By Iris K. Tilley & Gabrielle A. Hansen

There is no denying that time has moved particularly fast over the past year and a half. In the world of employee benefits, the law has changed, adapted and updated in a multitude of ways to move with the needs of plan participants and sponsors. Below we discuss some of these changes so that employers can prepare for the changes ahead.

Health Plans

COBRA

The specific measures affecting COBRA include extension of COBRA deadlines until 60 days after the end of COVID-19 National Emergency (the Outbreak Period) and a 100 percent COBRA Subsidy in the American Rescue Plan Act (ARPA).

The COBRA deadline extensions tolled major COBRA deadlines, including the election of COBRA. After their implementation in 2020, these extensions were extended again in February. This February extension revised the application of the previously extended deadlines to extend them for the lesser of one year from the original deadline or the end of the Outbreak Period. The Outbreak Period is still ongoing as of July 15, 2021, but each individual COBRA beneficiary is limited to one year of Outbreak Period relief.

The ARPA introduced the other major change related to COBRA in the past year: subsidized COBRA coverage. The subsidy took effect on April 1 and will last until Sept. 30. It is available to anyone, including dependents, who lost employer-provided group health coverage because they experienced a reduction in hours or an involuntary termination.

The subsidy has altered the way employers administer COBRA in several ways. First, under ARPA rules, employers were required to provide notices to those individuals who experienced a qualifying event prior to the start of the subsidy, but who could enroll in subsidized coverage starting April 1. Second, it includes a second notice requirement regarding the end of subsidized coverage. Finally, and most relevant to employers’ day-to-day operations, it calls for changes to the COBRA forms that employers use when an individual experiences a loss of coverage.

Optional Provisions for Section 125 Plans and Dependent Care Plans

Among the notable optional changes, for plan years ending in 2020 or 2021, employers may lengthen the grace period or increase the carryover limit to allow employees to utilize otherwise unused 125 Plan funds. And for plan years beginning after December 31, 2020, and before January 1, 2022, employers may amend their 125 Plan to increase the limit of the amount that an employee can exclude from their income for dependent care assistance from $5,000 to $10,500 and from $2,500 to $5,250 for taxpayers who are married filing separately.

Self-Insured Health Plan Mandates

While sponsors of self-insured health plans have often been able to stay out of the regulatory fray, recent federal legislation has put the compliance spotlight on these plans. In particular, new mental health parity testing requirements rolled out this spring, and transparency and “no surprises” mandates will take effect in 2022.

Payroll Considerations

Both Washington and Oregon introduced new payroll considerations for employer withholding in the last year.

WA Cares

In Washington, the WA Cares long-term care benefit requires employers to start withholding the mandatory employee-side payroll tax January 1, 2022.

WA Cares is a long-term care benefit designed to provide payment for benefits necessary for daily living. The program is funded by an employee-side only payroll tax. Benefits are scheduled to be available starting in 2025 for employees who have met the contribution requirements and who are otherwise eligible.

There is a one-time opt-out available to individuals who do not wish to participate in the program. Individuals wishing to opt out must obtain alternative long-term care insurance and opt out between Oct. 1, 2021 and Dec. 31, 2022.

Preschool For All

In Oregon, the Multnomah County Preschool for All Tax took effect on Jan. 1, 2021. This tax is a personal income tax measure that affects individuals earning over $125,000 individually or $200,000 jointly who work or live in Multnomah County.

Employer withholding is required starting Jan. 1, 2022. This tax may come as a surprise to the employees to whom it applies, so employers should be prepared to explain the withholding.

Conclusion

As the Biden administration continues, it is apparent that we will continue to see developments regarding employer sponsored health and welfare plans. Further, although deadlines for plan sponsor action related to some of the changes that have already occurred may have recently seemed far off, they are now approaching.

To learn more about the topics discussed herein and more, register for Barran Liebman’s upcoming webinar presented by Iris Tilley: “Preparing for 2022: Your Benefits & Compensation Planning Guide,” by emailing jpeterson@barran.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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When Oregon’s new salary history ban went into effect earlier this month, it became illegal for employers to inquire about a job applicant’s salary history until a job offer has been extended.

The ban is just the first step in larger changes that employers will need to comply with when the Oregon Equal Pay Act of 2017 goes into full effect on Jan. 1, 2019.

Since receiving unanimous approval from the Oregon Legislature this past May, the act has drawn attention for being one of the most expansive in the country. While federal and most state equal pay laws require fair pay for men and women, Oregon’s new act expands existing law beyond gender, making it also illegal to pay less based on race, color, religion, sexual orientation, national origin, marital status, disability or age.

