On April 4, 2016, Governor Cuomo signed legislation, as part of the 2016-2017 state budget, enacting a $15.00 minimum wage plan and a 12-week paid family leave benefit. Minimum Wage Increase The legislation includes a historic increase in the minimum wage (currently $9.00 per hour) that will ultimately reach $15.00 per hour for all workers in New York State.  The increases vary based on employer size and geographic location as follows:

• For large employers (11 or more employees) whose employees work in New York City, the state minimum wage will increase to $11.00 per hour on December 31, 2016, $13.00 per hour on December 31, 2017, and $15.00 per hour on December 31, 2018.
• For small employers (10 or fewer employees) whose employees work in New York City, the state minimum wage will increase to $10.50 per hour on December 31, 2016, $12.00 per hour on December 31, 2017, $13.50 per hour on December 31, 2018, and $15.00 per hour on December 31, 2019.
• For employers with employees working in Nassau, Suffolk, and Westchester Counties, the state minimum wage will increase to $10.00 per hour on December 31, 2016, $11.00 per hour on December 31, 2017, $12.00 per hour on December 31, 2018, $13.00 per hour on December 31, 2019, $14.00 per hour on December 31, 2020, and $15.00 per hour on December 31, 2021.
• For all employers with employees working outside of New York City and Nassau, Suffolk, and Westchester counties, the state minimum wage will increase to $9.70 per hour on December 31, 2016, $10.40 per hour on December 31, 2017, $11.10 per hour on December 31, 2018, $11.80 per hour on December 31, 2019, and $12.50 per hour on December 31, 2020.  The minimum wage will continue to increase to $15.00 thereafter on an indexed schedule to be set by the Director of the Budget in consultation with the Commissioner of the Department of Labor.  These increases will be published on or before October 1^st of each year.

The legislation also includes a safety measure allowing the Division of Budget, beginning in 2019, to conduct an annual analysis to determine whether there should be a temporary suspension or delay in any scheduled increases.  These minimum wage increases do not affect the timing and amounts of the minimum wage increases for fast food workers that were incorporated into the Hospitality Industry Wage Order effective December 31, 2015. Paid Family Leave In addition to a gradual increase in the minimum wage, a paid family leave program was enacted that will eventually result in eligible employees being entitled to up to 12 weeks of paid family leave when they are out of work for the following qualifying reasons:  (1) to care for a family member with a serious health condition; (2) to bond with a child during the first 12 months following birth or placement for adoption or foster care; or (3) because of a qualifying exigency arising out of the fact that the employee’s spouse, domestic partner, child, or parent is on active duty (or has been notified of an impending call or order to active duty) in the armed forces. In order to be eligible for paid family leave, employees must work for a covered employer – as defined under the New York Disability Law – for 26 or more consecutive weeks.  Family leave benefits will be phased in as follows:

• Beginning on January 1, 2018, eligible employees will receive up to 8 weeks of paid family leave in a 52-week calendar period at 50% of the employee’s average weekly wage, capped at 50% of the state average weekly wage;
• Beginning on January 1, 2019, eligible employees will receive up to 10 weeks of paid family leave in a 52-week calendar period at 50% of the employee’s average weekly wage, capped at 50% of the state average weekly wage;
• Beginning on January 1, 2020, eligible employees will receive up to 10 weeks of paid family leave in a 52-week calendar period at 60% of the employee’s average weekly wage, capped at 60% of the state average weekly wage; and
• Beginning on January 1, 2021 and each year thereafter, eligible employees will receive up to 12 weeks of paid family leave in a 52-week calendar period at 67% of the employee’s average weekly wage, capped at 67% of the state average weekly wage.

Like with the minimum wage increase, the legislation includes a safety measure whereby the Superintendent of Financial Services has the discretion to delay the scheduled increases listed above. Family leave benefits may be payable to employees for family leave taken intermittently or for less than a full workweek in increments of one full day or one-fifth of the weekly benefit.  Significantly, employers are not required to fund any portion of this benefit.  Rather, the program is funded entirely through a nominal employee payroll deduction.  The maximum employee contribution will be set by the Superintendent of Financial Services on June 1, 2017 and annually thereafter. Entitlement to paid family leave is also subject to certain medical certification and notification requirements.  Paid family leave benefits must be used concurrently with leave under the Family and Medical Leave Act.  In addition, employees are prohibited from collecting disability and paid family leave benefits concurrently. In addition to paid leave, this legislation contains a provision for the continuation of health benefits which provides as follows:  “In accordance with the Family and Medical Leave Act (29 U.S.C. §§ 2601-2654), during any period of family leave the employer shall maintain any existing health benefits of the employee in force for the duration of such leave as if the employee had continued to work from the date he or she commenced family leave until the date he or she returns to employment.” Lastly, employees who take paid family leave must be restored to their current position or to a comparable position with equivalent pay, benefits, and other terms and conditions of employment. Clearly, there are a lot of questions that remain unanswered regarding the paid family leave program.  However, covered employers should begin to prepare for the implementation of this legislation.

