Wednesday, November 18, 2015

One Spot Where "Mumbo Jumbo" Doesn't Cut it Any More

In an old television commercial for a law firm whose name I cannot recall, two lawyers are standing at a judge's bench, chatting seriously with the robed judge.  "Mumbo jumbo mumbo jumbo," chatters on one of the lawyers, met with their opponent's "Mumbo jumbo, mumbo jumbo" followed by the court's chiming in, "Mumbo jumbo" at which point the voice over announcer says, "We take the 'mumbo jumbo' out of the law."  

An effective commercial?  Guess not.  Like I said; I can't remember the name of the firm.

What has this got to do with employment law?

Pennsylvania statutory law has long provided that any document which simply recites that the signer intended to be legally bound did not require consideration to be enforceable.  This was under the "Uniform Written Obligations Act," 33 Pa. Stat. Section 6.  Specifically that statute says that a written promise "“shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound.” 

For years, lawyers have routinely been putting language at the end (or the beginning) of Pennsylvania contracts stating that the signer is "intending to be legally bound" to avoid a challenge to enforcement of the contract for lack of consideration.  Heck, I've done it myself.

What is "consideration," you say?  Consideration is something of value, bargained for and exchanged between parties in exchange for a promise.  (There, Professor Siskind, I remember my first year contracts law.  Would that I had remembered more of it during finals, but that's another story).

When you pay a cab fare (or an Uber fare), you're paying consideration for the ride.  When you collect your paycheck, you're getting consideration for your labor.  When I pay Wawa my $1.49, I'm giving consideration for their agreement to provide me coffee.  And so it goes.

So what happens when the contract says that "you can't work for anyone else in the business for which you're working for me?"  Pennsylvania law has always required consideration for such agreements, known more generically as "non-compete agreements."

But once upon a time an employee's non-compete covenant simply provided that he "intended to be legally bound," and therefore, his former employer argued, they didn't need to give him consideration because the Uniform Written Obligations Act said so.

The Pennsylvania Supreme Court today handed down its decision in Socko v. Mid-Atlantic Systems of CPA, Inc. (142 MAP 2014), rejecting mere OWOA language as a substitute for consideration.  As Justice Todd put it so elegantly in closing the opinion:

[W]e hold that an employment agreement containing a restrictive covenant not to compete may be challenged for a lack of consideration even though the agreement, by its express terms, indicates that the parties “intend to be legally bound” pursuant to the UWOA.
So, employers, if you want that non-compete to stick, make sure you "pay" for it with some form of consideration.  Mumbo jumbo just won't cut it any more.

Wednesday, May 6, 2015

PA Senator Toomey is Playing Politics with Judicial Appointments

The Third Circuit Court of Appeals, crippled by an overwhelming docket, is also laboring with a vacancy on its bench.  In November of 2014 the White House nominated the Honorable Luis Restrepo to fill the position.  Judge Restrepo only recently took his place on the Eastern District of Pennsylvania Bench after receiving bipartisan support, including the express endorsement of Senator Toomey.

Back in November of 2014, Senator Toomey said, “As both a federal magistrate and district judge, Judge Restrepo has served the people of Pennsylvania honorably and with distinction. He also is dedicated to his community by giving his free time to the Make-a-Wish Foundation. Sen. Casey and I recommended Judge Restrepo to the White House for a seat on the federal district court, and I believe that he will also make a superb addition to the Third Circuit based in Philadelphia."

But now, Senator Toomey has admittedly participated in a Republican backed effort to prevent the Obama administration from seeking any kind of legacy on the Federal bench or appeals courts.  As one conservative think tank member suggested this past March in the Wall Street Journal, “There is little risk of the public outrage that might accompany a DHS shutdown or even a fight over a Cabinet nominee.”

I have appeared before Judge Restrepo both as a district court judge and as a federal magistrate judge before that.  I have always found him to be an open minded, capable, and reasonable judge.  His background as a defense lawyer brought a rare perspective to the Eastern District.  Judge Restrepo's experience offered a viewpoint that restored humanity to what is often a grueling and dehumanizing experience --- employment discrimination litigation.

Hopefully, Pennsylvania voters will remember Senator Toomey's shenanigans with this nomination when Toomey runs for re-election next year.  In the mean time, readers can sign an online petition at this link and read more about Judge Restrepo and the nomination here, here, and here.

Thursday, February 26, 2015

Another Shoe Falls: DOL Issues Regulations Redefining Who is a "Spouse" for Purposes of FMLA

Following the Supreme Court's Decision in U.S. v. Windsor which invalidated Section 3 of the Defense of Marriage Act ("DOMA"), federal agencies scoured their enabling legislation to ensure that many Federal benefits and statutory protections were extended to same-sex couples.

The Department of Labor issued its Final Rule, effective March 27, 2015 implementing a "state of celebration" rule for the definition of a "spouse" for eligibility for leave under the Family and Medical Leave Act ("FMLA").  The regulations require an employer to look to the law of the place where the marriage was entered into, instead of the law of the state in which the employee resides.  29 CFR §§825.102 and 825.122(b).   This new definition of "spouse" under the Final Rule includes individuals in lawfully recognized same-sex and common law marriages and marriages that were validly entered into outside of the United States if they could have been entered into in at least one state.

The Department of Labor Fact Sheet on these changes is here.