Circuit found no ambiguity, but held that Dodd-Frank’s “anti-retaliation provision unambiguously and expressly protects from retaliation all those who report to the SEC and who report internally.” On the other side of the aisle was the Fifth Circuit’s decision in Asadi v. G.E. Energy (USA), L.L.C., which held that Dodd-Frank “unambiguously requires individuals to provide information relating to a violation of the securities laws to the Securities and Exchange Commission to qualify for protection from retaliation.”

At the district court level, only 3 courts followed the minority view in Asadi, while the rest followed the majority view that internal complaints were protected.

In ending the discussion and finding that Dodd-Frank applies solely to those employees who complain to the SEC, the Court stated that a statute’s explicit definition controls, even if it varies from the term’s ordinary meaning. Here, even though there appeared to be ambiguity between Dodd-Frank’s provisions, the provision defining “whistleblower” (15 U.S.C.§ 78u-6(a)(6)) is controlling and it says that to be a “whistleblower,” you have to provide “information relating to a violation of the securities laws to the Commission in a manner established, by rule or regulation, by the Commission.”

Deep breath and long exhale, especially those of you in the C-suite.

 

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Confirmed: In Wisconsin, Non-Solicitation Agreements Must Meet Restrictive Covenant Requirements http://www.walcheskeluzi.com/blog/confirmed-in-wisconsin-non-solicitation-agreements-must-meet-restrictive-covenant-requirements/ http://www.walcheskeluzi.com/blog/confirmed-in-wisconsin-non-solicitation-agreements-must-meet-restrictive-covenant-requirements/#comments Wed, 24 Jan 2018 20:17:00 +0000 http://www.walcheskeluzi.com/?p=4194 Back in August 2016, we told you a New Wisconsin Court of Appeals Case Should Have You Reviewing Your Noncompete Agreements Quicker than a Simone Biles Backflip. The reason for such an obscenely-long, yet at the time socially relevant headline? The Wisconsin Court of Appeals’ determination in Manitowoc Company, Inc. v. Lanning, that Wis. Stat. § 103.465, Wisconsin’s restrictive covenant law, applies to nonsolicitation agreements. If you didn’t listen to us then, it’s time to now. On Friday (January 19th), the Wisconsin Supreme Court confirmed that, in order to be valid, nonsolicitation agreements must meet the requirements of Wisconsin’s restrictive covenant law (check out the full decision here).

As a refresher, the nonsolicitation agreement at issue restricted Lanning’s ability to “(either directly or indirectly) solicit, induce, or encourage any employee(s) to terminate their employment with Manitowoc or to accept employment with any competitor, supplier or customer of Manitowoc” for a period of two years. When Lanning left Manitowoc Company for a competitor, Manitowoc Company alleged other employees followed him due to his solicitation in violation of this agreement. Of course, litigation ensued (and, now, two blog posts followed).

Confirming the Court of Appeals, the Wisconsin Supreme Court held that nonsolicitation agreements are subject to Wisconsin’s restrictive covenant law. This meant that Manitowoc Company’s (and your) nonsolicitation agreement had to meet all five requirements of Wis. Stat. § 103.465: 1) be reasonably necessary for the protection of the company; 2) have a reasonable time limit; 3) have a reasonable territorial limit; 4) not be harsh or oppressive to the employee; and 5) not be contrary to public policy.

Unfortunately for Manitowoc Company, not only did the Court disagree with its legal argument, it also found that its nonsolicitation agreement did not get past the first requirement, rendering it unenforceable. Specifically, it found that because Manitowoc Company’s nonsoliciation agreement was not limited territorially or to a certain class of employees, it “restricts Lanning’s conduct as to all employees of Manitowoc Company everywhere” – something it did not have a protectable interest in restricting, even if its intent was to enforce the restriction more narrowly in practice.

The takeaway: “A non-solicitation of employees provision may be enforceable under Wis. Stat. § 103.465 if it is reasonably necessary to protect the employer and reasonable as to time, geography, and type of conduct covered.” So, time to pull out your employment agreements and see if your nonsolicitation agreement stands up. Don’t have a nonsolicitation agreement, but are thinking about including one? Talk to an attorney. No need to find out the hard (and expensive) way that your agreement isn’t worth the paper it’s written on.

