Chicago Executive Lawyer Blog

Employers often use suspensions as a means of gathering evidence to support a decision to terminate employment. Last year we saw a number of executives suspended after making a report about various issues such as discrimination, harassment, and even corporate waste. In many of the cases, the executive made the report to a supervisor or the Board of Directs. A few months later, with no prior warning, accusations about the executive began emerging. The executive is then suspended, pending an investigation.

Sitting at home wondering what might happen to your livelihood and/or career is agonizing enough, but, in that situation, an executive also needs to decide whether to let the investigation play out or take a proactive approach.

Most people know that there are numerous employment related laws that prohibit retaliation, but not all reports of corporate wrongdoing are a basis for retaliation. Employees should investigate whether they are engaging in protected activity before assuming that the law will insulate them.

Regardless of whether a suspension was a retaliatory measure, getting a response on file before a decision is made to terminate your employment is often the best step you can take. Once your employment is terminated, it is difficult to back track and get reinstated. Getting help in drafting your rebuttal is always a good idea. Using an attorney, a career coach, or a consulting professional can help you articulate a clear defense without causing further harm.

If I had a nickel for every time and executive told me that their employer told them the company never enforces the non-compete, I'd have a lot of nickels. Almost every written contract drafted by a half-way decent attorney includes what is called an integration clause. An integration clause essentially says that the written agreement is the entire agreement between the parties and that no oral modifications or promises hold any water. In other words, your boss might tell you that the contract means nothing, but a court is likely only going to rely on what was agreed to in writing.

Despite being incredibly smart and well educated, many executives trust what their boss tells them, signs the non-compete agreement and then breach the agreement when they try to move on to new employment in the future. Sometimes it works and life goes on. Other times, nasty letters are sent and/or lawsuits are filed.

When the nasty letters are sent they are usually sent to both the former employee and the new employer. The new employer either steps in and defends or cuts their losses and moves on. Cutting their losses usually means employment termination for the executive.

So how can all this be avoided? Sometimes it can't; and that's life. But, in most cases there is a pragmatic solution that likely could have been determined much earlier. There are at least two occasions when an executive can take steps to minimize the likelihood of a non-compete dispute: (1) before signing the non-compete: an executive can say no, ask for revisions, clarify the restriction, or at least make an informed decision; or (2) after signing, but before resigning from employment or accepting new employment: an executive can, either directly or through an attorney, try to negotiate limitations or a release from the obligations and/or find out if the new employer will indemnify and defend against a lawsuit.

It's a lot cheaper for everyone to work things out on the front end than to fight it out on the back end.

There are certain industries and business types where partnerships are pretty much the accepted standard. Law firms, accounting firms and medical practices quickly come to mind. However, nearly any type of business can use a partnership structure. Whether for tax or liability reasons, partnerships can offer a lot of benefits.

At the same time, if you have little control over decision making and operate under the authority of more senior partners, being a partner can create a lot of difficulties. Even with the default "at-will" employment status in Illinois (and nearly every other state in the country), being an employee does provide some protections against discriminatory and/or harassing treatment or retaliation.

Partnerships operate by agreement of the parties (often an Operating Agreement or Partnership Agreement will be in effect). Even when a partnership exists only by law under the terms of the Illinois Uniform Partnership Act or Illinois Limited Liability Company Act, there is still an implied agreement amongst the partners. And, there is often a lot of upside to being a partner.

Being a partner does not mean you are not an employee. Many partnerships employ their partners. This allows partners to make a salary, receive benefits, and get company distributions. It also gives partners the protections of being an employee in case their partners ever decide to fire them for an illegal reason.

If you are a partner (paid only through a Schedule K1) who is treated like an employee and are being subjected to discrimination or harassment, check your partnership agreement to see what protections are in place.

Nearly everyone who has had a job has experienced a bad boss at one point or another. There is a seemingly infinite bad boss profiles. There is the boss that always takes credit for your work, the demanding boss, the demeaning boss, the lazy boss, the stressed boss, the timid boss, the cocky boss, the forgetful boss, and so on and so on. The list goes on.

