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Dejanovic began working for Monster as its senior vice president and global chief information officer in 2007 and was promoted to executive vice president in 2008. According to the complaint, Dejanovic signed nonsolicitation agreements when he joined the company and another when he was promoted in exchange for $1.2 million in stock options.

In August 2011 Dejanovic left his position at Monster for a new job with The Active Network, Inc.  After his move, Dejanovic obtained Monster’s permission to solicit one Monster employee but, according to the complaint, then solicited two other employees who left monster in October 2011 without disclosing their future plans. These two employees are currently alleged to work for The Active Network.

The lawsuit seeks an injunction permanently barring Dejanovic from making further solicitations of Monster employees until August 2012, an order forcing Dejanovic to return his stock options, and attorney fees.

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.

Here are the common but avoidable mistakes:

1. Failing To Provide COBRA Notices: The Consolidated Omnibus Budge Reconciliation Act of 1985 (COBRA) requires covered employers to permit qualified employees to purchase health care coverage at group rates temporarily. Covered employers must provide notice to qualified beneficiaries of their right to purchase COBRA coverage within 30 days of the occurrence of a qualifying event. . . .  When employers fail to provide their employees with a COBRA notice in a timely fashion, employees become concerned and seek legal assistance in obtaining the continuation of their benefits.
2. Failing To Compensate Employee Wage Due: An employer’s failure to pay the employee’s outstanding wages and/or vacation time, to the extent required, in a prompt manner often prompts an employee to seek legal assistance in obtaining the compensation owed to them.
3. Ignoring Employee Complaints: If an employer establishes a protocol for handling its employee complaints and follows its protocol, an employer is more likely to avoid a finding of discrimination and to avoid the imposition of punitive damages. Frequently, employees simply wish to have their complaints acknowledged.
4. Disregarding Employee Discipline Protocols: Employees feel wronged when employers do not follow their own written protocols relating to discipline of employees. Employers could even revitalize problem employees by issuing detailed PIPs that clearly lay out their expectations for their employees’ conduct and the specific actions that employees may take to meet those expectations.
5. Delaying Response To Accommodation Request: Once an employer learns that an employee requires an accommodation to continue performing his or her job, the employer must engage in “an interactive process with the employee to identify and implement appropriate reasonable accommodations.”
6. Terminating An Employee On FMLA Leave: An employer’s termination of an employee who is currently using FMLA leave can be direct evidence of FMLA retaliation…. If an employer finds that it must terminate an employee who is out on FMLA leave, it should ensure that it has an independently confirmable legitimate business reason for terminating that employee. Further, the employer should be able to demonstrate that its legitimate business reason does not in any way relate to the employee’s use of FMLA leave, or the circumstances surrounding that employee’s use of FMLA leave.
7. Providing Inadequate Notice of Terminations: If an employee learns of his termination through a third party or though the employer’s work schedule (i.e., the employee is not scheduled to work), an employee is more likely to seek legal advice regarding his employment rights. When an employer decides to terminate an employee, it should provide a terminated employee with a written notice of termination as soon as is practicable.
8. Escorting Employee Off Employer’s Premises: Employees are also likely to contact an employment attorney after suffering the indignity of being escorted from their employers’ premises by security or management. . . . The employer should avoid making a spectacle of the employee’s termination.
9. Giving Negative References: Employers can push their former employees to seek legal advice if they provide negative references to potential employers. . . . Negative references may unfairly portray the employee in a negative light and later subject the employer to claims of defamation. Instead, the employer should confirm nothing more than the employee’s position, employment status and/or title, dates of employment, and salary.

The list, although not comprehensive, provides employers with suggestions that could prevent some of the lawsuits brought by current and former employees.

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The court examined the following non-compete provision in the employment agreement between plaintiff Home Paramount and  its former employee Justin Shaffer:

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever . . .

(Emphasis added).

In Virginia and many other jurisdictions, the enforceability of a non-compete provision is a question of law in which the court closely examines the provision to determine if it is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.  The court considers as a whole the extent of the provision’s restrictions on employment activities; the geographic scope of the restrictions; and the duration of the restrictions.

The court held in Home Paramount that the provision was overly broad because it sought to prohibit Shaffer from working for a competitor in any capacity.  This made the entire non-compete unenforceable.  The court found:

. . . [V]alid provisions prohibit “an employee from engaging in activities that actually or potentially compete with the employee’s former employer.”  Omniplex World Services,270 Va. at 249, 618 S.E.2d at 342 (emphasis added).  But a former employee may find new employment with his former employer’s competitor in which he engages exclusively in activities that do not compete with the former employer. . . .  When a former employer seeks to prohibit its former employees from working for its competitors in any capacity, it must prove a legitimate business interest for doing so.