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Attorneys Walcheske, Luzi, and Temeyer Named Rising Stars by Thomson Reuters http://www.walcheskeluzi.com/blog/rising-stars/ http://www.walcheskeluzi.com/blog/rising-stars/#comments Mon, 11 Dec 2017 23:54:08 +0000 http://www.walcheskeluzi.com/?p=4190 Last month, the attorneys at Walcheske & Luzi, LLC were once again honored as Rising Stars in Employment Law by Thomson Reuters. This year marked the sixth straight year Attorneys James Walcheske and Scott Luzi received this honor and the first year for Attorney Kelly Temeyer!

“Just being nominated says a lot about our firm and our attorneys, but to be named Rising Stars again and across the board speaks volumes to what we are doing here and our reputation throughout the State. It’s always an honor and I’m looking forward to us keeping the streak alive.” – James Walcheske

To be named Rising Stars, Thomson Reuters put our attorneys’ accomplishments through a multi-step process. First, they had to be nominated for the award or recognized by Thomson Reuters as candidates. Second, they were evaluated by Thomson Reuters based on twelve indicators of peer recognition and professional achievement. Third, they were subjected to peer evaluation from another attorney in the area of Employment Law. Finally, they went through a final selection process.

Only 2.5% of attorneys in the State of Wisconsin, including the attorneys at Walcheske & Luzi, make it through this process and are ultimately named Rising Stars.

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Proof That Overtime Rule Changes Are Still Coming http://www.walcheskeluzi.com/blog/proof-that-overtime-rule-changes-are-still-coming/ http://www.walcheskeluzi.com/blog/proof-that-overtime-rule-changes-are-still-coming/#comments Wed, 01 Nov 2017 17:17:00 +0000 http://www.walcheskeluzi.com/?p=4173 We all remember the freak out in 2016 when the Department of Labor (DOL) announced changes to the overtime rules, including increasing the minimum salary requirement from $23,660 to $47,476 for white collar workers. We were right there with you, talking about it nonstop at our presentations and seminars. We also all remember when everything came to a screeching halt when a federal court judge in Texas issued a preliminary injunction blocking the changes. In fact, it was our biggest news story in 2016.

It is easy to forget about the changes, since they seemingly feel like forever ago. However, you may be surprised to learn that the federal judge who blocked the changes did not actually enter a final ruling invalidating the changes until recently – August 31, 2017. The delay was the result of the change from the Obama administration to the Trump administration, including changes to people at the top of various departments, including the DOL.

Alexander Acosta, the new U.S. Secretary of Labor, hinted that changes to the overtime rule may be in the offing around the time of his appointment. More recently, in July 2017, the DOL issued a Request for Information seeking comments on what, if any, increase should be made to the minimum salary requirement for purposes of exemption. Finally, on October 30, 2017, we received confirmation that changes are in the works.

On October 30th, the DOL appealed the Texas judge’s decision to the United States Court of Appeals for the Fifth Circuit. At the same time, the DOL asked the Fifth Circuit to “hold the appeal in abeyance while the Department of Labor undertakes further rulemaking to determine what the salary level should be.” Translation: hold on a sec while we change the salary level again. The presumption is that the new salary threshold will be somewhere in the lower 30’s, maybe around $32,000. Regardless, whenever it makes its decision, the DOL will issue a new rule and then argue that the case now pending before the Fifth Circuit is moot (meaning it’s pointless and should be dismissed because the rule at the heart of the challenge has been abandoned for whatever the new rule is).

We’ll keep an ear and eye out for any news on the rule change. Remember that even when it is issued, there will be time to implement it before you will be held to it. Take a deep breath. We’ll get through this.

Stay tuned.