In the end, all we care about is our own bad boss and how to deal with him/her. Our office has seen and/or heard about nearly every type of bad boss imaginable. Sometimes it's horrible and heart wrenching. Sometimes it's sordid and comical. But it's almost always horrendous for the person going to work every day and facing their own personal Bad Boss Hell.

The problem is that most bad bosses are not engaging in any illegal activity. Illinois, like most states in the country, is an employment "at-will" state, meaning you can quit or be fired at any time, for any reason. This essentially means "if you don't like it here, you can quit."

At the same time, "at-will" employment does not give employers a completely free pass to engage in bad behavior. Conduct such as sexual harassment; employment discrimination on the basis of race, gender, national origin, religion, sexual orientation, age, pregnancy, familial status, disability and/or gender identity; and retaliation for engaging in protected activity are all forbidden and actionable.

The problem is that illegal conduct is often cloaked in more subversive garb. The boss that thinks women should be at home raising kids might give female employees less challenging work or less opportunity for advancement, but will likely never say why. Or, the boss that thinks that being gay is a choice (and a bad one at that) might only give bonuses to straight employees but say that bonuses are tied to subjective performance measures. Or, the harassing boss might make innuendos that sound innocent when restated, but are clearly sexual in the moment.

So when does bad boss behavior cross over from being just plain wrong to being illegal? If there was an easy answer, there would be no employment law and no employment lawyers. This blog contains no answers and no legal advice. There is no simple calculation that tells you exactly when your bad boss' behavior has crossed over to illegal conduct. There is almost always a way to address bad behavior. Sometimes it's legal. Sometimes it's tactical. Don't let a bad boss ruin your career.

By: Poonam Khatri

Recently, there has been a disturbing trend of employers asking job applicants for their social media passwords. Many ask: should this practice be legal? Not so, says the Illinois House of Representatives, which recently approved legislation that would prohibit employers from demanding passwords or ordering workers and applicants to sign into their accounts for review. House bill 3783 must now be approved by the Illinois Senate.

Although this is a good sign for employees, under the proposed bill, bosses may still ask for usernames to view public information online. In addition, employers can monitor work-owned computers and enforce workplace technology policies.

Regardless of whether this bill passes or not, there are steps you can take to better protect yourself:

1. Know what's out there.
Google yourself and see what's out there. If there is anything questionable, you can proactively remove it or have an explanation ready.

2. Set your profile to private.
Many social media sites have privacy settings that make your profile private, or at least limit what the public can view.

3. Screen people who want to connect with you.
Don't add people you've never met or don't recognize. You never know who might be connected to your interviewer.

4. Try not to include too many personal details, such as your religious or political views.
Although current laws prohibit employers from considering protected information, such as sexual orientation or religious views, it's better to not volunteer such information to ensure its not consciously or subconsciously used as hiring criteria.

5. Use Social Media to define your personal brand.
Although you should protect yourself, don't be scared to use social media to your advantage. Use social media to define your personal brand. Keep your online presence professional and seek to provide content that demonstrates your intelligence and professional skills.

Yesterday I participated in a panel discussion for the Black Women Lawyers Association addressing the topic of employment and benefits issues for the lesbian, gay, bi-sexual and transgender community. The title of the program was "Be Careful Where You Work and Love: LGBT Employment and Relationship Rights."

The issue is very timely because of the recent passage of the Illinois Religious Freedom Protection and Civil Union Act (the Civil Union Act") in Illinois, which provides extends marriage protections under Illinois law to same sex couples in Illinois. While the Civil Union Act is a big step forward, it also emphasizes what same sex couples are being denied: a choice. It is amazing to think that we still have not realized the fallacy in "separate but equal." This is not to say that Illinois is not being somewhat progressive given the fact that the Defense of Marriage Act passed by the federal government blatantly denies an entire community of people equal marriage rights. At the same time though is fosters an accepted form of discrimination that easily creeps into the workplace.

