Many employers and employees have questions regarding their right to privacy while at work. One popular question is, are employers allowed to read employee e-mails?

Employers are legally allowed to monitor communications by employees on company owned communications devices including telephone, voicemail, e-mail, company owned cell phones with voicemail and text messaging capabilities as long as they inform employees that they should have no expectation of privacy.

A Plus Benefits encourages clients to create a policy stating that the employee should have no expectation of privacy. A sample policy can be found below:

Employees should have no expectation of privacy. Telephones, computers, e-mail systems, voice mail systems, lockers, desks, etc., are and remain the property of the Company. From time to time it may be deemed appropriate to monitor or search these systems and property.

Employees should not have any expectation of privacy when company computers are used for such purposes as e-mail, internet use, instant messaging, etc. Further, employees who have personal mail delivered to a Company address should have not expectations of privacy concerning mailed communications, while the Company has no desire to examine personal mail; there is no assurance that personal correspondence will not be inadvertently opened.

Such a policy will protect employers if they choose to monitor employee communications. For example, if a company decides to monitor an employee’s e-mails and the employer finds proof of some act leading to the termination of the employee, the employee would not be able to claim that he was unaware that his e-mail messages were being monitored and the company would avoid a potentially costly lawsuit.

Samantha Bushard is an HR employee at the Idaho office of A Plus Benefits, Inc.

The following article appeared in a June 9, 2008 SHRM Update.

FLSA (Fair Labor Standards Act) Amended To Increase Penalties for Child Labor Violations
By Allen Smith (Allen Smith, J.D., is SHRM’s manager of workplace law content)

This summer employers will face new penalties when youth who are working in violation of the Fair Labor Standards Act (FLSA) are injured or die on the job.

In addition to prohibiting discrimination based on genetic information, the Genetic Information Nondiscrimination Act (GINA) amended the FLSA to provide that employers may be penalized up to $50,000 for the death or serious injury of any employee under the age of 18 years. The penalty may be doubled if the violation is a repeated or willful violation.

In addition, GINA raised the maximum penalty for other violations of child labor rules from $10,000 per worker to $11,000 and increased the maximum civil penalty (which may be in addition to the ordered payment of unpaid wages and damages) for willful violation of minimum wage and overtime provisions of the FLSA from $1,000 per violation to $1,100.

Also, GINA added a definition of “serious injury” to the FLSA. Alexander Passantino, the U.S. Department of Labor (DOL) Acting Administrator for the Wage and Hour Division, told SHRM Online that this was the first time a definition of serious injury was provided in the statute.
“Serious injury” under the FLSA now means:

• Permanent loss or substantial impairment of one of the senses (sight, hearing, taste, smell, tactile sensation);
• Permanent loss or substantial impairment of the function of a bodily member, organ, or mental faculty, including the loss of all or part of an arm, leg, foot, hand or other body part; or
• Permanent paralysis or substantial impairment that causes loss of movement or mobility of an arm, leg, foot, hand or other body part.

The DOL is pleased that Congress raised the penalties for the violation of child labor laws, Passantino remarked. He noted that the DOL had proposed the increase “to act as a deterrent for dangerous conduct.”

The National Institute for Occupational Safety and Health (NIOSH) estimates that 157,000 youth sustain work-related injuries and illnesses each year, only a third of which result in emergency room treatment. Approximately 54 workers under 18 died on the job in 2007.

Passantino noted that most youth injuries on the job are not attributable to the violation of child labor laws. But as summer approaches, employers should refamiliarize themselves with the rules on youth employment, he said.

Restrictions on Youth Employment
Youth who are under the age of 14 generally are prohibited from nonagriculture work with certain exceptions such as for babysitters, newspaper deliverers and child actors. For youth who are 14 or 15 years old, certain hours of work are restricted during school weeks. Passantino said these youth are limited to three hours of work on school days up to 18 hours a week during school weeks. These teens cannot work more than eight hours on non-school days and 40 hours in non-school weeks.

