WI Employee Rights Lawyer: Severance, Wages, Job Termination, Discrimination

Wisconsin-based workers often remark to me their belief that their non-compete agreements are “probably invalid.”

This belief is common, and understandable. 

But it’s usually incorrect. And that belief does not provide the workers with a silver bullet or an ace in the hole. Below, I’ll explain why. 

The origin of this belief, I believe, stems from Wisconsin’s non-compete statute at Wis. Stat. 103.465.

That statute provides as follows (bold emphasis mine):

“A covenant … not to compete with his or her employer or principal … within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant… imposing an unreasonable restraint is illegal, void and unenforceable…”

The Wisconsin Supreme Court further clarified these standards:

“This court … set forth five basic requirements necessary to enforcement of a restrictive covenant. … They are: (1) The agreement must be necessary for the protection of the employer or principal; (2) it must provide a reasonable time period; (3) it must cover a reasonable territory; (4) it must not be unreasonable as to the employee; and (5) it must not be unreasonable as to the general public.” See Chuck Wagon Catering, Inc. v. Raduege, 277 NW 2d 787, 88 Wis. 2d 740, 751 (1979).

To sum up the law above, a given non-compete agreement could be invalidated by a Court if, among other things, that agreement covers an unreasonable (too long) period of time, and/or an unreasonable (too broad) geographical territory.

Word of these legal standards, I believe, has dispersed among the Wisconsin business-masses, with workers becoming familiar with standards above, including the notion their own-noncompete agreements may be legally-invalid if they cover an unreasonable timeframe and/or territory. 

And if you look at your non-compete agreement and determine it is unreasonably lengthy and/or geographically broad, then your non-compete agreement is surely invalid and you don’t have to worry about it. Right?

Wrong.

The fundamental problem underlying the common “my non-compete is invalid” belief is this: it is a Court, not you (or me, as a lawyer) that gets to make that legal determination whether the agreement is in fact legally invalid or not.

Relatedly, it takes a process, i.e. an investment of time and money, in order to obtain that legal determination. And the Court may or not agree with your assessment (or mine). Thus, risk exists as to that legal process. Plus, the employer likely believes it is valid, and if they decide to sue you it will be based on their belief, not your (or your lawyer’s or others’) beliefs.

So there is no bird in the hand, or silver bullet, when it comes to one’s own beliefs about the invalidity of his or her non-compete agreement.

Do I say all this to claim your non-compete agreement is valid, and that your former employer is sure to win a legal dispute if they sue you based on that agreement? Not at all.

Rather, I’m saying that whether the agreement is valid is an open question, with a process necessary in order to get a (legally-binding) answer.

So, what should you do?

Consult with an employment lawyer. (And while I’m happy to talk, it doesn’t have to be me 🙂 ).

Furthermore: only consult with a lawyer when the time is right.

When is the time right?

In my opinion, the time is right when circumstances are such that it is most cost-effective, and risk-effective, for you to do so.

More specifically: once you have a new job offer, or a new business opportunity, consult with a lawyer at that time, i.e. before you accept or start the new work.

At that point in time, the lawyer can: (1) review your new job/business opportunity and the details of what business, work, duties, etc. will be involved; (2) review your non-compete agreement, and consider its terms as applied to the circumstances of your new opportunity; and (3) advise you about the safest, lowest-risk courses of action you can take in light of that agreement and those circumstances.

Usually, when I have consultations with clients about non-compete agreements, the consultations do not end with me telling the clients a legal opinion that they should not accept or work at the new job/business opportunity. Rather, the consultations usually involve discussions of (manageable) dos and don’ts and ways to mitigate/reduce risks.

During a consultation, I typically describe (in my opinion) the odds whether a Court would find the agreement enforceable. But that part of the discussion is just one issue among other, more important issues. 

Most important of all is deciding upon a plan and strategy to move forward with the new job opportunity, while doing (and not doing) certain things to avoid certain risks inherent to your particular non-compete agreement and circumstances.

Of the many persons I’ve had consultations with about non-compete agreements, I cannot recall a single instance where someone I had consulted with was later sued. 

While I have represented some persons defending non-compete lawsuits, those persons had first retained me after their employer-troubles/lawsuits had already occurred. They had not had a lawyer consultation, of the type I recommend above, before their new (allegedly competitive) work had begun.

In summary: Wisconsin workers should avoid relying on the (faulty) assumption that their non-compete agreements are “probably invalid”, and avoid basing important decisions (e.g. whether to accept a given new job) on that assumption. Instead, consider investing in a lawyer consultation at the point in time you’ve had a new and tangible opportunity arise, but you have not yet accepted or started that work. 

