You only get one chance to make a first impression, so you want to make sure your company avoids unnecessary missteps when recruiting and hiring employees. Understanding what you can and cannot say during interviews and how to respond when a candidate volunteers information that may be considered “off limits” is essential. At the same time, there are a host of laws being passed throughout the country that address when and what sort of information you can request from applicants regarding their criminal and financial histories. In the event you decide to protect your organization by requiring certain employees to sign some type of restrictive covenants—non-competition, non-solicitation and/or non-disclosure—there are a host of legal and practical issues to consider. This webinar explores these and other issues so that you can be confident, going forward, that you are starting off on the right foot—legally, at least—when you hire new employees. To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/recruiting-and-hiring-including-restrictive-covenants-2020/

1. 1

2. 2
Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.

3. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
3

4. Meet the Faculty
MODERATOR:
Charles Krugel - Law Offices of Charles Krugel
PANELISTS:
Helen Bloch - Law Offices of Helen Bloch, P.C.
Max Barack - Partner, Favaro & Gorman
Gary Savine - Savine Employment Law, Ltd.
4

5. About This Webinar -
Welcome to the Team! Recruiting and Hiring,
Including Restrictive Covenants
You only get one chance to make a first impression, so you want to make sure you’re your
company avoids unnecessary missteps when recruiting and hiring employees. Understanding
what you can and cannot say during interviews and how to respond when a candidate
volunteers information that may be considered ―off limits‖ is essential. At the same time, there
are a host of laws being passed throughout the country that address when and what sort of
information you can request from applicants regarding their criminal and financial histories. In
the event you decide to protect your organization by requiring certain employees to sign some
type of restrictive covenants—non-competition, non-solicitation and/or non-disclosure—there
are a host of legal and practical issues to consider. This webinar explores these and other
issues so that you can be confident, going forward, that you are starting off on the right foot—
legally, at least—when you hire new employees.
5

6. About This Series-
Protecting Your Employee Assets: The Life Cycle of
the Employment Relationship 2020
If you have employees or advise companies with employees, this webinar series is for you!
No employer—whether large, medium or small—is immune from the reach of federal, state
and/or local employment laws and regulations. Now, more than ever, employers should
consider taking a proactive approach to auditing their employment practices and policies so
that they can better respond when issues arise. This webinar series approaches the
employer-employee relationship from beginning to end, with programs covering the most
important steps along the way, including hiring and onboarding, policy and procedure
development and training, wage and hour compliance, accommodating disabled employees,
conducting investigations and considerations associated with ending the relationship.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
6

7. Episodes in this Series
#1: Welcome to the Team! Recruiting and Hiring, Including Restrictive Covenants
Premiere date: 1/28/20
#2: An Ounce of Prevention: Policies, Procedures and Proactivity
Premiere date: 2/25/20
#3: Show Them the Money: Wage & Hour Compliance
Premiere date: 3/24/20
#4: Time for a Break: Managing Leaves of Absence and Accommodating Disabilities
Premiere date: 4/28/20
#5: I Know What You Did Last Summer: Workplace Investigations
Premiere date: 5/19/20
#6: It’s So Hard To Say Goodbye: Minimizing Risk When Terminating Employees
Premiere date: 6/16/20
7

8. Episode #1:
Welcome to the Team! Recruiting and Hiring,
Including Restrictive Covenants
8

9. Risks in Hiring and Interview Process
• Aspects of recruiting that could trigger discrimination claim:
 Advertising and describing job vacancies
 Conducting interviews
 Making an offer of employment
 Rejecting an applicant
 Setting compensation
9

10. Risks in Hiring and Interview Process
• Ways to minimize risks of discrimination claim:
 Determine applicable federal, state and local laws and the protected
classes covered by each
 Ensure that individuals in recruitment process are trained to identify
and avoid potential discriminatory practices
 Identify the essential qualifications and functions of each position
 Focus on objective criteria in the interview and selection process
10

11. Social Media Issues in Hiring
• Law in this area is still developing
• You do not want to learn info about applicant’s race, religious beliefs, genetic
conditions, sexual orientation, age, national origin
• Can minimize potential liability by either:
 Not conducting social media searches at all; or
 Using someone other than the interviewer to conduct social media screening,
and ensure that person only passes lawful info to the interviewer
• Trend in state law is to prohibit asking candidate for access to their social media
accounts
11

