Category Archives: Uncategorized

NEW NON-COMPETE LAW COMING TO ILLINOIS

By:       Sally A. Piefer

June 21, 2021

Non-compete and non-solicitation agreements are relatively commonplace. However, these agreements have been under increasing attack by legislatures across the country. President Biden has also expressed that one of the items on his regulatory agenda is to eliminate all non-compete agreements except for those necessary to protect trade secrets.

The Illinois legislature recently unanimously passed legislation changing the non-compete and non-solicitation agreement landscape. The Illinois Governor is expected to sign this legislation which will go into effect on January 1, 2022, and will impact agreements entered into after that date.

The Illinois legislation implements the following changes to non-compete and non-solicitation agreements:

Compensation Thresholds

The legislation voids all non-compete provisions with an employee if the employee has expected earnings below $75,000. The legislation also voids all non-solicitation provisions with an employee if the employee has expected earnings below $45,000.

The expected earnings levels include not only compensation reported on an employee’s W-2, but also elective deferrals such as employee contributions to a 401(k), FSA or HSA. The current earnings thresholds for non-competes will increase by $5,000 every 3 years through 2037 (e.g., on January 1, 2027, the earnings levels increase to $80,000). For non-solicitation provisions, the earnings levels increase by $2,500 every 3 years (e.g., $47,500 on January 1, 2027).

Adequate Consideration

The legislation requires an employer to provide adequate consideration in exchange for signing the agreement and specifically states that 2 years of employment is adequate consideration, but so is a period of employment plus additional professional or financial benefits, or merely professional or financial benefits, such as a signing bonus. Employers should ensure that the consideration being offered is specifically identified in the agreement.

Notice to Employee

Employers must give the agreement to a new employee at least 14 days before the employee starts employment. If an employer misses that window of opportunity, the employee must then be provided 14 days from receipt to sign and return. The employee can sign earlier, but cannot be forced or coerced to do so. The agreement must also advise the employee that he/she may consult with an attorney before signing. An agreement which fails to incorporate these provisions is considered illegal and invalid.

Restrictions on Enforcement

The Illinois legislature has placed several restrictions on enforcing a non-compete or non-solicit provision. For example, an employer cannot enforce a non-compete or non-solicitation clause where the employee is terminated, furloughed or laid off as a result of “business circumstances” or governmental orders relating to COVID 19 or similar circumstances—unless the agreement contains a compensation equivalent to the employee’s base salary at time of termination for the length of enforcement – minus compensation earned by the employee in replacement employment.

In addition, the legislation specifically provides that if an employee prevails in an attempt to enforce a non-compete or non-solicitation clause, the employer has to pay the employee’s reasonable attorney’s fees and costs. While the legislation does not provide a similar statutory provision for the employer, there is no restriction on incorporating such a provision into the agreement.

Attorney General Enforcement

Finally, the new legislation permits the Attorney General to conduct investigations and sue employers if there is a belief that the employer is engaging in a practice in violation of the legislation. In the event of litigation, the Attorney General can seek a temporary restraining order or preliminary injunction preventing the employer from further violations of the law, and it can recover damages, which can include a $5000 civil penalty for each violation (or $10,000 for repeat violations within a 5-year period). Each employee subject to an illegal agreement is considered a separate and distinct violation of the law.

Next Steps

Illinois is not alone. Several other states, including Arizona, Oregon, Nevada and Washington DC have also implemented new legislation in 2021 which may impact the enforceability of non-compete and non-solicitation agreements in those states. Employers with operations in multi-state locations should have their non-compete and non-solicitation agreements analyzed to determine whether these new laws will impact the enforceability of the agreements.

If you have questions about the new law, or any questions about non-compete and/or non-solicitation agreements, please contact Sally Piefer at 414-226-4818 or spiefer@lindner-marsack.com, or contact your regular Lindner & Marsack attorney.

Current Trends & Treatment in Worker’s Compensation

Lindner & Marsack’s worker’s compensation defense practice is well recognized as an industry leader in providing work injury defense services to many of Wisconsin’s largest employers and insurance carriers.