In my view, the old saying is quite true that an ounce of prevention (i.e. having a preventative legal consultation for a @$300 fee that helps you ward off future problems) is better than a pound of cure (i.e. paying a lawyer thousands of dollars after a lawsuit’s been filed against you).

If you performed work in Wisconsin and/or work for a WI-based employer that deducted money from your wages without your permission, you may have strong legal rights, depending on the circumstances. Below, I describe several laws that make various kinds of wage deductions unlawful. Please note that the information in this article is not legal advice for your specific situation; only if you consult directly with an employee rights attorney could you get legal advice specific to your situation (i.e. whether any law was arguably violated and what legal options, if any, are available and recommended for you).

Wisconsin Statute 103.455 generally prohibits an employer from deducting money from an employee’s wages in order to cover the employer’s financial losses that the employer perceives to be owed by employee and/or to pay for property or monetary losses that the employer believes were caused by the fault of the employee.  See Wis. Stat. 103.455; see also, Donovan v. Schlesner, 72 Wis. 2d 74, 240 N.W.2d 135 (1976).  An employer is allowed by Wis. Stat. 103.455 to make a wage deduction if the employee provides written consent in advance for that deduction. Please note the employee must approve that specific deduction in advance; if the employee signed a contract or document that purports to give permission to the employer to make wage deductions in a general sense (i.e. not for any known/specific deduction), said contract’s terms are not valid per Wis. Stat. 103.455. If an employer is sued and a Court finds the employer violated Wis. Stat. 103.455, the employer could have to repay the deducted amount to the employee, and could potentially be ordered to pay double the amount (per a statutory penalty).

Also, Wisconsin and Federal minimum wage laws — as applied to some but not all employer-deduction situations– can prohibit certain wage deductions. Namely, if an employee is subject to minimum wage law protections (i.e. if the employee is not exempted from a given law per certain loopholes), AND if the employer’s deduction from a given paycheck results in the employee being paid less than the minimum wage rate for time worked that given pay period, then the employer’s deduction could potentially be in violation of WI and/or Federal minimum wage laws. These minimum wage laws provide their own potential legal relief and potential recovery of various money, including statutory penalty money and reimbursement of reasonable attorney fees and legal costs.

In addition, there are other areas of law– e.g. WI contract law, Federal antitrust law, etc.– that are arguably implicated and/or violated in certain scenarios where wages are deducted by an employer or by an employer’s contractor (e.g. by the employer’s contracted relocation expense vendor or payroll vendor).

Last but not least, sometimes an employment relationship involves not only Wisconsin but other state(s), and certain other State laws prohibit certain wage deductions as well. For example, the Illinois statute 820 ILCS 115/9 has prohibitions for certain employer wage deductions as well.

If you are interested in learning whether any given law(s) was violated by any given employer wage deduction(s), I’d strongly recommend you consult directly with an employee rights attorney before you take any action involving the employer (i.e. before you complain to your employer, tell them they violated a law, and/or take any legal action). If an employee tries to assess or handle such legal issues without an attorney’s assistance, there can be increased risks of employer retaliation, and/or risks of losing out on legal rights or opportunities. Thus, talking to an attorney can help not only in getting a reliable assessment about laws potentially violated, but the attorney could also advise about potential retaliation risks etc. for a given situation, and advise how to reduce or eliminate those risks. Many employee rights attorneys, including myself, offer free initial phone consultations, so there would be nothing to lose in making a free consult call about any given wage deduction(s), to see if there are any viable legal rights or courses of action the attorney recommends.

Are you a Wisconsin- based employee with a dispute (or potential dispute) with an employer about an expense reimbursement contract? If so, before you take action or communicate with the employer about the dispute, below are five factors to consider.

1. Review the contract’s terms, including terms about timing and key dates, before taking action.

Many expense – reimbursement contracts have terms that specify important dates and/or time periods. For example, a contract may say that if the employee resigns within one year of his employment start date, then he must reimburse the employer 100% of the expenses it paid relating to the employee’s hire, travel and relocation. Or a contract may say if the employee resigns during a given time frame (e.g. at a time between Jan. 1 and Jun. 30, 2019), then he must reimburse 50% of the employer’s expenses, or if he resigns during a later time frame (e.g. between Jul. 1 and Dec. 31, 2019), he must reimburse 25%.