12. Identify Essential Functions of Position
• Create/review position description
• Document detailed tasks to be performed outside of PD
• Identify most important competencies/tasks for the position
• Realistically evaluate/document physical requirements
• Use this information in developing various materials
• Job posting and behavioral interview questions
12

13. Internal Posting Considerations
• Ensure ALL openings are posted
• Ensure ALL employees are made aware of openings
• Ensure ALL interested employees have opportunity to apply
• Risks associated with employee referrals
• What happens if you depart from standard practices?
13

14. Employment Applications
• Certification of accuracy with signature block can be used effectively in subsequent
proceedings if applicant misrepresented information
• Asking about reasons for leaving prior positions or whether individual was involuntarily
separated may also yield valuable information
• If sourcing applicants in multiple jurisdictions, tread carefully regarding criminal
background inquiries
• Similarly, questions about past salary history are prohibited/limited in certain
jurisdictions
• You may inquire about immigration status on the application but be careful because
overly broad questions can lead to discrimination claims
14

15. Background Checks
• Best way to assess information about job applicants
• May learn about an applicant’s job history, credit history or personal
character
• Decide whether you will call references
• Potential legal exposure if do not
• May conduct internally or use a third party provider, known as a Consumer
Reporting Agency.
15

16. Background Checks
• FRCA applies to the use of third-party service providers to obtain background
information on applicants.
• Before obtaining a consumer report from a CRA, an employer must:
 Notify the applicant in writing that it will obtain a consumer report
 Obtain the applicant’s written consent
 Certify to the consumer reporting agency that they have complied with
FCRA
 Meet additional requirements, including personal interviews
• FRCA does not apply to employers conducting background checks on their own
• But in-house background checks may be regulated by state law
16

17. Background Checks
• Beware ―click wrap‖ acknowledgments.
• Notice must be in writing and in a stand-alone format.
• Notice cannot be in an employment application.
• Employer may can include some minor additional information in the notice, like a
brief description of the nature of consumer reports, but only if it does not confuse or
detract from the notice.
• If you want the authorization to allow you to get consumer reports throughout the
person's employment, make sure you say so clearly and conspicuously.
17

18. Background Checks
• Before You Take Adverse Action (reject applicant, terminate, etc.):
 Provide individual with a notice that includes a copy of the report you
relied on; and
 a copy of A Summary of Your Rights Under the Fair Credit Reporting
Act.
18

19. Background Checks
• After You Take Adverse Action:
 Give a notice of that fact – orally, in writing, or electronically.
 The notice must include:
o The name, address, and phone number of the consumer reporting company
that supplied the report;
o A statement that the company that supplied the report did not make the decision
to take the unfavorable action and can't give specific reasons for it; and
o A notice of the person's right to dispute the accuracy or completeness of any
information the consumer reporting company furnished, and to get an additional
free report from the company if the person asks for it within 60 days.
19

20. Screening Process
• Determine what qualifications are required to progress to each step
• Do not allow those without to advance beyond
• Consider use of third party provider
• Consider having someone other than hiring manager to pre-screen
• Document steps and reasons
20

21. Wage and Hour Law
• Comply with minimum wage and OT laws!!
• Make sure you know FLSA/state law basics
• Current Federal Minimum Wage is $7.25/hr. (unchanged since July 2009)
• Chicago: $12 effective July 1, 2018  $13 effective July 1, 2018
• Non-exempt employees must receive an overtime premium of 1 ½ x their
regular rate of pay for all hours worked in excess of 40 in any workweek
21

22. Employee Classification: Employee or Contractor?
• Classify workers correctly to avoid potential lawsuits and penalties by the
DOL
• It may appear that using independent contractors saves costs.
• This is not the case if the worker is actually an employee.
• Assuming the worker is working solely or primarily for your company, the
worker is, in all likelihood, an employee.
• Economic realities & degree of control
22

23. Employee Classification: Exempt Vs. Non-Exempt
• Appears to ―save‖ costs is by treating most employees as exempt from the
FLSA.
 No overtime, no uncertainty.
 But huge misclassification risk.
• Job titles do not determine exempt status; the only thing that can determine an
employees’ status are duties and responsibilities.
• Assume all workers are non-exempt
• Entitled to overtime pay for over 40 hours worked
• Higher level employees may be exempt if certain criteria are met
23

