Pautsch, Spognardi & Baiocchi Legal Group LLP
Monday Morning Minute
In This Issue
Quiz: Covenants Not to Compete
BIPA Lawsuits
Did You Know?
                  September 10, 2018


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A few weeks ago, MMM featured an article regarding the recent trend in state legislatures to pass statutes defining or limiting the use of covenants not to compete. Careful drafting of these important tools that businesses are increasingly turning to protect their "competitive edge" is becoming more difficult. Yet if done carefully, and with knowledge of this area of law, a company can have a court protect its' valuable "know-how" from slipping away to its competitors. We set out a quiz this week on this topic to highlight some of the important issues, and potential pitfalls in drafting these important covenants.  Some questions are a repeat from past quizzes and some are new reflecting recent developments.

1.            If you do not have a covenant not to compete agreed to and executed by an employee who leaves your company and takes trade secrets with him or her, you are left without a remedy.

2.            The drafter of the covenant can choose which state's law to apply to the agreement and this choice will be honored so long as the state chosen is the state the drafter resides in. 

3.            It is permissible for a company to terminate an employee for refusing to sign a covenant not to compete.

4.            If you decide to have an incumbent employee sign a covenant not to compete, it is not necessary to give that employee additional consideration for his or her execution of the agreement.

5.            California and New York both have laws that largely forbids the use of covenants not to compete in the private sector workplace. 

6.            Wisconsin and Arizona both have laws that largely restrict the use of covenants not to compete.
7.            It is permissible to have all of your employees sign a covenant not to compete.

8.            Massachusetts and Illinois have passed legislation in recent years limiting the application of covenants to employees above certain wage levels.

9.            Sometimes it is advisable to "race to the courthouse" in one state as opposed to another to secure an injunction enforcing a covenant against an employee who has left your company.

10.          In order that a covenant to compete to be enforceable the employee against whom it is to be enforced must be deemed to have possessed a "protectable interest".

If you need or want to discuss the answers to one or more of these questions or assistance on this topic generally, please drop us a line or give us a call.
Many Illinois employers and other business establishments are using high tech biometric information, such as biometric clocks for time management and hand, finger, or iris/retina scans for security and access to workplaces or places of public accommodation.   The Illinois Biometric Information Privacy Act governs all "private entities" (even individuals, and not just employers) who use biometric "identifiers," for these purposes, and requires that the entity using biometrics adopt certain policies and obtain individual consent.  The statute exposes private entities to stiff fines for failing to do so, from $1000 to $5000 per violation or actual damages, whichever is greater, plus plaintiffs' attorney's fees and costs.   As of the 2018, numerous class actions have been filed against top-tier businesses for technical violations of BIPA, including airlines, hospitals, hotels, fitness centers, etc. 
Currently pending before the Illinois Supreme Court is an appeal which will decide that issue of whether a "person aggrieved" includes persons alleging technical violations of BIPA, or whether an actual or tangible injury is needed to have standing to sue.  Rosenbach v. Six Flags.  The Rosenbach class representative is a teenager who purchased a Six Flags thumbprint season pass without written notice or consent.  The Illinois Supreme Court's decision will either drastically halt class actions based upon only technical violations or will open the doors to further class actions.  Regardless of the Illinois Supreme Court's decision, employers are still subject to individual or class action lawsuits which allege a tangible injury.  Because attorney's fees are provided to a prevailing plaintiff, the costs of defending either type of lawsuit well outweigh the costs of developing and implementing a well-tuned BIPA policy and consent release, which provides the best shield against aggressive plaintiff attorneys.        
The take away for all business using biometrics, including employers, is to adopt a policy and obtain written consent covering biometric data systems for timekeeping, security, or other business reasons.   In summary, BIPA:  1) requires informed consent of the individual before collecting biometrics; 2) prohibits the business from profiting from biometric data; 3) generally prohibits disclosure of biometric information, except in limited circumstances; and 4) requires the protection and retention of biometric information the same way a business would protect other sensitive or confidential information and provide destruction schedules.
Illinois does not recognize the FLSA exemptions for the categories of HCEs as well as computer professionals?  

The lesson:  Remember state exemptions may differ from what is classified under federal law.  Know your state's exemptions and adjust accordingly.  

PAUTSCH, SPOGNARDI & BAIOCCHI LEGAL GROUP is a law firm dedicated to finding common sense, affordable solutions for businesses to labor, employment, human resource and general business needs. With over 75 combined years of experience among its 3 founding partners in these areas, we can assist businesses in developing custom solutions to today's tough issues.  And as litigators, who combined have over thousands of trials  "under their belts" before state and federal courts as well as administrative agencies (such as the NLRB) you will find no better advocate and partner. 


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