The discussion yesterday primarily around the idea that we are creating landmines for the LGBT community by not pushing the federal government to change the law. In terms of employment law, Illinois is one of only 21 states that offer protections against employment discrimination based on sexual orientation and one of only 16 states that have laws or regulations that offer protections against employment discrimination against gender identity discrimination.

I would like to think that the 29 states without any LGBT employment discrimination protections are going without solely because their residents don't know their laws are lacking. It's hard to maintain that belief though knowing that the federal government does not specially prohibit employment discrimination on the basis of sexual orientation or gender identity either.

We are living in a time where kids are killing each other in schools because of bullying and hate. What kind of example are we as adults setting for children when don't push for our laws to protect against bullying and hate in the workplace? That is really what discrimination is, hate in action. Embodying the "golden rule" is possible, but we all have to work to make that happen. One steps forward in that process is supporting marriage equality for all.

By: Poonam Khatri

Most employees are somewhat familiar with non-compete agreements as part of their employment contracts, however, did you know that your non-compete agreement may be considered an asset to the company during a change in control?

In Illinois, a non-compete agreement may be made in connection with the sale of a business. Sometimes when the value of the company depends on the goodwill commanded by its top employees, those employees may enter into an enforceable non-compete agreements with the purchaser. In effect, an employee's agreement not to compete becomes an asset for the purchaser.

Such non-competes are generally more difficult to get out of. Courts are less likely to declare a non-compete agreement made in connection with the sale of a business as invalid in order to protect the value of what the purchaser has bought. Accordingly, before you sign a non-compete, it's important that you know exactly what you are agreeing to, and what type of non-compete you are signing.

You always want to make sure that you are seen as an asset to your company, but maybe not always literally.

I was recently a guest on the cable news show FirstBusiness to discuss the difference between being fired for unfair reasons and wrongful termination. The most important (non-legal) advice that I can give to an employee is: Document everything. Regardless of whether your employer's conduct is illegal or just unfair, documenting issues early can prevent unfair terminations from occurring. And, if you are ever forced to bring claims against an employer, the same documentation might end up as evidence.

The National Equal Pay Task Force is currently running a contest to see who can develop an app that will help make pay disparity issues more transparent. The Equal Pay App Challenge seeks to accomplish at least one of the following goals:

• Greater access to gender, race and ethnicity pay data;
• Early career coaching tools;
• Negotiation guides, tips and critiques; and
• Online mentoring resources

The best app would be an executive career app that not only provides general information about pay, negotiating an employment agreement, and seeking out mentorship, but also turns gender, race and ethnic stereotypes on their head. By this I mean an app that acknowledges that people will have biases regardless of all our efforts to spotlight and diffuse them. But, that we can use those biases in negotiations and in interviews.

By no means am I excusing prejudices or discrimination in the workplace. In fact, my office is dedicated to fighting against discrimination. I am simply stating that many biases are subversive. For example, a financial services firm that has only had male partners and female subordinates for 30 years might want to diversify by promoting/hiring female partners. However, they might not realize how ingrained that hierarchy can be in their culture. Will female partners feel welcomed? Will the long standing male partners subconsciously revolt?

The point I am trying to make is that pay is only a symptom of the real problem. And yet it seems we are continuously trying to band-aid the symptoms and pretend that someday we will live in a world where prejudices don't exist. I welcome that world, but my biased perspective tell me it's unlikely we will get there without recognizing what is holding us back.

Owning a business is a huge pain in the you-know-what. It's one of those things that nearly everyone says they want to do someday. At the very least you want to know that you can take the chance if/when you want to. Wouldn't it be horrible to find out that keeping your job could be contingent on saying "no" to an opportunity at entrepreneurship?

A few small words in your offer letter or employment agreement can make all the difference. Most employers ask that their senior executives "devote their full working time and attention to the duties of their role." This means that your employer can terminate your employment on the basis of contract violation if you wanted to engage in other for-profit activities without involving your employer.

Who cares? You have a good job. You don't need the money.

Maybe that's true, but we are all realizing that we have to be entrepreneurial in our careers these days if we want to grow and increase success. And, why limit yourself by signing an employment contract that says your sole devotion should be to your employer? I don't know too many employers that are solely devoted to their employees. Do you?

