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Texas Law Update: Can I Make My Employee Sign a Non-Compete/Non-Solicit? (Part II)

September 29, 2016

For a non-compete/non-solicit to be enforceable under Texas law, it must be reasonable as to time, geographic area, and scope of activity.  Needless to say, it is a fact-specific inquiry and there is no one-size-fits-all answer.  Generally speaking, however, a restrictive covenant that does not bear some relation to the activities of the employee or that contains an industry-wide exclusion from subsequent employment is unreasonable.[1]  And as you will see, it is often necessary to look at all the restraints together to determine the reasonableness of a non-compete/non-solicit as a whole.… Read the rest

Texas Law Update: Can I Make My Employee Sign a Non-Compete/Non-Solicit? (Part I)

September 22, 2016

In our previous blog series “Covenant Not To Compete When Buying or Selling a Business,” we looked at several state laws governing covenants not to compete in the context of buying or selling a business.  This time, we will look at Texas law in depth, focusing on non-competition and non-solicitation covenants in the employment context.  As we mentioned before, a non-compete is enforceable in Texas if: (i) it is part of an otherwise enforceable agreement at the time the agreement is made; (iii) the restraint imposed is no greater than is necessary to protect the goodwill or other business interests at issue; and (ii) it is reasonable as to time, geographic area, and scope of activity to be restrained.… Read the rest

Employee or Independent Contractor? That Is the Question (Part II)

May 5, 2016

This is the second in a two-part blog on Cotter v. Lyft, a California case involving misclassification of drivers.  Read about the “whys” of the case in our first post, Employee or Independent Contractor? That Is the Question.

In the settlement agreement, Lyft agreed to pay more than $12 million ($12,250,000 to be exact, for all monetary benefits and payments to the settlement class, fees and expenses, taxes, and so forth), as well as revise its terms of service with drivers, including the following:

  • Lyft will modify the at-will termination provisions in its terms of service to remove Lyft’s ability to deactivate a driver’s account for any reason and to replace those provisions with language detailing specific actions that will constitute a breach of contract by a driver and/or result in termination of the driver’s terms of service;
  • Lyft will modify the arbitration provision in its terms of service to state explicitly that Lyft will pay for the arbitration fees and costs for claims brought by either party based on an alleged employment relationship between Lyft and a driver, Lyft’s deactivation of a driver’s account, termination provisions, or fares or hourly rates;
  • Lyft will create a “favorite driver” option that results in some benefit to drivers who Lyft passengers designate as a “favorite”; and
  • Lyft will modify its smartphone app to provide drivers with additional information about a potential Lyft passenger prior to a driver accepting any ride request from the passenger.
Read the rest

Employee or Independent Contractor? That Is the Question (Part I)

April 28, 2016

As part of our previous blog series titled Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law, we wrote about Cotter v. Lyft, a California case involving claims of misclassified drivers.[1]  At the heart of this case was the question of whether Lyft drivers were independent contractors or employees under California law.  Why should this matter to a business?  Because the determination has its consequences– under California law, for instance, employees are entitled to certain benefits and protections, whereas independent contracts are not.… Read the rest

Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law

September 10, 2015

Cotter v. Lyft.

In Cotter v. Lyft, a district court case involving similar facts as in Berwick v. Uber, the court acknowledged at the outset that Lyft drivers didn’t seem much like employees or independent contractors.[1]  On one hand, the court noted, Lyft drivers, unlike typical employees, work as little or as much as they want and can schedule their driving around their other activities; on the other hand, Lyft drivers, unlike typical independent contractors, use no special skill when they give rides, and their work is central, not tangential, to Lyft’s business.… Read the rest

Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law

September 3, 2015

Berwick v. Uber.

In 2014, Uber and a middleman Rasier-CA LLC (collectively referred to as “Uber”) employed Berwick as a driver in San Francisco, California, under the terms of a written agreement.[1]  The agreement provided, in relevant part, that Berwick was entitled to accept, reject, and select among service requests and that Berwick was to perform accepted requests in accordance with certain rules, which include, among other things:

  • provide and maintain liability insurance and vehicle(s) approved by Uber that meet certain standards;
  • accept a service fee determined and remitted by Uber, and nothing else (e.
Read the rest

Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law

August 27, 2015

Employee or Independent Contractor?

Business owners hire people all the time.  Depending on their status as an employee or independent contractor, however, the law treats them differently, affecting all facets of the relationship, including wages, taxes, etc.  Employers who misclassify workers as independent contracts can end up with substantial tax bills and face penalties for failing to pay employment taxes and for failing to file required tax forms,[1] so it is important that business owners understand the difference between employees and independent contractors.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.