“This was a huge amendment, unprecedented in every sense of the word both at the state (level) and nationwide,” said Anne Milligan, an associate attorney in the Portland office of Fisher Phillips whose practice includes pay equity issues. “Oregon is the only state that (will cover) 10 protected classes, instead of just being about men and women.

“It’s harder even than California,” she added. “It’s really a hard-line statute.”

In addition to more qualifying categories of who must be given equal pay, Oregon’s new act is being viewed as groundbreaking for taking bold steps in other areas. The equal standards, for example, aren’t limited to wages and salaries; they also apply to benefits.

For employers faced with a lawsuit from an employee, the act also contains a “safe harbor’ clause. If an employer can prove it made a good-faith effort to conduct an equal-pay analysis within the past three years (as long as the analysis was reasonable in detail and scope) that corrected for any previous pay gaps, the company may be protected from having to pay compensatory or punitive damages, although it could still be held liable for economic damage such as back wages owed.

The new rules also focus on a shift in how employers determine whether given employees are appropriate comparators in how similar their jobs are. For example, under federal standards, equal pay requirements would apply only where employees are performing jobs that are “substantially equal.”

But that’s a high bar to meet and can be very difficult to evaluate, according to Shayda Zaerpoor Le, an associate attorney with Barran Liebman, whose practice includes equal pay issues. By contrast, Oregon’s new equal pay requirements apply where employees are performing work that is of a “comparable character.”

Oregon’s new act also comes with several exceptions for circumstances and situations in which employees can be paid more than others doing comparable jobs. This is permissible when the difference in pay is based upon merit, seniority, quantity or quality of production, education, training, experience, workplace locations or travel requirements.

BOLI is still developing the accompanying regulations for the act, and the agency has reportedly indicated it won’t begin enforcing any aspect of law – including the salary history ban that went into effect this month – until the act fully goes into effect in 2019. In addition, although employees with grievances can file complaints with BOLI, they won’t be able to file civil suits against employers they believe have violated conditions of the new act until 2024.

But attorneys like Milligan and Le say they’re telling their clients it’s not too early to start digging into current procedures and compiling information.

Le also offers a suggestion for how an employer might want to tackle the task.

“Start with a list of all your employees, compile the information about their salaries, begin evaluating how their positions are similar or different, and force yourself to articulate how you’ve traditionally made salary choices,” she said. “You really want to work backwards from how those decisions are usually made to see if they correlate appropriately with the nature and character of the positions.

Milligan also recommends that employers consider whether they might benefit from having an independent audit conducted – i.e., salary information run through software programs.

“If you’re pegged with a lawsuit (after the act goes into effect), you have an audit that shows you’ve corrected (pay gaps),” Milligan said.

While the new changes are expansive and will require some time and effort to implement, taking a look at how pay has been provided to employees in the past – and examining whether those practices and systems need to be changed – can yield benefits, such as helping companies create a consistent and standardized process for making sure all employees are being evaluated fairly.

“Particularly for larger organizations, it may be more common to see variations in how salary decisions are made between different departments and managers,” Le said. “But revisiting those processes may also allow you to make evaluations … about things you’ve rewarded historically that you may (now) realize aren’t as important or impactful to your business.”

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The latest session in Barran Liebman‘s 2015 Food For Thought series of law seminars will focus on the different tools that employers can use to protect company proprietary, confidential information in light of present-day challenges such as those that come with shorter-term employees.

Tyler Volm, an attorney with firm, will lead the Dec. 1 seminar. He holds a bachelor’s degree from the University of Oregon and a business law certificate from Lewis & Clark Law School. He uses his background in business law to represent employers in a wide range of industries in state and federal courts. He has written for several publications, including the Daily Journal of Commerce and Legal & Compliance Essentials, and frequently speaks at events on topics such as privacy issues, affirmative action obligations and employer testing issues.

During the seminar, Volm will discuss effective uses of confidentiality and nondisclosure agreements, how employers can solidify protections during entry and exit interviews, and the concept of trade secrets.

The seminar will take place at Multnomah Athletic Club, 1849 S.W. Salmon St. Check-in will open at 7:15 a.m. The program will run from 7:45 to 8:45. The cost is $35 per person. For registration and additional information, email anelson@barran.com.

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An independent auditor hired to investigate budget overages during construction of an employee building at the Columbia Boulevard Wastewater Treatment Plant found no evidence of illegal practices, according to Portland Commissioner Nick Fish.

