Resolving Disputes with Former Employers Archives

“Lawyer on Contingency Fee?” – Who “Swallows” the Expenses?

Published on June 4th, 2019 by Alan L. Sklover

Sklover Working Wisdom Law Justice Scale

“Be careful who you trust – The devil was once an angel”

– Unknown

ACTUAL CASE HISTORIES: Wendy hired an attorney to represent her in a lawsuit against a former employer. Her agreement with the attorney said that attorney would represent her on a “contingency” basis, meaning that the attorney would be paid only if the lawsuit was successful, and then he would be entitled to 1/3 of the proceeds.

The lawsuit was settled for $90,000, and so Wendy expected that she would receive $60,000 (that is, 2/3 of $90,000), and the attorney would get $30,000 (that is, 1/3 of $90,000). It turned out that the lawyer got his $30,000, but Wendy only received $40,000. How come? The other $20,000 went to pay the expenses of litigation.

Les also hired a lawyer to represent him in a lawsuit against his former employer. He also agreed to a 2/3 split for Les and 1/3 split for the lawyer. The case was, unfortunately, dismissed in favor of the employer. So, the lawyer got nothing, and Les got nothing . . . but Les did receive something a few weeks later: a bill for $25,000 for the expenses of the lawsuit. How come? That is what the attorney’s retainer provided for, unbeknownst to Les. Les even lost money on his “contingency fee” case.

In both cases, each of the lawyers’ retainer agreements provided that the client was responsible for the expenses of the lawsuit, whatever that came to. Sad, because it might have said something different if Wendy and Les had noticed it, and asked to change it.

“Clients beware.”

LESSONS TO LEARN: In any relation involving money, it is important to the success of the relation to enter into a clearly written and fully understandable agreement on all of the terms and conditions of the relation. Nowhere is that more important than in the attorney-client relation.

A lawyer’s retainer agreement is a contract, and should be no less clear and no less understandable than any other contract; maybe more so, especially if they anticipate lawsuits, which can be heavily burdened by costs and expenses.

“Contingency Fee” means “A fee comprised of a percentage of payments received, if any.” While you might think that it suggests “payments received after expenses are taken off the top,” it does not say that. It says nothing at all about costs and expenses.

Costs and expenses of a lawsuit commonly include: (a) Court filing fees; (b) process server fees; (c) expert witness fees; (d) Court reporter costs; (e) photocopying costs; (f) messenger and postage costs; (g) costs related to obtaining medical, government and school records; (h) transcript costs; and lots, lots others. In some cases, they end up being in the many tens of thousands of dollars. And, as noted above, if you lose your lawsuit, you just might also have to pay your employer’s legal costs. BIG OUCH!!

The need to raise – and clarify – this issue early on is important. So many clients get mentally and emotionally distracted in the process of hiring legal counsel; others get intimidated. This particular point often gets lost in the process, but is an important one to focus on before the onset of the attorney-client relation.

WHAT YOU CAN DO: When hiring an attorney, make sure you understand the attorney’s retention agreement. Especially if you are considering hiring an attorney on a “contingency” basis, make sure you understand who “swallows” the expenses. Don’t just focus on the possible amount of money to come your way; focus, too, on the amount of money that may leave your wallet, related to expenses.
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The Bill O’Reilly Debacle – Its Most Important Negotiating Lesson for Employees

Published on May 2nd, 2017 by Alan L. Sklover

“Without accountability, we cannot expect responsibility.”


From each and every event and circumstance, we can take away important lessons to guide our future actions. Some are obvious, others not. Some are important, others not. Bill O’Reilly’s recent contract termination by Fox News – despite his stellar ratings and very significant contribution to its revenues – offers one lesson for working people that, I believe, stands out among others. And, oddly enough, it has little to do with whether or not Mr. O’Reilly was “guilty as charged.”

This newsletter is less a “letter of news” than it is an observation on a societal change, and employees’ need to consider adapting to address change, in this order:
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“Injunctive Relief” Clauses in Contracts – What Do They Mean?

Published on December 13th, 2016 by Alan L. Sklover

“Perhaps all pleasure is only relief.”

– William S. Burroughs

ACTUAL CASE HISTORY: Most employment contracts have a section in them, usually toward the end of the contract, labeled “Injunctive Relief,” or a phrase containing similar sounding words. It is inserted into employment contracts by employers’ legal counsel.

Contrary to many of my blog posts on clauses in employment contracts, it is a welcome change of pace to share with readers that this clause, in particular, is not very dangerous, risky or frightening. Those who commonly handle cases in which “injunctive relief” is requested will likely admit these clauses are of limited utility.

