TELG Principal’s Article on Security Clearance Guidelines Featured in Westlaw Journal

Thursday, November 10th, 2011 | Executive Compensation Attorney | No Comments

The Employment Law Group® law firm principal attorney R. Scott Oswald’s two-part article titled “Introduction to the Federal Security Clearance Process,” recently appeared in the Westlaw Journal, Government Contracts.

In Part 1 of the article, Oswald provides a comprehensive summary of the history and development of security clearance law. He explains how recent law has developed by referring to important Executive Orders under Presidents Eisenhower and Clinton, as well as landmark Supreme Court Cases such as Egan v. Department of the Navy.  In addition, Oswald explains the basis on which security clearance candidates are evaluated.  He explains that:

The adjudicative process for a security clearance is ‘an examination of a sufficient period of a  person’s life to make an affirmative determination that the person is an acceptable security risk.’ Agencies inquire into a candidate’s perceived loyalty, reliability, and trustworthiness by reviewing the candidate’s history, relationships, and overall character.

Oswald lists the primary factors considered by evaluators during a security clearance investigation:

• Foreign Influence
• Foreign preference
• Sexual behavior
• Personal conduct
• Financial considerations
• Alcohol consumption
• Psychological conditions
• Criminal conduct
• Handling protected information
• Outside activities
• Use of information technology systems

In Part 2 of the article, Oswald describes the process of appealing a security clearance denial or revocation across various government agencies, such as the Department of Defense and NASA. He also offers practical tips for successfully appealing an adverse security clearance determination by an agency. He encourages the candidate to examine the agency’s stated reasons for denying or revoking the security clearance and collect evidence to support an argument against the agency’s decision. Oswald strongly recommends seeking the advice of an experienced employment attorney:

An attorney with experience examining and cross-examining witnesses can be invaluable during a hearing.  An experienced attorney may also have handled security clearance cases with your particular agency and will be able to frame your case consistent with your agency’s expectations.

TELG Principal David Scher Quoted by Forbes

Friday, September 16th, 2011 | Executive Compensation Attorney | No Comments

David Scher, a Principal attorney at The Employment Law Group®, was quoted by Forbes, ‘Contagion’: Why Your Company Needs a Succession Plan. He discusses the importance of succession plans as a smart business practice. Scher says, “The purpose of a succession plan, which is also referred to as a redundancy plan, is to help less experienced employees develop themselves in management.” This works as a type of insurance to ensure the success of a company should something happen to a more experienced worker: “What happens is, when a more experienced worker does retire or move on, there’s now someone at the company who can pick up the slack because he or she has been trained to step into that position. It’s a back-up plan” but shouldn’t be confused with an exit strategy. “The question that companies need to ask, from an employment perspective, is ‘Do we have a plan in case a person- or several people- become permanently or medically unable to perform.”

However, this plan should not be used as a way to discriminate against the medically disabled. He also goes on to say, “Succession plans need to be legally compliant, and not be a way to discriminate based on illegal factors, such as age.” A company should protect itself from discrimination claims by maintaining good communication with employees and by openly discussing succession plans. Scher says that most importantly, “Succession plans need to be visible.”

Gateway Ruling May Prompt Many Companies to Change Their D&O Insurance Policy

Monday, September 12th, 2011 | Executive Compensation Attorney | No Comments

“In recent years, directors and officers liability insurance has become a core component of corporate insurance. As many as 95% of Fortune 500 companies maintain directors and officers (“D&O”) liability insurance today.” However, a recent ruling by the Southern District of California might prompt many companies to change the language in their D&O policies.

In 2003, a number of Gateway officers and directors were sued by the Securities and Exchange Commission (SEC) but eventually settled out of court. In the course of investigation, several executives and Gateway employees that weren’t the target of SEC investigation were subpoenaed as witnesses. The SEC commonly asks non-party corporate employees to testify when corporate officials face SEC enforcement actions. Gateway employed the same law firm representing the Defendant’s sued by SEC to conduct all of the depositions in connection to the case. Gateway incurred $553,875 in attorneys’ fee as a result of the deposition. Gateway’s Directors and Officers policies written by Travelers Indemnity Co., had a $15 million limit.