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Six Workplace Takeaways from Harvey Weinstein, et al. http://www.walcheskeluzi.com/blog/six-workplace-takeaways-from-harvey-weinstein-et-al/ http://www.walcheskeluzi.com/blog/six-workplace-takeaways-from-harvey-weinstein-et-al/#comments Fri, 27 Oct 2017 00:37:48 +0000 http://www.walcheskeluzi.com/?p=4171 Unless you’ve been living with your head in a pumpkin, you’ve now seen/heard countless news stories regarding instances of sexual harassment and assault, from Harvey Weinstein to George H.W. Bush. Beyond never again being able to look at a potted plant the same (thanks, Harvey), here are six workplace takeaways:

  1. Sexual harassment is alive and well. There are (or at least there were/have been) plenty of nay-sayers who believe that sexual harassment is a thing of the past. Clearly that is not the case and no one should be assuming that is the case in the workplace.
  2. Anything that could constitute sexual harassment must be taken seriously. Plenty of people apparently knew about Weinstein’s crazy disgusting ways, but chalked it up to “Harvey being Harvey.” Let’s be clear: there is and cannot be any “Harvey being Harvey” in the workplace. Every employee handbook includes a sexual harassment policy stating that sexual harassment is taken seriously. Don’t just say it, do it.
  3. Because an employee does not immediately raise sexual harassment to your attention does not mean it’s any less serious or that it was welcome. We’ve heard this numerous times over the years, but these recent stories, many of which involve events that transpired years ago, should drive this point home.
  4. If you see or if someone who works for you sees conduct that could constitute sexual harassment, begin the investigation process. Going back to point 3, not all sexual harassment is immediately reported and it’s your job to make sure it has no place in your workplace, reported or not.
  5. Even if an employee asks you not to take any action or to “keep it quiet” for now, you need to do your job and begin the investigation process. Again, it’s your duty to make sure sexual harassment does not occur in your workplace and, if it does, that it is promptly and properly addressed.
  6. The current spotlight on sexual harassment provides a prime opportunity for you to review your handbook, policies, and procedures (particularly complaint procedures), to make sure they are up-to-date, designed to effectively address problems, and do not leave anything unaddressed. It’s also a great time to make sure your executives, management, and supervisors are all properly trained to handle and address sexual harassment in the workplace, and that your employees are trained on how to identify it and bring it to your company’s attention.
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When is social media activity a breach of a non-solicitation agreement? http://www.walcheskeluzi.com/blog/when-is-social-media-activity-a-breach-of-a-non-solicitation-agreement/ http://www.walcheskeluzi.com/blog/when-is-social-media-activity-a-breach-of-a-non-solicitation-agreement/#comments Tue, 26 Sep 2017 15:25:51 +0000 http://www.walcheskeluzi.com/?p=4156 Many employers are trying to limit the potential damage an employee might cause upon termination of the employment relationship by agreeing to post-employment limitations with employees. These restrictions can come in a variety of forms but most prominently they include non-competition and non-solicitation agreements. The latter can usually be further divided into agreements not to solicit customers and agreements not to solicit former co-workers after the employment relationship ends. (For more on a recent Wisconsin Supreme Court case addressing whether non-solicitation agreements are restrictive covenants under Wis. Stat. § 103.465, see our blog post here.)

Of course, with the wide-spread use of social media platforms such as Facebook and LinkedIn, the interesting question arises of when does social media activity cross over into prohibited solicitation? If an individual posts to their “network” that they have a new job with a great new employer, has that person solicited customers? If an ex-employee updates her status with available positions at her new employer but does not direct it to anyone in particular, is that prohibited solicitation?

These are all good, common questions and a recent court of appeals opinion brought to us by dirty Bears fans our friends in Illinois gives employers some valuable insight. In Bankers Life and Casualty Company v. American Senior Benefits LLC, et al., Gregory Gelineau left his employment with Bankers Life and took a position with ASB. While at Bankers Life, Gelineau agreed to terms that included he would not solicit his co-workers after his employment relationship ended. The Illinois Court of Appeals for the First Division took on questions related to the definition of “solicitation” where allegedly:

[A]fter joining ASB, Gelineau recruited or attempted to recruit Bankers Life employees and agents from the Warwick, Rhode Island office by sending LinkedIn requests to connect to three employees, Richard Connors, Sally Levesque, and Russell Dolan. According to Bakers Life, its employees ‘would then click onto [Gelineau’s] profile [and] would see a job posting for ASB.’