Bloomberg Businessweek's recent The Perfect Husband cover story highlights a shift we are seeing in families where women are the primary breadwinner. The trend will likely continue as women are obtaining degrees and graduate degrees at a higher rate than men, and our economy is placing a greater emphasis on service. Yet, women continue to lag behind men in terms of compensation and we do not appear to be making great strides in recent years. Earlier this week I was a guest on First Business with Bill Moller to discuss this issue.

While lawsuits do help, most women executives with whom I have worked would prefer to be paid on merit, not because the law requires equal pay but because pay should be based on qualifications, effort and results. The main point that I tried to highlight during the interview is that women need to ask for the pay their deserve and stop undervaluing their contributions.

The next step you are negotiating an employment agreement, think big and then ask for more.

Starting a new job is exciting. There is nothing but possibility. You have yet to learn all the little annoyances that will come with your new role. And, you have high aspirations for all you will accomplish.

All of the things that make starting a new job exciting often keep executives from asking for a severance provision in their employment agreement or offer letter. But, taking on a new job is also a big risk, especially if you are leaving a long term position for the job. The fact is it is not just employees who put their best foot forward during the interview stage. Employers also try to sell their positive and supportive working environment. Everyone is wearing a little cover-up to the pre-employment dance. It never hurts to have an exit strategy.

The fact is everyone typically likes each other during the offer negotiations. And the best time to ask for what you want is when the other side still likes you. Negotiations on the way out usually involve threats and posturing. Negotiations on the way in usually involve pragmatic requests and "win-win" proposals. The deciding factor is usually how you ask. Here are some tips:

1. Be enthusiastic about the job. Don't ask for severance assuming that your employment will be terminated within the first year. Instead, focus on the fact that, while you are really excited about the opportunity, you are leaving a long term position and want to make sure that your family has some cushion if the company changes direction. Or, if it is an early stage company, make sure you emphasize the fact that you believe the company will be extremely successful and will likely be sold in the short term.

2. Be Realistic. Don't ask for a one-year severance position if that amount of severance is inconsistent with your role or level. If you want a higher severance, look for other factors that would support your request such as (i) taking a risk with a young company, (ii) the company is positioned for sale, or (iii) the company is requiring a non-compete.

3. Write down what you plan to ask for and practice asking. Even the most persuasive people need to prepare for negotiations. Be prepared with your request, the basis for your request and some counter-arguments to respond to denials.

4. Even if severance is not a deal breaker, don't accept the first no. Most employers will initially say that they don't typically include severance in their offer letters. That is fine, but you are not typical. Don't just immediately settle for no. Explain why you are not typical and ask for reconsideration.

Use your initial negotiation to demonstrate your skills and show your potential employer that you have the skills that they need. This way, even if the final answer is NO, you have at least shown your employer what you are bringing to the table.

It is the start of a new year and, despite media reports to the contrary, there are opportunities out there. One question that we often get is "Should I take a lower salary for a great opportunity?" It might seem like a simple question with a simple answer, but the fact is that the answer varies based on a number of factors.

"Great opportunity" means many different things to different people. We always start by asking what "great opportunity" means to you. If great opportunity means a chance at more money, we need to make sure the money is there.

For some executives, a great opportunity is a chance to get C-suite experience. In those cases, we always want to know if the experience is really going to get them where they want to be. Taking a lower salary can sometimes reduce your apparent value. Of course, a lower salary with a well positioned and highly visible organization is more than likely going to add value to your career and resume.

Similarly, some executives are offered tremendous bonus opportunity in exchange for taking a reduced salary. However, most company bonus plans are discretionary. If you are willing to sign an employment agreement based on bonus potential, make sure that the opportunity is real before signing an employment agreement.

For other executives, equity is the great opportunity they are seeking. But not all equity grants are equal. An options grant is not going to have the same value as a share or unit grant (if we are comparing grants within the same company). Moreover, your employment agreement could make it nearly impossible for your equity grant to ever come to fruition. We have seen enough executives lose equity grants because they didn't closely examine the terms of the grant at the start of employment.

