President Obama signed the Defense Authorization Act of 2010 on October 28, 2009. Within the literally hundreds of pages appears Section 565, which amends the military leave provisions of the Family and Medical Leave Act. In a nutshell, this law expands some of the definitions to provide even broader rights. For example, qualifying exigency leave may now be available to the family of a member of the regular Armed Forces during deployment to a foreign country. Qualifying exigency leave may also be available to the families of covered military members deployed to a foreign country, even if not in support of a contingency operation.

With regard to military caregiver leave (the 26 weeks), it is expanded to include certain veterans.

If you are an employer who employs at least 50 employees, you are covered by the Family and Medical Leave Act. You are required to post the FMLA notice and have a policy for your employees. These documents may need to be updated to reflect the changes in the law. Until you get those documents updated, remember that the military leave provisions have been expanded. Do not deny leave under these provisions without being certain it is not covered.

By Kristen L. Brightmire, kbrightmire@dsda.com

With many municipal and special elections set in November it is a good time for a reminder that employers must allow employees time off to exercise their right to vote. The purpose of Oklahoma’s time off to vote law is to give employees an opportunity to vote without loss of compensation or being penalized. The law requires employers to give employees at least 2 hours off work to vote. If the employee is far enough away from his/her voting place that more than 2 hours will be needed, you must give them “sufficient time” in which to cast a ballot.

All that is required of the employee to get the statutory time off to vote is to give the employer written or oral notice of his/her intention to be absent to vote by at least the day before the election. Upon the employee’s notice, the employer has the right to select the hours the employee is allowed to take off to vote and give the employee notice of same. In lieu of giving the employee two hours off, the statute specifically allows employers to re-arrange the employee’s schedule on election day to allow three hours off after polls open or before they close. Oklahoma polling places are generally open from 7:00 a.m. until 7:00 p.m.

An employee cannot be disciplined in any way for the time missed to go vote. That means the employee’s statutory time off to vote must be compensated and cannot count against vacation time. Any employer who fails to comply with the law may be guilty of a misdemeanor, and can be fined $50.00 to $100.00 per occurrence. It’s also possible an employer could face civil liability if it retaliates against an employee who takes time off to vote in compliance with the statute.

Be sure you are complying with the time off to vote statute and any voting policies in your employee handbook or other personnel policies. To summarize, the only time you do not have to give an employee time off under the statute is when: (1) the employee does not give you written or oral notice of her intention to be absent to vote by at least the day before the election, (2) the employee is not registered to vote, or (3) if the employee’s work day begins 3 or more hours after the polls open or ends 3 or more hours prior to the polls closing.

By N. Lance Bryan, lbryan@dsda.com

Although Oklahoma laws frown upon any contracts that restrain the exercise of a lawful profession, trade or business, Oklahoma statutes do provide for the enforcement of non-competition agreements in situations where they are executed in connection with the sale of the goodwill of a business or the dissolution of a partnership. (15 O.S. §§ 218 and 219). Provided the non competition agreements are limited in time (2 years is generally accepted as a reasonable time period) and territory (limited to the county in which the active business is operated and any contiguous county), courts will generally enter injunctions to enforce the terms of the non competition agreements.

Monetary damages are also recoverable. However, the standards and requirements for proving monetary damages are not as clearly defined as those set for the issuance of injunctive relief. In the case of Southwest Stainless, LP and HD Supply, Inc. v. John R. Sappington; William B. Emmer; Rolled Alloys, Inc. and Ronald L. Siegenthaler (Case No. 08-5127), the Tenth Circuit Court of Appeals recently applied Oklahoma law in addressing damages recoverable for breach of a non-competition agreement.

In the Southwest Stainless case, the individual defendants Sappington and Emmer were found to have violated a non competition agreement after leaving their place of employment. The enforceability of the non-competition agreement does not appear to have been seriously challenged since it had previously been executed when the individual defendants had sold their business to the plaintiffs.

Were the Companies damaged monetarily?

The primary issues reviewed by the Tenth Circuit on appeal involved the district court’s determination of damages that were awarded to the plaintiffs. The individuals argued (1) that their breaches of the non-competition agreements did not cause damage to the companies, and (2) that the district court’s manner of calculating the damages awarded to the companies was incorrect.

The companies put on evidence designed to show that one of their customers had been diverted to the competing company by one of the individual defendants. The evidence presented showed that the individual defendant had worked with the customer prior to leaving his employment, that the customer had placed its order with the competing company days after the defendant had left, that the defendant had a friendly relationship with the purchasing contact of the customer and that the competing bid was just $856 less than that of plaintiffs. In response to the defendants argument that the plaintiffs could not show what the defendants purportedly did and how the damages had been caused, the Court of Appeals upheld the award of damages finding that the causal connection may be proved by circumstantial evidence, provided the evidence is not mere speculation but leads to the conclusion with reasonable certainty and probability. Because the district court did not merely speculate that the defendant caused the plaintiffs to lose the order, the circumstantial evidence was sufficient to justify the awarding of damages.