In addressing the issue of whether the LinkedIn posts breached the non-solicitation restrictions, the court highlighted multiple cases on this area of the law with holdings falling on both sides of the question. To answer the question at hand, the Bankers Life Court looked to “the content and the substance of the communications.” Examining the substance of the LinkedIn connection invitations, the court found they “did not contain any discussion of Bankers Life, no mention of ASB, no suggestion that the recipient view a job description on Gelineau’s profile page, and no solicitation to leave their place of employment and join ASB. . . . Furthermore, Gelineau’s post of a job opening with ASB on his public LinkedIn portal did not constitute an inducement or solicitation in violation of his noncompetition agreement.” Thus, the Illinois court of appeals was unwilling to find a mere LinkedIn connection request and general post to be a violation of non-solicitation terms.

This case is the latest example showing that the best chance for employers to enforce a non-solicitation agreement against an employee who is getting too cozy with former co-workers or clients on social media is to spell out what conduct applies in the agreement. Courts generally are unwilling to interpret agreements that lack these specifics in a way so that indirect social media activity is covered by agreements not to solicit.

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Foxconn Fever: Three Unique Wisconsin Employment Law Issues for New-to-Here Employers http://www.walcheskeluzi.com/blog/foxconn-fever-three-unique-wisconsin-employment-law-issues-for-new-to-here-employers/ http://www.walcheskeluzi.com/blog/foxconn-fever-three-unique-wisconsin-employment-law-issues-for-new-to-here-employers/#comments Mon, 18 Sep 2017 21:28:28 +0000 http://www.walcheskeluzi.com/?p=4130 Wisconsin currently has a hot case of Foxconn fever. Spurred by a $3 billion state subsidy package, the Taiwanese company is set to build a new manufacturing center in Wisconsin that has the potential to create 13,000 jobs. When established employers in other states (or countries) look to expand in Wisconsin, some of our unique employment law requirements can often be overlooked. Here are three of the most common compliance issues for new-to-Wisconsin employers.

1.) Arrest and Conviction Record Discrimination. The Wisconsin Fair Employment Act protects individuals from discrimination or harassment in the workplace in a host of ways not offered by federal law. Chief among these is that an employer is prohibited from discriminating against a job candidate on the basis of his or her arrest or conviction record. This means that if an employer decides not to hire a candidate because of a conviction that appears on a “routine” background check, the employer must be able to show that the conviction is substantially related to the job duties and responsibilities of the position for which the individual applied. Thus, employers new to Wisconsin need to evaluate any background check policies and make sure they are considering this protection before deciding against hiring an applicant.

2.) Overtime Exemptions. Similar to the Fair Labor Standards Act, Wisconsin requires employers to pay overtime to employees who work over 40 hours in a workweek. Also like the Fair Labor Standards Act, Wisconsin’s state overtime requirement exempts individuals who hold executive, administrative, and professional positions. However, there is a significant difference in the “job duties analysis” between the federal and state exemptions. Under federal law, an individual’s “primary duty” must consist of the executive, administrative, and professional work to qualify for the respective exemption. There is not a specific amount of time identified by law or regulation that an individual must perform exempt work for it to be his or her “primary duty.” Contrast this position with Wisconsin, which requires that an individual not devote more than 20% of his or her hours in a workweek to non-exempt activities to maintain the exemption. For executive or administrative exempt employees in a retail or service establishment, this percentage goes up to 40%. Therefore, employers new to Wisconsin need to more closely audit exempt positions to make sure this 20% threshold does not apply.

3.) Wisconsin Family and Medical Leave. Like federal Family and Medical Leave Act, the Wisconsin Family and Medical Leave Act provides qualifying employees with periods of unpaid leave for a serious health condition or the birth or adoption of a child. A key difference between the federal and state laws lies in Wisconsin’s “buckets of leave.” That is, federal law provides an individual with one mass of up to twelve weeks of leave regardless of whether the leave is for the employee’s serious health condition, a family member’s serious health condition, or the birth or adoption of a child. Wisconsin, however, provides specific periods of leave that depend on the need for leave. For an employee’s own serious health condition, the employee is permitted two weeks of leave. For the serious health condition of an employee’s family member, the employee is permitted a different “bucket” of two weeks leave. Lastly, for the birth or adoption of a child, the employee is permitted six weeks of leave.