This is what an “Injunctive Relief” clause generally looks like:

“The Employee and Employer agree that, if the Employee breaches or threatens to breach his or her obligations not to compete, or not to violate confidentiality, it would cause irreparable injury, and the amount of money damages would be difficult to establish. For this reason Employee and Employer agree that, in such event, the Employer is entitled to Injunctive Relief to prevent or restrain any such breach.”

Even though they do not pose any danger or risk, employees should understand what these clauses mean, why they are inserted into employment contracts, and the few points employees might raise in response.

LESSON TO LEARN: Even though “injunctive relief” clauses are not usually harmful to employees, understanding what they mean can only help. To understand “Injunctive Relief” contract clauses, let’s start with some basics:

A Brief History –

Many years ago, we used to have two kinds of Courts, one kind called “Law Courts,” in which people or companies sued each other for money, and the other kind called “Equity Courts,” in which people or companies sued each other for “equity,” which is another word for “fairness.” Suing for “fairness?” “Fairness” lawsuits generally seek a Court to Order someone to do something or stop doing it. Perhaps injunctive relief can be best illustrated by this example:

Suppose two farms sat next to each other for 200 years. Many years ago, property deeds would often describe property boundaries as “from the oak tree to the edge of the pond,” or “the boundary line is the stream.” Using the “stream-boundary” example, suppose one day a big storm deposits so much rain that the stream overflows, and makes a new path, which now cuts one of the farms in half.

Did the original farmers intend the boundaries of the two farms to be changed whenever a big storm came around? Or was it their intention to use the stream path only as a convenience, and later disregard the effects of droughts, storms and even beavers? Did the deed say “wherever the stream might meander?” If two farmers could not agree on who owns how many acres, and one started to till the soil on the disputed land, the other could go to Court asking the Judge to Order him to stop, and declare whose land it is.

Granting “Injunctive Relief” is entirely within a Judge’s Discretion. –

Years ago, the two kinds of Courts were combined into today’s Courts, but we can still seek either “money damages” or “equitable relief.” In today’s employment law, “injunctive relief” is commonly sought by employers seeking a Court Order to (a) stop a current or former employee from sharing or using “trade secrets” or (b) stop a former employee from violating a non-competition agreement.

When employees seek Injunctive Relief (which is not very common) it is most often to seek a Court Order demanding a former employer stop interfering with the employee’s new employment, or disparaging the former employee.

Whether or not to grant such Injunctive Relief is entirely up to the Judge, who must decide if it is necessary and if it will impose an undue burden on the freedom of a person to work and earn a living. The Judge looks at many different things to decide what is fair, and two Judges could easily differ on that conclusion. He or she actually “weighs” the effect on both parties, in what is actually called a “balancing of the equities.” It literally is “the scales of justice” in action.

Such Provisions are usually “toothless tigers,” but any kind of “tiger” can seem scary. –

The important point here is that Courts hardly ever give much credence to what the employer and employee agreed in a contract months or years earlier regarding what the Court should do. It is the facts, events and circumstances at the time that a Court is concerned with.

So, you may ask, “Why does an employer insert an Injunctive Relief clause into an employment contract, and why would an employee care?” In my experience, Injunctive Relief clauses are instruments of fear, nothing less and nothing more.

They are inserted into employment contracts to create the illusion that even a “possible,” “potential” or “threatened” violation of an employment contract will result in a Court Order against the employee, like the Wizard of Oz behind the curtain who really had no power. It is a kind of legal bullying, intended to send an employee the implicit message, “Don’t even THINK of not honoring these obligations!” But, to continue the analogy, you can never be sure a tiger is truly “toothless” unless you get so close to the tiger that you can actually see into its mouth.

No matter what, you should carefully read “Injunctive Relief” clauses, not so much because of what they say, but sometimes other things – potentially risky or expensive to you – that may be woven into the otherwise “toothless” language.

WHAT YOU CAN DO: When looking over an employment agreement, read every section and every word, even if it seems to make you sleepy to do so. Don’t be fearful of Injunctive Relief clauses, because they do not represent any real risk to you, but do beware of other items that might be inserted into them:
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Fired Compliance Officer Strikes Back – Is Awarded $51 Million for Doing So

Published on March 15th, 2016 by Alan L. Sklover

“In a room where people unanimously maintain a conspiracy of silence,”
one word of truth sounds like a pistol shot.”