On March 29, 2016, the Supreme Court issued a one sentence opinion in the highly publicized case of Friedrichs v. California Teachers Association, stating “[t]he judgment is affirmed by an equally divided Court.”  This outcome was not unexpected after the death of Supreme Court Justice Antonin Scalia left the Supreme Court with eight remaining Justices.  This split decision means that public sector agency shop fees are still lawful, and that state statutes authorizing agency shop fee arrangements (including New York's Taylor Law) remain constitutional. Although the Supreme Court has issued an opinion, it seems that this case is far from over.  In a press release issued on the day of the decision, the President of the Center for Individual Rights (the public interest law firm that originally brought the case on behalf of the petitioners), Terry Pell, stated, “We believe this case is too significant to let a split decision stand and we will file a petition for re-hearing with the Supreme Court.”  Considering the significance of this issue, it appears likely that a petition for re-hearing will be granted once another Supreme Court Justice is appointed and confirmed.

One of the largest investments an organization makes is in its employees.  As organizations grow and evolve, often Human Resources policies and procedures lag behind and are a last area of concern.  Experience has repeatedly shown that the most progressive employers do not wait for an unanticipated employee situation, when it may be too late, to discover they are not in compliance with regulations, or that they have left themselves at risk due to incomplete or outdated policies.  Employers who conduct Human Resource audits position themselves to proactively address situations before costly and time-consuming consequences arise. A Human Resource audit may vary based on an organization’s needs.  Frequent components of an audit consist of:

• Policy and Document Updates
  • Review employment applications, offer letters, and other hiring documents.
  • Audit record retention policies and practices for legal compliance.
  • Assess employee handbooks and other existing employment policies.
  • Analyze employment agreements, termination letters, and severance arrangements.
  • Identify gaps between written policies and procedures and actual practice.
• Employee Classification Analysis
  • Review Job Descriptions.
  • Evaluate classifications of individual workers for purposes of:
    • Independent contract versus employee status; and
    • Overtime exemption.
  • Audit personnel files and payroll practices for legal compliance.

Having high quality, up-to-date Human Resources policies and procedures ensures that the investment made in employees is productively leveraged, managed properly, and in compliance with frequently changing labor and employment laws and regulations.  All employers should seriously consider using experienced labor and employment law legal counsel to assess compliance with applicable employment laws and regulations and reduce the risk of employment disputes. Information concerning Bond’s Human Resources Audit and Compliance Training Services can be found here.

On March 17, 2016, the United States Court of Appeals for the Second Circuit issued a decision in Graziadio v. Culinary Institute of America.  In that decision, the Court held that the facts (when viewed in the light most favorable to the plaintiff) could lead a jury to conclude that the Culinary Institute of America’s Director of Human Resources was individually liable for violating the Family and Medical Leave Act. The plaintiff, Cathy Graziadio, was employed at the Culinary Institute as a Payroll Administrator.  On June 6, 2012, Graziadio’s son was hospitalized due to issues related to Type I diabetes.  Graziadio immediately informed her supervisor that she needed to take leave to care for him.  Graziadio completed the necessary FMLA paperwork and submitted medical documentation supporting her need for leave.  Only a few weeks later, Graziadio’s other son fractured his leg playing basketball and underwent surgery.  Graziadio again notified her supervisor that she needed leave to care for her other son and expected to return to work, at least part time, by the week of July 9. On July 9, Graziadio’s supervisor asked for an update on Graziadio’s return to work and Graziadio responded that she needed a reduced, three-day week schedule until mid-to-late August and could return July 12 if that schedule was approved.  Graziadio asked whether the Culinary Institute required any further documentation from her.  At that point, Graziadio’s supervisor contacted the Director of Human Resources regarding Graziadio’s request.  Despite several calls and e-mails from Graziadio, the Director of Human Resources did not respond until July 17.  Over the next several weeks, Graziadio and the Director of Human Resources corresponded regarding Graziadio’s need for continued leave, alleged deficiencies in her FMLA documentation, and her expected return to work date. On September 11, 2012, the Director of Human Resources sent Graziadio a letter notifying her that she had been terminated for abandoning her position.  After being terminated, Graziadio commenced an action against the Culinary Institute, her supervisor, and the Director of Human Resources alleging interference with her FMLA leave and retaliation for taking FMLA leave.  The District Court granted summary judgment to the Culinary Institute and the individual defendants, but the Second Circuit reversed that decision. Under the FMLA, an individual may be held liable if he or she is considered an “employer,” defined as “any person who acts, directly or indirectly in the interest of an employer to any of the employees of such employer.”  In examining this standard, the Second Circuit applied the economic realities test – which courts apply to determine who may be considered an employer under the Fair Labor Standards Act.  Under this test, the Court must look to whether the individual “possessed the power to control the worker in question.”  The factors include whether the individual:  (1) had the power to hire and fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.  In the context of the FMLA, courts look to whether the individual “controlled in whole or in part plaintiff’s rights under the FMLA.” In the Graziadio case, the Second Circuit held that the Director of Human Resources “appears to have played an important role in the decision to fire Graziadio” and “under the totality of the circumstances, [the Director of Human Resources] exercised sufficient control over Graziadio’s employment to be subject to liability under the FMLA."  Accordingly, unless the parties reach a settlement, the case will proceed to trial with both the Culinary Institute and its Director of Human Resources as defendants. This case stands as a stark reminder to human resource professionals involved in making decisions related to employee FMLA requests to proceed with caution and to strictly comply with the requirements of the FMLA when processing requests for leave.  If there is any doubt regarding the appropriate course of action, human resource professionals should consult with counsel.

