Posts tagged with "Employment Lawyers"

Preemptive Effect of LMRA Extends to Suits Alleging Liability in Tort

Collective Bargaining Agreements (CBA)

Labor relations between an employer and a union are typically defined in a Collective Bargaining Agreement (“CBA”) between the two.  The CBA sets forth the parties’ respective rights and obligations with respect to such things as wages, hours, and other terms and conditions of employment.  The Labor Management Relations Act (“LMRA”) grants jurisdiction to the federal district courts for “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce.”

If resolution of a state law claim turns upon interpretation of the CBA, the claim is preempted and subject to dismissal by the federal court.  But “when the meaning of contract terms is not the subject of dispute, the bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.”

A Relevant Case

A decision of the Second Circuit Court of Appeals pointed out the fuzzy line that can sometimes exist between a preempted claim and one that is not.  In Adonna v. Sargent Mfg. Co., 2012 U.S. App. LEXIS 10343 (2d Cir. May 23, 2012), a union employee brought claims against his employer for intentional and negligent infliction of emotional distress.  The employer conduct complained of included reassignment, suspension, reduction in pay, and demands not imposed on any other employee.

The Court of Appeals concluded that whether or to what extent this conduct was wrongful could be determined only by examining the CBA provisions relating to the employer’s right to manage, direct, and discipline the workforce, and set employee wages.  Because the employee’s claims were “inextricably intertwined” with the terms of the CBA they were preempted and properly dismissed by the trial court.

Employers and employees alike should be aware of the extensive preemptive effect of the LMRA.  It is the rare state-law tort claim that will not require not only the consultation, but also the interpretation of the relevant CBA, thereby resulting in preemption at the federal level.

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our office at 203-221-3100.

Identifying de facto Geographical Limitations in Connecticut Non-Compete Agreement

New Haven Tobacco Co., Inc. v. Perrelli, 18 Conn.App. 531
Case Background

New Haven Tobacco Company operated a wholesale tobacco business and entered into an employment contract with Mr. Frank Perrelli in December 1980.  As part of the contract, Mr. Perrelli signed a non-compete agreement wherein he agreed to “not directly or indirectly sell products similar to those of the Employer (New Haven Tobacco Co.) to any of the customers he has dealt with or has discovered and became aware of while in the employ of the Employer for a period of twenty-four months from the termination of his employment”.

In November 1981 Mr. Perrelli voluntarily left the employ of New Haven Tobacco and proceeded to start his own wholesale tobacco business.  New Haven Tobacco sued to recover money damages and for injunctive relief in the form of a court order restraining Mr. Perrelli’s wholesale tobacco business activities.

The Court’s Decision

The trial court found in favor of Mr. Perrelli and denied New Haven Tobacco’s injunction application.  It found that the agreement lacked geographical limitations and went against the public’s interest.  New Haven Tobacco appealed to the Appellate Court of Connecticut claiming that the trial court erred when it held that the non-compete agreement was unenforceable.  The Appellate Court reversed the trial court’s decision and found in favor of New Haven Tobacco.  The Appellate Court held that the agreement in dispute focused not on Mr. Perrelli engaging in a certain business sector, but instead on the prohibition of transacting with a specific group of customers, namely those of his former employer, New Haven Tobacco.

By limiting the customers the agreement applied to, the agreement in essence instituted a geographical limitation.  The customer list was local and de facto limited the agreement to the greater New Haven area.  The Appellate Court also held that the trial court erred with regard to invalidating the non-compete agreement on the grounds of public interest.  The trial court concluded that the provisions of the agreement aided in creating and maintaining a monopoly on the wholesale tobacco business and thus disadvantaged customers and was contrary to public interest.

The Appellate Court however found this assertion to be unsubstantiated and held that the non-compete agreement did not unreasonably interfere with the public’ interest.  The enforcement of the non-compete agreement would not disadvantage the public or place hardships on individuals wishing to transact in the local tobacco wholesale industry.