– Czeslaw Milosz

ACTUAL CASE HISTORY: John Slowik, the former Chief Compliance Officer of Olympus America, Inc., the largest distributor of endoscopes in the U.S., discovered that his employer was paying bribes to win new sales. When he reported this to his employer, he learned the meaning of the old saying, “Tell your boss the truth, and the truth shall set you free.” Simply put, first he was retaliated against and, soon after, he was fired.

Slowik had discovered that Olympus was obtaining sales by giving away free medical equipment, paying for luxury vacations for physicians and their families, making hundreds of thousands of dollars in cash payments to physicians masqueraded as educational grants, lavishly wining and dining physicians, and paying exorbitant consulting and speaker fees to physicians. And, just as you might imagine, many of these payments were paid by you and me by means of higher prices paid by Medicare and other publicly funded insurers.

Slowik retained legal counsel experienced in employment law, who understood the gravity of what Slowik had reported. Slowik then sued Olympus based on allegations that the company had violated a federal law known as the “False Claims Act,” and a second federal law known as the “Foreign Corrupt Practices Act.”

Slowik had worked for Olympus for 18 years, starting as a finance manager, and through a series of promotions, in February, 2009 was appointed Olympus’s first-ever Chief Compliance Officer. He had no healthcare compliance background, and had only one employee, who also had no compliance background.

After Slowik sought to eliminate these systematic illegal practices, (i) his complaints fell on deaf ears, (ii) he was told to back off and instead “work around the rules,” (iii) his duties were diminished, (iv) his reporting line was lowered to the Head of the Ethics Department, (v) his compensation was frozen, (vi) he was increasingly isolated from others, and (vii) he was evaluated as a poor performer. Finally, (vii) he was terminated for poor performance.

To resolve Slowik’s lawsuit against Olympus, which even resulted in federal criminal charges against the company, Olympus agreed to pay fines and penalties to the U.S. government of $646 million, out of which Slowik was awarded $51 million.

In addition to the required payments, in order to avoid criminal prosecution, Olympus also agreed to:

  • Hire an experienced Chief Compliance Officer, who will be a member of senior management, and report directly to the Board of Directors;
  • Make the Chief Compliance Officer position not subordinate in function or authority to the General Counsel;
  • Expand the Compliance Department from one full-time position to 19, and fund it appropriately;
  • Engage independent third parties to conduct risk assessment targeted to compliance risks;
  • Implement an anonymous reporting hotline, and
  • Begin compliance training for all employees.

What happened to Slowik was a truly classic example of the treatment afforded so many Compliance Officers who raise sensitive issues of non-compliance with rules, regulations and laws. Often, there is just too much concern in the minds and hearts of management for the financial consequences of “playing by the rules.” How ironic it is that Slowik was fired for poor performance; in the end, he did quite a good job improving Olympus’s compliance organization.

Slowik’s whistleblower complaint did a great service for Olympus. But did it have to be so expensive for Olympus and so damaging to its relations and reputation?

LESSON TO LEARN: What happened to Slowik vividly illustrates an important point for all Compliance Officers, and for all other employees, as well: there are more ways than are commonly thought of to achieve true compliance in the workplace. In addition to “internal efforts,” the many state and federal so-called “whistleblower” laws stand ready to assist.

Can a fired Compliance Officer make use of the many whistleblower laws? Sure. Can a Compliance Officer do so if he or she is still employed? That is a great question, from both legal and ethical perspectives. I believe the answer is surely “Yes,” because in the end, the shareholders’ interests are aligned with the corrective purpose of whistleblower laws, and surely out of alignment with those who act – supposedly on shareholders’ behalf – in violation of applicable laws and regulations. And, too, the larger societal interests are best served by enactment of rules, and the observance of those rules.

Do we need all these rules and regulations? Do we need all these whistleblower laws? Considering Olympus’s and John Slowik’s experiences, apparently we do. Surely, the Olympus story offers a cautionary tale to other endoscope manufacturers, and others, as well, who might be tempted to “throw a party” for physicians at the public expense.

WHAT YOU CAN DO: Keep in mind that efforts to gain company compliance with applicable laws and regulations are not limited to working internally. The many whistleblower laws and programs that exist do “have your back.” Here are seven thoughts to bear in mind:
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“What is Joint Employer Liability?” Many Workers Have Two Employers, But Don’t Know It

Published on October 21st, 2015 by Alan L. Sklover

“I got a job working for a hostage negotiator.
One day I tried to call in sick, but my boss talked me out of it.”

