Chicago Executive Lawyer Blog

Earlier this week Crain's Chicago Business blogger Brigid Sweeny wrote about Sears Holding Corp. suing its former head of home goods business for breach of contract. Sears alleges that the former executive, Chris Capuano, owes the company $750,000 because she failed to repay her signing bonus and relocation expenses when she resigned less than six months after her hire. The signing bonus was $150,000 and the relocation bonus was $350,000. The $750,000 figure comes from the costs and fees associated with Sears' attempts to collect the money.

Many sign on bonuses and relocation packages come with a repayment obligation that expires after one or two years. And, if the agreement also has a fees provision that makes you responsible for the attorneys' fees and costs associated with enforcing the contract, the price of a breach can obviously be high. I can only guess that Ms. Capuano left her $650,000 annual salary and $487,500 bonus opportunity at Sears to take on a more attractive role elsewhere. The question I have is why isn't her new employer indemnifying her and resolving this matter? She clearly negotiated a lucrative contract with Sears. It seems likely she would do so with her subsequent employer.

Executives need to remember when they sign their employment agreement, they are not the only party seeking protections. Large employers are typically careful enough to to tie incentive compensation to an obligation. If you don't minimize the liability in your up front negotiations, you should at least try to do it on the back-end. For some reason, the situation has gone far beyond that point in Ms. Capuano's situation. And, those experienced with litigation know that the costs will only go up.

This is not a political post. This is a post about professional women. Regardless of whether I was offended or just plain surprised by the fact that Governor Romney could not find any qualified women candidates for his cabinet without a search strictly dedicated to finding female candidates, his answer to the young woman's question about pay parity highlighted how not very far women have come.

How is it that the governor of Massachusetts needed to request "binders full of women" to find a qualified candidate? Twenty percent more women receive college degrees than men; and women outnumber men in attaining graduate and law degrees as well. Maybe women are not stepping forward enough and making themselves seen. It's possible, but there are so many strong professional female role models today that it makes me wonder if Romney's comment that "if you're going to have women in the workforce, [] sometimes they need to be more flexible" highlights the unconscious bias of many employers. It sounds like women are more difficult to employ because they have to be home making dinner for the kids.

Flexibility in the workplace is a great advance, so long as it's flexibility for all employees. Flexibility doesn't mean less productivity. It means letting professional adults chose when and how to get their work done. Now, this may not practical for every profession or every employer, but most professional roles could very well be more flexible.

The belief that only women need flexibility in the workplace is the modern language of gender discrimination. There are many households where a woman is the primary breadwinner and many more men are taking on the primary role of caregiver for their children. The assumption that women are the only ones that need to be home to pick up the kids, make dinner and/or clean the house is outdated. We will never have pay parity if we keep perpetuating the belief that women are less productive and need more concessions.

An episode of "Mad Men" comes to mind when I think of sexual harassment: an office full of male executives that harass and abuse their female secretaries and assistants. That, however, is not the only type of sexual harassment that occurs.

There were at least three news stories in September alone in which men filed complaints or lawsuits alleging that another man sexually harassed them.

In New Jersey, a former school administrator claims that the assistant superintendent made several sexual advances towards him and that they eventually had sexual encounters. In Louisiana, the police arrested four men after they sexually attacked their male coworker. And two military cadets are accusing a former aide to Mr. Rick Santorum for sexually harassing them while they were students.

An increase in reports of same sex harassment is not a recent trend. A Newsweek article reported in 2010 that the EEOC indicates that the amount of sexual harassment charges filed by men doubled, from eight percent to sixteen percent, between 1992 and 2008. An EECO spokesperson indicated that this increase is mainly due to reports of men harassing other men.

The United States Supreme Court has also provided a ruling on this issue. In its 1998 decision, Oncale v. Sundowner Offshore Services, the Supreme Court ruled that an individual can bring a claim for workplace harassment against someone of the same sex.

The biggest takeaway is that employers need to be aware of all types of harassment, not just the stereotypical advances that occur in "Mad Men." Supervisors need to make sure they take all complaints seriously, even if the situation involves two people of the same gender. As our society becomes more accepting of all sexual orientations, more men will feel empowered to speak up and report the harassment they endure at work.

By: Poonam Khatri

There are numerous types of leave that employees are often eligible to take. Many employees think that these different types of leave are all the same. However, this is not true. It's important to understand your leave and time-off options so that you don't inadvertently lose money owed to you.