A common issue for new-to-Wisconsin employers occurs when the individual might exhaust federal leave for one reason, but still have Wisconsin leave for another. For example, an individual might have a surgery on his leg that requires twelve weeks of leave. Assuming the need for surgery is a serious health condition under the Family and Medical Leave Act, the individual would have exhausted his federal leave benefit. Now say the same individual welcomes his first child in the same year. Under Wisconsin law, the individual still has a right to six weeks of leave for the birth of his child. Thus, this employee can be entitled to eighteen weeks of leave in a single year. In light of these circumstances, new-to-Wisconsin employers must closely track not only the amount of family or medical unpaid leave an employee takes, but employers must also closely track the reasons for the leave.

While this post isn’t exhaustive, these are just a few of the common issues we see for employers who come to Wisconsin with established policies and procedures in another state. Such employers must take care to cater their compliance efforts to every jurisdiction, just like Wisconsin.

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Looking Into the Restrictive Covenant Crystal Ball: Wisconsin Supreme Court Oral Argument in The Manitowoc Co. Inc. v. Lanning http://www.walcheskeluzi.com/blog/looking-into-the-restrictive-covenant-crystal-ball-wisconsin-supreme-court-oral-argument-in-the-manitowoc-co-inc-v-lanning/ http://www.walcheskeluzi.com/blog/looking-into-the-restrictive-covenant-crystal-ball-wisconsin-supreme-court-oral-argument-in-the-manitowoc-co-inc-v-lanning/#comments Fri, 08 Sep 2017 13:47:12 +0000 http://www.walcheskeluzi.com/?p=4126 During presentations I lead on non-competition and non-solicitation agreements, I frequently point out that employers need to have these contracts reviewed regularly. I emphasize this suggestion because, almost as sure as Wisconsin will see snow this winter, there is a significant case that comes out every few years affecting whether these agreements are enforceable. For geeks like me those who closely follow restrictive covenant law, September 5, 2017, was a significant date as the Wisconsin Supreme Court heard oral argument in the case of The Manitowoc Co. v. Lanning. This case raised several questions about restrictive covenants that will very likely require employers to re-examine any agreements they have in place and give lawyers new guidelines in drafting future contracts.

Restrictive covenants are regulated by Wisconsin Statute § 103.465. Prior to the Lanning case, I think it is fair to say that most attorneys treated non-competition agreements (or agreements that restrict where an employee can work after the employment relationship ends) and non-solicitation agreements (or agreements that restrict who an employee can talk to after the employment relationship ends) as falling under the gamut of § 103.465. However, one of the issues raised by Lanning is whether a non-solicitation agreement is a restraint that falls under § 103.465.

Courts have interpreted § 103.465 to impose numerous requirements on restrictive covenants to be enforceable contracts. Most notably, courts require restrictive covenants to meet a five factor standard to be enforceable, which includes that any restrictive covenant must: (1) be necessary for the protection of the employer; (2) provide a reasonable time limit; (3) provide a reasonable territorial limit; (4) not be harsh or oppressive as to the employee; and (5) not be contrary to public policy.

The restrictive covenant at issue in Lanning was an employee non-solicitation provision that stated:

I agree that during my Employment by Manitowoc and for a period of two years from the date my Employment by Manitowoc ends … I will not (either directly or indirectly) solicit, induce, or encourage any employee(s) to terminate their employment with Manitowoc or to accept employment with any competitor, supplier or customer of Manitowoc.

The Lanning case is going to be a significant decision no matter who comes out on top. The Wisconsin Supreme Court will likely answer multiple questions about restrictive covenant law that are pertinent to such agreements. Namely, are non-solicitation agreements subject to § 103.465? If so, how specific must the restrictions of a non-solicitation agreement be so that it is enforceable? Based on this week’s oral argument, here are three predictions on what we may expect from the Court’s decision.

Prediction Number 1: The Court will hold that non-solicitation agreements are restraints on trade and therefore subject to analysis under § 103.465.