24. Exemption Types
• Executive
• Administrative
• Professional
• Outside Sales
• Commissioned Employees
• Certain Computer-Related Workers
24

25. Protecting Trade Secrets
• Information not generally known to others that gives an employer a
competitive advantage
 Confidential information
 Information has economic value
• Subject of reasonable efforts to maintain its secrecy
• Generally defined by state law – a large majority of states have adopted
the Uniform Trade Secret Act
25

26. Protecting Trade Secrets
• Fact-specific inquiry
• Factors courts consider include
 Whether the information is known outside of the owner’s business
 Measures taken by the owner to guard the secrecy of the information
 The value of the information to the owner and to the competitor
 The amount of effort or money expended by the owner in developing the
information
 The ease or difficulty with which the information could properly be acquired or
duplicated by others
26

27. Protecting Trade Secrets
• Tell employees what information is confidential and require signed employment
agreements
 Duty to Maintain Confidentiality
 Restrictions on Solicitations of Customers
 Restrictions on Solicitations of Employees
 Duty to Return Confidential and Proprietary Information
• Safeguard computer-based information
 Password protections
 Anti-deletion programs
 Mark information confidential (hard copy and electronic)
27

28. Confidentiality, Non-Disclosure Agreements
• Whether a non-disclosure agreement (NDA) is enforceable rests on the somewhat
vague notion of ―reasonableness.‖
• The scope of NDAs varies by state
• However, courts typically look at several factors when determining whether or not
an NDA is reasonable, including:
 Interests of the disclosing party in keeping the information secret
 Period of time the information must be kept secret
 Burden of compliance on the receiving party
 Interests of the public
• Also, the information that an employer is seeking to protect must actually be
confidential
28

29. Non-Compete Agreements
• Require employees to enter into a non-competition agreement before beginning
work
• Agreement does not take effect until after the employee-employer relationship has
ended
• Generally, in order to be considered valid, a non-competition agreement must:
 Be supported by consideration at the time it is signed;
 Protect a legitimate business interest of the employer; and
 Be reasonable in scope, geography, and time
29

30. Non-Compete Agreements
• Some states do not permit non-competition agreements at all
 Examples: Oklahoma, North Dakota and California
• Most courts disfavor non-compete agreements – but they are not prohibited
 restraint on trade interferes with competition and impairs the availability of
services and the ability of workers to follow personal interests
 courts will still scrutinize non-compete agreements closely
 important to have a reasonable non-compete agreement that is narrowly
tailored
30

31. Non-Compete Agreements
• Regardless of how well a non-compete agreement is written, no court will enforce
it unless the employer can identify a legitimate business interest that the restrictive
covenant seeks to protect
• Case law has expanded upon the meaning of legitimate business interest but this
also varies by jurisdiction
• Typically, court’s will apply a totality of the circumstances review to determine
whether the employer has identified a protected business interest
31

32. Hiring Employees with Restrictive Covenants
• KEY: Take Reasonable Steps to Protect your Business from Interfering With
Competitors’ Restrictive Covenants.
• Interview Stage
 When considering a new hire, ask during the interview whether the individual is
subject to any employment agreement
 Obtain copies of the employment agreement pre-hire
 Inform the applicant that Company insists on full compliance with employment
agreements
 Company does not want applicant to disclose or use any of the competitor’s
confidential or proprietary data
• Hire Stage: Confirm in offer letter that Company expects employees to comply with
former employer’s agreements.
32

33. Making an Offer
• Confirm at will status, if applicable
• Issues to address in offer letter:
 Salary
 Benefits
 Relocation/Sign-on Bonus
• Employment for a definite term – define cause to terminate
• Do not forbid salary discussions
33

34. Delivering Bad News
• Nobody likes rejection
• Importance of closure
• Do you owe them an explanation?
• What should you say?
• What should you not say?
34