Similarly, the Tenth Circuit Court of Appeals held that the uncertainty as to the exact amount of damages would not preclude the right of recovery of lost profits, provided the award is not based on mere speculation. The amount of damages may be shown by “just and reasonable inference.” In this case, the profit margin extrapolated from the plaintiffs’ track record of doing business was sufficient to establish a basis for the calculation of damages. Interestingly, the Court cited a New Mexico Court of Appeals case for the proposition that the amount in dispute can impact what the court considers to be “sufficient” evidence to establish damages. Apparently, the Court believes that smaller awards of damages need not be supported with the same degree of evidence necessary to uphold larger awards.

Can you protect pricing information provided to a potential customer?

The Tenth Circuit’s opinion also dealt with the issue of misappropriation of trade secrets in this case. For companies who regularly submit competing bids to customers, it is worth noting that quotes and pricing information will not be treated as trade secret information, if provided to customers and vendors without restriction. In such cases, ex-employees may communicate pricing information to their new employers without misappropriating trade secrets. If a company wants its bids and pricing information to be treated as trade secrets, customers who receive that information must agree not to disclose it to others.

By Lewis N. Carter, lcarter@dsda.com

If you are subject to the federal anti-discrimination laws (and for most of you, that would be if you employ at least 15 employees), you must have a poster in your break rooms, on bulletin boards, etc., advising employees of various rights under the federal anti-discrimination laws. Due to recent changes in the Americans with Disabilities Act as well as the fact that the Genetic Information Nondiscrimination Act (GINA) will go into effect November 21, the EEOC has revised its poster.

You have three options for compliance:

1. You can print and post the November 2009 version of the “EEO is the Law” poster. This would replace previous versions of the EEO poster. This seems to make sense if you post your EEO poster as a single document, not an integrated one you may have purchased from a vendor.

2. You can post a supplemental poster alongside the EEOC’s September 2002 “EEO is the Law” poster or the OFCCP’s August 2008 “EEO is the Law” poster. This makes sense if you use integrated posters which address other required notices, such as wage and hour issues.

3. You can order new posters through the EEOC Clearinghouse. If you have employees whose native language is not English, you should consider ordering posters in the languages spoken by your employees.

To download the posters or for the address of the EEOC Clearinghouse, click here. NOTE: In our December Employer’s Legal Resource, we will discuss GINA in more detail.

By Kristen L. Brightmire, kbrightmire@dsda.com

Whenever an employer makes a court-awarded or settlement payment to an employee, the question arises as to whether the payment should be treated for income and FICA purposes as a wage or non-wage payment. And, if treated as a non-wage payment, how should it be classified? The recently released Program Manager’s Technical Advice 2009-035, provides a detailed account of the IRS’s position on how to handle the tax consequences of both these taxes as well as the related reporting duties. Although the memorandum addresses the employment related judgments and settlements that the IRS may make to its current or former employees, its conclusions (although they cannot be used or cited as precedent) are useful to any employer.

The memorandum provides that these determinations should be made under the following four-step process:

Step One: Determine the character of the payment and the nature of the claim that gave rise to the payment. The payment should be characterized as severance pay, back pay, front pay, compensatory damages, consequential damages, punitive/liquidated damages, or restoration of benefits. The memorandum then lists several statutes that could form the nature of the claim, including the Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1962.

Step Two: Determine whether the payment constitutes an item of gross income. An issue that often arises in these situations is whether the settlement or award can be excluded from the employee’s gross income under the IRC § 104(a)(2) exclusion for damages received on account of personal physical injuries or physical sickness. The memorandum discusses how the exclusion provision should be analyzed and applied.

Step Three: Determine whether the payment is “wages” for FICA and income tax withholding purposes. Assuming that the payment constitutes gross income, this section looks at whether it should be classified as wages and discusses such issues as how to treat severance pay and emotional distress awards and how allocations should be made between wage and non-wage payments that are part of the same award or settlement.

Step Four: Determine the appropriate reporting for the payment of any attorney’s fees that may be paid to or on behalf of the employee. This section of the memorandum discusses normal Form W-2 reporting for wages, special reporting rules that apply to payments of back pay, Form 1099 reporting for non-wage payments, and how the payment of the employee’s attorney’s fees, whether paid to the employee or directly to the attorney, should be reported. Finally, the memorandum lists for each different type of payment whether it constitutes taxable income, whether it should be treated as wages for FICA and income tax withholding purposes, and whether reporting is required and, if so, the proper form to use.

The information is presented in summary format on pages 15 through 20 of the memorandum which is posted on the IRS website here.

The bottom line is you cannot simply make a payment to a former employee, either as severance or to obtain a waiver of the right to bring a lawsuit, without considering how those payments should be characterized, whether any portion is subject to withholding, and what tax reporting forms (e.g., W-2 or Form 1099) must be used to report the payments to the IRS.