 

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Excessive Geographical Limitation in Connecticut Non-Compete Agreement Found Unenforceable

Timenterial, Inc. v. Dagata, 29 Conn. Supp. 180
Case Background

Timenterial was a company that engaged in the sale and rental of mobile units and had previously employed Mr. James Dagata.  The employment contract contained a non-compete clause wherein Mr. Dagata agreed not to “engage in any business venture having to do with the sale or rental of mobile homes or mobile offices in a fifty miles radius from any existing Timenterial, Inc. sales lot” for one year following the termination of his employment.

Mr. Dagata terminated his employment on June 1, 1970, and Timenterial claimed that he had been active in business ventures involving mobile homes beginning June 12, 1970, at an office located a mere one-quarter mile from Timenterial’s Plainville, CT office.  Timenterial commenced a suit for violation of the non-compete agreement and sought to restrain Mr. Dagata from further mobile home business ventures in accordance with the agreement.

The Court’s Decision

The court found in favor of Mr. Dagata and held that the non-compete agreement was unenforceable because the geographical restriction in the agreement was unreasonable and excessive.  At the time of legal proceedings, Timenterial had seven facilities in Connecticut, four in Massachusetts, two in Vermont, and one in New Hampshire.  The court applied the fifty-mile radius as stipulated in the agreement and held that this territorial prohibition was unreasonable.

The application of the agreement would mean that Mr. Dagata could not be involved in the mobile homes business in all or substantial parts of Connecticut, New York, Massachusetts, Vermont, New Hampshire, and Rhode Island.  This placed excessive restrictions on Mr. Dagata and severely limited the opportunity for him to practice his occupation.  This excessive and burdensome characteristic of the non-compete rendered the agreement unenforceable and the court concluded that Mr. Dagata’s actions did not constitute a breach of the restrictive covenant.

 

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Connecticut Courts Strike Down Unreasonable Non-Compete Agreements

Connecticut Courts Strike Down Unreasonable Non-Compete Agreements

Have you lost your job?  Your career? This economy is brutal and has affected millions of Americans.  Countless people have been fired or laid off, and a lot of folks are struggling to regain their livelihood, especially in the banking industry.  The current job market is lean and extremely competitive, and as a result, finding a replacement job to make ends meet has become difficult.  Remarkably, in some instances, it is not the economy that is preventing these folks from rejoining the ranks of the employed, but rather it is their former employers!

Assume this scenario for a moment.  Stock-Broker was working for JPMorgan in New York City, and her employment ended. She was either let go because of the economy or she just wanted a change in scenery.  After her employment with JPMorgan came to end, she received an offer from Morgan Stanley in Stamford, a competitor with JPMorgan in the investment banking industry.  Morgan Stanley is great.  They give free bagels out for breakfast on Wednesdays.  Stock-Broker decides she wants to take the job with Morgan Stanley, but there is a caveat.

When Stock-Broker began working for JPMorgan she signed an agreement that she would not work for another investment bank within a 60-mile radius for a year. The question then becomes not whether Stock-Broker wants to work for Morgan Stanley, but does the law allow her?  Does this scenario seem familiar to you?  If it does, please continue reading.

What is a Non-Compete Agreement

Typically, when an investment banker begins a career with a new employer, he or she signs a “non-compete” agreement.  This agreement essentially bars a former employee from engaging in a business that competes with the former employer.  This is certainly the case with hundreds of New York investment banks who require their bankers to sign a non-compete before they begin working.  When determining whether Stock-Broker in our hypothetical above can work for another investment bank, the legality of her non-compete agreement must be examined.

How Connecticut Approaches Non-Compete Agreements

In Connecticut, courts take a hard-line approach to non-compete agreements, and usually view them as against public policy.  This does not mean that all non-compete agreements are struck down, however they must be reasonable in order to survive.  To determine the reasonableness of a non-compete agreement, Connecticut courts take numerous factors into account such as the length of time the restriction lasts, the extent of the geographic area the former employee is barred from working in, and the public interest. See Robert S. Weiss & Associates, Inc. v. Wiederlight, 208 Conn. 525, 529 n.2, 546 A.2d 216 (1988).

Under this multiple factor test, if any restriction is found to be unreasonable, then the agreement fails, and the employee is free to work where he or she will.   A non-compete agreement usually fails because the time-limit or geographic boundaries are unreasonable.  Typically, if the agreement restricts the former employee from engaging in a competing business within one year of termination and within a five-mile radius, a Connecticut court will not overturn it.  In contrast, during a non-compete agreement dispute, a Connecticut court quickly struck down a 50-mile radius restriction. See generally Braman Chemicals, Conn. Super. Ct.  LEXIS 3753 (2006).