Sometimes, the terms are not clearly defined or ambiguous on their face. For example, a reimbursement contract may say the employee has a reimbursement obligation if he resigns “before a one-year period”, but may not specifically define the date that “one year” has ended. Such ambiguous terms can raise doubts when, exactly, the one year period begins and ends. Is it one year after the date the last party signed the contract? One year after the date the employee accepted the job offer? One year after the date the employee first started employment at the employer’s building?

An employee with a reimbursement contract should review and understand the contract’s terms– including its terms about important dates and timing– before he takes action, e.g. before he gives notice of resignation on a given date. A close review of the contract, including terms about key dates and timing, can help the employee be aware of important timing considerations and perhaps avoid a very costly mistake. For example, it may help him avoid giving notice of resignation to occur a day before a date when reimbursement obligations would have vanished under the contract had he stayed employed just a day longer.

2. Know that some contracts and/or their reimbursement terms are invalid under Wisconsin law; don’t assume the employer’s legal interpretation is correct.

Employers act as if the reimbursement contracts they drafted– and their interpretations of their contracts– are unquestionably valid under the law. But in reality, some reimbursement contracts are invalid under Wisconsin law standards.

Only a Court can determine if a given contract is valid or invalid. However, an employee can have a lawyer assess the likelihood or odds a given contract would be found invalid by a Court, via the lawyer reviewing that contract and comparing it to applicable legal standards, etc.

If an employee’s lawyer reviewed a reimbursement contract and saw legal problems with it and felt a Court would likely consider it invalid, the lawyer’s opinion to this effect could be conveyed to the employer, and could cause the employer to reduce or withdraw its demand for the employee’s expense-reimbursement payment.

It is common in my experience to see problems in the language of an expense – reimbursement contract that present risk to the employer that the contract could (if a legal action arose) be determined by a Court to be invalid. There are some legal issues that, if present in a given contract, could cause a Court to decide the whole contract is invalid. In other instances, there are problems with a contract that are likely to cause a Court to decide only a portion of its terms, or only a portion of money (less than what the employer demands) are legally-valid or owed.

If you have a reimbursement contract with one or more of the following attributes, it may be legally-vulnerable for the employer, and you should consider having an employee rights lawyer assess it further:

• If the contract was drafted by the employer and has vague or ambiguous terms the employer is now interpreting in its favor, to your financial detriment.
• If the contract defines types of expenses or time frames, etc., and the employer is seeking reimbursement of types of expenses that are not of the type the contract defines, or were not incurred during defined contractual time frames, etc.
• If the contract has terms that say the employer may dock your wages (paychecks) for reimbursement money the employer decides you owe.

3. Request proof from the employer for the expenses at issue; make sure they’re legitimate expenses and of a type reimbursable under the contract.

A reimbursement contract may specifically state the employee has a right to request the employer give her proof of the expenses at issue, so she can verify they were in fact paid and in fact were proper for the employer to have paid for her hire and relocation, etc.

Such proof can include an itemization of expenses that specifies exact expenses’ dates and amounts of payment, to whom they were paid, for what purpose, etc. Proof can also include receipts or bank entries from the employer, or other documents that prove and/or describe how various expense payments were made for given purposes, etc.

Whether or not your contract says you can request the employer provide you such proof of the expenses’ legitimacy, it is a good idea for you to make such a request.

If an employer provides you an itemization or other proof of expenses, you should carefully review that documentation, to make sure the described expenses appear legitimate and appropriate. As an initial matter, you may discover that there are erroneous entries or amounts stated for given expenses, and find the employer has overstated the value of expenses it is asking you to reimburse.

You should also compare those documented expenses (as described in the documentation) to the terms and descriptions in your reimbursement contract. Are those expenses, for which the employer demands reimbursement, actually of the type and nature for which the contract requires reimbursement?

If there’s any problem with the expenses’ legitimacy and/or legality under the contract, it is good that you identify any such issues before communicating with the employer about potential reimbursement, and certainly before paying for reimbursement.

4. You may have legal leverage, for your reimbursement dispute, based on factors outside the reimbursement contract and/or that you may not have considered.

Above I reference some legal issues with a given reimbursement contract or its terms that, in a reimbursement demand or dispute situation, can possibly raise legal risks for an employer and/or leverage for the employee.

Aside from the content or issues in any given contract, there may be external factors or laws that provide potential leverage for the employee.