What Hours Can Youth Work?
14 and 15 year olds can work:
Outside school hours
After 7 a.m. and until 7 p.m. (except from June 1 through Labor Day when 14 and 15 year
olds can work until 9 p.m.)
No more than 3 hours on a school day
No more than 18 hours in a school week
8 hours on a non-school day
40 hours in a non-school week
16 year olds and older can work:
Any day, any time of day, and for any number of hours.
There are no restrictions on the work hours of youth aged 16 and older
**See the DOL Website for complete details

What Jobs Can Youth Do?
The child labor rules that apply to non-agricultural employment depend on the age of the young worker and the kind of job to be performed. 14 years old is the minimum age for non-agricultural employment covered by the FLSA. In addition to restrictions on hours, the Secretary of Labor has found that certain jobs are too hazardous for anyone under 18 years of age to perform. There are additional restrictions on where and in what jobs 14-and 15-year-olds can work. These rules must be followed unless one of the FLSA’s child labor exemptions apply.

A youth 18 years or older may perform any job, whether hazardous or not.

A youth 16 or 17 years old may perform any non-hazardous job. (See the list of hazardous occupations below.)

A youth 14 and 15 years old may not work in the manufacturing or mining industries, or in any hazardous job. (See the list of hazardous occupations below.) In addition, a 14- or 15-year-old may not work in the following occupations:

Communications or public utilities jobs;
Construction or repair jobs;
Driving a motor vehicle or helping a driver;
Manufacturing and mining occupations;
Power-driven machinery or hoisting apparatus other than typical office machines;
Processing occupations;
Public messenger jobs;
Transporting of persons or property;
Workrooms where products are manufactured, mined or processed;
Warehousing and storage.

A 14- or 15-year-old may work in retail stores, food service establishments and gasoline service stations. However, a 14- or 15-year-old may not perform the following jobs in the retail and service industries:
Baking;
Boiler or engine room work, whether in or about;
Cooking, except with gas or electric grilles that do not involve cooking over an open flame
and with deep fat fryers that are equipped with and utilize devices that automatically lower
and raise the baskets in and out of the hot grease or oil;
Freezers or meat coolers work;
Loading or unloading goods on or off trucks, railcars or conveyors;
Meat processing area work;
Maintenance or repair of a building or its equipment;
Operating, setting up, adjusting, cleaning, oiling, or repairing power-driven food slicers,
grinders, choppers or cutters and bakery mixers;
Outside window washing, or work standing on a window sill, ladder, scaffold or similar
equipment;
Warehouse work, except office and clerical work.

The jobs a 14- or 15-year-old may do in the retail and service industries include:
Bagging and carrying out customer’s orders;
Cashiering, selling, modeling, art work, advertising, window trimming, or comparative
shopping;
Cleaning fruits and vegetables;
Clean-up work and grounds maintenance - The young worker may use vacuums
and floor waxers, but he or she cannot use power-driven mowers, cutters, and
trimmers;
Clean cooking equipment, including the filtering, transporting and dispensing of oil and
grease, but only when the surfaces of the equipment and liquids do not exceed 100° F;
Delivery work by foot, bicycle, or public transportation;
Kitchen and other work in preparing and serving food and drinks, but not cooking
or baking (see hazardous jobs);
Office and clerical work;
Pricing and tagging goods, assembling orders, packing, or shelving;
Pumping gas, cleaning and polishing cars and trucks (but the young worker
cannot repair cars, use garage lifting rack, or work in pits);
Wrapping, weighing, pricing, stocking any goods as long as the young worker
does not work where meat is being prepared and does not work in freezers or
meat coolers.

