Synopsis: Happy Anniversary, Keefe, Campbell, Biery & Associates—C’mon Readers, What Can We Do Better for Our Clients, Potential Clients and You?
Editor’s comment: This week marks our 13th Anniversary in the insurance defense business. We love working for you and all of our great clients and friends in the five states we cover. It has been a wonderful ride.
Please help us with your thoughts on how we can be a better defense firm by ranking these ten concepts from:
1. Speed of claim closure—is this the number one question for all litigation risk managers? Is your main issue getting complex/challenging claims to rapidly close via settlement, dismissal or trial?
2. Overall focus on value in claims handling? Are you worried about reasonable legal fees, predictable costs and saving money?
3. Litigation avoidance counseling—have you got a brewing issue and you need free legal advice on how to avoid/resolve a tough claim before you truly need a defense lawyer?
4. Knowledge of the law—do you want the top legal minds in the five states we defend claims of Illinois, Indiana, Wisconsin, Iowa and Michigan? Do you know we have adjunct professors of law on our staff?
5. Knowledge/familiarity with the hearing officers, including judges/justices/arbitrators/hearing members? Is it a prime factor for our team to thoroughly know the politics and proclivities of the great men and women we appear before every day of every year?
6. Do you know KCB&A may be the most ethical firm in the U.S? Is it important to have defense lawyers of the highest possible ethics working with and for you?
7. Are actual winning results from the top defense firm in Illinois, Wisconsin, Michigan, Indiana or Iowa important to you? We post them on our website and can contrast/compare them to your toughest claims.
8. Are reference materials, books and claims manuals of value to your adjusting or risk practice? What reference materials do you need to help you in handling day-to-day claims?
9. How important is free, accurate online email assistance? Do you know we have 24/7/365 answers to questions for WC, GL and EPLI adjusters have about compensability, defense tactics and appropriate reserves on claims, usually within 24 hours.
10. Do you need great experts for all aspects of your claims? We have a strong list for use in workers’ compensation, general liability and employment law defense litigation. If you need a one-time expert for an unusual issue, try us out!
Have we missed anything? Please tell us what else you need to be a great risk manager or adjuster and we will bring it to the fore.
We appreciate your thoughts and comments. Please post them on our award-winning blog.
Synopsis: Illinois AG Working to Free the Freaky Fast from the Chains of Jimmy Johns’ Servitude. Analysis by Shawn R. Biery, J.D., MSCC.
Editor’s comment: As you may recall if you are an avid and longtime reader, we have reported in the past with regard to non-solicit and non-compete agreements and they are in the news again. Attorney General Lisa Madigan has filed suit against the Jimmy John’s sandwich-shop franchise over their arguably highly restrictive non-compete agreements allegedly forced upon sandwich shop employees and delivery drivers in their nearly 300 sandwich shops in Illinois. Madigan argues it is unfair to Illinois workers and bad for Illinois businesses as it prohibits workers from seeking better paying jobs elsewhere and provides the employer no incentive to increase their wages or benefits.
Jimmy John’s has yet to respond to the allegations based upon our research. At the center of the battle are Madigan’s contention that all employees are required to sign a non-compete agreement as a condition of employment which restricts the signee for two years after employment from working in any other business that earns more than 10 percent of its revenue from selling “submarine, hero-type, deli-style, pita, or wrapped or rolled sandwiches.” The restriction applies to any sandwich business within three miles of any Jimmy John’s Sandwich Shop in the country, according to the lawsuit which seeks declaratory judgment that the agreements are unenforceable, void and rescinded.
Research sources indicate Jimmy John’s corporate entities reportedly ceased using non-competition agreements in April 2015, but the change in corporate policy may not have been appropriately implemented or communicated to sandwich shops, employees or franchisees. Not a single employee of the Jimmy Johns’ providing my lunch last week was aware of the lawsuit or of having signed any non-compete agreement with the company when they took their job.
As we have noted in the past, if your company provides adequate legal consideration or extended employment these types of agreements can be enforceable. However, they are limited in nature and generally are for unique employees. It is unclear if the AG even needs to take up this fight as Illinois courts have weighed in on the agreements repeatedly and I was unable to locate a citation for a sandwich artist or delivery driver who has been subject to a court action to enforce one of the purported agreements.
Previously in Fifield & Enterprise Financial Group, Inc. v. Premier Dealer Services, Inc. 2013 IL App (1st) 120327, the Appellate Court indicated Illinois companies cannot require newly hired workers to sign a non-compete agreement with no consideration and expect it to be enforceable if the employee leaves within two years for any reason (or no reason at all). The unanimous June 24, 2013 decision appears to have affirmed what was considered conventional wisdom about non-competes. We have routinely advised clients to provide some form of separate consideration for non-compete agreements and it is unclear if Jimmy Johns provides anything other than employment for their alleged agreement. In Fifield, had the employer provided some form of consideration, the courts may have enforced the agreement.
Fifield involved an appeal from a Circuit Court of Cook County dismissal of non-solicitation and non-competition clauses in Fifield’s employment agreement. Prior to October 2009, Fifield was employed by Great American Insurance Company (GAIC). As an employee of GAIC, Fifield was assigned to work exclusively for Premier Dealership Services (PDS), a subsidiary which marketed finance and insurance products to the automotive industry. PDS was sold to Premier in 2009 and Premier made an offer to continue employment if Fifield signed an employment agreement which included non-solicitation and non-competition provisions for two years past any termination of employment. Fifield even negotiated the agreement to void if terminated without cause in the first year of employment. He then resigned In February 2010 and in March 2010, along with his new employer, filed for injunctive relief. After a counterclaim was also filed by Premier, the trial court addressed the non-solicit and non-compete portions by declaring them unenforceable due to lack of adequate consideration.