“In response to the auditor’s report about the new Bureau of Environmental Services employee building at the Columbia Boulevard Wastewater Treatment Plant, I committed to bring in an outside law firm to review the findings, conduct an investigation, and issue a written report on lessons learned and ‘best practices,’ ” Fish wrote in an email. “In its report, Barran Liebman LLP found no evidence that laws, rules or ethical guidelines were violated. However, the report raises a number of red flags about bureau practices and decisions.”

The Bureau of Environmental Services recently completed design and construction of an office building that was supposed to cost $3.2 million. Instead, ratepayers forked over $11.5 million to complete the building.

Portland City Auditor LaVonne Griffin-Valade conducted an audit of the project and released in October 2014, stating that cost increases were due to the bureau expanding the project’s scope, making “discretionary design choices” and failing to oversee the project during the design phase.

Fish’s office hired Barran Liebman‘s investigators to review the auditor’s report, investigate whether any laws, rules or guidelines were violated, and analyze project management decisions.

The firm’s report states: “We found no evidence that funds were misappropriated, misdirected or mishandled (with the sole exception of the pass-through payment to the designer discussed in more detail below). We also found no evidence that caused us to question the motivations of the BES staff. While there is considerable legitimate debate about BES decisions and judgment calls and whether the right choices were made, we saw evidence that the BES staff tried to make the best choices for the city and the ratepayers and we were impressed with their skill level. Our review, however, identified practices and decisions that contributed to the controversy and which we believe should be evaluated by the city in its ongoing discussions about best practices in managing capital projects of this magnitude.”

The “pass-through payment” mentioned in the report was a transaction during the design phase in which the project’s general contractor, Skanska, paid the project’s design firm, Skylab, and was reimbursed from the construction budget.

“We did not find any evidence to suggest that the design work was not performed and we did not find any evidence to suggest that the design work was unnecessary,” Barran Liebman investigators wrote in their report. “BES had, however, incurred the expense without authority. Specifically it had permitted design work to proceed when the design budget was exhausted and ultimately arranged for payment from the construction budget by means of a pass-through.”

Barran Liebman issued 11 recommendations the bureau should implement in order to prevent a situation like this from occurring again. Fish said he’s “already initiated a number of reforms that address many of the findings. They are designed to strengthen accountability and transparency.”

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If you run a staffing firm or utilize a staffing firm in your business, chances are good that compliance with the Affordable Care Act (ACA) is somewhere on your list of concerns. For people running staffing firms, questions of when to offer coverage and who to cover tend to dominate the discussion. Meanwhile, staffing firm clients struggle to confirm whether ACA penalties will be triggered by staffing-firm employees.

Penalties: the big picture

We will get to what we know about each of these issues, but first, a reminder: The period during which penalties may be assessed under the ACA will begin on Jan. 1, 2015. During this first year, penalties will be assessed only against employers with 100 or more full-time equivalent employees.

In 2016, this number will drop to 50 or more full-time equivalent employees. Penalties will be assessed in 2016 based on information reported in employer tax filings and records of those employees who received help paying for coverage on the insurance exchanges.

Employers are vulnerable to penalties if they either fail to make an offer of coverage to at least 70 percent (95 percent after 2014) of their employees working 30 or more hours per week, or if they make an offer of coverage but the offered coverage is either insufficient or unaffordable. Various forms of transitional relief reduce penalties in 2015 and give some employers a free pass for a few months, but this covers the basics at a big-picture level.

The staffing-firm challenge

At its most fundamental level, the challenge faced by staffing firms and their clients is a question of employment. Specifically, which entity employs a W-2 employee supplied by a staffing firm to a client, or “who’s the boss?” Identifying the W-2 employer matters because penalty exposure and reporting requirements under the ACA are driven by employee count, and a single staffing-firm employee could trigger thousands of dollars in penalties if his or her W-2 employer fails to comply with the ACA.

In addition, many staffing-firm placements are designed to be only temporary in nature or to work erratic hours, triggering further questions about whether and when they should actually receive an offer of health insurance coverage.

ACA compliance

While, like so many areas of the ACA, more guidance on this issue is needed, both staffing firms and the employers who rely on them can help protect themselves from penalty exposure (and in the case of staffing firms, client discontent) with a few steps:

1. Clarify W-2 relationships. Review staffing firm agreements, offer letters to employees and handbook language to ensure that it is clear that the staffing firm operates as a staffed-employee’s W-2 employer. Language directing the employee to contact the staffing firm’s human resources, and not the client company’s human resources is helpful, but both the staffing firm and client entities may want to consult with employment counsel regarding the latest joint-employer issues.