Hazardous Occupations
18 is the minimum age for employment in non-agricultural occupations declared hazardous by the Secretary of Labor. The rules prohibiting working in hazardous occupations (HO) apply either on an industry basis, or on an occupational basis no matter what industry the job is in. Parents employing their own children are subject to these same rules. Some of these hazardous occupations have definitive exemptions. In addition, limited apprentice/student-learner exemptions apply to those occupations marked with an *.
1- Manufacturing and storing of explosives
2- Driving a motor vehicle and being an outside helper on a motor vehicle
3- Coal mining
4 Logging and sawmilling
5- Power-driven woodworking machines *
6- Exposure to radioactive substances
7- Power driven hoisting apparatus
8- Power driven metal forming, punching, and shearing machines *
9- Mining, other than coal mining
10- Meat packing or processing (including the use of power driven meat slicing machines)
11- Power driven bakery machines
12- Power driven paper product machines, including scrap paper balers and paper box compactors *
13- Manufacturing brick, tile, and related products
14- Power driven circular saws, band saws, and guillotine shears *
15- Wrecking, demolition, and ship building operation
16- Roofing operations and all work on or about a roof *
17- Excavation operations
See the DOL Website for complete details

There aren’t hour of work requirements for 16- and 17-year-olds, but Passantino said that the DOL has designated particular occupations as too hazardous for these teenagers to perform. These hazardous occupations include operating or unloading certain power-driven balers and compactors, roofing and operating power-driven meat processing machines.

Driving on the job is not permitted for 16-year-olds but is permitted for 17-year-olds only to drive cars or small trucks during daylight for limited times and under strictly limited circumstances.

Many teens work outdoors during the summer, which places them at risk of sun stroke. NIOSH reminds landscaping employers to take steps to avoid heat stress among their employees.

The new penalties for child labor violations were tacked on to the end of GINA, noted Cynthia Marcotte Stamer, an attorney with Glast, Phillips & Murray in Dallas. She told SHRM Online that the new penalties are “timely as we approach summer” but cautioned that there might also be penalties under federal and state Occupational Safety and Health Acts and state workers’ compensation laws.

Dip in Youth Employment?
Stamer said that she is seeing fewer employers hire teens than 10 years ago. She attributes this decline to greater competition for seasonal employment and says that landscaping and hospitality jobs increasingly are being filled not only by recent immigrants but also by seniors seeking to return to the workforce.

Stamer has chatted over drinks with mothers and is hearing some of them say that their kids don’t want to work, while others say that their teens have looked for work at restaurants but that no one is hiring them.

Patricia Mathews, MBA and president of HR consulting firm Workplace Solutions in St. Louis and a member of the SHRM Employee Relations Special Expertise Panel, said that lower employment of teens might be a trend in some parts of the country, but she isn’t seeing it in the Midwest. Her clients include five McDonald’s restaurants, which are hiring teens for the summer, as are a variety of tourist attractions in the St. Louis area, such as the Gateway Arch and riverboats on the Mississippi.

Extra Care
“Employers need to take a little extra care in terms of orientation” for teens, Mathews reminded. This includes not only basic safety but also customer service and sanitary issues.

Mathews said that, unfortunately, managers often just show newly hired teens to their work stations without anyone investing the time to bring them up to speed.

Teens should be encouraged to ask questions, Mathews emphasized. Mathews cautioned that managers shouldn’t assume that teens can figure it out on their own.

The new FLSA penalties for child labor violations took effect when GINA was signed into law on May 21, 2008, and apply to deaths or serious injuries that occur after GINA’s enactment.

– The child labor laws are not new, however, even after having these laws in place for a very long time, employers are still violating the rules associated with employing youth.

If you have questions about employing youth please call your assigned A Plus Benefits HR Advisor or place a call to the Human Resources Department at A Plus Benefits. We can provide you with information that will help you stay within the laws, rules, and regulations of youth employment.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Are They Really Independent Contractors?

(The following information was derived from BLR HR Updates May 21 and 22, 2008)

These days, organizations frequently try to increase their workforce flexibility and decrease their benefit costs by hiring independent contractors to do required work.

All well and good … unless a court later determines that while you’re calling such workers independent, you’re really treating them as employees. In that case, and as names as famous as Microsoft have learned the hard way, penalties can be severe.

