Workplace Wise - Iowa Employment Law Attorneys

Wednesday, June 8, 2016

Companies Must Update Policies, Agreements To Receive Benefits Under New Federal Trade Secrets Act

By Bryan Ingram

Trade secrets are common in virtually every industry and range from complex technical designs to simple business processes.[1] Prior to the enactment of the Defend Trade Secrets Act (“DTSA”)[2], if an employee illegally took a valuable design or process to a competitor, the company could only seek recovery under state law.[3] However, on May 11, 2016, The DTSA created a federal private right of action and expanded the benefits for victims of misappropriated trade secrets.

The DTSA automatically creates a federal private right of action if a company’s misappropriated trade secret is “related to a product or service used in, or intended for use in, interstate or foreign commerce.”[4] The remedies available under the DTSA include injunctive relief, damages, and attorney’s fees.[5] The DTSA also includes a three-year statute of limitations.[6] While the DTSA creates a new federal pathway to protect trade secrets, it does not preempt existing state law.[7] Consequently, companies now have more jurisdictional options when pursuing trade-secret litigation.

The DTSA also creates a mechanism to recover stolen trade secrets in “extraordinary circumstances.”[8] According to the DTSA, a court may “issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”[9] The court may issue a seizure order only if specific requirements are met, including: (1) another order or form of equitable relief is inadequate; (2) immediate and irreparable injury exists; (3) the harm to the applicant outweighs the harm of the person against whom seizure would be ordered or a third party; (4) there is a likelihood of success in showing that the information is a trade secret and the person misappropriated the trade secret; (5) the person has actual possession of the trade secret/property; (6) the application describes with particularity the location and item to be seized; (7) the trade secret would be destroyed “if the applicant were to proceed on notice to such person”; and (8) “the applicant has not publicized the requested seizure.”[10] A seizure order must also meet strict statutory requirements.[11] While the DTSA’s stringent requirements make it difficult to pursue a court-ordered seizure of a trade secret, companies now have the ability to recover trade secrets in extraordinary circumstances.

The DTSA offers many financial advantages to companies, including access to exemplary damages (awards of up to twice the amount of damages) and attorney’s fees for the willful and malicious misappropriation of trade secrets.[12] Attorney’s fees are also available if a motion to terminate an injunction is made in bad faith.[13] However, these provisions are not automatic. In order to qualify for exemplary damages and attorney’s fees, the DTSA’s compliance provision requires companies to give notice of the whistleblower protection available under the DTSA.[14]

The broad language of the DTSA means that most agreements and policies require attention. Any Non-Disclosure Agreement, Employee Handbook, Employee Contract, or other agreement “govern[ing] the use of a trade secret or other confidential information” created or executed after May 11, 2016, should be reviewed and updated.[15] Thus, if an employee operating under a contract signed after May 11, 2016, quits and takes valuable trade secrets to a competitor, the employer cannot recover exemplary damages and fees, unless the contract was updated with the appropriate notice requirement. By proactively updating agreements now, companies can save millions in future trade-secret litigation. Failure to act may prohibit litigants from seeking exemplary damages and attorney’s fees in misappropriation suits under the DTSA. Provided the relevant agreements comply with the statutory requirements, the DTSA is a win for virtually all companies and industries. 

Should you have questions about the DTSA and its impact on your business, please contact me or your BrownWinick attorney.

[1] 18 U.S.C. § 1839 (3).
[2] 18 U.S.C. §§ 1831–1839.
[3] Under Iowa law, the Uniform Trade Secrets Act protects the misappropriation of trade secrets. Iowa Code § 550 (2015).
[4] § 1836 (b)(1).
[5] Id. at (b)(3).
[6] Id. at (d)
[7] § 1838.
[8] § 1836 (b)(2)(A)(i).
[9] Id.
[10] Id. at (ii)(I)–(VIII).
[11] Id. at (b)(2)(B).
[12] § 1836 (b)(3).
[13] Id.
[14] § 1833 (b)(3)(c).
[15] Id. at (b)(3). 

Friday, June 3, 2016

DOL's Time-Limited Non-Enforcement Policy of New Salary Level for Certain Medicaid-Funded Providers

By Megan Erickson Moritz

The new overtime regulations were officially published on May 23, which among other things, more than doubles the salary level requirement for exemption under the Executive, Administrative, and Professional (so-called “white collar”) exemptions under the FLSA.  At the same time the final rule was published, the agency also published in the Federal Register a “time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.” The regs are effective Dec 1, 2016; however, the agency has announced that for this limited category of employers, it will not enforce the new salary level until March 27, 2019.  This means the current salary level of $455 per week will continue to apply to employees working in these small residential homes and facilities with 15 or fewer beds and providing Medicaid-funded services to people with certain disabilities.

While this is welcomed news to this subset of organizations, do keep in mind the effective date of the new Final Rule remains December 1, 2016.  Although this policy announcement means the DOL will not take agency action to enforce the new salary level for this segment of employers, the agency’s non-enforcement policy does not protect these employers from private lawsuits by employees.  Additionally, these employers should keep in mind this limited non-enforcement policy only applies to the new salary requirement, and not to other FLSA compliance issues (such as the duties test requirements for the exemptions).  

Employers who have questions about the application of this policy, would like help evaluating their policies and practices, or are interested in a customized wage and hour Audit or assistance with reclassifying employees, may contact Megan Moritz or another member of our Employment & Labor Law Practice Group for more information.

Thursday, June 2, 2016

EEOC Increases Civil Penalty for Posting Violation

By Elizabeth Coonan

The U.S. Equal Employment Opportunity Commission issued a Final Rule increasing the maximum penalty for violation of posting requirements relating to Title VII and other employment-related laws. The agency cited inflation as the reason for increasing the maximum penalty from $210 to $525. Penalties will still be assessed on a per-violation basis. The final rule is effective 30 days after publication in the Federal Register. Employers should use this as an opportunity to check all postings for compliance. If you have questions, please contact a member of the BrownWinick Employment Law Practice Group.