2. Review (and possibly revise) agreements. Final ACA regulations include a special safe harbor for staffing firms and their clients, which relieves clients from penalty exposure for staffed workers where: 1, the staffing firm makes an offer of health coverage to the worker, and 2, the fee paid by the client is higher than the fee the client would have paid to the staffing firm if the staffing firm did not make an offer of health coverage to the employee.

Some staffing-firm clients have asked firms they work with to sign addendums to existing agreements that explicitly provide for these terms. In some cases, this may mean that a staffing firm with fewer than 100 employees will discover that it is in the firm’s business interests to offer coverage to employees it places with larger employers to assuage those clients’ concerns about ACA penalties.

3. Become familiar with the rules and safe harbors. This guidance is really just for the staffing firms, but for those staffing firms that have not already done so, it is not too late to become familiar with when penalties will be imposed for a new hire and when measurement and stability periods may allow the firm to delay making an offer of coverage.

In particular, while the ACA does not include an exception for temporary employees, no penalty will actually be assessed against a new hire until the new hire’s fourth month of employment. This means that very short-term placements do not pose a penalty risk. However, staffing firms must be mindful that an employee who bounces from temporary position to temporary position with the same staffing firm can pose a penalty risk because the law will aggregate the employee’s service in the multiple temporary positions.

Similarly, when used properly, measurement and stability periods can offer some relief. An employee-benefits attorney is helpful in crafting these periods and ensuring that they are properly documented, because measurement and stability periods allow employers to delay making an offer of health coverage to those employees who are brought on for a seasonal or variable-hour position. (A variable-hour position is one for which the employer legitimately does not know if the employee will work sufficient hours to qualify for health insurance.)

Bringing it all together

In light of these complexities and the significant monetary impact that may result for both staffing firms and businesses that use staffing firms, careful consideration of the regulations and the particulars of an organization can save it thousands of dollars in penalties. Taking a proactive approach is likely to be well worth the investment.

Iris Tilley is a partner at Barran Liebman LLP. She advises employers about all aspects of employee benefits, including health care under the ACA. Contact her at 503-276-2155 or itilley@barran.com.

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Noncompetition agreements may be declared unenforceable or void depending upon the state law, the scope of the agreement and other factors. Therefore, it is important that a company require its employees to sign agreements containing other types of restrictive covenants limiting them from soliciting the company’s customers and employees, prohibiting acceptance of business from former clients and preventing improper use, disclosure or misappropriation of confidential information.

Covenants restricting competition

Noncompetition restrictions are not enforced in every jurisdiction. For example, California prohibits noncompetition agreements in almost all circumstances. Some other states impose requirements such as advance notification of noncompetition restrictions or a requirement of execution of the noncompetition restriction prior to or upon initial employment.

Noncompetition restrictions are also subject to attack if they are overly broad in scope or duration. On the other hand, noncompetition restrictions that are narrow and intended to prohibit the individual from performing a specific type of work or working in a specific industry are more likely to be enforced. Similarly, noncompetition restrictions that are shorter in duration or confined to a specific geographic area are more likely to be upheld.

Non-solicitation restrictions

An agreement should also contain a separate non-solicitation restriction that restricts an individual from soliciting both customers of the company and employees of the company. Although some courts treat non-solicitation restrictions the same as noncompetition restrictions, in most jurisdictions non-solicitation restrictions are viewed as less restrictive than noncompetition restrictions that prevent an individual from going to work for a competitor.

A non-solicitation restriction allows an individual to work for a competitor but restricts that person from soliciting the customers or employees of the company. Non-solicitation restrictions are more likely to be enforced if they are for a limited duration. Some states, such as Oregon, cap the duration of non-solicitation restrictions.

Clauses prohibiting acceptance of work

Many jurisdictions allow employees who have terminated their employment to publish an announcement informing the public of their new position with a different company and their new contact information at that new company. Former employees often contend that they did not solicit customers following separation from their former employer, asserting that the former customer approached them and sought to renew the relationship. A clause restricting a former worker from accepting the business from former customers may be effective and enforceable, even if the individual made no direct solicitation to that former client or customer.

Confidentiality restrictions

Even if noncompetition restrictions and non-solicitation restrictions and restrictions against accepting business are not enforced, the company should always have language in its agreement that protects against taking, disclosing or otherwise misappropriating confidential information.

The agreement should define the term “confidential information” and often will include information concerning customers, vendors, suppliers, financial data and business operations. Any definition of confidential information should include information that is stored on electronic devices.