When Gateway submitted $553,875 in attorneys’ fees, Travelers refused to pay stating that the policy was only intended to cover officers and directors who were the defendants in the SEC lawsuit. Gateway sued the insurance company claiming that the policy could be read to include all directors, officers or employees connected to the defense against the charges. U.S. District Judge William Hayes of the Southern District of California ruled in favor of Gateway. In his opinion, Hayes wrote that both interpretations are reasonable to resolve the ambiguous language of the policy; however, Travelers must suffer for the ambiguity of its policy and pay all attorneys’ fees. This ruling will likely prompt liability insurance companies to change the definition of “Directors and Officers” in their D&O policies to limit the types of attorneys’ fees for which insurance companies will indemnify corporations and their directors and officers.

Tags: Directors and Officers Insurance Policy, Securities and Exchange Commission

Shareholder Sues Nutrisystem for Violating “Say on Pay” Vote

Thursday, September 8th, 2011 | Executive Compensation Attorney | No Comments

Walter Wyrick Jr., a Nutrisystem shareholder, filed a suit in the U.S. District Court for the Eastern District of Pennsylvania against Nutrisystem’s board of directors. Wyrick alleges that the company failed to uphold its shareholder “say on pay” policy when it gave company executives pay increases even though shareholders voted against them primarily due to “abysmal” stock prices. Despite this vote, Wyrick claims, the board of directors increased CEO, Joseph Redling’s compensation by 50% and CFO David Clark’s by 90%.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 granted shareholders the right to vote on pay increases for executives contingent on good performance. However, in May 2011, 60% of shareholders voted against Nutrisystem’s proposed pay packages because the company’s stock price dropped nearly a third- or 70% since 2007.

Tags: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

TELG Principal on D.C. Bar Executive Employment Agreements Panel

Wednesday, June 15th, 2011 | Executive Compensation, Executive Compensation Attorney, The Employment Law Group | No Comments

On June 20, 2011, R. Scott Oswald, Managing Principal of The Employment Law Group® law firm, will serve as a panelist at a D.C. Bar CLE entitled “Drafting and Negotiating Executive Employment Agreements.”  The Employment Law Group® has substantial experience advising corporate officers on their executive compensation packages.  The panel will concentrate on D.C. law, but will also compare and contrast the law and practice in Maryland, Virginia, and Pennsylvania.  Register for the event at this website.

Related articles

• TELG Principal Named Top Ten Leader in Employment Law for Washington, D.C. Metropolitan Area (executivecounselblog.com)

The Employment Law Group® Negotiates $1.1 Million Settlement for Client

Thursday, March 3rd, 2011 | Breach of Contract, Executive Compensation, Executive Compensation Attorney, The Employment Law Group | No Comments

The Employment Law Group® law firm negotiated a $1.1 million settlement for their client, an executive alleging his employer breached the employment contract.  The client wrote, “… without [The Employment Law Group’s ®] assistance, I never would have gotten the outcome we have.”  To learn more about our employment contract disputes practice, click here.

MSPB Affirms Right to Review for Federal Workers in National Security Positions

Wednesday, January 19th, 2011 | Executive Compensation Attorney | No Comments

In the case of Conyers v. Dep’t of Defense, The Merit Systems Protection Board (MSPB) affirmed the right of federal employees to have the merit of their denial of eligibility for national security positions reviewed by the MSPB.  Without such basic protections, government agencies could classify nearly any position as relating to national security, deny a federal employee eligibility for the position (even if they are currently working in the position), and then fire them without any possibility for review by an independent body or further justification by the agency. 