Part of Manitowoc Co.’s argument was that a non-solicitation agreement is not an agreement that restrains where an individual can work so the highly critical analysis under § 103.465 should not apply. Several of the justices strongly questioned this argument. Most notably was Justice Gableman who did not seem to think that this position reflected the realities of the workplace. At one point, Justice Gableman said “How things work in the real world . . . is that the way most people get the jobs they want . . . [is] by hearing from their friends, hearing from people that they know, hearing from their mentors, hearing from their associates.” Justice Gableman’s voice may be considered especially important to this decision as he authored a recent significant opinion that had wide ranging affects on restrictive covenant law in Wisconsin, in Star Direct, Inc. v. Dal Pra. The justices who raised questions on this issue seemed to agree that an employee non-solicitation agreement impedes employee mobility and is thus subject to § 103.465.

Prediction Number 2: The Court will hold that the loss of an employee in and of itself is not a protectable interest for an employer seeking to enforce a non-compete agreement.

In the lower court’s opinion, it presented a hypothetical that was significant to the court of appeals concluding that the non-solicitation agreement was overbroad. The court of appeals faulted the non-solicitation agreement for not strictly protecting Manitowoc Co. from the loss of an individual to another employer that competes with Manitowoc Co. To illustrate this point, the court of appeals noted that under the terms of the non-solicitation agreement, Lanning would be prohibited from convincing another employee of Manitowoc Co. to retire so that he or she could spend more time with family.

The Court is likely going to need to clarify whether Manitowoc Co. had a protectable interest in the loss of an employee in and of itself for purposes of the five factor analysis under § 103.465. Perhaps surprisingly, Justice Ann Walsh Bradley, considered to be among the Court’s minority liberal wing, seemed to raise the strongest question from this hypothetical of whether it is possible for an employer to draft an enforceable agreement. However, Justice Rebecca Bradley, of the Court’s conservative bloc, seemed to find the court of appeals’ hypothetical to be persuasive and the lack of any strong challenge to it by another justice suggests to me that employers will need to identify a competitive purpose to prohibit the solicitation of employees.

Prediction Number 3: The Court will address whether the circumstances of a restrictive covenant breach affects whether the provision is enforceable in the first instance.

Surprisingly, this issue seemed to be a point on which multiple justices focused. That is, whether the Court could consider the facts and circumstances of the employee’s breach in determining whether the restrictive covenant is reasonable. Justice Gableman was especially critical of Lanning’s argument seeking to exclude the facts of the breach in determining whether the non-solicitation agreement was reasonable. Chief Justice Roggensack’s questions also seemed to suggest that she is willing to explore the circumstances at the time the parties agree to a restrictive covenant can be used to determine a reasonable interpretation of its boundaries. Coming down strongly on the side of Lanning, however, was Justice Kelly who reminded the Court that § 103.465 requires that a restrictive covenant is unenforceable “even as to any . . . performance that would be a reasonable restraint.” I anticipate that the Court will ultimately go back to the statutory language to conclude Manitowoc Co.’s non-solicitation agreement is overbroad but may leave some room to consider narrowly limited, case-specific circumstances at the time of executing one of these agreements to determine whether a restriction is reasonable.

Readers can view the Lanning oral argument here. The Wisconsin Supreme Court’s opinion in Lanning is sure to offer new insights into restrictive covenant law. Be sure to check back to not only see if any of my predictions were correct, but also to confirm whether you may need to update the restrictive covenants in your workplace.

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When is Unequal Pay Not a Violation of the Equal Pay Act? http://www.walcheskeluzi.com/blog/when-is-unequal-pay-not-a-violation-of-the-equal-pay-act/ http://www.walcheskeluzi.com/blog/when-is-unequal-pay-not-a-violation-of-the-equal-pay-act/#comments Wed, 03 May 2017 21:26:45 +0000 http://www.walcheskeluzi.com/?p=4102 The Equal Pay Act of 1963 prohibits sex discrimination in pay for completing the same work. An employer has multiple statutory defenses at its disposal, including that the differential is  “based on any other factor other than sex.”

