Wednesday, August 26, 2015

Monday, August 17, 2015

EMPLOYMENT NON-COMPETE / NON-SOLICITATION RESTRICTIONS NEED TO BE DISCLOSED TO NEW EMPLOYER

Some employees, including many executives have, in addition to confidentiality requirements with the current employer, non-compete or non-solicitation obligations. A non-compete obligation is generally one that restricts the ability to work for a competitor for a period of time after leaving the current employer. A non-solicitation obligation usually addresses the inability of the employee to solicit customers or employees of the current employer when working for a new employer. Employees should disclose to potential new employers all ongoing obligations to the current employer. A July 23, 2015 decision from the Federal Trial Court in Massachusetts in the case of Mark Manning v. Healthx, Inc. and Frontier Capital, LLC illustrates the importance of disclosing to a potential new employer all obligations you have to your current or previous employer that might impact your ability to do your job with your new employer.

In the case of Mark Manning, he had been employed by Pegasystems, Inc. as the Vice President of Healthcare Services making over $500,000 in compensation. In August 2013, Healthx, Inc. recruited Manning to become President and CEO of it with an employment agreement that provided for substantial compensation and a severance package if he is terminated without cause, but no severance package if he was not terminated for cause. On February 3, 2014, Manning reported to work at Healthx, Inc. and one week later he was informed he was being fired because of his contractual obligations with his former employer which Healthx stated was not disclosed to it prior to the hire.

The Federal Trial Court’s decision of July 23, 2015 merely addressed whether or not a claim, in addition to breach of contract, could be made for the breach of an implied duty of good faith and fair dealing of that contract. Manning had argued that Healthx had the obligation to investigate whether or not there were current contractual obligations to his former employer rather than just terminating him. The Court ruled that the case, at that early stage, would go forward with pretrial discovery. Therefore the case will likely cost both sides a fair amount in money before it is later resolved by the court or by settlement.

Making a jump from one employer to another has risks and an employee is substantially increasing those risks if he fails to disclose to the new employer the contractual obligations he has to the former employer. By way of example, if an employee has a non-compete and/or a non-solicitation obligation to the former employer for a period of time after the employment ends and goes to work for a competitor, the employee should expect that the former employer’s attorney will send a letter to the new employer identifying those non-competition or non-solicitation obligations; whether it is to assert a breach of those obligations or to make sure the employee complies with the obligations. After the new employer learns of those obligations, if it permits the employee to violate those contractual non-compete or non-solicitation obligations to the benefit of the new employer, then the new employer may be sued along with the employee. The employee would be sued under a breach of contract claim for breaching the non-competition or non-solicitation obligations under his employment agreement and the new employer would be sued for what is called wrongful or tortious interference with the contractual obligation.

For employers looking to hire new employees, putting into an employment agreement a promise by the new employee that he does not have any former-employment obligations that could restrict him from doing his job at the new employer would be prudent. If the employee does have such obligations, the agreement can be tailored to address what those obligations are and attach a copy of the language of that post-employment restriction so both the new employer and the employee know exactly what there are getting into if a dispute arises with the former employer.

In being on both side of this situation, I have on behalf of the former employer have made such claims against the new employer for tortious or wrongful interference with a contractual relationship and have found that when such a claim is made it is more likely that the new employer will fire the employee if the new employer is just learning of the obligation from me representing the former employer rather than if it was fully disclosed upfront by the employee and the new employer still decided to hire the employee notwithstanding those obligations. I have also been in a situation where the new employer knows ahead of hiring the new employee that the non-compete is weak and will actually pay for the defense of the employee and the non-compete. Simply put, the relationship with your new employer should be one of trust and loyalty. Beginning that relationship with dishonesty is not prudent. For any employee thinking about making a move to the dream job, disclosure of your post-employment obligations with your current employer to the new employer will lessen the likelihood that your dream job will turn into a nightmare of litigation.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at dmarr@nashualaw.com.

Thursday, August 13, 2015

Radio Program: August 11, 2015 "Fighting Custody and Child Support Battles Across State and Foreign Borders"

August 11, 2015: Attorneys Kevin P. Rauseo and J. Daniel Marr discuss "Fighting Custody and Child Support Battles Across State and Foreign Borders".

Wednesday, August 12, 2015

INDEPENDENT SALESPERSON’S COMMISSIONS ARE PROTECTED IN NEW HAMPSHIRE

An individual who is sales representatives of a number of companies may not be an employee of any of them, but is an independent contractor. For example, a manufacturer’s representative for furniture companies may have a lamp line, a dining room table line, and an upholstery chair and couch line, and sells all of these types of furniture from different manufacturers to various retail furniture stores. The New Hampshire legislature recognized the need to protect the sales commissions of those independent contractors and established RSA 339-E. This statute permits the sales representative, when in litigation, to recoup his attorney’s fees and costs as well as permitting the Court authority to award up to three times the commission owed. Further, that statute requires that the company enter into a written agreement with the sales representative clearly setting forth the commission, when it is due, and to provide a copy to the sales representative. Any provision in the contract that attempts to force the sales representative to only sue in a state other than New Hampshire is void so the contract could still be enforced by the sales representative with him suing in New Hampshire. The company is not allowed by contract to waive any of the rights of the sales representative in the statute even if he agrees in writing that he has knowingly and voluntarily waived those provisions. That waiver is still void. For an individual contract sales representative that is owed commission, RSA 339-E can be a powerful tool to see that commissions are promptly and timely paid since the alternative of going to court could be costly for the company that owes the commission.