For one, an employee who is contemplating resignation and related reimbursement contract issues, may be subject to unlawful activities by his or her employer that prompted the plans for resignation in the first place. For example, the employee may be resigning because the employer failed to pay the employee a bonus or commission that was (in the employee/lawyer’s view) owed under WI wage or contract laws, or because the employer harassed or discriminated against the employee in arguable violation of WI or Federal discrimination laws.

If an employer arguably violated laws with respect to the employee– and arguably owes the employee legal damages (money) due to lost wages or discriminatory acts, etc.– then those matters may serve as counter-leverage in a negotiation with an employer seeking expense-reimbursement money from the employee.

If a negotiation occurs with an employee about any legal issue, it is likely best that any and all other potential legal issues are also considered by the employee (and employee’s lawyer, if applicable). That way, the employer’s reimbursement demand is not discussed in a vacuum and the employee’s potential legal rights and potential damages are also part of the discussion, leveraging and/or settlement agreement that may occur.

5. If you decide to get a lawyer’s advice about a contract reimbursement dispute, it is best to do so before you take action or communicate with the employer.

As referenced above, an employee rights lawyer can review an expense reimbursement contract, assess the circumstances of a reimbursement request or dispute, and possibly identify deficiencies with the contract or the employer’s legal position. As a threshold matter, the lawyer may tell the employee some important things not to do, e.g. not to resign before a given date (because of bad consequences per the contract’s terms, etc.).

Also, the lawyer may opine that the employer’s position has legal weaknesses. If that is the case– e.g. say the lawyer opines a Court would likely find the contract invalid– then that opinion could be helpful for the employee to know before communicating or trying to negotiate with an employer about an expense reimbursement demand.

The employee could retain the lawyer to do the communicating or negotiating.

Lawyers are better at conducting communications and negotiations about contracts than are employees and employers. Most employers know this and have lawyers (or promptly retain lawyers) to assist with any reimbursement-contract disputes that arise for them.  Sometimes, employers’ lawyers are behind the scenes and, unbeknownst to the employee they’re in a dispute with, are monitoring and advising the employers’ personnel about what to say or write to the employee. Employees, too often, try to tackle contract-related communications and negotiations on their own, and are thus at a disadvantage compared to the employers, who typically have attorney help accessible.

The more an employee communicates with an employer about a contract dispute– especially written or emailed communication– the more risk the employee incurs of diminishing or eliminating legal rights or options he or she may have had. For example, an employee may send off an email to the employer, about a reimbursement dispute issue, in which he inadvertently agrees to new contractual terms, or agrees to a contractual modification, that are against his interests and/or waive legal rights he’d had (to reduce or eliminate reimbursement money owed) that he never knew he had.

While a lawyer could potentially help an employee at any point in time– even after the employee has communicated at length with the employer– the earlier the employee consults with the lawyer for advice, the better. If a competent employee rights lawyer is retained to communicate directly with the employer’s representative, the lawyer’s written communications will likely be very precisely worded to include legal standards, citations, etc. that are applicable to the contract dispute and explain the employee’s legal rights and leverage.

With all that said, there can be potential downsides to securing a lawyer. For one, a cost/benefit comparison may rule out hiring a given lawyer in a given situation, e.g. it would be disadvantageous to hire a lawyer with a high fee rate for a low-dollar expense dispute. In an article here, I discuss in more detail various factors one may consider in deciding whether to hire a lawyer, and good questions to ask a prospective lawyer to ensure they are competent and likely to provide cost-effective representation.

In general, I can say the potential dollar-savings in employee reimbursement disputes are often much higher than typical lawyer-fee values. (My employee-clients in such matters usually wind up with reimbursement savings amounts that are significantly higher than their fee payments, i.e. they usually wind up ahead). If an employee rights lawyer is willing to provide a free initial evaluation, as I am and others are too, then you have nothing to lose in at least contacting such a lawyer for initial feedback about your expense reimbursement dispute.

Conclusion

If you are an employee with concerns about an expense-reimbursement contract or dispute, I hope the five factors above are of help to you.

 

If you want to know the right answer, and why it’s right, email me and I’ll tell you. (There’s no charge).

Most individuals have misconceptions about the legal system. These misconceptions are usually quite understandable. Often, they are based on human instincts. (Such instincts work well in many areas of life, but have bad results when applied to legal matters). Other times, legal misconceptions are based on internet information– or based on information considered common knowledge, or thought to come from a valid source– when the information is in fact highly-deficient or completely wrong.