Often the issue revolves around how much control employers exercise over these workers’ job activities. The more control, the more likely the worker is actually an employee.

This point was highlighted recently in a case described by attorney Michael Curtis on the website, Mondaq.com. The case helps in understanding the reasoning that must be used in determining how “independent” workers are. (Curtis is with the California law firm of Thelen Reid Brown Raysman and Steiner LLP).

The facts were these:
Threatened with unionization of his drivers, a cab company owner contended that they were independent contractors and, thus, not a collective bargaining entity, because:
–They paid a fixed rental fee for the cabs.
–They didn’t have to account for fees or tips.
–They had no set work hours or minimum work requirements.
–They received no benefits and no tax or social security was withheld from pay.
–Lease agreements openly stated that the drivers were independent contractors.

Independent contractors, right? Not so fast. The court held that while all the above was true, the drivers also suffered a “lack of entrepreneurial freedom” (i.e. the chance to make money on their own).

The evidence:
–Drivers could only use cabs to respond to the cab company’s dispatches.
–They were prohibited from distributing private business cards and could not accept calls for service on their cell phones.
–They had to comply with company policy on how they drove and dressed, and they were subject to company discipline.
–They had to carry ads in their cabs that generated revenue for the company, but not for the drivers.
–Drivers were required to take more training than was legally mandated.

Taken together, those facts indicated that the company had a significant amount of control. This led the court to conclude that the cabbies did not have entrepreneurial freedom. And that, said the court, meant they were employees.

What the DOL Says
The U.S. Department of Labor (DOL) states that, under the Fair Labor Standards Act (FLSA), the employer-employee relationship is tested by “economic reality” rather than “technical concepts.” So just words in a leasing agreement, or a “little bit of independence” isn’t enough to classify someone as an independent contractor.

Furthermore, the U.S. Supreme Court has, on a number of occasions, indicated that there is no single test for determining whether an individual is an independent contractor under the FLSA. It’s instead the total activity or situation that defines. Besides the control and entrepreneurial freedom issues mentioned above, courts consider:

– The extent to which the services rendered are part of the principal’s business
– The permanency of the relationship
– The amount of the alleged contractor’s investment in facilities and equipment
– The amount of initiative, judgment, or foresight required
– The degree of independent business organization and operation

Bottom line on all of this: Before you seek the advantages of calling your workers independent contractors, consider their total situation carefully. And remember, it’s not what you call them that may count in the end.

The U.S. Department of Labor (DOL) points out the following particular problem areas for employers when it comes to determining whether a worker is an employee and, thus, is eligible for protections under the Fair Labor Standards Act (FLSA), or is an independent contractor, and therefore not covered under the FLSA. (And note that when DOL identifies problem areas, that usually means they’re keeping a keen eye on anyone in these situations.)

1. Construction. DOL notes that in the construction industry, many builders hire “so-called independent contractors,” who in reality should be considered employees because they do not meet the government’s tests for independence.

2. Franchises. Franchise arrangements can pose problems in the independent contractor arena as well. Depending on the level of control the franchisor has over the franchisee, workers may be considered to be employed.

3. Volunteers. A person employed by a for-profit organization cannot “volunteer” to perform the same services he or she performs as an employee. (Of course, DOL says, individuals may volunteer their services to religious, public service, and nonprofit organizations without contemplation of pay, and not be considered employees of such organizations.)

4. Trainees. Trainees, interns, or students may also be employees, depending on the circumstances of their activities for the employer. Are they doing the same work that regular employees do, as opposed to tasks that help them learn? They might then be considered employees.

5. Homeworkers. People who perform work in their own homes are often improperly considered to be independent contractors. FLSA covers such home workers as employees, and they are entitled to all benefits of the law.

HR Discussion:
One category not listed above that should be considered is sales. Many employers errantly believe that sales people can be classified as independent contractors. In most cases it comes down to an issue of control. If an employer demands total loyalty, and by that we mean prohibiting the sales person from selling other products it’s a good bet that sales person isn’t a qualified independent contractor.