Also, the provision should require the return of all confidential information upon termination, for whatever reason. Confidentiality restrictions should apply to conduct during the course of employment and for an indefinite duration after employment.

In jurisdictions where noncompetition or non-solicitation restrictions are unenforceable, if the court determines that confidential information has been used by a departing individual to unfairly compete or conduct customer solicitations of former customers, then courts (even in California) often rule that such conduct is improper.

Provisions permitting rewrites or revisions of overly broad covenants

An agreement containing restrictive covenants should include a “blue pencil” provision empowering the court to revise or rewrite or narrow an overly broad covenant so that it can be enforced as revised. However, the danger of having a covenant that is excessively overbroad is that a court may decide that it will not make any revisions and instead declare entire covenants as void and unenforceable.

Clause extending the restriction in the event of breach

An agreement containing restrictive covenants should also contain a clause that provides that in the event that a violation is established, the restrictive period should be extended so as to run from the date when the breach is identified.

Choice of law and venue provisions

The agreement should provide that it is governed by the law of a particular state, such as the law where the company is headquartered or the county and state in which the individual works. A choice of venue provision is recommended particularly for companies that want to have disputes heard in the state and county where the company is headquartered. In some instances courts will decline to enforce a choice of law or choice of forum provision if there is an overriding interest in the state in which the individual works or is employed.

In summary, even if some restrictive covenants are not enforced as written, it is strategically advantageous to have a variety of restrictions in an agreement so that if a court declines to enforce some restrictive covenants, it will have the option to enforce other provisions or modify provisions.

Richard Hunt is a partner at Barran Liebman LLP. He represents and advises clients concerning employment law issues, including noncompetition and trade secrets litigation, and employment-related litigation on behalf of employers. Contact him at 503-276-2149 or rhunt@barran.com.

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Workplace violence is a sad reality of our world today. Last year, there were 397 workplace homicides in the United States. Just last month, a former employee walked into a UPS facility in Alabama and shot and killed two people, and in Oklahoma someone recently terminated by Vaughan Foods returned to his former workplace and attacked and killed a former co-worker.

Unfortunately, the question is not if more incidents of workplace violence will occur, but rather where they will occur. If one were to occur at your workplace, would you be prepared? For too many of us, the answer is “no.” If you find yourself in a violent incident at work, your survival may depend on whether you and your employer have a plan.

While employers may not possess the power to fix the social forces that contribute to workplace violence, they can control the effect of workplace violence on their employees. In fact, employers have some legal responsibility to do so. The Occupational Safety and Health Administration (OSHA) recently cited several employers for failing to provide employees with adequate safeguards against violent acts that occur in the workplace. In August, OSHA announced that it fined a company $71,000 for failing to adequately protect employees against workplace violence.

To protect employees, employers should take the following steps: research previous incidents, conduct a site visit, develop a written plan, train employees on the plan, test the plan and revise as needed. Research should not be limited to an employer’s own facility, but include others with similar operations. For example, employers with a perimeter gate and access badges can learn valuable lessons about removing former employees’ access to the facility by studying the September 2013 incident at the Navy Yard in Washington, D.C.

By conducting a site visit, an employer can assess both the specific types of threats likely to occur and whether current facilities provide adequate protection and resources in the event of an incident. A site visit may reveal the need for some simple changes that could mean the difference between life and death, such as installation of a lock on an office door to provide an effective hiding place from an intruder. An office remodel presents a great opportunity to redesign the workspace to prevent entrapment of employees or to build in controlled access to employee work areas.

Employers need to develop a written plan. The plan should instruct employees how to prevent or defuse an incident of violence. Employers are wise to train employees on how to identify escalating behavior in co-workers, patients or customers. When employees spot the warning signs of escalating behavior, such as confusion, frustration, blame, anger, and finally hostility, they should contact their supervisor.

Supervisors should be trained on the appropriate strategic response to the escalating behavior. Employers should also develop procedures for employees to discreetly alert supervisors and co-workers of an escalating situation and the need for assistance. For example, it is common practice in hospitals to alert staff to emergencies by using a public address system; “code silver” typically indicates a combative person with a weapon. Such a warning provides employees the opportunity to take steps to protect themselves.

If it is not possible to prevent an incident of workplace violence, employees should be trained on how to respond appropriately. There are three things employees can do that make a difference: run, hide or fight.

First, if employees can get safely out of harm’s way, they should do so. Employees should help others leave too, but not at the risk of slowing down their own exit. If employees do not have a safe escape path, they should find a place to hide. Employees should turn out lights, lock doors and silence cellphones. Only as a last resort should employees try to engage an intruder.

