Client Alert - Employment Law Update
Illinois Courts Weigh in on Social Media and Restrictive Covenants, and Overtime Policies
An appellate court recently decided the first case in Illinois interpreting the extent to which social media use could be the basis for breaching a non-solicitation agreement. In addition, a federal appellate court recently decided a case, involving a claim for unpaid overtime for work an employer did not know was performed. Both cases highlight the importance of clear employment policies and agreements to head off potential legal issues.
The Case of Bankers Life & Casualty Co. v. American Senior Benefits, 2017 IL App (1st) 160687 (August 7, 2017), began when Gregory Gelineau, a branch sales manager, went to work for a competitor after signing a restrictive covenant nearly 10 years earlier. The agreement prohibited him from, among other things, soliciting fellow employees to leave Banker's Life. After Gelineau went to work for the competitor as a senior vice president, it hired many Banker's Life employees.
Banker's Life filed a lawsuit to enforce Gelineau's agreement, alleging that he breached it by attempting to recruit former colleagues through requests to connect on LinkedIn. Although his profile contained a link to a job posting at the new employer, Gelineau argued that his requests were generic and that he never solicited anyone to leave their employment. He also denied Banker's Life's other claim that he directed his subordinates to contact former colleagues to induce them to join the new company.
Looking at precedent from other states, the language of Gelineau's agreement, and the content of his LinkedIn communications, the court found that a LinkedIn invitation, standing alone, was not enough to be a breach. It reasoned that the invitations were generic requests to form a networking connection, which did not mention the new company or job opportunities. It also found that posting the job opening on his public profile was not an inducement in violation of the agreement. Put simply, under Gelineau's agreement, no breach existed without proof that he actually and directly recruited individuals. Further, without proof that he actually directed subordinates to reach out to Banker's Life employees, any contacts they made could not be breaches, either.
Employment Policies and Uncompensated Overtime
The case of Allen v. City of Chicago, 16-1029 (August 3, 2017) involved a claim by Chicago police officers under the Fair Labor Standards Act ("the Act") that they were not compensated for overtime performed after-hours on their smart phones. The Act requires employers to pay covered employees one-and-a-half times their usual pay rate if they work for longer than a certain hourly threshold. Employers must pay for all work they know about even if they did not ask for it, did not want it done, or had a rule against doing it. In sum, an employer must see that work is not performed to avoid paying overtime.
But what happens in cases where employers do not know about work that is performed? Under the Act, employers are not required to pay for work about which they did not know, and had no reason to know. Importantly, employers cannot deliberately close their eyes to overtime work their employees do, and must pay for work they either know, or should have known, was performed. This "constructive knowledge" exists when an employer should have acquired knowledge of work through "reasonable diligence."
One way to guard against a potential finding of "constructive knowledge" is to establish a reasonable process for reporting uncompensated work time. The Chicago Police Department implemented such a policy, and police officers were to submit time slips for overtime work performed after-hours on their smart phones. Many did not submit complete time sheets for all the work they performed, and sought the unpaid amounts in the lawsuit.
While written policies will not protect employers that prevent or discourage accurate reporting in practice, the police could not show the Department either overtly or subtly discouraged them from submitting time sheets. There was no evidence the City did not honor timesheets, disciplined or reprimanded officers for submitting them, or pressured officers not to do so. As such, the written policy permitted the City to prevail at both the trial and appellate courts.
Banker's Life was hampered in its efforts to enforce its restrictive covenant because it had no direct evidence of actual solicitation by Gelineau. However, it could have strengthened its position if it had clear provisions in its agreement concerning what an outgoing employee could and could not do on social media. In contrast, the City benefited greatly from its written policy on overtime, which provided a meaningful defense to the overtime claims. Both cases are a helpful reminder that clear, written contracts and policies are vital to protecting employers' interests and avoiding legal liability.
If you have any questions about how these cases might affect your business or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.
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