Sick Leave - Most states do not require that an employer provide sick leave, either paid or unpaid. If your employer does provide sick leave, it should provide you with written notice. If you have accrued sick time, this is typically not paid out upon separation. However, your employer's specific policy may differ. Regardless of if your employer provides sick leave or not, they are required to provide leave under the Family and Medical Leave Act in certain situations under federal law.

Vacation - Again, most states do not require employers to provide vacation time to employees, either paid or unpaid. In Illinois, if your employer provides vacation time, it is legally required to pay you your accrued vacation time upon separation. Some exceptions to this rule exist for union employees. Employers are legally permitted to have "use-it or lose-it" policies, where your accrued vacation will not carry over beyond a certain date.

Paid-Time Off - Paid-time off or "PTO" is treated very differently in different states. In Illinois, employers recognize PTO as being a combination of vacation and sick time, which sometimes can include holidays or personal days. Employers may designate what percentage of PTO is "vacation" which must be paid out upon separation.

Holidays - Many states do not require that employers provide employees with paid or unpaid holiday leave. In fact, an employer can require an employee to work holidays. However, if your employer does have a policy of providing holiday leave, it must comply with the terms established by its policy.

Jury Duty - Employers are required to grant employees time off in order to serve on a jury, but employers are not required to pay an employee for this time.

Your employer may modify or create its own policies regarding leave. Be sure to review your employee handbook and consult a knowledgeable attorney to determine your rights regarding leave.

Things can get a little murky when you are a Member of a multi-Member LLC or one of a few shareholders in a closely held corporation and your the only owner that is employed as an executive.

We often hear questions such as "Can I negotiate my own employment contract?", "Am I allowed a say in determining my salary?", or "What happens if I want to quit?"

The short answer is always "It depends." Things are easy when you are the executive and the sole owner of a company, but partnerships (or any other multi-owner structures) make things complicated. The agreements you make (or fail to make) with your partners can set the tone and parameters of both ownership and employment.

Working things out on the front-end limits confusion on the back-end. It sounds simple, but many partners fail to ask each other the questions identified above. It's a lot cheaper to discuss these things with your partner and tell your lawyer the agreement than it is to ask a judge to make a determination.

By: Poonam Khatri

You've just been offered a new position. You and your employer have verbally agreed to certain terms and shook on it. Now, the employer wants you to sign a form contract. It's just a formality, right? Wrong.

Most contracts contain a merger clause or integration clause. This clause may seem like trivial boilerplate language, but it can have grave consequences if your employer doesn't hold up its end of the bargain. A merger clause generally states that the contract contains the entire agreement between the parties. This means that if you verbally agreed to certain terms which are not reflected in the contract, those terms are likely not enforceable. This includes how your salary will be paid, bonus compensation terms, how your vacation time will accrue, and even your work schedule.

In a perfect world, you want to be able to trust that your employer will stay true to his word. Unfortunately, we've seen numerous instances where employers don't follow through with their promises. You can save yourself a lot of time, expense, and headaches by simply making sure that your written employment agreement accurately reflects your verbal agreement at the outset. Remember, it's not just your word that matters, but what's in writing too.

Last week at my six month teeth cleaning at the dentist's office, I happened to have a new hygienist cleaning my teeth. Of course, she was the most chatting hygienist in the office and, while prodding and poking around in my open mouth, she proceeded to engage me in an in depth conversation about employment law. Luckily, she did most of the talking. I was really caught off guard though when she proceeded to tell me that she assumed sexual harassment no longer occurred in the workplace. The irony is that just last month we saw two high profile cases involving sexual harassment.

On August 24, a Wall Street Journal Blog reported that New York State Assemblyman Vito Lopez was forced to step down as chairman of the chamber's housing panel after an ethics committee found that he had sexually harassed two female employees. Lopez was accused of making repeated comments about the appearance of female employees. One employee alleged that he tried to kiss her and put his hand between her legs during a business trip.

Earlier in the month, the Chief of Staff of the Immigration and Customs Enforcement Agency voluntarily stepped down (to take a paid leave of absence) because of allegations regarding discrimination and sexual harassment. This was especially newsworthy because the Chief of Staff is a woman, Suzanne Barr.

The Wall Street Journal reported that Ms. Barr is accused of (1) calling a male subordinate "sexy" during an office party and asking a personal question about his anatomy; (2) offering to have sex with other male subordinates while on business travel; and (3) creating a "frat house" atmosphere designed to humiliate male employees.