It is important for employees to know that first responders’ top priority is not to evaluate individuals or attend to the injured, but rather to stop the intruder. Employees need to remain calm and hidden until authorities communicate that the scene is safe. These steps can make a difference in employees’ survival.

It is not enough to have a great plan; employers must also ensure that everyone experiences how it will work. It is a best practice for employers to conduct workplace violence drills. Such drills require careful planning to ensure employees and visitors understand the incident is simulated. Placing a camera, such as a GoPro, on a simulated intruder provides great data to analyze how employees responded and how to improve their response. This data will aid employers with the final step: revising the plan as needed.

It is often said that nobody plans to fail; they just fail to plan. The consequences of employers failing to plan for an incident of workplace violence could have dire consequences. Employers may want to avoid planning for a situation that seems altogether too terrible to consider; however, preparing employees for safety will demonstrate care for their well-being. Employers can prepare employees for an incident of workplace violence by training and equipping them on how to properly manage the crisis.

Kyle Abraham is an attorney at Barran Liebman LLP. He represents employers in traditional labor and employment law matters. Contact him at 503-276-2132 or kabraham@barran.com.

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Historically, many employers required executives, managers, sales personnel, technical staffers, and other important employees to execute a non-compete agreement restricting them from working for a competitor. However, other alternatives available to employers may accomplish similar objectives with less risk.

Non-competes often are unenforceable

A covenant to not compete is the most restrictive covenant, and increasingly subject to challenge or disfavor. Consequently, employers should consider whether they can achieve their goals by requiring employees to sign other forms of restrictive covenants that are less likely to be challenged.

The enforceability of non-competes varies by state. Some states, such as California, make non-competes void in almost all circumstances. Other states, such as Oregon, impose a number of conditions upon employers seeking to hold employees to non-compete agreements.

Oregon requires that the employer inform the employee in a written employment offer of the non-competition restriction at least two weeks before the employee’s first day of employment. The employer must also show that the employee is exempt from Oregon’s overtime laws, and earns an annual salary exceeding the median family income for a four-person family. Non-competes are unenforceable against employees who do not meet these criteria, even if they sign a non-compete agreement.

Increasingly, courts carefully scrutinize non-competes to determine whether they are necessary to protect the employer’s business, goodwill or information. Courts look at the nature of the work performed and whether the non-compete restricts the employee from performing identical work for others or whether it is a broad prohibition of performing any work for a competitor. Courts also examine the geographic scope and duration of the agreement. If it is determined that the non-compete is too broad, the court may refuse to enforce the agreement as written.

Improve chances of enforceability

Promotions: In some circumstances an employer may have a greater chance of successfully enforcing a non-compete in instances where an employee is promoted. In such cases, even though the employee was not notified in advance of hire of a non-compete restriction, the employer can show: 1, the individual is being promoted to a new managerial or executive position; 2, there is a significant increase in compensation; and 3, the promoted employee is assigned new duties and greater responsibilities.

Invite the court to narrow restrictions: An employer may be able to avoid the consequences of a court refusing to enforce a non‑compete as written by including language that invites the court to carve back the agreement so as to allow it to be enforced narrowly as to the nature of the work restricted, the geographic area subject to the restriction, or the length of the restriction. However, there is also a risk that the court will decline to modify the non-compete restriction and will declare it void without narrowing the language, in order to make it narrower in scope, geographic restriction, or length of restriction.

Consider alternative restrictive covenants

Employers may be able to accomplish many of the same goals as a non-compete by requiring an employee to agree to other restrictions, such as those against disclosure, use of confidential or trade secret information, or solicitation of customers or employees.

Confidentiality and nondisclosure agreements: Courts are more likely to enforce confidentiality restrictions (regardless of whether they are signed in advance of employment) because employers have protectable interests in avoiding misappropriation or disclosure of confidential or trade secret information.

In order to be a protectable trade secret, the company’s information must derive independent economic value from not being generally known to the public, and must be subject to efforts to maintain its secrecy. Confidentiality covenants help employers establish that the information provided to an employee is confidential. Employers may also take steps to limit disclosure by marking data as confidential or by adopting a policy that limits the access, use or disclosure of information stored on electronic storage devices. Employers able to prove that such information, whether technical data, business information, financial information, pricing information, customer information or other information are trade secrets, may be able to obtain attorney’s fees, double damages, and an injunction against disclosure.