One common misconception involves peoples’ belief in the existence of so-called “slam-dunk” legal cases, i.e. cases that are certain to win. For reasons I describe below, there is no such thing as a slam-dunk case.  Every case has at least some risk of losing or having a bad outcome.  Many individuals who wrongly believe slam-dunk cases exist further believe their case is a slam-dunk case. Then they often take actions (e.g. make uniformed settlement or severance offers, file uniformed legal complaints, etc.) based on these false beliefs. These actions often lead to bad outcomes.

While there is no such thing as a slam-dunk or surefire-winner case, there is such a thing as a very strong case. Often, the very strong cases are supported by strong law and by strong evidence. The best kind of evidence is so-called “smoking-gun” evidence, such as a document or recording in which the opponent’s wrongdoing is stated or admitted in their own words.

Let’s assume for a moment that an individual (maybe you!) has a very strong case supported by smoking-gun evidence. Does that mean the case will reach a good result? That depends. If you don’t have a lawyer, or don’t know what you’re doing (as is the case with most folks doing something they’re not experienced with), you will likely not have a good outcome, regardless whether you have a smoking-gun case.

Here are five ways a smoking-gun case can lose.

1. You may not make it to the finish line, and your opponent out- endures you.

Legal cases involve a process.

That process takes time. Usually, a lot of time. Most cases that are litigated take at least 1-2 years to resolve. I’ve had a few legal cases that lasted over 5 years, and one that lasted over 10 years, before a resolution was reached. Yes, some legal matters (e.g. certain settlement negotiations and agreements) can be resolved in a short time. “Short” typically meaning, in the legal world, several weeks or months. But those short legal cases are the minority.

Human instinct often skips over the notion of a process. If someone thinks they have a winning case, they may forget (or not know or not think at all about) the associated legal process– and the time, work, emotion and/or money expended during that process– that must be completed before the “win” can happen.

If your opponent is a corporation or wealthy person(s) who are familiar with the process, they will use that to their advantage. Knowing that you must complete a long process before you reach a point where you even could win, they may string things out, to see if you can even make it to that point. To see if they can out-endure you. They may be successful. If you don’t make it to a trial or finish-line, so to speak, it won’t matter how strong your case or smoking-gun proof are. Your case will have fizzled out, with nothing won, before you reached the point where a win (via legal decision) could be possible.

2. Your opponent may outspend you, and you could run out of money (if you don’t have a contingency fee arrangement or attorney who takes on financial risk).

A smoking-gun case could fail to reach the finish line, and thereby fail to win, if the person or plaintiff pursuing the case is paying money out of pocket and runs out of money before the point of the process where a legal decision is made.

This risk can be avoided by finding an attorney who will assume most or all the financial risk. Many lawyers, including myself, represent clients on contingency-fee arrangements or other arrangements where the attorneys (in exchange for a chance to be paid a percentage of money won or paid via a settlement later) assume our clients’ financial risks and they pay zero dollars, or low dollars, out of their pockets.

However, if an individual signs up a lawyer to assist on an hourly-fee basis– and the individual misjudges the hours the legal process will take, or finds over time he has accrued more fees than he can afford– that individual can run out of money and the case can fall flat as a consequence.  As another matter, if an individual files a legal complaint on her own, without an attorney, she could be committing herself to a situation where third-party costs would later be needed in the litigation (e.g. costs for depositions, expert witnesses, etc. ultimately needed to take the case to completion and have a chance to win). The individual may have no idea of the types and potential amounts of such third-party costs, or whether she could afford them. Smoking-gun case or not, if potential fee and cost scenarios and risks are not addressed upfront– e.g. via securing a lawyer who works on contingency or financial-risk-sharing arrangement– any case could lose or reach a bad result due to that issue alone.

3. You could be wrong (yes, really!): you could be relying on information, advice or a source that is highly-deficient or completely wrong.

Many well-intended people who are not lawyers with expertise in a given arena (e.g. employment or shareholder litigation) will nonetheless try to solve their own problem in that arena, or will rely on the advice of other sources or persons who do not have expertise in that arena either. This is a huge mistake. It should be obvious, but it is not. Too many people, including smart people, take do-it-yourself approaches to legal matters, or rely on so-called expertise and advice from unqualified persons, and have bad results as a consequence. For example, if you think you have smoking-gun evidence based on an assessment from yourself or from anyone other than a lawyer experienced with your type of matter, you probably do not have a smoking-gun at all. Or you may have a smoking-gun and not even recognize it, because you are focusing on the wrong issues and evidence, halfway down a rabbit hole that you don’t realize is a rabbit hole.