– Anonymous

ACTUAL “CASE HISTORY: Thomas was an experienced software coder. He was registered with an employment agency that regularly placed him on coding projects with its customers– usually for three to six months at a time. He was considered an “independent contractor” and earned $35 per hour for his efforts, without benefits. The employment agency handled all of the details of his assignments, collected the fees from the customer, and then paid Thomas for the hours he worked. It was part of a significant trend that many people refer to as “outsourcing” or “employee leasing.”

As is quite common in these “outsourcing,” “agency,” “contracted” or “leased employee” arrangements, Thomas worked at the offices of the employment agency’s clients, on the projects they assigned to him, often alongside their own employees, told what time to arrive and leave, where to sit, and always under their supervision. Somehow, he was not considered their employee.

One assignment for a large financial institution was particularly demanding, with very complex objectives that needed to be completed within an unusually short period. After two of the team’s five coders quit, Thomas ended up working through many nights and over many weekends to meet the project’s demanding deadlines.

After his financial institution assignment was completed, Thomas asked his employment agency whether he was eligible for overtime pay for the extraordinary hours he had put in. He was told “No,” as overtime pay was given only to “employees” and that he was an “independent contractor.”

When Thomas contacted us for a telephone consultation, we disagreed with what he had been told. Not only was he entitled to all of the payments, benefits and legal rights of an “employee” – including overtime – but he could demand those payments, benefits and legal rights from both the employment agency and the large financial institution that had “leased his services.”

Because the employment agency feared that Thomas would request overtime from the large financial firm, or perhaps that Thomas might even tell other temporary coders he worked with that they were entitled to employment benefits, such as overtime, they quickly paid up all overtime due Thomas, which was a very tidy sum. This was a vivid illustration of the “joint employer liability” doctrine in action.

LESSON TO LEARN: If you are a “contract,” temporary, “contingent,” seasonal, “leased,” “outsource,” or “independent” worker, in the eyes of the law you may well be an employee and, what may seem odd to some people, of two companies. Thus, both your employment agency and the agency’s customer for whom you toil may be liable to you for payments, benefits and rights denied to you.

Example: Department stores are not hiring “seasonal employees” at year-end holiday time, as they always used to do, but instead are increasingly turning to “temp agencies” to hire them and then “lease them” back to the department stores.

Example: Law firms are hiring “contract lawyers” who sometimes work for them for years at a time, but are nonetheless not considered by them to be their “employees.” These “contract lawyers” have the same law licenses as other attorneys at the law firm, do the same work as other lawyers, are supervised by the same people who supervise other lawyers, and work in the same offices as other lawyers. But, somehow, they do not get unemployment insurance, Social Security benefits, or protected leaves of absence that all employees are entitled to under the federal Family Medical Leave Act.

Example: Nurses in hospitals are being hired through “placement agencies” to do the same work as “employed” Nurses. But these Nurses are being denied overtime, the right to file sexual harassment complaints, paid vacation, and at times workplace safety protections.

How does this save employers money? By “outsourcing” much of the work they need to get done, companies are avoiding the considerable costs of employee benefits, payments and protections the law requires employers provide employees, such as (a) overtime, (b) unemployment benefit contributions, (c) payment of Social Security contributions, (d) Workers Compensation coverage for on-the-job injuries, (e) unpaid medical leave, (f) occupational safety, (g) even protection from harassment and discrimination.

The law, though, is not blind. It recognizes that quite often this kind of “outsourcing” of work is a charade, a subterfuge, and a deception. After all, if it was so easy to use another company to avoid employer obligations, no company would be an employer. It would be the end of “employment” as we know it.

Temporary, “on call,” “leased,” seasonal, contract workers, and others should be aware that the law provides that many of them are employees of BOTH (1) their temp assignment agencies AND ( 2) the companies on whose behalf they toil – just like employees

Recently, “joint employer liability” (sometimes called “co-employer liability”) has been applied to companies with a “franchise” business model. For example, in the fast-food industry many large companies are “franchisors” who sell the right to use their corporate name to smaller local “franchisees.” The law is increasingly making such large “franchisor” corporations, such as McDonalds Corporation, Dunkin Donuts and Wendy’s liable for unpaid wages and denied benefits to those who toil for their many locally-based franchised store operators, even if they have been labeled “independent contractors” or the equivalent.

WHAT YOU CAN DO: If you believe you may be one of those many workers who is treated as a “second class employee,” and may be due payments, benefits and legal rights and protections from a “joint employer,” you would be well-advised to consider the following:
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Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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