The recent Ninth Circuit Court of Appeals decision in Rizo v. Yovino put this affirmative defense to the test under circumstances that employers may commonly experience. The employer relied on a schedule to determine the starting salaries of its employees. To determine a new employee’s salary, the employer looked at the employee’s most recent prior salary and put the employee on that step of the employer’s schedule plus 5%. The employer and female employee agreed that she was paid less than her male counterparts for the same work. The employer argued, however, that her salary was based on the schedule, which was a factor other than sex.

The Ninth Circuit agreed with the employer in finding the defense applied to the plaintiff’s Equal Pay Act claim and the employer’s use of the schedule. The Ninth Circuit cited its prior precedent that held if an employer relies on prior salary to determine compensation, then the employer must show its use of prior salary was reasonable and effectuated some business policy. In Rizo, the court credited four business policies cited by the employer in relying on the schedule: (1) it is objective; (2) it encourages employee mobility; (3) it prevents favoritism; and it is a judicious use of taxpayer dollars. The court concluded that under these facts the district court erred in denying the employer’s motion for summary judgment.

As mentioned above, this case comes from the Ninth Circuit Court of Appeals which is the federal appellate court for Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. Despite the geographic distinction, it is significant to Wisconsin because the opinion was written by Judge Lynn Adelman. Judge Adelman is one of the judges for Eastern District of Wisconsin, the lower federal court, but was sitting by designation on the Ninth Circuit for this decision and wrote the Ninth Circuit’s opinion. Indeed, the opinion is similar to the decision of the Seventh Circuit Court of Appeals on the same issue in Wernsing v. Dept. of Human Servs., State of Ill. However, the Seventh Circuit does not require employers to demonstrate that the policy is reasonable and effectuates some business policy as the Ninth Circuit requires.

This case is also notable because of an increase in legislative activity concerning whether individuals should reveal prior salary history when seeking new employment. Last September, a bill introduced in the House of Representatives would prohibit employers from asking about salary history with employees or applicants. Closer to home in Wisconsin, similar legislation has been introduced in the Assembly and Senate. If ever signed into law, these measures could have a significant impact on a defense that has served employers well in the past.

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Paid Family and Medical Leave Introduced in Wisconsin http://www.walcheskeluzi.com/blog/paid-family-and-medical-leave-introduced-in-wisconsin/ http://www.walcheskeluzi.com/blog/paid-family-and-medical-leave-introduced-in-wisconsin/#comments Tue, 25 Apr 2017 21:13:29 +0000 http://www.walcheskeluzi.com/?p=4099 Late last week, a group of Democratic state senators in Wisconsin introduced a bill to provide for paid family and medical leave or 2017 Senate Bill 215. While it is unlikely to receive much more legislative attention given the current political control of all branches of Wisconsin government, it is a topic that has publicly generated an increased amount of discussion in recent years.

The bill calls for paid family and medical leave to work much like unemployment benefits currently operate in Wisconsin. Employees would pay a percentage of their income towards a trust fund established to distribute benefits to approved applicants. Family and medical leave benefits would be paid weekly and based on the individual’s average annual income as compared to the state’s annual median wage. For example, an individual who makes 30% of the state’s annual median wage would receive benefits of 95% of their average weekly earnings while an individual who earns at least 80% of the state’s annual median wage is eligible to receive 66% of their average weekly earnings as benefits.

Certainly, 2017 Senate Bill 215 does not relieve the administrative headaches that exist in Wisconsin due to similar but differing state and federal family and medical leave laws. Readers are likely well-acquainted that Wisconsin provides “buckets” of leave that grant employees a certain amount of weeks of leave depending on their reason while federal law provides for a mass of 12 weeks of leave for any and all qualifying reasons. The Wisconsin paid family and medical leave bill goes farther with paid and unpaid benefits in making employers with 25 or more employees eligible to provide leave and allowing for grandparents to take leave to care for grandchildren.

Another common issue for employers that remains intact under the Wisconsin paid family and medical leave bill is substitution of leave. An issue that is frequently overlooked by employers, Wisconsin law currently allows for employees to substitute “paid or unpaid leave of any other type provided by the employer.” By providing paid leave and keeping the substitution provision of WFMLA, employees face the prospect of extensive paid leave rights if employers do not carefully review other paid leave benefits they provide to employees.

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