Furthermore, Connecticut courts have routinely struck down non-compete agreements that restrict anything more than a 35-mile radius.  See e.g., Nesko Corp. v. Fontaine, 19 Conn. Super.  Ct. 160, 110 A.2d 631 (1954); see also Trans-Clean Corp. v. Terrell, Conn. Super. Ct. LEXIS 717 (1998) (court noted that the 60-mile radius from the employer’s home office in Stratford encompassed approximately 75% of the state); see also Timenterial, Inc. v. Dagata, 29 Conn. Super. Ct. 180, 277 A.2d 512 (1971) (50-mile radius restriction held invalid).

Analyzing a Hypothetical Non-Compete Agreement

Apply these factors to our Morgan Stanley hypothetical.  Remember, Stock-Broker signed a non-compete agreement with JPMorgan that provided she would not work for a competing investment bank within a 60-mile radius. Unfortunately for Stock-Broker, Stamford is in Connecticut and only 40 miles away.  Stamford’s location falls within the 60-mile radius in JPMorgan’s non-compete agreement, and thus Stock-Broker would be violating the agreement if she took the job.

Stock-Broker takes the job anyway and JPMorgan sues her.  Stock-Broker argues that her non-compete agreement is unreasonable and therefore invalid.  The Connecticut court will apply the five factor test, and based on past rulings, most likely find that a 60-mile radius is too large of a geographic area.  Subsequently, Stock-Broker will then be allowed to take the position with Morgan Stanley.

Now, let us assume that JP Morgan is also in Stamford, and Stock-Broker signed a non-compete that restricted her from working with a competing business within a 15-mile radius.  JP Morgan sues Stock-Broker and she again argues to invalidate the non-compete for unreasonableness.  This time however, the outcome will be different.  The geographic distance of a 15-mile radius is negligible compared to a 60-mile radius, and Connecticut courts have routinely upheld non-competes that contain such a distance.

Conclusion

Non-compete agreements prevent thousands of stock-brokers from regaining employment in investment banking.  A lot of former employees believe there is nothing that can be done; when in reality a lot of non-compete agreements would most likely not hold up in court.  If you’re a stock-broker who was fired or laid off, and is struggling to find a replacement job in the investment banking world because of your employment contract, call us here at Maya Murphy P.C. and we’ll give you free advice.

Is a Bonus a ‘Wage’?: Not According to a Recent Connecticut Supreme Court Decision

Is a Bonus a ‘Wage’?:  Not According to a Recent Connecticut Supreme Court Decision

Are you currently employed in Connecticut and have been promised a year-end bonus or had been promised a year-end bonus and never received it?   A recent Connecticut Supreme Court decision may affect the amount of protection you are afforded under Connecticut law if your employer defaults or has defaulted on that promise.

This recent case addressed the question of whether a year-end bonus promised by an employer is considered a ‘wage’ for the purposes of the Connecticut Wage Act.  Answering that question in the negative, the Supreme Court denied a Connecticut employee the ability to proceed with a wrongful withholding of wages claim that he had initially pursued after his employer failed to pay out what the employee had thought to be a promised year-end bonus.

Under this decided Supreme Court case, the amount of liability your employer will face for failing to pay out a promised year-end bonus will hinge upon how your employer defined the conditions under which a bonus would be paid.  If the conditions are specific goals set for you as an individual employee (e.g. a certain number of billable hours need to be reached), then under the Connecticut Wage Act your employer will be required to pay out that bonus as wages in accordance with their promise.  If they do not, you are afforded the protections of the Wage Act and can bring an action against your employer for wrongfully withholding wages.  If successful, it is possible that you could receive, by way of damages, twice the full amount of your bonus and any attorney fees incurred in pursuing the action.  In addition, due to the serious nature of such an offense, your employer could potentially be fined and/or imprisoned for their actions.

Unfortunately, however, if your employer was more ambiguous about the requisite conditions for a bonus, under this new case law, it is likely that they will be able to avoid liability for wrongfully withholding your wages.  If that is the case, while you can still pursue other causes of action against your employer, you will not be able to receive twice the full amount of your bonus or attorney fees.

