Employment Law This Week: Trade Secrets, Banker Bonus Restrictions, Musicians Are Employees, Misclassification Violates NLRA

(1) Former Workers Violated Ex-Employer’s Trade Secret Rights

Our top story: The U.S. Court of Appeals for the Sixth Circuit upholds a ruling against ex-employees for a trade secret violation. The Sixth Circuit has upheld a ruling that a group of workers at a fastener company used confidential drawings from the company to design, manufacture, and sell competing parts for their new business venture. On appeal, the former workers argued that they were “filling a gap” for customers, not competing with the original company. But the Sixth Circuit found that this argument ignored undisputed evidence in the case. Peter Steinmeyer, from Epstein Becker Green, has more on what employers can do to protect their trade secrets.

On a related note, last week, the House of Representatives passed a bill to federalize trade secrets law. The legislation now heads to President Obama, who has promised to sign it.

(2) Financial Regulators Propose Banker Bonus Restrictions

U.S. financial regulators seek comments on a proposed rule restricting incentive compensation. Several financial regulatory agencies, including the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission, are looking to ensure that incentive compensation balances risk and reward. The proposed rule would require that up to 60 percent of certain compensation be deferred for as long as four years, and firms would have the power to claw back incentive pay for at least seven years. This new proposed rule reflects the 10,000 comments received in response to the original 2011 proposal.

(3) D.C. Circuit: Musicians Are Employees

Musicians who perform in seasonal concerts for a Pennsylvania orchestra are employees, not independent contractors. That's according to the D.C. Circuit, which ruled that the orchestra members are indeed employees and have the right to engage in collective bargaining through a union. After noting that there are a variety of “unharmonious” tests for independent contractor status, the D.C. Circuit deferred to the decision of the National Labor Relations Board (NLRB) on the matter, citing court precedent that held that NLRB rulings in cases with conflicting views should stand.

(4) NLRB Alleges Misclassification Violates NLRA

In California, we’re seeing a new strategy from the NLRB on employee classification. The NLRB’s Los Angeles office is arguing that Intermodal Bridge Transport's alleged misclassification of its drivers as independent contractors is an unfair labor practice because it deprives the drivers of rights granted to employees under the National Labor Relations Act (NLRA). With the continued growth of the “gig” economy, even companies that have taken proper care in the classification of their independent contractors may face NLRB action on this front. For more on this complaint, click here.

(5) In-House Tip of the Week

Michael Brizel, Executive Vice President and General Counsel of FreshDirect, shares some advice on dual representation for litigation claims.