. . . On its face, [the non-compete provision] prohibits Shaffer from working for Connor’s or any other business in the pest control industry in any capacity.  It bars him from engaging even indirectly, or concerning himself in any manner whatsoever, in the pest control business, even as a passive stockholder of a publicly traded international conglomerate with a pest control subsidiary.  The circuit court therefore did not err in requiring Home Paramount to prove it had a legitimate business interest in such a sweeping prohibition.

(Emphasis added).

Since the court found the non-compete provision overbroad and therefore unenforceable, it did not examine any evidence of the former employee’s purported unfair competition following his tenure at Home Paramount.

Kotz’s investigations followed the 2008 Bernard Madoff Ponzi scheme. The SEC received a great deal of criticism for failing to conduct a thorough investigation despite receiving multiple tips about Madoff’s scheme. According to the Bloomberg article, the SEC’s “internal watchdog has castigated the agency for missing the Bernard Madoff fraud,” resulting in several investigations of SEC employees.

Since H. David Kotz was appointed Inspector General of the SEC, says Bloomberg, “his office referred 28 cases to the Justice Department from October 2007 to March of this year, leading to two prosecutions, one agreement not to bring charges and no convictions so far.” TELG client Nancy McGinley was one of the individuals Kotz aggressively pursued. Bloomberg said the following:

According to Adam Augustine Carter, McGinley’s attorney, federal prosecutors dropped the case after a review showed that the employees didn’t trade on material non-public information, the legal standard for insider trading

In the Bloomberg article, Carter was quoted as saying, “They [federal prosecutors] looked at this and determined that there was nothing to prosecute.” Carter also stated, “Not that there wasn’t a felony or it wasn’t worth it, but that there was nothing.”

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The Employment Law Group’s © Managing Principal Scott Oswald and Principal Attorney Adam Augustine Carter published an article for the Bureau of National Affairs, Inc. titled Drafting and Negotiating Executive Employment Agreements. This article discusses the importance of employment agreements for employees of all levels and discusses in detail key provisions for employment contracts.

Messrs. Oswald and Carter state in the article:

In the District of Columbia, Maryland, and Virginia, if employers do not offer their employees a definite term of employment, the presumption is that, absent a clear expression of the intent to form a contract of employment for a fixed period of time, ‘the parties have in mind merely the ordinary business contract for a continuing employment, terminable at the will of either party.’ Under the at-will doctrine, an employer can terminate an employee at any time and for any reason or no reason at all, so long as the employee is not terminated for an unlawful reason.

Moreover, a written agreement can “prevent misunderstandings between the parties as to employee’s duties and responsibilities, criteria for earning bonuses, and eligibility for promotions and/or transfers.” Having the employment agreement in writing benefits both the employer and the employee and often leads to the best outcome for both parties. Overall, employment agreements help avoid employment disputes, statute of frauds claims, Fair Labor Standards Act claims, and discrimination claims. Finally, “employment agreements can also prevent misunderstandings between the parities as to employees’ duties and responsibilities, criteria for earning bonuses, and eligibility for promotions and/or transfers.”

The key provisions outlined in this article highlight the following points that should be included in employment contracts:

1. Offer and Acceptance of Employment: To make certain that courts interpret an employment agreement as a contract, at the beginning of the agreement, the employer should include a short section discussing the purpose of the contract…and a section wherein the employee acknowledges that he or she accepts the employer’s offer of employment.
2. Position for Which Employer Hires Employee: To avoid confusion and contention over an employee’s position, duties and responsibilities, the employer should clearly state the employee’s title and should clearly delineate the employee’s main responsibility… [But] should leave room for flexibility and change.
3. Length of Contract, Compensation, Benefits, and Bonuses: Other key terms of an employment agreement are provisions that state the length of the contract as well as the employee’s compensation and benefits.
4. Noncompete/Nonsolicit Provisions: To prevent employees from taking their talents and employer’s trade secrets to competitors, a growing number of employers are requiring employees to sign noncompete agreements… [However,] in realizing that noncompetes are agreements in restraint of trade, courts critically examine and narrowly construe non-compete agreements. Thus, a broad-form agreement that is not narrowly tailored to serve the employer’s business interest is likely unenforceable
5. Confidentiality Provisions: Confidentiality provisions in employment agreements should not be used to silence employees or to require that employees report fraud internally prior to going to any outside entity to obtain assistance. In negotiating an employment agreement, the parties should clearly define what information is and is not confidential and should carve out exceptions for the good faith reporting of fraud or violations of law to outside entities.
6. Lapse of Contract: As the employment agreement should be for a definite term, the parties should also address criteria for extending the period of the contract and what should occur if the contract expires but the employee remains employed with the company.
7. Entire Agreement: Both parties must be sure to include a provision stating that the employment agreement represents and contains the entire agreement. Otherwise, the parties could be subject to litigation over whether the parties included or intended to include other provisions in the employment agreement.

Employment agreements not only protect employers and employees in the long run, but they also provide an opportunity to negotiate severance provisions before the employment relationship has soured. Provisions within the agreement are best negotiated at the outset of the employment relationship rather than during employment.

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.”

“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.

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.