Please contact the A Plus Benefits Human Resource Department if you have any concerns that you might have employees that are misclassified. A Department of Labor audit that occurs because of misclassification is time consuming and potentially very expensive.

It is our desire to assist our clients with being in full compliance with Department of Labor regulations. It is our goal to help you get back to business.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

The following is an article that recently appeared in the BNA Bulletin to Management with some imbedded comments from A Plus Benefits.

As E-Verify, No-Match Rules, I-9s Evolve, Employers Need to Stay on Top of Issues

While awaiting government action on various immigration issues, employers must continue to staff their workplaces, avoid the dramatically increased fines for hiring illegal immigrants, and stay on the right side of the Immigration Reform and Control Act’s anti-discrimination provision.While awaiting government action on various immigration issues, employers must continue to staff their workplaces, avoid the dramatically increased fines for hiring illegal immigrants, and stay on the right side of the Immigration Reform and Control Act’s anti-discrimination provision.Experts told BNA that while it is not an easy situation, especially given a dearth of skilled workers in some sectors, there are ways to cope, including:

• being scrupulous about I-9 forms; (A Plus has announced a new initiative for I-9s)
• if the company is using E-Verify, employing it correctly; and (A Plus has announced that it can now act as a third party agent for its clients, a no cost benefit)
• ensuring that staff are trained in race and national-origin anti-discrimination policies. (Every A Plus HR Advisor can provide this training)

Eleanor Pelta, a partner in Morgan Lewis’s Labor and Employment Practice in Washington, D.C., told BNA that when it comes to hiring foreign-born workers, “employers are still between a rock and a hard place.”

“I don’t think there’s any employer immune to an [Immigration and Customs Enforcement] action, and the fines have just been adjusted upward for inflation,” she warned.

Changes to I-9s, E-Verify
The I-9 process is essentially the same as it has been—companies are required to complete these work authorization forms for employees and check their documentation the first day on the job. But the forms now feature an even more prominent “Anti-Discrimination Notice”, and the Department of Homeland Security’s Citizenship and Immigration Services is expected shortly to issue a proposed final rule reducing the number of documents employers can accept.

Increasing the stakes, under a joint rule from DHS and the Department of Justice, a 25 percent increase in fines took effect March 27 for knowingly employing a person not authorized to work in the United States.

Meanwhile, DHS is working hard to turbo-charge the Social Security Administration’s annual “no-match” letters. The letters have previously been used for informational purposes only—informing employers when 10 percent or more of their workforces show data discrepancies. However, under a proposal issued last year, DHS expanded what is considered “constructive knowledge” that an employee has provided a false Social Security number and stated that employer failure to respond to no-match letters can be evidence used in civil and criminal actions brought by the agency.

In the midst of legal challenges from a coalition of labor unions, business groups, and immigrant rights groups that blocked implementation of the rule, DHS issued a related supplemental proposed rule March 21.

In addition, while DHS’s E-Verify employment verification system is currently voluntary on a national basis, agency Secretary Michael Chertoff has promised a proposed rule soon making it mandatory for some 200,000 federal government contractors, and several states are already requiring some or all employers to use it.

“It seems to be the trend,” said Brent T. Huddleston, attorney with the Law Offices of Richard A. Gump Jr. in Dallas. “We expect it to continue, and in many cases we recommend [using E-Verify now],” he said.

Review, Training Recommended
Pelta warned that an employer “can be fined even if you have an entire population of legal workers if you’re not doing the I-9s correctly—it’s called ‘paper work violations.’ ” Keeping accurate and timely I-9s has never been more important, she said.

“You want to really have a system that you can trust,” she advised, including a written protocol accessible to all human resources staff, and see to it that everyone receives training. She suggests a complete review at least once a year to identify recurring mistakes and target areas for further training.

“We’re seeing this come up in a lot of interesting places,” Pelta said of immigration-related concerns.