If you want legal advice about a given situation– for example, a dispute involving employment or shareholder laws– do not rely on yourself or on anyone else who does not have expertise and experience with said type of situation, laws and associated litigation. This includes lawyers who do not actively practice in the area or type of matter you need help with, but who are willing to give you advice anyway.  This includes your non-lawyer friend or relative who is a high-level professional (e.g. a paralegal, a Human Resources executive, etc.) who thinks their perspective qualifies them to give you advice of value rather than (as is likelier the case) advice that is deficient, wrong and outright harmful.  These folks are often well-intended. However, after giving you the minutes or hours of advice they have to give, it is you who will be responsible for the process (which again may take years to complete), and for the consequences you encounter, without having the kind of help you will need.

Please note I practice what I preach. I’m a litigation lawyer who does a great deal of litigation and negotiations in certain areas of law (e.g. employment and shareholder disputes), but if someone contacts me seeking advice about an area of law outside of my practice and expertise, I refer that person to a lawyer who does actively practice and have experience in said area. Just to describe one example, in law school I took some intellectual property (IP) courses for which I received high grades. As a lawyer, I do a lot of litigation, i.e. courtroom work. But if someone approaches me with an IP or IP-litigation matter, I refer them elsewhere without hesitation. If I (despite having a law degree, IP-law education, over a decade of litigation experience, etc.) refer such matters elsewhere because I perceive myself to be insufficiently-qualified, why should you rely on advice from people with far lesser qualifications relative to your matter, especially if the stakes are significant for you?

If you’re relying on deficient or false information, your case — even if objectively a smoking-gun case which would have a great chance to win with a competent lawyer’s assistance– will likely have a poor outcome.

4. Even if your smoking-gun case is effectively pursued (e.g. with the help of an experienced attorney on affordable basis), your opponent could potentially exploit legal loopholes, so at least some risk exists of losing or a poor outcome.

Every case has at least some risk. Even if it is a smoking-gun case with the assistance of a very competent and effective lawyer who represents you on a contingency or affordable arrangement. There is always at least some potential legal loophole or loopholes the opponent could try to exploit, and at least some chance (even if just a small one) the opponent could be successful.

As a threshold example, if a deadline or statute of limitations period had passed for a potential legal claim before the claim was filed in a legal forum, that claim could not be won, regardless how strong or well-supported by evidence it otherwise would have been.  For those claims being pursued that do not have any deadline-related problem, there are inevitably other potential loopholes the opponent will at least try to exploit in hopes of getting the case dismissed. For example, in the employment and shareholder law contexts, it is common for the opponent to claim “employment at will” or “business judgment rule” loopholes should cause the case to fail, and try to get a judge to dismiss a given case based on those asserted rationales. While in my experience these particular loopholes (despite being commonly asserted and attempted) are not usually successful for my opponents, they do present at least a minor risk of causing a given case to lose or to have a worse outcome.

The main point here is that even a smoking-gun case for which you are represented by a competent attorney would face at least some risk in the legal system. While the odds of success are higher for an attorney-assisted and well-handled smoking-gun case, there still are odds.  No outcome is certain. Risk exists, at least to some degree.  Any case could lose or not reach a favorable outcome, it is just a matter of how likely or unlikely that is to happen.

5. Some smoking-gun cases could lose despite winning, e.g. the value of claims won could be less than money, work or value invested.

For certain cases, the financial dynamics are such that the value of what is ultimately won could be less than the value of legal work and/or expense invested in the case by the individual and/or their attorney.  For example, say a given claim or case has $50,000 in maximum potential money or damages that could be won, or that is “on the table” for that given case, so to speak. Say further, for this example, that the particular type of case would have to be litigated (if pursued to its legal end point) in a given court that is known to take several years to adjudicate cases, and further that this type of case involves very complex legal issues and a high work volume for an attorney. Such a case could accrue, over time, more than $50,000 worth of attorney’s work (whether that work is charged to you as a client via hourly legal fees, or whether that financial risk is accrued by your attorney via contingency- work hours). If such a case has smoking-gun proof and ultimately wins, it could still be a financial loser if the legal award (capped at $50,000) or settlement turns out to be less than the value of legal work or fees for which the client paid or for which a contingency attorney incurred financial risk along the way.

Of course, this type of lose-despite-winning cost dynamic does not apply to many cases. But for those particular cases where this scenario is at issue, the existence of smoking-gun proof does not help. That proof could help the case win, but again the value of the win would be less than the value of work or fees invested. Do you know the long-term cost dynamics that are likely for your case? If you don’t know, that should give you pause, regardless whether you believe yourself to have a smoking-gun case.