Ever since President Obama on March 13, 2014 signed a Presidential Memorandum directing the United States Department of Labor to update the overtime exemption regulations under the FLSA, it has probably been the most talked about employment law issue over the last two years.  This is not surprising, as the FLSA applies in both the private and public sector and generally does not distinguish between for-profits and non-profits. Given the significant potential implications, the process of revising the overtime exemption rules moved along gradually.  It took over a year for the DOL to even publish proposed changes, which it did on July 6, 2015 in the Federal Register.  Despite numerous requests by various entities to extend the September 4, 2015 public comment period, including from approximately twenty members of Congress, the DOL declined to do so. On March 14, 2016, the DOL took the final step necessary before implementation of the proposed changes by sending the controversial rules to expand overtime protection to the White House’s Office of Management and Budget (“OMB”).  OMB can review the rules for a maximum period of 90 days.  There is no minimum amount of time required for OMB review.  We believe, given the heightened level of public scrutiny of the rules and collateral issues like the Presidential election coming up in November, that OMB should be prepared to do a relatively prompt review within 30 to 45 days.  If so, and assuming there is a 60-day grace period between issuance of the final rules and implementation of the final rules, this would mean an effective date of the final rules in late July or early August. Perhaps the most important question still remains though -- will the final rules contain any significant changes to the “duties” tests for the white collar exemptions despite the absence of any specific changes in the proposed rules?  Even if not, litigation over the final rules seems inevitable.  If so, the screams of foul play from employers will be deafening.

As previously reported on this blog, President Obama signed Executive Order 13706 in September 2015, requiring certain federal contractors and subcontractors to provide at least seven paid sick days per year to employees (both hourly and salaried) working on federal contracts.  Recently, on February 25, 2016, the United States Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM), setting forth its proposed regulations to implement this executive order.  Interested parties can now submit comments on these proposed regulations, but must do so quickly.  Comments must be received by the DOL by midnight on March 28, 2016 (although several commentators have already requested that the deadline be extended.) First, the basics. Contractors will be required to allow paid sick time to be used not only for an employee’s own illness or medical appointments (including preventative care), but also for the illness and medical appointments of a family member (defined quite broadly) or for absences related to domestic violence, sexual assault or stalking.  The leave cannot be tracked in increments greater than one (1) hour.  While unused time must be carried over into a new calendar year, the contractors will be permitted to cap accrual of new time until the employee’s time drops below 56 hours. Compliance with Executive Order 13706 will not be as easy as confirming your existing paid time off policies include seven sick days and cover the right types of absences.  The proposed regulations create a regulatory scheme similar in complexity to the Family and Medical Leave Act (FMLA), with detailed notice and recordkeeping rules.  For example:

• Contractors must notify employees in writing of the amount of paid sick leave they have accrued no less than monthly, as well as each time they request sick leave, and each time they request the information (but no more than once a week), and again upon separation.
• Contractors may only require medical certification or documentation for absences of three or more days.  Significantly, the employee has up to 30 days after the first day of the absence to provide the documentation.  During those 30 days, the contractor must treat the request for paid leave as valid.  If the contractor does not receive the documentation, or if it is insufficient, the contractor may retroactively deny the employee’s request for use of paid sick leave, and may deduct any sums paid, but only if those deductions are lawful under state wage payment laws.  (Given the intricacy of New York’s wage payment law and its restrictions on deductions, the practical impact may be that New York employers rarely, if ever, seek to recoup this pay.)
• An employee may make a request for paid sick leave orally or in writing, and must make the request seven days in advance if possible.  If advance notice is not possible, the employee need only make the request when he or she becomes aware of the need for leave or the next business day.
• If the contractor approves the use of paid sick leave, it can do so orally as long as it also provides a written statement of how much leave is available.  If the contractor denies the use of paid sick leave, however, it must do so in writing with an explanation of the denial.  If the denial is based on insufficient documentation, the employee must be given an opportunity to submit a new, corrected request.
• The contractor’s response to the employee’s request must be made “as soon as is practicable.”  Notably, the proposed regulations state that in many instances, the contractor should be able to respond to a request “immediately or within a few hours.”
• Contractors need only apply the paid sick time off policy to employees actually working on the covered contract, and only for the hours they are working on the covered contract.  However, if the contractor intends to make such a distinction, it must keep records reflecting when the employee is and is not working on the covered contract.
• At the completion of a covered contract, a prime contractor must provide to the contracting officer a certified list of all employees entitled to paid sick leave under the Executive Order at any time during the twelve months preceding the end of the contract, the date each employee separated if prior to the completion of the contract, and the amount of paid sick leave each employee had available for use.
• Finally, contractors must keep records of the following available for inspection by the DOL:
  1. Name, address, Social Security number, and occupation for each employee;
  2. Wage rates, hours worked, deductions made, and total wages each pay period;
  3. Copies of notifications to employees of the amount of paid sick leave accrued;
  4. Copies of employee leave requests, and if requests are not made in writing, other records reflecting those oral requests;
  5. Dates and amounts of paid sick time used;
  6. Copies of written denials of requests;
  7. Copies of certifications and other documentation provided by employees;
  8. Any other records showing tracking or calculations of accrual and time used;
  9. Copies of any certified list of employees' unused paid sick leave provided to or received from a contracting officer; and
  10. The relevant covered contract.

Similar to the FMLA, contractors are prohibited from interfering with an employee’s use of leave or discriminating against an employee for requesting or using leave.  There is no private right of action, but employees may file complaints with the DOL.  The DOL may order penalties, including back pay, reinstatement and liquidated damages, and debarment. Given the impact of this proposed regulatory scheme, contractors should consider submitting comments on how this will impact their business and/or how the rules should be modified or clarified to the DOL before the March 28, 2016 deadline.  Comments can be easily submitted online by clicking "Submit a Formal Comment” on this page.

As we have reported in earlier posts, the U.S. Equal Employment Opportunity Commission (“EEOC”) has previously taken the position that discrimination on the basis of “sexual orientation” is prohibited under Title VII of the Civil Rights Act of 1964.  Although not explicitly listed as a protected category under Title VII, the EEOC views sexual orientation discrimination as a form of “associational discrimination” on the basis of sex because it involves an employee being treated differently based on his or her association with a person of the same sex. The EEOC first asserted its position with respect to sexual orientation discrimination in April 2012, in Macy v. Holder, a case in which the Bureau of Tobacco, Firearms and Explosives withdrew an offer of employment after an applicant revealed that she was in the process of transitioning from male to female.  Later that same year, the EEOC issued its Strategic Enforcement Plan, in which the EEOC made “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions” a top priority.  In July 2015, the EEOC issued another decision against the Federal Aviation Administration in which it held that discrimination based on sexual orientation constituted a form of sex discrimination. On March 1, 2016, the EEOC took its position one step further by filing lawsuits in the U.S. District Court for the Western District of Pennsylvania against Scott Medical Health Center and in the U.S. District Court for the District of Maryland against Pallet Companies, d/b/a IFCO Systems NA, alleging discrimination based on sexual orientation under Title VII. In the suit against Scott Medical Health Center, the EEOC alleges that a gay male employee allegedly suffered harassment in the workplace due to his sexual orientation.  The complaint alleges that the employee’s supervisor referred to him using anti-gay epithets and made offensive comments about his sexuality and sex life.  The complaint further alleges that although the employee complained of how he was treated, his manager refused to take any corrective action, forcing him to resign from his position. In the suit against IFCO Systems, the EEOC alleges that a supervisor harassed a gay female employee because of her sexual orientation.  The complaint alleges that the employee’s supervisor made comments about the employee’s orientation and appearance, and made sexually suggestive gestures toward her.  The complaint further alleges that the employee complained about the harassment but was terminated shortly after making the complaint. In a press release announcing the two lawsuits, the EEOC stated that these two suits “solidify its commitment to ensuring that individuals are not discriminated against in the workplace because of their sexual orientation.” Despite the EEOC’s continued assertions that Title VII encompasses sexual orientation as a protected category, there is no dispute that the plain language of Title VII does not expressly prohibit discrimination on the basis of sexual orientation.  Of course, employees in New York are nevertheless protected against discrimination based on sexual orientation, because the New York Human Rights Law already includes such protection.  If defense counsel challenges the EEOC’s interpretation, the federal district courts will have the opportunity to establish a precedent regarding whether this protection also exists under Title VII.