Non-solicitation restrictions: In states such as Oregon, non-solicitation restrictions prohibiting an employee from soliciting customers or other employees are treated differently than non-competes. Thus, even in those circumstances in which a company seeks to bind its workers to a non-competition restriction, it should set out a separate provision restricting employees from soliciting the company’s customers on behalf of a competitor and restricting an individual from soliciting current employees to go work for a competitor. Thus, even if the non-compete is declared unenforceable, the non-solicitation restrictions may still be enforced.

However, not all states treat non-compete agreements and non-solicitation restrictions differently. For example, except in very narrow circumstances involving the misuse of confidential information, California does not make legal distinctions between non-compete and non-solicitation agreements.

Non-compete isn’t always the best option

In summary, obtaining non-competes may not always be the best option because those restrictions may be costly to draft, certain statutes impose many preconditions and hurdles to enforceability, and in the end, a court may rule that the non-compete is unenforceable.

In contrast, confidentiality and nondisclosure agreements are restrictions that typically may be imposed at the time of employment or during the course of employment, and are effective tools to protect companies’ business interests. Similarly, in many circumstances separate restrictions against soliciting customers and employees, both during the term of the agreement and following an employee’s separation from the company, may protect companies’ business interests.

Richard Hunt is a partner at Barran Liebman LLP. He advises and represents employers on a variety of matters, including non-competition and trade secret litigation. Contact him at 503-276-2149 or rhunt@barran.com.

The post OP-ED: Alternatives to non-compete agreements appeared first on Daily Journal of Commerce.

Last month, the New York Times’ editorial board declared that it was “high time” to end federal prohibition of marijuana. The announcement was newsworthy as the latest social indicator of changing public attitudes about marijuana usage and criminalization. However, for the Times’ human resources department, the editorial stance in favor of marijuana legalization arguably has created more headaches than anything else.

Within 24 hours of the editorial board’s announcement, the Huffington Post and other Internet sites ran stories about the Times’ company policy of subjecting all new hires to a pre-employment drug screening that includes testing for marijuana metabolites. Additionally, a petition on change.org, urging the Times to make its internal policy consistent with its editorial board’s views on the need to “end legal discrimination against people who use marijuana” has received over 5,000 signatures.

I mention this anecdote not to criticize the company’s drug policy or to suggest that a newspaper’s editorial board has any business dictating a large media company’s personnel policy, but rather as an example of the way in which an employer can find itself pulled in mutually exclusive directions on the issue of marijuana.

Another example of the same phenomenon can be seen in the New Mexico Court of Appeals’ 2014 decision in Vialpando v. Ben’s Automotive Services. In the case, the court affirmed the decision of an administrative law judge ordering an employer to reimburse an injured worker for the cost of medical marijuana.

The court rejected the employer’s argument that the administrative decision was illegal because the employer “would be required to violate federal law in reimbursing (the) worker for his medical marijuana expenses.” Instead, the court reasoned, in light of the federal decision not to challenge Washington’s and Colorado’s voter-initiated decisions to legalize and regulate marijuana possession, production and distribution, it was appropriate to enforce the state’s Compassionate Use Act by requiring the employer to reimburse the employee’s medical marijuana expenses.

As states continue to relax marijuana laws, and public acceptance of marijuana continues to grow, these incongruous and internally inconsistent results will only become more common on the employment landscape.

Currently, 22 states and the District of Columbia allow for some form of medical marijuana. In November, Oregon is likely to become a state that allows for and regulates the production and sale of recreational marijuana. Other states are likely to follow suit. Indeed, according to the Pew Research Center, 54 percent of Americans favor legalization of marijuana.

So, how is an employer to respond? Unfortunately, there is no one-size-fits-all answer.

For many employers, if not most, compelling operational needs to strictly maintain a drug-free workplace will remain unchanged.

For example, employers that service federal contracts within the United States are subject to the federal Drug-Free Workplace Act; any relaxation in employer policy could jeopardize the contract. Similarly, employers that have employees performing safety-sensitive functions risk, among other things, potential liability on claims of negligent hiring or retention, were those employers to relax their marijuana policies and a workplace injury involving a marijuana-impaired employee were to occur.

Nonetheless, anecdotal reports suggest that in certain less-skilled industries and geographic areas, employers have challenges finding sufficient eligible applicants who can pass a pre-hire marijuana screening. In such circumstances, where there is not a specific safety or other operational need to safeguard against off-duty marijuana usage, it may make sense for an employer to tailor its policies on marijuana usage to capture on-duty impairment, but leave that employee to his or her own devices when off the clock.