The point is sexual harassment has not disappeared, it's evolved. It's no longer just the powerful man attempting to take advantage of female employees; we now have powerful women attempting to take advantage of male employees. This is not the sort of gender equality we have been striving for.

By: Natalie L. Lange

Employers are concerned with equipment and technology costs. The increased number of employees using company equipment for personal use has led to the adoption of monitoring practices in many companies as an attempt to combat costs. While employers are generally prohibited from intentionally listening to phone calls or intercepting electronic communications as provided by federal laws, a carefully crafted pre-consent practice may allow employers to circumvent such laws.

Many employers will obtain your consent through a policy. You may have agreed to a telephone or email use and/or monitoring policy and not know it. Such policies are often inserted as clauses into contracts or offer letters, or as part of a policy circulated around the office. In any event, if your employer has attained your consent through notice or signature, it can probably monitor your calls and emails. Conference call, anyone?

By: Natalie L. Lange

For the last few years, the Equal Employment Opportunity Commission ("EEOC") has reported that retaliation is among the highest number of employment related charges filed with its offices. Not only is retaliation often included as part of a race, age or gender discrimination EEOC charge, it consistently surfaces as an added claim in the federal suit that follows. Among employment law attorneys, it is common knowledge that plaintiffs must first file their charge with the EEOC; then receive a Right to Sue; then file in federal court. Typically, if the charge does not first go through this process (i.e., "exhausting administrative remedies"), it cannot be filed with the courts. Executive employees, I know what you are thinking. But, what if my employer retaliates against me during or after the EEOC process? Isn't that retaliation? Shouldn't that be part of the eventual claim(s) filed with the courts? Well, the answer is, of course, - it depends - which court you are in and which judge you ask. Currently, the federal circuits are in conflict on the issue.

However, the bottom line is - Employer retaliation occurring during or after the EEOC charges have been filed is illegal.

If you think you've been faced with discrimination and retaliation based on your reports of the same, it is important to:

Document. Document. Document.

Regardless of when it happens, if something doesn't feel right, it may be worth investigating, and documentation helps.

Preserve your potential claims through documentation. A court may allow you to proceed - despite the claim(s) not having been raised in the EEOC charge - under the theory that such claim(s) grow out of or are sufficiently related to the actual charges brought.

By: Natalie L. Lange

Employers cannot interfere with your Family Medical Leave Act ("FMLA") rights. Ok, that may not be news to you. While most executive employees are generally aware that they can take leave for certain circumstances, the details under the FMLA are complicated. Since FMLA requirements can be confusing, let's explore the basics. Your employer cannot deny an FMLA request, if made properly, or if you are otherwise eligible. Once you take FMLA leave, your employer cannot retaliate against you for taking it. In any event, it is your responsibility to comply with proper procedures for requesting FMLA leave, medical certifications, and return to work requirements. With respect to medical certifications, it may behoove you to supply your medical provider with a copy of the recently issued Department of Labor ("DOL") guidebook entitled, "The Employee's Guide to The Family and Medical Leave Act." This Guide explains your FMLA rights in pretty simple language and is a great reference. However, for questions on specific issues, it is always a good idea to consult an attorney. The Guidebook only attempts to set out the FMLA's requirements in simple terms and does not provide legal advice.

By: Natalie L. Lange

The National Labor Relations Board ("NLRB") recently took issue with employment at-will disclaimers in employee handbooks. While this may affect some employer-employee relations with regard to union activities, many executives at the management level are not involved with union issues. The fact of the matter remains that at-will employment is the default in Illinois. Unless you have an executive employment agreement stating otherwise, your employment is probably at-will. This means your employer can fire you at any time for any reason (except for an illegal one), and you can walk away at any time. The at-will employee default status is preferred by many companies. As an executive employee, you will typically be required to sign an acknowledgment of this at-will status. If this is the case, that writing is usually an offer letter, not a contract.

Disclaimers for this approach are often used by employers to protect them from claims that employees may have with regards to employment contracts, and these disclaimers are now under attack by the NLRB. However, while two recent cases show the NLRB's heightened criticism for employment at-will disclaimers, at-will employment is still par for the course.

By: Poonam Khatri

The workplace, just like the school playground, is not always fair. Sometimes the company bully is rewarded and promoted. Sometimes the A+ worker is fired. When these situations occur, it's not fair, but is it illegal?