For sales representatives that like the idea of being an independent contractor, perhaps because they can represent a variety of companies to sell a variety of products and have more autonomy, they should consider in that analysis of whether to become a separate legal entity such as a corporation or a limited liability company. This statute only applies to independent contractor sales representatives who are individuals and not a limited liability company, a corporation, or other legal entity. A separate legal entity may get the sales representative more or better clients yet in doing the sales work through that legal entity the sales representative has no rights under this statute, which only applies to individuals. For companies that have individuals who are independent contractor sales representatives doing business in this state, they will want in writing in any contract, which is signed by the sales representative, to clearly state how and when the commission is due. For example: if a company does not want to pay any commission until and unless the product is shipped and paid for, the contract should clearly set forth that understanding in the expressed terms of the contract. Companies may also wish to insist that independent contractor sales representatives are legal entities in that if they are individuals, not only do they risk potential liability under RSA 339-E if they fail to pay the commission, even if they have every intent on paying the commissions, the company may have a better argument in any subsequent legal challenge by a governmental agency as to whether the independent contractor sales representatives are truly employees if the sales representatives are providing their services under a separate legal entity such as a corporation or a limited liability company. So the company may prefer to not merely retain as an independent contractor Bob Jones, Sales Representative, but retain Jones Sales Solutions, Inc. of which Bob Jones, who provides the sales services to the company, does so as a shareholder and agent of Jones Sales Solutions, Inc.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at dmarr@nashualaw.com.

Monday, August 10, 2015

INTERNATIONAL CUSTODY BATTLES

In 1988, Congress ratified the Hague Convention on the Civil Aspects of International Child Abduction (“Hague Convention”). The treaty addresses the issue of children who have been wrongfully taken or retained in a foreign country. Simultaneous with the ratification of the Hague Convention, Congress enacted the International Child Abduction Remedies Act (42 U.S.C. §11601 (1988)), which implements the treaty and sets out the method of using the Hague Convention in the United States. If a child has been brought to the United States without permission from a foreign country or has been wrongfully retained here, the Hague Convention requires the child to be returned to the country of his/her habitual residence. However, the Hague Convention only applies to countries that have ratified the treaty and the United States has established a United States a treaty relationship per Article 38 of the Convention with the country in question.

While the Hague Convention uses slightly different terminology, its provisions are similar to the Uniform Child Custody Jurisdiction and Enforcement Act (“UCCJEA”) and the Parental Kidnapping Prevention Act (“PKPA”). Article I of the Hague Convention declares the purpose of the Act is to: (i) secure the proper return of children wrongfully removed or retained from a participating country; and (ii) ensure that the rights of custody and of access under the laws of one country are effectively respected in the other country. Article III of the Act declares the removal or a retention of a child is a violation when: (i) it is in breach for the rights of custody attributed to a person, an institution, or any other body, either jointly or alone, under the law of the country in which the child was habitually resident immediately before the removal or retention; and (ii) at the time of the removal or retention those rights were actually exercised, either jointly or alone but would have been so exercised but for the removal of the child.

There are several exceptions under the Convention which allow the court to refuse returning a child who otherwise falls under the Act. First, return is not mandated if the proceeding is commenced more than one year after the wrongful removal or retention if the court determines that the child is settled in the new environment. Second, return is not required if the petitioner was not actually exercising custody rights at the time of removal or retention. Third, return is not required if the respondent can show the petitioner assented or acquiesced in either the removal or the retention; the court is not required to order the return if the respondent establishes that a grave risk of physical or psychological harm exists to the child if returned to the country. Finally, Article 20 of the Hague Convention allows the court to refuse to return the child if this would not be permitted by the fundamental principles of the requested country relating to the protections of human rights and fundamental freedom.

Federal law gives concurrent jurisdiction to state and federal courts in Hague Convention cases. New Hampshire has one reported case decided under the Hague Convention. In Currier v. Currier, the father, a New Hampshire resident, was found to have wrongfully removed the children from their habitual residence, Germany. The mother lived in Germany and was found to have been exercising lawful custody rights. The children were ordered to be returned to Germany.

Navigating through disputes over child custody that involve multiple countries is complex and difficult. If you have any questions regarding a custody dispute involving multiple countries, please contact an attorney at Hamblett & Kerrigan.

Kevin P. Rauseo is a director at Hamblett & Kerrigan P.A. He concentrates his practice in the areas of family and divorce law, Collaborative law, child custody and visitation, child support and alimony, personal injury, insurance defense, slip and fall accidents, automobile and truck accidents, motorcycle accidents, premises liability, dog bites and civil litigation. He is a member of the International Academy of Collaborative Professional and serves on the Professional Development Committee and has previously served on the Public Education Advisory Panel of the Academy. He also is a member of the Collaborative Law Alliance of New Hampshire. AV Preeminent Rated by Martindale-Hubbell. Recipient of the 2014 Nationally Ranked Top 10 Attorney Award from the National Academy of Family Law Attorneys (NAFLA). You can reach Attorney Rauseo at krauseo@nashualaw.com.