The events of this recently decided case unfolded as follows:   At the beginning of the employment relationship between an employee and a Connecticut law firm, the parties agreed that the employee’s annual compensation would consist of a base salary and a year-end bonus.  The employment contract called for this year-end bonus to be based on factors such as seniority, business generation, productivity, professional ability, pro bono work, and loyalty to the firm.  The employee remained at the firm for several years and each year he received his salary and the promised year-end bonus.  When the employee left the firm he discovered that he was not going to receive the year-end bonus for that last year of his employment.  To try and recover what he had thought was a promised bonus; the employee commenced an action against his employer alleging breach of contract and wrongful withholding of wages.

The trial court dismissed the wrongful withholding of wages claim, determining that the year-end bonus was not ‘wages’ as defined by the Connecticut Wage Act.  The breach of contract claim, however, went to trial.  The Trial Court found in favor of the employee and awarded him damages in the amount of his year-end bonus plus interest.  On appeal, the Appellate Court upheld the Trial Court’s finding as to the breach of contract claim but reversed the Trial Court’s decision to dismiss the wrongful withholdings of wages claim.  The Appellate Court determined that the structure of the agreement as to the year-end bonus meant that the bonus could have been classified as ‘wages’ under the Connecticut Wage Act and therefore held that the employee could proceed with his wrongful withholding of wages claim.

The issue of the wrongful withholdings of wages claim was appealed to the Connecticut Supreme Court where the Court decided that because the employee’s bonus was discretionary, (not ascertainable by applying a formula) it did not constitute ‘wages’ under the Connecticut Wage Act.  The employee, therefore, was not able to proceed with his wrongful withholding of wages claim.

Although the employee did recover some monetary damages through his breach of contract claim, it was not anywhere near as much as he would have received if he had been able to proceed with his wrongful withholding of wages action.

It is quite possible that after the release of this opinion many employers will revisit their bonus policies to make the language a little less precise or announce that their bonuses are discretionary in order to take advantage of the protections afforded under this recent case.  It is important, therefore, that as an employee you are aware of what kind of bonus you have been promised so that you know how strongly to rely on that promised bonus and what options are available to you if the employer refuses to pay.

If you have already been denied your year-end bonus and believe that it was a discretionary bonus, there are still ways in which you can potentially recover that lost income, such as the breach of contract claim pursued by the employee in this recent case.  If you have been denied a year-end bonus that was not discretionary and you had met the required conditions for receiving that bonus, you are still protected under the Connecticut Wage Act and can bring a wrongful withholding of wages action against your employer.  This action may allow you to receive damages in the amount double your bonus and possibly receive any incurred attorney fees.

If you have any questions regarding employment and labor law in Connecticut, please contact Joseph C. Maya, Esq. He can be reached at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com. Mr. Maya handles cases involving employment contracts, separation agreements, non-competition agreements, restrictive covenants, union arbitrations, and employment discrimination cases in New York and Connecticut.

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Litigating Non-Compete Agreements in Connecticut

In Connecticut, the breach of an employment agreement by an employer is a recognized defense to the enforcement of a covenant not to compete. The breach must be material. For example, if the employee were promised a bonus or stock options and the employer refused to honor the promise. In order for the breach to effectively waive the non-compete restriction, the employee must timely object to the breach by the employer, otherwise the breach is waived. For more information, or to discuss an employment contract, non-compete, stock options, or bonus situation with an attorney, please contact Joseph C. Maya, Esq. at JMaya@Mayalaw.com or (203) 221-3100.

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Litigating Non-Compete Agreements in Connecticut

In Connecticut, the breach of an employment agreement by an employer is a recognized defense to the enforcement of a covenant not to compete. The breach must be material. For example, if the employee were promised a bonus or stock options and the employer refused to honor the promise. In order for the breach to effectively waive the non-compete restriction, the employee must timely object to the breach by the employer, otherwise the breach is waived. For more information, or to discuss an employment contract, non-compete, stock options, or bonus situation with an attorney, please contact Joseph C. Maya, Esq. at JMaya@Mayalaw.com or (203) 221-3100.

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