We often hear complaints from individuals that they are being subjected to bullying and harassment or have been wrongfully terminated. However, it is important to understand that not all harassment, or terminations are illegal. If you have engaged in a protected activity, for example, whistleblowing, filed for worker's compensation, or made a complaint of discrimination, and are being harassed or terminated as a result, this is protected. However, if you disagreed with your boss or have personality clashes with your co-workers, and face harassment or termination, this is not always protected. Since Illinois is an At-Will State, a person can even be fired for no reason at all. Sometimes the situation is not always so black and white. A knowledgeable attorney can help you determine if you were subjected to illegal treatment.

Since 2003, 21 states have introduced bills to protect employees from bullying, but none have passed any new laws. Last year, the Illinois House of Representatives rejected the Healthy Workplace Bill introduced to protect individuals from bullying. If you believe that employees should be protected from bullying, write to your local representatives and express your opinion.

Although bullies are not always placed in time-out, there are efforts you can take to protect yourself. Consult with an experienced attorney or career coach who can help you traverse a difficult work environment.

Last week I joined Bill Moller on First Business to discuss Google's recent acquisition of Motorola Mobility, Inc. and the approximately $182 million that Google paid out to laid off Motorola Mobility executives. These payments are usually made in connection with severance agreements that contain general releases and other protective provisions. During the interview, we discussed the numerous benefits that drive companies to make such large payouts to terminated executives.

By: Natalie L. Lange

Whether its widgets or words, your employer has a legitimate business interest in something. As an executive employee, you will likely have had a hand in creating, selling, marketing and/or developing that product or service. Since you have exposure and experience with your employer's valuable interest, you are in a position to use that interest to your benefit post-employment. However, your employer probably does not want you helping competitors as you capitalize on skills and client relationships you developed during your time with the company. At some point in your career, it is likely your employer will ask you to sign a non-compete to take you out of the game and eliminate the competition, so to speak. You may be asked to sit on the sidelines for months or years while your employer happily competes away in the marketplace. The minute you sign a non-compete drafted by your employer, you are signing a contract. In exchange for giving up the right to compete with your employer, you should receive something. But, that's just it. What is it?
A non-compete can appear on your desk as a document separate from your employment agreement, or it may show up as a clause somewhere amongst the many pages of that employment agreement you signed on your first day. Either way, it is a contract. Like any other business contract, you should try to get the most out of the exchange. Your employer is looking to protect the company's time, money and resources. You should do the same with yours.
For some executive employees, the career opportunity is so lucrative that simply being employed is worth signing the non-compete. If it is part of your hiring process, the non-compete is a clause in the agreement that is part of that process. In this situation, your only benefit gained is your employment with the company as described in the four corners of that agreement. For that benefit, you are trading your right to compete later on. You may be giving up the right to pursue employment with an exciting company and great colleagues you have yet to meet. Or, you could be giving up the chance to turn your big idea into a business opportunity.
If the non-compete is signed later on, you are in a better position to ask for an additional benefit. You already have your employment. So, perhaps a raise, promotion, signing bonus or guaranteed severance would suffice as sufficient consideration for adhering to an extra term and condition of employment. In any event, you are bargaining for your freedom to engage in whatever kind of work you desire and follow your dreams - a consideration not to be taken lightly.

By: Poonam Khatri

You've just been asked an intrusive personal question during an interview. How should you handle this?

Sometimes employers ask improper questions because they don't know any better. Other times, employers may have more sinister motives. Regardless, you want to be sure you handle these questions with poise and grace.

You have a choice in how you respond to illegal and intrusive interview questions. You could outright refuse to answer the question, although that may hinder your chances of getting the job. You could answer the question, which may help or hurt your chances of getting the job. Alternatively, you could formulate a response that would address the underlying legitimate concern that is presented or change the conversation.

Often, interviewers ask improper questions related to the age of the interviewee. For example, an interviewer may ask, "what year did you graduate?" Instead of revealing your age by answering, you could respond by asking if the interviewer knows someone who graduated from the same institution. Another example of an improper question is, "do you have any children?" You could chose to respond by stating that the job would be a priority and you would make sure that you always meet all your obligations regardless of family commitments.

If the questions are really offensive, you may want to ask yourself if you actually want to work for this employer. Remember, an interview is not just about the employer deciding if you are a good fit, but if you think the employer will be a good fit for you too.