Conclusion

The above five factors could cause even a smoking-gun case to lose or have a poor outcome. Before you take action(s) based on any belief you may have a smoking-gun case, please consider consulting with an attorney who is competent and experienced with your type of matter. That attorney may not be me, which is fine, of course. But I hope this article helps in describing why a smoking-gun legal case– assuming a person in fact has one– is not alone sufficient to ensure a good result.

Say your employer told you that your employment is going to end, and you have the “choice” to resign rather than be fired. (Many employers do this in conjunction with presenting a severance agreement that has a “resignation notice” as an exhibit the employee can sign and submit). Understandably, if your employer puts you in this situation, you may view your impending decision in the terms the employer presented: “Should I resign or not?”

This is actually not the question you should decide. At least not at first. There are more important factors to consider before giving the employer an answer (or a signed resignation notice, etc.).

These other factors, and other questions, should first be considered:

• A documented “resignation” could possibly hurt your chance to receive unemployment benefits.

A given State’s unemployment office may consider a resignation to be basis to disqualify a worker from unemployment benefits eligibility. Although a given State may also ask questions to determine if a so-called “resignation” was involuntary and initiated by the employer. A given State may award unemployment benefits for various forced-resignation scenarios. The bottom line is this is something you could learn more about, with respect to your given State and situation, before make the “resignation” decision presented by the employer.

• Would the employer agree to not contest your unemployment benefits, and to (correctly) report to the unemployment office that the ending of your employment was involuntary (whether labeled a forced “resignation” or not)?

This relates to issues above. If an employer agrees, e.g. via a severance agreement, not to contest unemployment and to acknowledge the truth to unemployment authorities that the ending of employment was involuntary, then there may be less risk in agreeing to a forced “resignation”, depending on the State and it unemployment eligibility criteria involved. In my home State of Wisconsin, many such forced-resignation scenarios do qualify for unemployment benefits.

• If you are considering potential legal claims and/or severance negotiations, agreeing to a “resignation” could potentially hurt related legal rights or leverage.

 

Generally speaking, legal claims under employment law (e.g. a legal complaint alleging a job termination violated discrimination law) are tougher to win if a worker is alleged to have resigned rather than been discharged.  Please note that every situation is different, and I have represented workers with forced “resignations” who had very successful litigation and severance outcomes. But documenting a resignation can present a very real risk factor for many workers who have potential legal rights that could be explored in severance negotiations and/or litigation.

• If you did not agree to call your job ending a “resignation”, would the employer disclose the fact you were involuntarily terminated to any new prospective employer(s) you applied to?

Many workers are rightfully concerned that a discharge looks bad on their “record”, and see a resignation as looking better when communicating to a new potential employer, etc. (Of course, having a “resignation” on one’s resume or job application could also conceivably raise an issue with a new employer, if it looks like the resignation occurred with a gap in service, or no new job to go to). One issue of note is that many former employers do not themselves disclose to prospective employers any information about how the former employee’s job ended, whether it was a discharge or resignation, etc. Many employers follow a “neutral reference” policy where they only disclose very limited and neutral job reference information, i.e. the worker’s dates of employment, job title and perhaps pay rate. If your former employer would follow such a neutral reference policy, that information could be helpful in deciding whether to agree to a forced “resignation” or not.

 

• Whether you decided to label your job-ending a “resignation” or not, how would you best explain the circumstances of your job ending to a new potential employer?

You should envision what you would say to a new potential employer under either scenario, and would of course need to speak truthfully about not only the agreed categorization (i.e. “resignation” vs. discharge), but also speak truthfully about factual circumstances. If you agree with your former employer to take the “resignation” option and to categorize your end of employment as such, you will still probably need to explain related factual circumstances with a new potential employer– which will likely want to know what happened and ask questions accordingly. You would also need an explanation for a new employer if you did not agree to the forced “resignation” option. Before making a decision as to “resignation”, you should visualize each potential scenario and each associated communication with a new prospective employer that would occur.

Conclusion

Before answering an employer’s request to categorize their ending of your employment as a discharge versus forced “resignation” option, you should consider the issues above, as well as any other related issues of importance to you. There is no best-answer that applies universally for all workers in this situation, but considering the issues above– before making your decision– will likely help you arrive at the best decision for you.

Many employees who are discharged or offered a severance will, understandably, research internet information about what options they may have.  For example, it is common for a discharged employee to research internet information about legal complaints, such as discrimination or wage complaints. For workers offered a severance agreement, it is common for them to research internet information about what a “typical” or fair severance payment may be, what leverage may exist to negotiate better terms with the employer, etc.