Regardless of any personal feelings with respect to non-solicit/non-compete agreements, Illinois maintains one of the more employee-friendly venues for these types of agreements and employers should take heart when attempting to achieve and enforce such agreements. This reviewing court has made it very clear (as they had in the past cases cited in the decision) two years of employment or some other consideration for the agreement to be enforced. We note this is particularly of importance in the insurance industry because so many companies and brokerages use non-solicit/non-compete requirements to hamstring their employees from performing even routine services after leaving.
The twist in this case is that prior cases generally dealt with an employee already having the job and having been employed at least two years so they were deemed to have received adequate compensation for entering into a non-compete agreement. This case clarifies the same standard should apply to a newly hired worker and makes it very clear two years of employment or some other adequate consideration is at the minimum necessary to successfully enforce these types of agreements. Following this ruling, one might assume unhappy workers will not stay more than two years to render non-solicit and non-compete agreements worthless. In the end, it would be nice to see the AG take on a problem that has an impact on the rest of the state, like say the lack of a budget, runaway pensions and the well documented propensity for former elected officials to “retire” to other taxpayer funded government facilities since this issue doesn’t appear to have the impact of those more important issues related to the state.
This article was researched and written by Shawn R. Biery J.D., MSCC and he is available at firstname.lastname@example.org or 312-756-3701 for any questions about this article or regarding crafting and implementing these type of agreements in appropriate situations or any other Employment or WC issues which employers may be dealing with in Illinois.
Synopsis: Warrantless Searches: Coming to a Privately Owned Commercial Property Near You. Analysis provided by Brittany Pendry, J.D.
Editor’s Comment: Recently, the U.S. District Court for the Eastern District of Kentucky relied on a 1978 decision of the U.S. Supreme Court in allowing the EEOC to enter a steel company’s property to investigate a hiring discrimination claim without a warrant. We consider this a very important development for risk managers to know about.
In EEOC v. Nucor Steel Gallatin, Inc., No. 15-53-GFVT, 2016 U.S. Dist. LEXIS 56406 (E.D. Ky. Apr. 28, 2016), a prospective employee, Edward Bennett, filed an employment discrimination charge with the EEOC, alleging Nucor Steel Gallatin, Inc., unlawfully rescinded a job offer after it became aware of Bennett’s disability record. Subsequently, the EEOC launched an investigation, issuing a Request for Information, and later stating an investigator for the Commission would conduct an on-site investigation, including conducting interviews with individuals who might have information relevant to the investigation.
Instead, Gallatin suggested the investigator conduct interviews of the individuals offsite. The Commission issued a subpoena requiring on-site access, and Gallatin filed a Petition to Revoke and/or Modify the Subpoena claiming it placed an unnecessary burden on Gallatin, and also such a search on company property required a judicially approved warrant. The Commission denied the petition, stating it would conduct an on-site examination and Gallatin responded it would not consent without the EEOC obtaining a court order or valid warrant.
The Commission petitioned the U.S. District Court, and the court reviewed two claims Gallatin raised: first, the Commission must obtain a warrant prior to entry; and, second, the Commission “does not have the statutory authority to conduct any on-site examination of commercial property, regardless of whether an owner consents to the entry.” Id. at 4-5. Gallatin cited Title VII of the Civil Rights Act of 1964, arguing the language does not “expressly afford a right of entry to the EEOC.” Id. at 5. The Federal Court disagreed, stating the EEOC has a long history of conducting a multitude of on-site investigations on private commercial property through the country. Id. at 6.
With regard to the most pertinent issue, that of the warrantless search, the Court relied heavily on Marshall v. Barlow's, Inc., 436 U.S. 307 (1978). In that case, the U.S. Supreme Court ruled “administrative agencies cannot conduct nonconsensual inspections of private commercial property.” Id. at 313. However, in that case, the Supreme Court said that holding “did not necessarily ‘mean that, as a practical matter, warrantless-search provisions in other regulatory statues are also constitutionally infirm.’” EEOC v. Nucor Steel Gallatin, Inc. at 8-9. Instead, the Federal Court found “‘[t]he reasonableness of a warrantless search...will depend upon the specific enforcement needs and privacy guarantees of each statute.’” The Court found there were “safeguards roughly equivalent to those contained in traditional warrants” and held their Order provided all of the protections guaranteed under the Fourth Amendment. Id. at 16.
After a charge has been filed with the EEOC, businesses can expect notification within 10 days. The EEOC will investigate whether there is reasonable cause to believe discrimination occurred. An EEOC investigator will evaluate submitted information and make a recommendation as to whether reasonable cause exists. Businesses can expect to be asked to submit a statement of position, respond to a Request for Information, permit an on-site visit, and provide contact information or have employees available for witness interviews. https://www.eeoc.gov/employers/process.cfm. Employers should be aware of the authority and power that the EEOC holds, and be prepared in the event a complaint is filed against the company. Particularly, employers should be aware the EEOC can launch an investigation on company property, without a warrant, to investigate claims made not only by employees, but potential employees as well.
This article was researched and written by Brittany Pendry, J.D. You can reach Brittany at any time for questions about EEOC regulations and defending EEOC charges, employment law, general liability defense, and workers’ compensation at email@example.com.