The appellant, Rhonda Conyers was an Accounting Technician working for the Defense Finance and Accounting Service (DFAS) until the agency indefinitely suspended her because she had been “denied eligibility to occupy a sensitive position by [the agency’s] Washington Headquarters Consolidated Adjudications Facility.”  The agency only stated that her position required her to have access to sensitive information, she had been denied access, and therefore she did not meet a qualification requirement of her position.  Seemingly at odds with the agency’s findings was the fact that the agency allowed Conyers to work at her position for nearly two years after determining she was not eligible to hold a national security position.  Additionally, the agency chose not to pursue her removal under an existing statute, 5 U.S.C. Sec. 7532, which allows agencies to remove employees for national security purposes but affords the employees some amount of due process such as requiring the agency to state its justification.  Instead, the agency chose to remove Conyers without affording her even the most basic of due process rights.

The MSPB was careful to distinguish the Conyers case from Egan v. Dep’t Navy, a Supreme Court case in which the court acknowledged that the President has some authority to “classify and control access to information bearing on national security.”  Relying on its previous decision in Jacobs v. Dep’t of the Army, the MSPB stated:

The Supreme Court’s decision in Egan was narrow in scope and specifically applied only to security clearance revocations.  As the protector of the government’s merit systems, the [MSPB] is not eager to expand the scope of the rationale in Egan to divest federal employees whose positions do not require a security clearance of basic protections against non-meritorious agency actions.

…

The [MSPB] may exercise its full statutory review authority and review the agency’s determination that [Conyers] is no longer eligible to hold a “sensitive” position, because this appeal does not involve a discretionary agency decision regarding a security clearance.

Click on the following links to learn more about Federal Employee Rights or to get the answers to many Common Security Clearance Questions.

TELG Principal Named Top Ten Leader in Employment Law for Washington, D.C. Metropolitan Area

Thursday, December 30th, 2010 | Executive Compensation Attorney | No Comments

R. Scott Oswald, Managing Principal of The Employment Law Group® law firm, was named as one of the top ten leaders in employment law for the Greater Washington, D.C. Metropolitan Area.  Top Ten Leaders are selected primarily based on five criteria:

1. Reputation among peers, based on multiple interviews with other professionals;
2. Leadership and written work on behalf of professional organizations, such as sections and committees of state professional organizations;
3. Number of years practicing in their area of expertise;
4. Degree of focus on a practice area; and
5. Volume of clients;

R. Scott Oswald also serves as President-Elect of the Metropolitan Washington Employment Lawyers Association, lectures extensively on employment and whistleblower law, and has authored numerous articles on innovations and trends in state and federal law.  For more information about The Employment Law Group® and to view R. Scott Oswald’s full biography, click here.

Judge Allows Options Backdating Case to Move Forward Against Microtune CFO

Thursday, November 4th, 2010 | Executive Compensation Attorney | No Comments

Judge Jane Boyle of the U.S. District Court for the Northern District of Texas refused to grant summary judgment, allowing the Securities and Exchange Commission (SEC) to continue its prosecution of Nancy Richardson, the former Chief Financial Officer and General Counsel of Microtune Inc. – a designer of radio tuners.  The SEC alleges that, along with former CEO Douglas Bartek, Richardson committed fraud by backdating options to dates when Microtune’s share price was low (thus increasing the option’s monetary value) without disclosing the backdating in its financial statements as required by law.  For more information about The Employment Law Group® and its SEC Whistleblower Practice, click here.

Federal Judge Dismisses Zurich Am. Ins. Co.’s Claims that Former Sales Manager Conspired with Employee to Breach Noncompete

Thursday, October 28th, 2010 | Executive Compensation Attorney | No Comments

According to Law360, a federal judge for the U.S. District Court for the Western District of Virginia dismissed Zurich American Insurance Co.’s claims against its former regional sales manager, David Neuenschwander. Zurich alleged that Neuenschwander conspired with another former employee, Toby Turbyfill, to breach Turbyfill’s noncompete agreement with Zurich by soliciting Zurich’s customers. The court found that Zurich failed to show that Neuenschwander even knew about Turbyfill’s noncompete agreement or had engaged in any improper or unlawful conduct. For information about The Employment Law Group® law firm and Non-Compete Litigation, click here.