As the law in this area is in a state of flux, employers are well-served to seek guidance from an employment attorney who can help develop a policy that meets the unique operational needs of the employer but also complies with operable laws.

José Klein is an attorney with Barran Liebman LLP. He advises and represents employers on a wide range of labor and employment law matters. Contact him at 503-276-2199 or jklein@barran.com.

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Imagine receiving a job application from an individual who appears highly qualified for the position you seek to fill. You eagerly invite the person to interview, but you are slightly surprised when he arrives because he uses a wheelchair and cannot travel up the stairs at the front door to the office.

Or picture a valued worker who suddenly begins to appear continually exhausted and starts losing her hair. She starts calling in sick frequently, and becomes far less productive. One of her co-workers then tells you that this valued worker is undergoing cancer treatment, but doesn’t want anyone to know.

Employers might think that because employees’ medical information is private, they should simply avoid the subject — and if they don’t ask questions, they won’t get into trouble. But employers can easily imagine situations in which they might want to know more.

Employers can lawfully ask employees about medical information for a variety of reasons, including to accommodate a disability or to provide required leave. Both of these reasons relate to employment, which means that the Health Insurance Portability and Accountability Act has little to do with these inquiries because it generally does not apply to employment records. Because the circumstances under which employers might need employee medical information are so varied, following is only a general overview of the key principles governing requests for medical information in the disability and medical leave contexts.

Several laws govern the rights of employees with disabilities, but the main one is the Americans with Disabilities Act. The ADA seeks to both eliminate discrimination and ensure that individuals with disabilities receive reasonable accommodations to perform their jobs. These dual purposes can create difficulty.

On one hand, the law discourages seeking disability-related information from an employee or job applicant, to prevent discrimination. On the other hand, the law requires an employer to obtain enough information to be able to provide reasonable accommodations when needed.

To make things even more challenging, the ADA obligates employers to provide reasonable accommodations not only for those who have jobs, but also for job applicants. An employer is usually forbidden from asking job applicants whether they have a disability, but is simultaneously required to provide the applicant with reasonable accommodations required to complete the application process. The best approach, therefore, is to invite all applicants to request reasonable accommodations if required.

Employers can also ask all applicants whether they can perform particular job functions either with or without reasonable accommodation. And, if an applicant’s disability is obvious, or the applicant says that he or she has a disability that could interfere with performing job duties, the employer can ask the applicant to describe or demonstrate how he or she would perform certain job duties. Finally, applicants might bring up the subject and ask for reasonable accommodation, and then, employers may ask them what type of accommodation they require.

Employers can carry the principle a step further and consider the case of conditional job offers: giving a person a job offer conditioned on passage of a test. This practice is permissible so long as all similarly situated applicants are required to pass the test in order to gain employment.

The test might require applicants to exhibit certain skills or abilities required to perform the job safely, either with or without reasonable accommodation. If an applicant fails the test and is denied a job, the reason must be job-related and consistent with business necessity – the fact that an applicant requires reasonable accommodation to perform a job does not constitute sufficient reason to deny him or her the position.

An employer might also need to ask people for medical information once they are employed; for example, if they ask for a reasonable accommodation, or exhibit performance problems that can be reasonably attributed to a medical condition of which the employer is aware.

Employers can become aware of an employee’s medical condition in various ways: notification from the employee, observation, or reliable information from someone else. In any case, the goal is for an employer to obtain only that information it needs and nothing more — information sufficient to describe the employee’s disability and to substantiate why an accommodation is needed.

An employee may also need leave from work to care for his or her own health or the health of a family member. Numerous laws define employee entitlements to leave, including the federal Family and Medical Leave Act, the Oregon Family Leave Act and the Portland Protected Sick Time Ordinance. Detailed regulations implementing these laws set forth procedures for, and constraints on, obtaining medical information from employees.

An employer might need information from an employee to certify that leave is required, during leave if circumstances change, or upon an employee’s return from leave, to show that the employee can safely resume his or her duties. In some cases, the law does not provide for employees to certify initially that leave is required. An employee is entitled to take up to three consecutive days of Portland sick leave, for instance, without providing any sort of medical verification.

Ultimately, both disability and leave law requirements are detailed and complex, and employers are likely to encounter many occasions on which they might legitimately seek employee medical information. When in doubt about when and how to inquire, consult with an employment attorney.

Banu Ramachandran, an attorney with Barran Liebman LLP, practices employment law. She offers advice to employers and litigates on their behalf. Contact her at 503-228-0500 or banu@barran.com.

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