Many workers then rely on such internet research to take various actions, e.g. they go on to file a discrimination complaint, or try to negotiate better severance terms with their former employer, using the internet information they reviewed.

Once action is taken, the employee has significantly changed his or her situation– for good or for bad.

I liken this to taking a road trip. Once you have driven down a certain road for awhile, you have committed yourself to a journey. If you failed to plan appropriately beforehand, that trip could lead to big problems. For example, if you fail to research or identify how long or how much time the trip would be, you may fail to fuel up your vehicle sufficiently, and could later find yourself stranded on the road. And associated with that unforeseen bad consequence come towing costs, lost time, and other headaches. Alternatively, you may take off on a trip and find yourself in a long drive down a road to nowhere– or, even worse, a road to an unpleasant destination– when other roads (unbeknownst to you) would have been far more promising.

Before you take action with regard to a discharge or severance, consider whether you’re truly going to head down the right road.  To determine that, you’d need to have answers to these questions:

• How long will the chosen road/option be and take to complete? How do you know (e.g. have you learned of that option’s timing and proces from a credible source, such as an attorney experienced with that option)?

• What specific good and bad result(s) could occur from taking that road? How do you know?

• What other roads/options exist, and what specific good and bad result(s) could occur from taking those roads? How do you know?

Educating yourself about options is a good thing. Especially if the information is free. That includes talking to an employee rights attorney (yes, like me :)) who offers a free initial evaluation of a discharge or severance matter.  But once you take action, you may have committed yourself to processes, consequences and/or costs that you did not initially anticipate.

As an attorney, I get inquiries from workers at many stages of their journey, and I can usually offer at least some help no matter what. But the most effective time for you to capitalize on legal advice is to obtain it before you take action. Too often, I get inquiries from folks who have (again, understandably) traveled far down the wrong road. Sometimes, a detour– and decent trip– is still possible. But rarely does the same degree of potential exist as for those who seek direct legal advice before committing to a given path.

This post is for those evaluating the financial worth of an employment-law related issue. For example, maybe you are reviewing a severance agreement that offers $X, or your employer is offering you a partial payment of $Y toward unpaid wages, e.g. commissions or bonus.

In such financial-evaluation situations, some employees rely on information from the employer that is inaccurate and serves the employer’s financial interests. So they accept the employer’s say-so as the final word, and sign off on what the employer wants without further exploration.

More often, employees will rely on their own assumptions and/or their own internet research, and try to identify a fair value on their own.

Please know this: your own assumptions and research are not your friend. You are far more likely to identify the wrong answers than the right ones.

Before you take action (e.g. before you negotiate an unpaid wage payment or sign a severance agreement) based on  your own assumptions or research, consider talking to an employee rights attorney first. Many of us offer a free initial phone call for such matters.

If an experienced employee rights attorney reviews an employment-valuation scenario, or starts a research project, he or she has the following advantages that you will not:

– He or she will have at least three years of law school training on the structure of the legal system and legal research methodologies, e.g. knowing the general nature and hierarchy of laws, knowing which research resources are valid and which ones aren’t, etc.

– He or she will have years of work experience with MANY employment laws that may be involved with your situation, AND with those laws as CARRIED OUT in the real world, i.e. “law in action”. For example, many employees who do their own legal research focus on one or two areas of law, when in fact a long list of laws potentially apply. Further, even if you somehow identified the correct (and best) laws or legal forums, how those laws and forums operate in the real world would be outside your experience and knowledge base. For instance, my law school training– and all the research resources I had– did next to nothing to train me for negotiating with an employer or dealing with a particular court, agency or judge. Another example: if straight out of law school I had read a particular government agency’s website that listed all the applicable legal standards and all the good things an employee could win from a legal claim, I wouldn’t have guessed that that same agency dismisses over 75% of employees’ complaints of particular types. Simply put, experience teaches many valuable things that reading a website (even an accurate one) does not.

Only through experience did I learn the approaches that worked and those that didn’t.  Whatever laws or approaches your are contemplating have been explored before. Before your put your wheels to the road, so to speak, there is great value in talking to someone who has taken that path (and many related paths) already.  So before you take action with an employer that is based on your own assumptions or research, please consider contacting an employee rights attorney and letting that person know your situation and your thoughts. The odds are very high the attorney would mention different considerations, and would recommend a different course of action, than those you are contemplating.