Chelsie Springstead, a Shareholder and member of the Firm’s highly regarded work injury defense team, is a presenter in the first episode of an educational video podcast series entitled “A Medical and Legal Analysis of COVID-19: Addressing Issues Surrounding Causation, Care and Courses of Action” on Thursday, April 29, 2021, at 12:00 p.m. CST.

If you are interested in attending this event, please send an email to info@crawfordevaluationgroup.com. This is a complimentary event!

Click here for more information. You will receive a link to view the broadcast closer to the date.

TWO NEW ATTORNEYS JOIN LINDNER & MARSACK’S WORKER’S COMPENSATION DEFENSE TEAM IN MADISON

Lindner & Marsack, S.C., today announced that Thomas Ryan Boyd and Vanja Pemac have joined the firm’s worker’s compensation defense team. The two attorneys join Andrew J. Quartaro, who joined Lindner & Marsack earlier this year to lead the firm’s new office in Madison.

Boyd comes to Lindner & Marsack after having practiced labor, employment and worker’s compensation law in the Chicago area for the past seven years. He focuses his practice on defending insurance companies and self-insured companies throughout Illinois and Wisconsin in worker’s compensation matters. He brings extensive trial experience – including proceedings before the Illinois Workers’ Compensation Commission, in Illinois Circuit Court, the Criminal Division of the Circuit Court of Cook County and in Illinois Appellate Court. He also volunteered his legal counsel to the Legal Assistance Foundation in Chicago. Boyd received his J.D., as well as a certificate in Alternative Dispute Resolution, from Pepperdine Law School in California in 2013. He received his Bachelor of Arts in Communication Science and Theory from the University of Wisconsin-Madison in 2010. Now, having returned to the Madison area, he lives on the city’s west side with his wife and daughter.

Having served as a law clerk with Lindner & Marsack since January of this year, Pemac received her J.D. from the University of Wisconsin-Madison Law School in May of 2020. As a student, she was a member of the Student Bar Association and competed in numerous Mock Trial competitions. She is the recipient of the Susan B. Steingass Outstanding Advocacy Award; the Mike Eidson Scholarship from the American Association of Justice; and the Sasich/Kordich Memorial Scholarship from the Serbian Bar Association of America. Previously, she graduated summa cum laude from the University of Wisconsin-Milwaukee with a Bachelor of Arts in Political Science. Outside of work, she enjoys hiking the trails of the Kettle Moraine area and is an avid amateur baker.

“With our growing presence in the Madison area and across the region, we continue to reinforce and deliver on our promise to serve as management’s most trusted partner and legal advisor,” says Firm President Oyvind Wistrom. “We’re thrilled to have Ryan and Vanja join our team in Madison in our work to help employers mitigate risk and successfully navigate the complex landscape of worker’s compensation defense.”

Updated EEO-1 Reporting Requirements

On March 5, 2019, a Federal Judge reinstated the EEO-1 pay data reporting requirement for all covered employers. Covered employers include employers with over 100 employees or federal contractors with 50 or more employees and a government contract worth $50,000 or more.

The EEO-1, otherwise known as The Employer Information Report, is a compliance survey which is to be submitted to the U.S. Equal Employment Opportunity Commission (the “EEOC”) and the Department of Labor’s Office of Federal Contract Compliance Programs annually.

For employers already required to submit an EEO-1 report, the March 5th reinstatement now requires EEO-1 Component 2 (the pay data reporting requirement) to also be submitted. On April 3, 2019, the EEOC filed a proposal extending the deadline to complete EEO-1 Component 2 to September 30, 2019. The Federal Judge will now assess the EEOC’s proposal and issue an order regarding the proposal and extended deadline. It is recommended employers start taking the necessary steps to gather relevant pay data and prepare for the obligation to file EEO-1 Component 2 in 2019.

Importantly, the Federal Judge’s reinstatement of EEO-1 Component 2 reporting does not in any way alter the deadline to file an employer’s annual EEO-1 report. This deadline is still May 31, 2019.

If you have any questions regarding the updated EEOC reporting requirements and how they may impact your business, please contact me by email at csaugstad@lindner-marsack.com or another attorney with whom you have been working at Lindner & Marsack, S.C.

Wisconsin’s Right to Work Law Upheld

By: Thomas W. Mackenzie and Kristofor L. Hanson

In a decision issued September 19, 2017, the Wisconsin Court of Appeals upheld as constitutional Wisconsin’s so-called “Right to Work” law (Act 1), which outlawed mandatory union membership as a condition of employment.