As we reported in a prior blog post, there is a case currently in front of the U.S. Supreme Court (Friedrichs v. California Teachers Association) in which the mandatory payment of union agency shop fees by public sector employees is being challenged as unconstitutional.  Oral argument in the case was heard by the Supreme Court on January 11, 2016.  On February 13, 2016, Supreme Court Justice Antonin Scalia passed away.  What is the likely impact of Justice Scalia's death on the outcome of this case? It was anticipated that based upon the questions posed during oral argument that the justices would likely find in favor of the petitioners by a ruling of 5-4, with Justice Scalia being one of the five justices holding that union agency shop fees in the public sector are unconstitutional.  Justice Scalia’s predicted opinion on the issue was evidenced by the following discussion with the petitioners' counsel during the oral argument regarding whether it would even be permissible to require someone to contribute to a cause that he or she does believe in, let alone a cause that he or she does not wish to support: Justice Scalia:  Mr. Carvin, is -- is it okay to force somebody to contribute to a cause that he does believe in? Mr. Carvin:  I wouldn’t think, Your Honor, that you could force Republicans to give contributions. Justice Scalia:  Yes.  That’s -- that's what I’m thinking.  Could you enact a law?  Let’s say the national political parties are in trouble so they enact a law that says all -- all members of the Republican party, if you want to be a member you have to contribute so much money. Mr. Carvin:  No. Justice Scalia:  Is that okay? Mr. Carvin:  No, it’s not, and that’s because the bedrock principle, as Harris made clear, is not whether or not you vividly oppose what they’re saying -- Justice Scalia:  Right. Mr. Carvin:  -- it's because you don't wish to subsidize it. Justice Scalia:  Exactly.  So I don't know why you're putting so much emphasis on the fact that your -- your clients oppose.  It really wouldn't matter, would it? Mr. Carvin:  No. The death of Justice Scalia leaves eight Supreme Court justices, which could result in a 4-4 tie in one of the closest cases of this term.  Many political commentators believe it is unlikely that another Supreme Court justice will be appointed before June decisions are published by the Court.  In the event that there is a 4-4 tie, the lower court decision stands.  In Friedrichs, the lower court decision of the Ninth Circuit affirmed the district court’s finding in favor of the union.  Therefore, a 4-4 tie would mean that union agency shop fees in the public sector would remain constitutional, at least for now.  If this occurs, the petitioners' counsel has already announced that they intend to seek a rehearing next term by the full Court.

