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Serious changes for fixed-term employment in Germany announced

The formation of a new government in Germany has not yet been completed however since February 7, 2018, the coalition agreement has been signed. Such political guidelines were consistently implemented during the last legislative periods.

The changes affect fixed-term contracts which require no objective grounds for limitation. The maximum permissible duration of such fixed-term contracts will be reduced from 24 to 18 months. While previously a three-time extension of these contracts was allowed, this should now be possible only once within those 18 months.

The permitted number of such fixed-term employment contracts will also be limited. Employers with more than 75 employees should only be allowed a maximum of 2.5 percent of the workforce for non-material fixed-term contracts. Exceeding the quota leads to the ineffectiveness of any further fixed-term employment contract, and to permanent employment contracts.

Fixed-term contracts with objective grounds for limitation, in practice used if the employee has

Paving the Way for Unpaid Interns: Trump Administration Relaxes the Standards

Internships are often a great way for students and young people to get their foot in the door and land their first job. But employers must ask themselves: is your unpaid intern actually an intern, or is the “intern” really an employee entitled to wages? Last week, the Department of Labor (“DOL”) aimed to provide clarity and flexibility when it revised its guidance for determining whether an unpaid intern is an “employee” who must be paid under the federal Fair Labor Standards Act (“FLSA”).

Unpaid internships have been the focus of some legal uncertainty over the past several years. The source of that uncertainty may be the FLSA’s simplistic definition of “employee” as “an individual employed by an employer.” The Supreme Court has yet to fully address the difference between unpaid interns and paid employees, but in 1947, the Court recognized that unpaid trainees should not be treated as

Tips for Drafting Executive Employment Agreements – Tip #4 – Beware of 409A

August 7, 2017

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This article continues with another tip for drafting executive employment agreements and the importance of consulting counsel.

For every well drafted executive employment agreement in the business world, there seem to be multiple, poorly drafted agreements.  Too often, employers simply copy and paste from older agreements without knowing anything about the identity or qualifications of the author of the original agreement, the jurisdiction, or circumstances in which the agreement was intended to be used.  Moreover, employers sometimes borrow terms from an agreement that was heavily negotiated by an executive with considerable leverage.  Under such circumstances, the agreement likely will contain terms that are less favorable to the employer than those that can be negotiated with another executive.  Most employers do not realize their mistakes until they are consulting an employment attorney regarding their rights and obligations with respect to an executive who has engaged in misconduct or is simply performing

Tips for Drafting Executive Employment Agreements – Tip #3 – Restrictive Covenants

July 28, 2017

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This article continues with another tip for drafting executive employment agreements and the importance of consulting counsel.

For every well drafted executive employment agreement in the business world, there seem to be multiple, poorly drafted agreements.  Too often, employers simply copy and paste from older agreements without knowing anything about the identity or qualifications of the author of the original agreement, the jurisdiction, or circumstances in which the agreement was intended to be used.  Moreover, employers sometimes borrow terms from an agreement that was heavily negotiated by an executive with considerable leverage.  Under such circumstances, the agreement likely will contain terms that are less favorable to the employer than those that can be negotiated with another executive.  Most employers do not realize their mistakes until they are consulting an employment attorney regarding their rights and obligations with respect to an executive who has engaged in misconduct or is simply performing

Other Perspectives on Trends in Employee Noncompetition Agreements

In mid-May, the New York Times published a long article reporting a national trend that employers are expanding both the number of employees who are required to sign non-competition agreements and the types of employees required to sign these agreements.  The article emphasized stories of low-paid, low-level employees who could not find a new job, or had to take a lower paying job, because they signed a non-competition agreement.  The Times ran an editorial that urged legislatures to prohibit employers from restricting the employment opportunities of lower paid employees.

What is missing from this picture?

While the Times article mentioned states vary in enforcement of non-competition restrictions, noting that California prohibits all restrictions on employees moving to new jobs, it did not explain the important differences in how states other than California enforce non-competition restrictions.  The Times article also did not report the damage to a business that may

Tips for Drafting Executive Employment Agreements -Tip #2 – Severance Conditions

July 20, 2017

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This article continues with another tip for drafting executive employment agreements and the importance of consulting counsel.

