Gruntled Employees

Attorneygate moral: Don't fire stupidly

OK. Time to weigh in on the Justice Department's disastrous firing of the US Attorneys, but from an employment-law perspective instead of a political one. For some background on the story, go to Peter Lattman's always-excellent Wall Street Journal Law Blog. His posts on the topics are archived here. The Washington Post has a nice summary here and a handy chart with art here.

Here's the short version: The Justice Department fired eight United States Attorneys in late 2006. (A US Attorney is the senior federal law-enforcement officer in his or her judicial district; there are 93 districts in the country.) The President appoints the US Attorneys, subject to the Senate's confirmation. Their terms are four years long, but they are subject to removal by the President (see 28 U.S.C. 541(c)). Just like that. In other words, they are employees at will, like 99 or so percent of the rest of us.

So the President fires these eight prosecutors. So what? They're political appointees, and he wants to replace them with new political appointees. The law allows it. Big deal.

Here's the problem, and the lesson for all employers. The White House could have said, "Yes, the President has decided to replace these eight US Attorneys. They're political appointees who serve at the pleasure of the President. It is the President's pleasure to replace them, and the law says he can do that." But the White House and the Justice Department instead started playing the explanations game. Rather than just owning the firings and then shutting up, they started giving reasons and stories that kept changing: Performance problems. Not political. It was Harriet Miers's idea. It was Karl Rove's. Attorney General Alberto Gonzales wasn't involved. OK, he was. (For a summary of the shifting stories, see Dan Eggen's "Accounts of Prosecutors' Dismissals Keep Shifting" in the March 17 Washington Post. Another cool graphic with problematic email quotes is here.)

Now everyone's up in arms over this. Congress wants explanations. Constitutional showdown and all that. Counterstories about how great the prosecutors were. Heck, one of them — David C. Iglesias — is widely reputed to be the model for the main character in A Few Good Men. Great. Now you've gone and fired Tom Cruise. And we're talking the old version: Oscar-nominated, box-office guarantee, Top Gun, Jerry Maguire Tom Cruise — not Scientology-promoting, psychiatry-slamming, couch-jumping Tom Cruise.

The problem wasn't necessarily the firing. Who are we to say that these eight (effectively) at-will employees should have kept their jobs. It's not our decision.

The problem was saying too much about it, and then having the stories change. Once that happened, Congress and the press smelled the blood in the water. Don't be surprised if we hear from some plaintiff-side employment lawyers, too. And Attorney General Gonzales will be sending out résumés by the time Opening Day rolls around.

The moral is: Fire who you want to fire, own the decision, and then shut up about it.

Otherwise Congress will be investigating you for firing Lt. Kaffee.

Are noncompetes the new Sarbanes-Oxley?

We talked last week about the increase in noncompete cases over the last decade (see "The rising noncompete tide"). Over that period, the number of published noncompete decisions in state and federal courts nationwide has doubled. And over the past two years (2004 to 2006), the number of decisions has surged 37%.

Several people have asked for more information on how I got these numbers. My firm did a series of LexisNexis searches designed to find reported noncompete decisions for each year. The complete results are shown in the chart above.

What this doesn't tell you is the number of noncompete cases filed each year. Those numbers are much larger because most noncompete cases are decided at the trial-court level instead of at the appellate-court level. Most trial-court decisions go unpublished, particularly when the decision is just a ruling on a motion for preliminary injunction, which is how most noncompete cases end. (The old employer asks the court to stop — or "enjoin" — the new employer from hiring the employee who signed the noncompete.) The increase in the number of cases filed would be even more dramatic.

Why the growth in noncompetes? One reason for this surge is the increase in employees signing noncompetes, especially outside the IT industry. Another reason is the fiercer competition for top-level talent. It's hard to get good people, and companies don't want their rivals to take theirs.

Many in-house counsel will tell you that one of their biggest employment-law concerns is the rise in Sarbanes-Oxley whistleblower lawsuits. But compare the number of cases filed under SOX's Section 806 (the only part of the Act that allows an individual to sue) with the noncompete statistics above. According to the U.S. Department of Labor, only 130 SOX whistleblower cases were decided in 2006. (You can get more data on SOX cases at the DOL's website.) And while that number has risen over the four years since the Act was introduced, the number of those cases pales when compared to noncompetes.

Maybe noncompetes are the new Sarbanes-Oxley whistleblower bogeyman.

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Several talented writers have picked up on the story of noncompete mania. Evil HR Lady weighed in with this comment, and Charles Green at Trusted Advisor Associates had this to say. Over at OregonLive: At Work, Brent Hunsberger contributed "Noncompete clauses on the rise?" And Professor Paul Secunda over at Workplace Prof Blog adds "Non-Compete Legislation To Combat Increasing Number of Cases." The latter two posts discuss legislation pending in Oregon designed to stem the noncompete tide.