The following article was first published in Employment Law 360 on February 24, 2016. Being both an employment law geek and a "Star Wars" geek, I can’t help but watch the "Star Wars" movies through the troublesome lenses of my employment lawyer glasses, nor can I practice employment law without various “Yodaisms” running through my mind (e.g., “Do or do not. There is no try.”).  Having watched all of the "Star Wars" movies, it occurred to me while watching "Star Wars:  The Force Awakens," that the most fundamental source of disturbances in the Force are key characters — employees, if you will, for the purposes of this article — joining competitor masters (employers) with catastrophic results.  Darth Vader, Count Dooku and Kylo Ren all started their careers with the Jedi before leaving to a competitor. But what if they couldn’t?  How would a New York court view a noncompete agreement in the context of the Jedi Order?  Below is my best estimate as to how it would play out, at least in the lower court. SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------------------X LUKE SKYWALKER’S JEDI ACADEMY, Plaintiff, -against-                                                                                                     Index No. 2016/R2D2 KYLO REN, THE FIRST ORDER AND SNOKE, Defendants. -----------------------------------------------------------------------X Miller, J. This case comes before the Court on Plaintiff’s motion for a preliminary injunction:  (1) enjoining defendant Kylo Ren from working for Defendants Snoke and the First Order; and (2) enjoining the Defendants from using Plaintiff’s trade secrets and usurping its customer relationships.  For the reasons stated below, subject to Plaintiff’s posting of a sufficient undertaking, the Court grants the motion for a preliminary injunction. Facts The Court assumes the parties’ familiarity with the facts and will state them only briefly here.  Plaintiff at all times relevant to this proceeding operates a Jedi Training Academy for the purpose of teaching its pupils (Padawans) how to use the “light-side” of the Force.  Defendant Kylo Ren is a former employee of the academy who was terminated for various alleged acts of misconduct (discussed, infra).  During the course of his employment, Ren signed a noncompete agreement in which he agreed not to compete against the academy for a period of one year following his separation. Notwithstanding the noncompete agreement, immediately upon his termination, Ren commenced employment with Snoke and the First Order.  The parties stipulate that Snoke and the First Order are direct competitors of the academy and the constituency it serves.  The present litigation ensued.  The parties agreed to venue this matter in New York County, as it is apparently the only venue in which individuals from the “bar scenes” from "Star Wars IV" and "Star Wars VII" can blend in without feeling self-conscious.  New York law controls this matter despite the choice of law provision regarding “Intergalactic Law” because that law is too employer-friendly.  See Brown & Brown Inc. v. Johnson, 25 N.Y.3d 364 (2015). Standard for Issuing an Injunction The standard for obtaining a preliminary injunction is well-known.  The moving party must show the following:  (1) the likelihood of ultimate success on the merits; (2) threat of irreparable injury absent the granting of the preliminary injunction; and (3) that the equities are balanced in its favor.  See McLaughlin, Pivin, Vogel Inc. v. W.J. Nolan & Company Inc., 114 A.D.2d 165, 172 (2d Dep’t 1986). Enforceability of the Noncompete The Court of Appeals has espoused a three-pronged test for determining whether a restrictive employment covenant will be enforced.  An agreement will be enforced if it:  (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.  BDO Seidman v. Hirshberg, 92 N.Y.2d 382, 388-89 (1999).  Legitimate employer interests include protection of trade secrets and customer relationships. Ren argues that, as a threshold matter, because he was terminated without cause, the noncompete cannot be enforced against him.  Post v. Merrill Lynch, Pierce, Fenner & Smith Inc., 48 N.Y.2d 84, 88 (1979).  There is currently a split in the appellate divisions on this issue.  The Second Department follows the rule against enforcement where an employee was terminated without cause.  Grassi & Co., CPAs PC v. Janover Rubinroit LLC, 82 A.D.3d 700, 702 (2d Dep’t 2011); Borne Chemical Co. Inc. v. Dictrow, 85 A.D.2d 646 (2d Dep’t 1981).  Conversely, the First Department is more wary in its application of the rule.  Bell & Co. PC v. Rosen, 2012 N.Y. Misc. LEXIS 6230 (N.Y. Cnty. Sup. Ct. Nov. 8, 2012), aff’d, 979 N.Y.S.2d 564 (1st Dep’t 2014). The Fourth Department has also held on numerous occasions that involuntary termination without cause will not necessarily preclude enforcement of a noncompete.  Eastman Kodak Co. v. Carmosino, 77 A.D.3d 1434, 1436 (4th Dep’t 2010); Wise v. Transco Inc., 425 N.Y.S.2d 434 (4th Dep’t 1980). This Court need not resolve this conflict because the Court finds that Ren has stolen trade secrets.  Consequently, the Court can and will issue a preliminary injunction on this issue irrespective of the existence of a valid noncompete.  See, e.g., Churchill Communications Corp. v. Demyanovich, 668 F. Supp. 207, 211 (S.D.N.Y. 1987) ("Of course, an employee’s use of an employer’s trade secrets or confidential customer information can be enjoined even in the absence of a restrictive covenant when such conduct violates a fiduciary duty owed by the former employee to his former employer."). Trade Secrets A trade secret is defined as "any formula, pattern, device or compilation of information which is used in one's business, and which gives [the owner] an opportunity to obtain an advantage over competitors who do not know or use it."  North Atlantic Instruments Inc. v. Haber, 188 F.3d 38, 49 (2d Cir. 1999); see also Ashland Management Inc. v. Janien, 82 N.Y.2d 395, 407 (1993) (discussing six-factor test).  Plaintiff argues that as an employee of the academy, Ren was entrusted with access to all manner of trade secrets, including how to use various mind tricks, construct a lightsaber and turn into a “force ghost.”  Further, Ren was provided with lists of individuals sympathetic to the cause of the rebellion (customer lists). Ren argues that despite the mystique of the Jedi, nothing they do rises to the level of a trade secret.  According to Ren, a cursory Google search will reveal how to do mind tricks and any elementary school student with a computer and a basement can construct their own lightsaber (albeit poorly shaped).  We disagree with this analysis. While Ren is correct that an employer has the burden of demonstrating that "it took substantial measures to protect the secret nature of its information," (see Geritrex Corp. v. Dermarite Industries LLC, 910 F. Supp. 955, 961 (S.D.N.Y. 1996)), Plaintiff has met its burden.  Only a select few are provided with its secrets, its secrets are only revealed in secure locations, and any computerized lists are password-protected, encrypted and stored in the vaults of droids.  Further, the trade secrets cannot, as Ren contends, be so easily learned or reverse engineered.  Ren’s own incomplete lightsaber reveals that guarded secrets are still needed to complete it. In any event, the record is clear that Ren took physical copies of the academy’s confidential information, namely sympathizer lists, a partially working lightsaber, and force ghost manuals. It is well-settled that "an employee’s illegal physical taking or copying of an employer’s files or confidential information constitutes actionable unfair competition."  Advance Magnification Instruments Ltd. v. Minuteman Optical Corp., 135 A.D.2d 889 (3d Dep’t 1987). Further, "if there has been a physical taking or studied copying of confidential information, the court may in the proper case grant injunctive relief, not necessarily as a violation of a trade secret, but as an egregious breach of trust and confidence while in plaintiff’s service."  Garbor GuyButler Corporation v. Cowen & Co., 155 Misc.2d 39 (N.Y. Cnty. Sup. Ct. 1992); see also Ecolab Inc. v. Paolo, 753 F. Supp. 1100, 1112 (E.D.N.Y. 1991) ("Moreover, even if this information did not independently rise to the level of a trade secret, [the former employees’] wrongful retention of the customer information would justify treating it as a trade secret."); Marcone APW LLC v. Servall Co., 85 A.D.3d 1693, 1696 (4th Dep’t 2011) (“In any event, even assuming, arguendo, that the misappropriated information is not entitled to trade secret protection, we conclude that the court properly determined that injunctive relief is warranted on the alternative ground of breach of trust by the individual defendants in misappropriating plaintiff’s proprietary information.”) Irreparable Harm "It is clear that irreparable harm is presumed where a trade secret has been misappropriated."  Lumex v. Highsmith, 919 F. Supp. 624, 628 (E.D.N.Y. 1996).  This is because a trade secret, once lost, is lost forever; its loss cannot be measured in money damages.  North Atlantic Instruments Inc. v. Haber, 188 F.3d 38, 49 (2d Cir. 1999) (quoting FMC Corp. v. Taiwan Tainan Giant Industrial Co., 730 F.2d 61, 63 (2d Cir. 1984). Scope of the Injunction Ren is directed to return all hard copies of any trade secrets he has taken from the academy and destroy any electronic version of any trade secret in his possession.  For a period of one year, Ren may work for Snoke and the First Order, but not in any capacity that requires the use of the Force.  Plaintiff argues that under the Inevitable Disclosure Doctrine, Ren should be barred from working for the First Order in any capacity.  The Court will address this argument after further briefing in the context of summary judgment on Plaintiff’s request for a permanent injunction.  Ren may discuss joining the First Order with individuals and entities who are his own relatives, personal friends and/or “who, without solicitation, approach [him],” (Eastern Business Systems Inc. v. Specialty Business Solutions LLC, 292 A.D.2d 336, 338 (2d Dep’t 2002); see also Frank Crystal & Co. v. Dillmann, 84 A.D.3d 704 (1st Dep’t 2011); Weiser LLP v. Coopersmith, 74 A.D.3d 465 (1st Dep’t 2010)), or who wanted to leave the academy on their own accord.  Data Systems Computer Centre Inc. v. Tempesta, 171 A.D.2d 724 (2d Dep't 1991). The foregoing shall constitute the Order of this Court.