For example, she said, “we’re finding that companies targeting acquisitions are asking us to come in and take a look at immigration compliance—they don’t want to acquire possible violations or find out that 50 percent of the employees are not authorized to work.”

Huddleston recommends that if possible, one employee at a company—often an HR person—should serve as the I-9 manager.

Having one person in charge leads to fewer mistakes and inconsistencies because that person tends to take ownership of the process and, as the in-house specialist, can become better versed in the requirements of the system, he said. Huddleston added that companies should avoid the temptation to have whoever is available on a new hire’s first day take care of it.

He also suggests periodic outside audits of the company’s system, so that problems can be caught before they become liability issues. One of the biggest mistakes he sees is companies’ resistance to this idea, Huddleston said.
(Beginning July 2008 A Plus HR Advisors will begin conducting I-9 audits and training to confirm that each and every client is submitting correct and complete form I-9s)

“Very rarely” would a company not benefit from such a review, he said, adding that companies of all sizes and reputations generally have room for improvement in their I-9 systems.

E-Verify Safe Harbor of Sorts
Meanwhile, using E-Verify can help an employer show that it is attempting to obey the law. Still, the system has been widely criticized, is not foolproof, and could eliminate some legitimate employees, many argue.

The problem with E-Verify, said Pelta, is that “it’s tapping into some very old data bases with high error rates.” According to the Social Security Administration, 7.8 million of its records have errors in them, with 12.7 percent of the mistakes pertaining to U.S. citizens.

“I’m not sure what employers can do about that,” she said. “I think you’re kind of stuck with that unless there is another way to verify a person’s work authorization.”

A potential landmine for employers using E-Verify, Pelta said, is taking adverse employment actions in response to tentative nonconfirmation notices (TNC) and failing to inform employees of their rights under E-Verify. She said such mistakes are avoidable.

It is a matter of getting used to the system and “ being very, very careful,” Pelta said.

According to Interim Findings of the Web-Based Basic Pilot Evaluation, prepared for DHS in December 2006 by Westat of Rockville, Md., foreign-born employees who were ultimately verified for work were 30 times more likely to have gotten a TNC during the process than U.S.-born employees eventually authorized.

Because of the possibility this presents for discrimination against immigrants, there is a precise procedure for using E-Verify, according to DHS. The system is not to be used as a prescreening device and in fact, cannot be consulted until a new hire’s first day.

Secondly, employers are required to inform employees getting a TNC of their right to take steps to correct the record.

Huddleston noted that an employer using E-Verify can be held liable if it knew that an employee was using a false identification—even if the employee checked out OK on E-Verify. “E-Verify doesn’t always protect against ID theft and fake documents,” he said.

Katherine Lotspeich, acting director of the USCIS Verification Division, told BNA that one of the original intents of an electronic verification system was to prevent discrimination against job candidates on the basis of ethnicity.

She said 92 percent of employees are certified nearly instantly using E-Verify and that the error rate has been overstated. “Everyone assumes the other 8 percent are eligible to work, but less than 1 percent of the tentative nonconfirmations are contested,” she said.

HR Discussion:
Our HR Department at A Plus Benefits is expending a lot of effort to stay on top of the developments concerning authorized and unauthorized workers and the various initiatives that are developing in different government departments.

We believe participation in the E-Verify is a wise step for each and every client to ensure that only those authorized to work in the US are hired.

While there are critics of the E-Verify system, there are adequate steps in place for individuals who believe they have been improperly flagged as unauthorized. As the article points out, less than 1% of those who are flagged as unauthorized claim that they are in fact authorized to work in the U.S.

If you have questions about the E-Verify program or any other concerns related to the hiring of authorized individuals, please contact us.

We appreciate your business, we hope our efforts allow you to get back to business.

Randall Barker is the VP of Human Resources for A Plus Benenfits, Inc.