Prior to the law becoming effective on March 11, 2015, the International Association of Machinists District 10, the United Steelworkers District 2, and the Wisconsin AFL-CIO filed an action in Dane County challenging the constitutionality of Act 1.  The Unions’ theory was that because unions are required to fairly represent all employees covered by a collective bargaining agreement, a law prohibiting unions from receiving just compensation for those services constitutes an unlawful “taking” under the Wisconsin constitution.  Dane County Circuit Court Judge C. William Foust agreed with the Unions, concluding that requiring Unions to represent non-members without compensation constituted a “taking” and threatened the Unions’ “very economic viability.”

The State Attorney General’s Office appealed Judge Foust’s decision to the Wisconsin Court of Appeals. The Court of Appeals reversed Judge Foust’s decision, concluding that Unions have no constitutional entitlement to the fees of non-members.  The Court found that Act 1 did not preclude Unions from receiving just compensation for the services provided to non-members; it merely precluded the Union from collecting those fees from the non-members themselves.  In other words, Unions will have to look to other sources (e.g. union members) to fund the duty of fair representation owed to members and non-members alike.

The Court’s decision is not surprising.  Wisconsin became the 25th state with a “Right to Work” statute.  That number has climbed to 28 states since Wisconsin’s enactment of the law.  These provisions have withstood similar constitutional challenges in other forums.  The Unions have the right to appeal to the Wisconsin Supreme Court but, given the current composition of that Court, success will be hard to find.

To view the Court of Appeals decision clicks here.

 

DOL WITHDRAWS JOINT EMPLOYER AND INDEPENDENT CONTRACTOR GUIDANCE

By:  Samantha J. Wood

On Wednesday, June 7, 2017 the U.S. Department of Labor (“DOL”) withdrew its 2015 and 2016 informal guidance letters regarding independent contractors and joint employment, which had been issued by the prior administration.

The DOL’s first guidance letter, which was issued in July 2015 and reiterated the DOL’s focus on misclassification of employees as independent contractors, was borne out of a concern that too many employers were misclassifying workers to avoid certain labor costs. In this guidance, the DOL narrowly interpreted the definition of independent contractor, focusing on the economic dependence of the worker, and downplaying the traditionally-used control test. The DOL stated that employers should consider and weigh the following factors: (1) the extent to which the work performed is an integral part of the employer’s business; (2) the worker’s opportunity for profit or loss depending on his/her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. Minimizing the control factor, the DOL stated that all of the factors should be considered and weighed together in each case, and that no one factor, such as the control factor, should be given undue weight. The DOL advised employers that under this analysis most workers should be classified as employees rather than independent contractors.

The DOL’s second guidance letter, issued in January 2016, took an expansive view in determining joint employment under the Fair Labor Standards Act (FLSA). The DOL differentiated between “horizontal” and “vertical” joint employment, and provided guidance on analyzing each type. The DOL stated that in determining whether horizontal joint employment exists (which analyzes whether two employers are sufficiently related and benefit from an employee’s work), employers should consider factors such as: (1) ownership of the employers; (2) overlapping officers, directors and managers; (3) shared control over operations; and (4) shared supervisory authority of employees. In determining whether vertical joint employment exists (which analyzes the employee’s relationship with the indirect employer and the intermediary employer), employers should consider the “economic dependence” between the employee and the two employers.

The DOL’s withdrawal of its July 2015 and January 2016 guidance letters signifies that, under the new administration, the DOL intends to take a more business-friendly approach in analyzing employer-employee relationships. However, the DOL has stated that the withdrawal of the two guidance letters “does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.” While the DOL may return to the traditional control tests under both the independent contractor and joint employment analyses, the full implication of the DOL’s withdrawals is unclear. Accordingly, until the DOL issues further guidance, employers should continue to consider all relevant factors in determining whether a worker is an employee or an independent contractor and in determining whether a joint employment relationship exists.

If you have questions about this material, please contact Samantha J. Wood by email at swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Register Now! Annual Compliance/Best Practices Update

Registration and a continental breakfast will be served beginning at 7:30 a.m.  Click here to register.