By Jeffrey C. Rambach, jrambach@dsda.com

2009 OKLAHOMA SUPER LAWYERS NAMES 11 DSDA ATTORNEYS

Eleven Doerner Saunders attorneys are listed among the top 50 lawyers named as Super Lawyers in their practice areas. They are, in the following alphabetical order:

William C. Anderson
Business/Corporate, wanderson@dsda.com

Sam G. Bratton II
Bankruptcy & Creditor/Debtor Rights, sbratton@dsda.com

Elise Dunitz Brennan
Health Care, ebrennan@dsda.com

Kristen L. Brightmire
Employment Litigation: Defense, kbrightmire@dsda.com

Lawrence T. Chambers, Jr.
Business/Corporate, lchambers@dsda.com

H. Wayne Cooper
Securities & Corporate Finance, hwcooper@dsda.com

Sam P. Daniel
Family Law, sdaniel@dsda.com

Tom Q. Ferguson
Energy & Natural Resources, tferguson@dsda.com

G. Michael Lewis
Business Litigation, mlewis@dsda.com

Linda C. Martin
Environmental Litigation, lmartin@dsda.com

James P. McCann
Business Litigation, jmccann@dsda.com

Additionally, Oklahoma Rising Stars named 4 Doerner Saunders associates, listed in alphabetical order as follows:

Courtney Bru
Employment Litigation: Defense, cbru@dsda.com

N. Lance Bryan
Civil Litigation, lbryan@dsda.com

Heather Flynn Earnhart
Family Law, hearnhart@dsda.com

Chad J. Kutmas
Bankruptcy & Creditor/Debtor Rights,
ckutmas@dsda.com

In addition, Doerner Saunders is proud to announce that Elise Dunitz Brennan received the honor of being placed among the top 25 women lawyers who received the highest point totals in the 2009 Oklahoma Super Lawyers nomination research and blue ribbon review process.

Last, but certainly not least, Linda C. Martin is featured in a two-page article in the November 2009 issue of Oklahoma Super Lawyers entitled “In a Word: Moxie.”

Congratulations to all! For more information, click here.

AMERICAN COLLEGE OF ENVIRONMENTAL LAWYERS

Linda C. Martin was selected to serve as a member of the Board of Regents of the American College of Environmental Lawyers. This is an honor for Linda and DSDA. We know she will carry the responsibility well.

November 4, 2009

Rebecca M. Fowler will present an Update on Wage and Hour Issues while Kristen L. Brightmire will be discussing Updates on the FMLA and ADA at the Fall CPE Program sponsored by the Tulsa Chapter of the Oklahoma Society of Certified Public Accountants. For more information, email admin@tcoscpa.org or call 918.512.4632.

November 5, 2009

Courtney Bru will be a feature presenter at the Tulsa Area Human Resources Association Annual Employment Law and Practices Seminar held at the Tulsa Renaissance Hotel and Convention Center. Ms. Bru will speak on Record Retention. For more information, click here.

November 11, 2009

Elise Dunitz Brennan will be speaking at the Oklahoma Association of Health Care Providers Owners’ Meeting. She will provide an Overview of the Oklahoma Comprehensive Lawsuit Reform Act of 2009 as it applies to long term care facilities. For more information or to register, please contact Connie Cook, ccook@oahcp.org or click here.

November 12, 2009

Tom Q. Ferguson will be speaking on strategic and ethical considerations involved with preserving, finding, and producing electronic documents in litigation. The seminar, titled E-Discovery: Searching the Virtual File Cabinets, will be held at the Tulsa Doubletree Hotel Downtown. For more information, or to register, click here.

November 17, 2009

Jim Milton will be a speaker at the Tulsa County Bar Association's continuing education seminar on "Municipal Nuggets." Mr. Milton's topic is Water Contracts and Water Rights from the Municipal Perspective. More information can be found here.

November 18, 2009

Hilary L. Velandia and James R. Bullard will present a free audio conference on involuntary discharge of residents in skilled nursing facilities, nursing facilities, assisted living centers, and independent living centers. The audio conference will cover the administrative and litigation procedures involved when the need for involuntary discharge may arise, whether it be due to the need for a higher level of care or payment issues. You can also ask questions, but space is limited. For more information or to reserve a space, please email Anna at aalmanza@dsda.com.

December 3, 2009

Elise Dunitz Brennan is speaking with Debbie Blackwell on federal health law reform at noon at the Tulsa County Bar Association. For more information, or to register, please click here.

December 9, 2009

Laura F. Bachman and Hilary L. Velandia will present a free audio conference on I-9 Compliance: New Requirements and Common Mistakes. This is an opportunity to learn more about recent changes in I-9 law as well as the resolution to common compliance concerns from the comfort of your own office. You can also ask questions, but space is limited. For more information or to reserve a space, please email Anna at aalmanza@dsda.com.

To sign up for additional newsletters or to edit your contact information, please click here.

If you have trouble viewing this email, click here.

To unsubscribe from this newsletter, please click here.