7th Circuit: Overbroad Non-compete Was Unenforceable
By Chris Arbery and Angela Mahdi

The 7th U.S. Circuit Court of Appeals upheld a district court’s ruling that a former employee of Cintas Corp. did not violate the terms of his non-compete agreement because the agreement itself was overbroad and, therefore, unenforceable. The appeals court further held that the district court properly refused to correct the problems in the agreement and properly awarded the defendant attorneys’ fees for prevailing in the matter.

The 7th U.S. Circuit Court of Appeals upheld a district court’s ruling that a former employee of Cintas Corp. did not violate the terms of his non-compete agreement because the agreement itself was overbroad and, therefore, unenforceable. The appeals court further held that the district court properly refused to correct the problems in the agreement and properly awarded the defendant attorneys’ fees for prevailing in the matter.

When Daniel Perry began working for Cintas in 1993 as a sales representative, he signed an employment agreement containing various restrictive covenants: non-competition, non-solicitation of employees and nondisclosure of confidential information. Although Perry was promoted to national account manager for Illinois and Indiana in 2000, he resigned in 2003.

Perry then started working for a large competitor of Cintas’ as vice president of sales for the western region. Perry provided his new employer a copy of Cintas’ employment agreement. Thereafter, Perry accompanied a fellow employee to a sales meeting with a Cintas customer, but Perry remained in the car during the meeting. He also conducted a telephone interview with an applicant, but ended the interview after learning that the applicant formerly worked for Cintas. Perry’s new employer did not hire the applicant. Perry also brought with him two computer disks containing forms he obtained from Cintas.

Cintas filed a breach of contract suit in Illinois federal court, alleging that Perry violated his employment agreement. Cintas also requested injunctive relief. Applying Ohio law, the district court denied injunctive relief and granted Perry’s motion for summary judgment. The district court found that the non-compete provision was overly broad and declined to use its authority to modify the provision and make the agreement enforceable. The district court further held that there was insufficient evidence to create a triable issue on the alleged violations. Lastly, the court ordered Cintas to pay Perry’s attorneys’ fees and costs.

On appeal, the 7th Circuit found that the only evidence that Perry violated the employment agreement was the fact that he went to work for a competitor. The appeals court held that Cintas’ contention that the district court should modify the non-compete provision to render it reasonable was “an implicit concession that the provision was overbroad and unenforceable as written.” Further, the court held that the power to modify an agreement is “discretionary, not mandatory” and that the district court did not abuse its discretion in declining to exercise its discretionary power.

The 7th Circuit further held that, even if the non-compete provision was reasonable, there was no evidence that a breach occurred. Indeed, the court held that remaining in the car while another employee conducts a sales meeting “does not amount to solicitation” of a Cintas customer. In addition, Perry’s decision not to hire a former Cintas employee “does not amount to solicitation of a Cintas employee.” The court also held that the information on the computer disks was “dated” and that Cintas had “not demonstrated how the information on the disks might provide an advantage to competitors within the meaning of the nondisclosure provision in the agreement.”

Finally, the 7th Circuit upheld the award of attorneys’ fees in Perry’s favor, even though his new employer had paid them. The court remarked that the agreement, while perhaps ambiguous, did not expressly require the employee to directly incur the fees in order to receive an award and that the ambiguity should be construed against Cintas as the drafter of the agreement.
Cintas Corp v. Perry, 7th Cir., No. 06-1958 & 06-2844 and 07-1216 & 07-1365 (Feb. 20, 2008).

Professional Pointer: Many courts are loathe to enforce non-competition agreements. This case demonstrates the importance of ensuring that such an agreement is narrowly tailored and enforceable under applicable law as written. Although a court may have the power to “blue pencil” or modify an unenforceable agreement to make it enforceable, it may choose not to do so.

HR Discussion – A Plus Benefits, Inc.
Most courts will not enforce a non-compete that prevents a former employee from working in the industry that has supported the former employee and his family. To expect that a former employee cannot continue to work in the industry would essentially require that the individual re-train in another industry. This would most certainly lead to a marked decrease in the person’s income for several years.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.