WHEN: April 14, 2016

8:00 a.m. – 12:00 p.m.

WHERE: Sheraton Milwaukee Brookfield Hotel

375 South Moorland Road

Brookfield, WI

This FREE half-day event will address current topics in labor, employment, benefits & worker’s compensation law and provide employers across industries with practical and creative solutions for addressing their toughest workplace legal challenges.

SESSION TOPICS INCLUDE:

  • Labor Law Update: Including Recent NLRB Decisions, Right to Work and Collective Bargaining Trends
  • 2016 Employment Law Update
  • FMLA Update – A Best Practices Review
  • The Use of Temporary Workers in 2016 – A Panel Discussion
  • Update on Proposed Wisconsin Worker Compensation Act Reform
  • Winning Strategies in Defending Worker Compensation Cases – How to Avoid Early Mistakes in Investigating Claims

THE SUPREME COURT DENIES ERISA PLAN’S RIGHT TO REIMBURSEMENT

February 10, 2016

By: Jenna K. Leslie

On January 20, 2016, the U.S. Supreme Court decided that a self-funded ERISA plan could not seek reimbursement for health insurance benefits from a participant who prevailed in a lawsuit against a third party if the settlement or award had been spent or comingled into the participant’s general assets.

In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, Montanile was a participant of a self-funded group health plan. The plan paid Montanile’s medical expenses following a motor vehicle accident. Montanile signed a reimbursement agreement confirming his obligation to reimburse the plan from any third party recovery.

After negotiating a $500,000 settlement, the participant’s attorney attempted to contact the plan with an offer. The offer gave the plan 14 days to respond. When the plan did not respond, Montanile’s attorney released the settlement funds to him.

Six months later, the plan sued Montanile seeking repayment of their lien for the payment of medical expenses on his behalf. The plan asked the District Court to enforce an equitable lien on any settlement funds or any other property in the Montanile’s possession. Montanile argued that because the settlement funds had been spent or comingled with other assets, enforcing a lien against his general assets was not “equitable relief” which the plan could pursue.

The U.S. Supreme Court agreed, ruling that a self-funded ERISA plan could not make a claim against a participant’s general assets. The Court emphasized that the plan’s remedy was limited to equitable relief under ERISA, which does not include recovery against a participant’s general assets. The plan could only recover from identifiable settlement funds within the participant’s possession and control.

The Montanile decision is significant for employers who sponsor self-funded ERISA plans because it demonstrates the difficulty of plans to recover payments. Employers should review the language of their ERISA plans to ensure that the plans allow them to recover reimbursement of medical expenses. Employers should insist the participant sign a reimbursement agreement, which includes specific language regarding the participant’s obligation to obtain the written consent of the plan before the release of any settlement funds. In addition, the plan’s administrative staff should be trained and monitored to assure their timely response to any notice of a settlement or its distribution.

If you have questions about this material, please contact Jenna K. Leslie by email at jleslie@lindner-marsack.com or any other attorney with whom you have been working here at Lindner & Marsack, S.C.

2015 Kids’ Chance of Wisconsin Golf Outing

PLEASE JOIN US FOR
THE 3RD ANNUAL KIDS’ CHANCE OF WISCONSIN
GOLF OUTING 

Lindner & Marsack’s worker’s compensation defense practice is well recognized as an industry leader in providing work injury defense services to many of Wisconsin’s largest employers and insurance carriers.

Doug Feldman heads the Firm’s highly regarded work injury defense team and is a founding Board Member and current President of Kids’ Chance of Wisconsin. Kids’ Chance is a non-profit organization that provides scholarships to children of seriously injured workers in Wisconsin.

Kids’ Chance of Wisconsin’s 3rd annual charity golf outing will be held on Friday August 21, 2015 at the Oaks Golf Course. Funds raised at the event will directly support the Kids’ Chance mission of providing financial support, in the form of scholarships, to children of parents who have been seriously injured at work.

If you are interested in attending or sponsoring this event, click here for more information, Kids’ Chance of Wisconsin – Golf Outing.

Lindner & Marsack owes much of its success to its good friends and clients in Wisconsin and is proud to be able to support this worthy endeavor and give back to the community in such a meaningful way. We hope you will consider sponsoring a hole or joining us for this entertaining event.