When an employee or former employee files a discrimination charge with the Equal Employment Opportunity Commission ("EEOC"), the first step in the investigation is generally the EEOC's request for a position statement from the employer in response to the charge.  Although many employers depend on their labor and employment counsel to gather the necessary information and submit the position statement on their behalf, some employers choose to handle the submission of the position statement themselves.  Employers that submit their own responses should be aware that the EEOC has published new procedures for how it will handle the release of information contained in employer position statements to the charging party.  The EEOC's new procedures and a Q&A for employers can be found on the EEOC's web site here. According to these new procedures, the EEOC will begin releasing employer position statements and “non-confidential attachments” to the position statements to a charging party upon request during the EEOC’s investigation.  The charging party will be permitted to submit a response to the EEOC investigator.  Notably, the EEOC procedures advise charging parties that they can submit this response in writing or they can simply call the investigator to discuss their response.  Employers will not be able to receive a copy of the charging party’s response, even if it is submitted in writing. Historically, a charging party’s ability to obtain the employer’s position statement and/or exhibits varied depending upon the individual procedures of each EEOC District Office.  These new nationwide procedures are intended to make the EEOC’s approach uniform across all offices. Under these new procedures, an employer that submits a position statement is directed to refer to, but not identify, the information it considers “confidential” and to provide that information in a separate attachment that will not be shared with the charging party.  Justification must be included to explain the segregation of this information.  This “confidential” information includes, and must be labeled as, one of the following:

• sensitive medical information (except for the charging party’s medical information);
• social security numbers;
• confidential commercial or financial information;
• trade secret information;
• non-relevant personally identifiable information of witnesses, comparators, or third parties, such as social security numbers, dates of birth in non-age cases, home addresses, phone numbers, etc.; or
• any references to charges filed against the employer by other charging parties.

These new procedures apply to all EEOC requests for employer position statements on or after January 1, 2016.