35. About the Faculty
35

36. About The Faculty
Charles Krugel - cak1@charlesakrugel.com
As a management side labor & employment attorney & human resources (HR) counselor,
Charles Krugel, www.charlesakrugel.com, has 24 years of experience in the field & has been
running his own practice for 18 years. His clients are small to medium sized companies in a
variety of industries. Charles has been lead negotiator for hundreds of labor & employment
agreements & contracts. Additionally, he’s litigated dozens of court cases, administrative
proceedings & arbitrations. In addition to providing traditional labor & employment law
services, he represents companies desiring to institute preventive & proactive HR functions.
These functions include policies & procedures, which help to efficiently & discreetly resolve
issues in-house & prevent lawsuits & complaints; they also help to reduce costs & act as
catalysts for increasing productivity & profits. Moreover, he’s frequently the subject labor &
employment law related TV, radio & print interviews.
36

37. About The Faculty
Gary Savine - gnoah@savinelaw.com
Gary Noah Savine is an employment lawyer and the founder of Chicago-based law firm
Savine Employment Law, Ltd. Gary brings to the table over twenty years of legal expertise
and hands-on experience, working around the globe, shoulder-to-shoulder with senior
executives and human resource professionals solving the thorniest of workplace disputes.
Before starting his firm, Gary practiced employment law exclusively at two of Chicago’s
largest law firms and served as chief employment counsel at Navistar (NYSE: NAV) and Hill-
Rom Holdings (NYSE: HRC). Gary frequently speaks and writes about employment law
issues. He has written and presented before the American Bar Association, the National
Employment Lawyers Association, the Northern Illinois Society for Human Resources
Management, the Northern Illinois Franchise Association and the American Conference
Institute. Gary received his law degree cum laude from the University of Michigan Law School
in 1996. More information about Gary’s firm can be found at www.savinelaw.com.
37

38. About The Faculty
Helen Bloch - hbloch@blochpc.com
In 2007, Helen Bloch founded the Law Offices of Helen Bloch, P.C., a general practice firm that is a
Certified Female Business Enterprise. In the employment & business context, Helen represents clients on
all sides of the employment relationship- individual employees, managers, or employers. Routinely Helen
negotiates & counsels clients on employment agreements, including non-competition, confidentiality, &
severance agreements. Also, she drafts employment handbooks & various policies & procedures. Helen
will advise businesses on best practices, including providing sexual harassment training. Helen has
lectured on topics such as gender role in the law, legal issues affecting small businesses, & legal rights &
obligations from multiple sides of the employer-employee relationship. For the past two years she has
been selected for inclusion in Super Lawyers in the area of employment law. Helen is President of the
Decalogue Society of Lawyers & serves on the Alliance of Bar Associations, where she assists in
screening judicial candidates. Her other bar association memberships include the Illinois chapter of the
National Employment Lawyers Association, Women’s Bar Association of Illinois, & the Illinois State Bar
Association. An active National Association of Women Business Owner’s (NAWBO) member, Helen
leads NAWBO’s Lincoln Park Business Exchange Group.
38

39. About The Faculty
Max Barack - MBarack@favarogorman.com
Max is a partner at Favaro & Gorman, Ltd., where he has worked since January 2017. He
concentrates his practice primarily on representing plaintiffs in their claims of discrimination,
as well as wage and hour violations, whistleblower actions, and severance negotiations. He
has extensive litigation experience, with a focus on electronic discovery (ESI). He has
represented and assisted employers in defending discrimination and wage and hour disputes,
including in department of labor investigations. He is a member of the Board of Directors of
the National Employment Lawyers Association of Illinois and co-chair of its Legislative
Committee. He is a regular contributor to the Chicago Bar Association's @theBar blog, and is
fluent in Spanish. To read more about Max,
visit <https://www.favarogorman.com/attorneys/max-barack-2/>.
39

40. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
40

41. About Financial Poise
41
DailyDAC LLC, d/b/a Financial Poise™ provides
continuing education to attorneys, accountants,
business owners and executives, and investors. It’s
websites, webinars, and books provide Plain English,
entertaining, explanations about legal, financial, and
other subjects of interest to these audiences.
Visit us at www.financialpoise.com
Our free weekly newsletter, Financial Poise
Weekly, updates you on new articles published
on our website and Upcoming Webinars you
may be interested in.
To join our email list, please visit:
https://www.financialpoise.com/subscribe/