For every well drafted executive employment agreement in the business world, there seem to be multiple, poorly drafted agreements.  Too often, employers simply copy and paste from older agreements without knowing anything about the identity or qualifications of the author of the original agreement, the jurisdiction, or circumstances in which the agreement was intended to be used.  Moreover, employers sometimes borrow terms from an agreement that was heavily negotiated by an executive with considerable leverage.  Under such circumstances, the agreement likely will contain terms that are less favorable to the employer than those that can be negotiated with another executive.  Most employers do not realize their mistakes until they are consulting an employment attorney regarding their rights and obligations with respect to an executive who has engaged in misconduct or is simply performing

Tips for Drafting Executive Employment Agreements -Tip #1 – Define “Cause” Broadly

July 10, 2017

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Tip No. 1:  Define “Cause” Broadly

Executives and other high-level employees often negotiate a contractual provision requiring the payment of severance if terminated without “Cause” prior to the expiration of a term agreement.  While the definition of Cause often depends on the parties’ respective bargaining power (highly sought talent typically has considerable leverage), the employer should attempt to negotiate as broad a definition of Cause as possible.  Too often, employers limit the definition of Cause to intentional misconduct that harms the company, criminal behavior, or the executive’s death.  Such a narrow definition ties the employer’s hands when an executive is not making a good-faith effort to perform well or is performing very poorly despite reasonable efforts.  Under these circumstances, the employer’s options are limited to continuing to employ the underperforming executive or terminating the executive and paying out severance.

It is also fairly common for Cause definitions to include a

Avoiding Three Common Mistakes Made By Employers When Terminating Employees (Part 3 of 3)

Common Mistake No. 3: Poor Drafting of Termination Letters

This post continues the discussion of common errors made by employers terminating employees which can be easily avoided.

As a general rule, an employer may terminate an employee for a good reason, a bad reason, or no reason, just not for an illegal reason. Moreover, in most (but not all) states, an employer is not required to provide an employee with the reason for the employee’s termination. Although there are different schools of thought on the subject in light of the broad latitude given to employers in most states, I typically recommend including the reason(s) for the employee’s termination in the termination letter. In my experience, the termination of an employee without providing a reason usually strikes an employee as fundamentally unfair and increases the likelihood of the employee seeking advice from an attorney (which, in turn, increases the likelihood of

Avoiding Three Common Mistakes Made By Employers When Terminating Employees (Part 2 of 3)

Common Mistake No. 2: Paying a Separating Employee Something Extra Without Requiring a Waiver and Release

This post continues the discussion of common errors made by employers terminating employees which can be easily avoided.

Whether it is advisable to pay a separating employee something extra in exchange for a waiver and release of claims against the employer depends on a number of factors, such as the strength of the potential claims that the employee would be waiving and the likelihood of the employee filing suit. That said, an employer should never pay separating employees money to which they are not otherwise entitled without requiring the execution of a waiver and release.

While the wisdom of this advice might be obvious to some, it is not uncommon in my experience to see an employer gratuitously pay a couple of weeks pay to a separating employee without requiring the employee to execute

The Use of Unconditional Offers of Reinstatement to Reduce Damages Exposure

This post discusses the underutilized litigation strategy of extending an unconditional offer of reinstatement to a former employee-plaintiff who has filed (or has threatened to file) suit challenging his or her termination from employment.

How the Rejection of an Unconditional Offer of Reinstatement Impacts Damages

The U.S. Supreme Court has held that a former employee’s rejection of an unconditional offer of reinstatement (i.e., one that does not require the plaintiff to waive or compromise his or her discrimination claim) to a substantially equivalent position tolls the accrual of the employer’s back pay liability:

An unemployed or underemployed claimant, like all other Title VII claimants, is subject to a statutory duty to minimize damages. . . . This duty, rooted in an ancient principle of law, requires the claimant to use reasonable diligence in finding suitable employment. Although the unemployed or underemployed need not go into another line of work, accept

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