The easiest answer to this question arises when "great opportunity" means a chance to pursue your dream and still be able to cover your family's expenses. While we will still tell you to make sure the details are in clearly in writing, we will always support clients who want to pursue their dreams.

The short answer is yes. But, on December 1, 2011, the Illinois supreme court held that the Fourth Circuit appellate court had it wrong when it held in Sunbelt Rentals, Inc. v. Ehlers on September 23, 2009, that a court need not consider whether an employer has a business interest in need of protection when determining the enforceability of a noncompete agreement.

Reliable Fire Equipment overturned the Illinois appellate court ruling in Sunbelt Rentals, and returned to Illinois' tradition of applying a three pronged rule of reasonableness test. The test asks the following: (a) is the restriction no greater than what is required to protect the legitimate business interest of the employer; (b) does the restriction impose undue hardship on the employee; and (c) is the restriction injurious to the public.

Although the court also held that a flexible "totality of the circumstances" approach must be used to determine whether an employer has a business interest deserving of restrictive covenant protection, the ruling confirms that employers need more than just reasonable restrictions on geographic and temporal scope to have an enforceable non-compete.

At the same time, the rule imposed by the court in Reliable Fire Equipment is flexible enough where almost anything can still happen in the area of noncompetes in Illinois. As we always tell clients, "it's not whether the agreement you are about to sign is enforceable that is important, but rather you want to sign an agreement that might costs tens or hundreds of thousands to litigate." Despite the Illinois supreme court's decision in Reliable Fire Equipment, the same rule applies.

Employers are likely to be more careful about how their employment agreements are drafted and what protectable interests can be articulated. For executives, this means being more careful about what you sign and how you are compensated for undertaking a restriction on future career opportunities.

On Saturday, December 3, 2011, I will be a guest on Bill Moller's Saturday morning show on WGN Radio here in Chicago to discuss how to negotiate salary in a difficult economy. During this time of end-of-year planning, performance reviews and budgeting, compensation is an issue we all have to consider. For your employer, this might mean a continued effort to decrease costs. For you, this might mean a need to increase your salary. This posting will give you a sneak peek into what will be discussed on Bill's show this weekend.

Clearly, pay negotiations are easier on the way in: everyone likes each other; you can set your value high and keep your weaknesses hidden. After a few years though, nearly everyone thinks that they have contributed the most, worked the hardest and gotten the least. It can make for a less optimistic negotiation.

Before you stomp into your boss's office with threats a-wielding and guns a-blazing, review this simple checklist for negotiating your salary:

1. Your personal situation is irrelevant. Although it is important to acknowledge how the economy has impacted your employer, how it has impacted you is not a tool for negotiation. Your employer pays you to do a job. You might work to pay bills, but your employer does not pay you to cover your bills. Be prepared to identify key benefits you have provided. Demonstrate that your work product exceeds expectations and that you have a realistic understanding of your value.

2. Timing is everything. If you know your boss is always crabby on Mondays or that you are always tired on Thursdays, avoid those days. The optimal time to ask for more money happens when you have just accomplished something substantial at work, your confidence is heightened and accolades are flowing. I recently read that similar job candidates who interview on a rainy day are substantially less likely to be hired than those who are interviewed on a sunny day. I will repeat it...Timing is EVERYTHING.

3. Never make threats. Threats are the weakest argument available to you. Most employers think that if they give into your threats now, you will be back with the same threats in the not so distant furture. I have heard a number of sales trainers tell audiences "People do not want to be sold. They want to buy." The same is true for raises. Bosses do not want to be pushed or forced into paying you more. They want the decision to be theirs. Don't sell. Give your boss the reason to buy.

4. Have a Plan B. If you don't get the raise you deserve (or don't deserve for that matter), try to use your negotiations as a means to either get the raise you deserve or deserve the raise you want. Ask your boss what it will take to get you to that salary. What does your employer need from you so that you can be more successful?

Tune into WGN Radio Chicago 720AM this Saturday at 11:35 am for more on negotiating pay.