As we reported in a previous blog post, the Office of Federal Contract Compliance Programs (“OFCCP”) Final Rule implementing Executive Order 13665 (titled Non-Retaliation for Disclosure of Compensation Information) took effect on January 11, 2016.  This Executive Order amended Executive Order 11246 by prohibiting Federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant. The new Rule applies to Federal contractors who enter into or modify existing covered Federal contracts greater than $10,000, on or after January 11, 2016.  The new Rule also requires Federal contractors to:  (1) revise the “equal opportunity clause” to include the new non-discrimination provision in contracts, subcontracts, and purchase orders; (2) incorporate an OFCCP-prescribed non-discrimination provision into existing employee manuals and handbooks; and (3) disseminate the non-discrimination provisions to employees and job applicants. The OFCCP has created two versions of the mandatory non-discrimination provision:

• One formatted with the OFCCP’s logo and contact information to be posted electronically or printed and posted on an employer’s premises.
• A second version which includes only the required language.  At a minimum, Federal contractors must use this prescribed language.

With the Final Rule already in effect, contractors should ensure their policies are in compliance with the non-discrimination provisions, make sure the OFCCP non-discrimination provision is included in handbooks or manuals and disseminated to employees and applicants, and ensure their “equal opportunity clause” in contracts, subcontracts and purchase orders is in compliance.

Employers face claims of retaliation at an increasingly alarming rate.  Nearly 43% of all charges filed with the U.S. Equal Employment Opportunity Commission (EEOC) in FY 2014 included some allegation of retaliatory conduct.  While retaliation is by no means a new concern for the EEOC, the Proposed Enforcement Guidance on Retaliation and Related Issues issued on January 21, 2016 shows very clearly that the agency intends to take an even more aggressive approach to address what it perceives as an epidemic of retaliation affecting the workplace. The EEOC last issued guidance on the topic of retaliation in 1998.  Since then, the percentage of retaliation charges has almost doubled and the U.S. Supreme Court has issued several significant decisions concerning the scope of the anti-retaliation protections under federal employment statutes, as discussed here.  Citing this backdrop, the EEOC chose to issue the proposed guidance to make known the agency’s current position on several key topics relating to retaliation.  Although not carrying the weight of law or regulation, the enforcement guidance, once adopted, will establish the various standards EEOC staff can be expected to apply while investigating charges or litigating cases. Perhaps not surprisingly, the EEOC’s proposed guidance advances a broader, claimant-friendly application of federal anti-retaliation statutes.  For instance, the EEOC’s classification of conduct as either “participation activity” or “opposition activity” – the two types of activities protected by most federal employment laws – differs sharply from the standard applied almost universally by courts.  Whereas nearly all courts hold that participation activity requires some connection to the administrative or litigation process (such as filing a charge or serving as a witness), the EEOC takes the position that even making an internal complaint with an employer constitutes participation activity.  This is significant because, unlike with opposition activity – which filing an internal complaint unquestionably is – an employee need not reasonably believe that unlawful discrimination actually occurred for participation activity to be cloaked with statutory protection.  In other words, according to the EEOC, an employee should be able to lodge a knowingly baseless internal complaint of discrimination without any potential for repercussion.  This is a dramatic departure from the current state of the law. Also, while the EEOC acknowledges that opposition activity is only protected if the manner of opposition is reasonable, the proposed guidance would make it extremely difficult for an employer to ever establish that an employee’s conduct was so outrageous that it loses the protection of federal anti-retaliation laws.  For example, the EEOC states that protected opposition activity may include engaging in a production slow-down, writing critical letters to customers, or protesting against discrimination in an industry or society in general – without any connection to a specific workplace – even if that conduct causes the employer financial harm. The proposed guidance shows that the EEOC intends to push the limits of federal anti-retaliation laws to expand the scope of employee protections.  To prepare for this, employers should re-evaluate their policies and procedures to ensure that the appropriate mechanisms are in place to minimize even the specter of retaliation.  In this regard, the proposed guidance lists several “best practices” that the EEOC believes employers should follow, including:

• Maintaining written policies which provide examples of prohibited retaliation, a complaint procedure, and a clear explanation that engaging in retaliation can result in discipline, up to and including termination;
• Training all managers, supervisors and employees on the employer’s written anti-retaliation policy and emphasizing to all employees that the employer will not tolerate retaliation;
• Establishing a protocol to remind managers or supervisors who are accused of discrimination of the employer’s anti-retaliation policy, and to provide tips to help managers and supervisors avoid engaging in conduct which might constitute unlawful retaliation or be perceived as such;
• Following up with employees, managers and witnesses while an EEO matter is pending to ask if they have any concerns about potential or perceived retaliation; and
• Reviewing proposed employment actions, ideally by designating a management or human resources representative who can ensure that employees or witnesses involved in an EEO matter are not subjected to unlawful retaliation.

The EEOC’s proposed guidance is open for public comment until February 24, 2016.