RHR 136: Retention Through Employee Agreements with Josh Hawks-Ladds

Joshua Hawks-Ladds: 0:00

Be proactive, get these policies in place. You don't want some Tinker tinkering and inventing something and saying, Okay, I invented this. I'm leaving and it's competitive. Now you may have a claim against an employee, but you have a much stronger claim. If you have a written agreement, or at least a policy they violated. So be proactive. Put these things in place now before they can hurt you.

Kyle Roed: 0:21

This is the rebel HR Podcast, the podcast where we talk to HR innovators about all things people leadership. If you're looking for places to find about new ways to think about the world of work, this is the podcast for you. Please subscribe, favorite podcast listening platform today. And leave us a review. Rebel on HR rebels. All right, rebel HR listeners, welcome to this week's episode. We're really excited for the conversation. This is gonna be fun, a little bit of a different slant on employee experience and retention. With us today, we have a wonderful guest, Josh hawks, lads. He is a co chair of the Labor Employment Law and employee benefits department at the law firm Pullman and comley practices in Connecticut, New York, Massachusetts, and Rhode Island, as serves as outside general counsel to numerous companies nationwide. Josh, thank you so much for joining us today.

Joshua Hawks-Ladds: 1:20

Very happy to be here.

Kyle Roed: 1:22

Well, I am really happy to have it, you're a super busy guy. And the fact that we have an opportunity to talk is just is just really awesome. So I want to ask you the question that I'm always fascinated to learn about anybody who is in employment law. Why did you enter the world of employment law?

Joshua Hawks-Ladds: 1:41

Well, so this might be sort of a mundane answer. But I will tell you that I fell in love with it intellectually in law school. And one of my professors taught us about the interaction between management and labor. And there's a very famous quote by the Canadian former. Now that Canadian Prime Minister who McKenzie, who talked about labor can do nothing without management. And management can do nothing without labor. And neither can do it without the genius of leaders. And that's a paraphrase. And everyone can Google that and see, but, and I love that idea that labor and management must find a way to work together in our capitalistic system, in order for companies to succeed. And I fell in love with employment and employment law and labor, and I focused on that, right in law school. And then, for my last 30 years of practicing, I've been handling all types of HR and labor and employment matters, and including the topics we're gonna talk about today.

Kyle Roed: 2:44

Well, I really appreciate that. And, and, you know, the more that I've been in the world of human resources, you know, the, the, the more time you spend in it, the more exposure you get to kind of the legal side of the business, right, and it's just kind of a natural overlap. And what I found is, you know, lawyers are not, you know, there's, there's not just one type of lawyer, right, like, you've got their specific types of lawyers and and I, I just have a soft spot in my heart for the the employment law professionals, so kudos to you.

Joshua Hawks-Ladds: 3:14

Good to hear, Well, you know, what, it's because we have to work with folks like you every day, and you know, how tough it is from both on our side, on the legal side. And on the HR side, it's a tough world out there.

Kyle Roed: 3:25

Well, and so often, it's like, you know, the, the conversation start with, we need help, what do we do? Correct? Correct. So with that in mind, one of the things right now that we're all facing, you know, is is the, the labor market, you know, whether it's trying to attract talent, or retain talent, and a lot of times we spend, you know, a significant amount of our time thinking about, you know, culture building and, and being a great place to work, impacting the employee experience, and all those things are really critical. But there's, you know, there's a whole nother aspect to, to the employer employee relationship. And that's kind of the the legal side of it, right. And so today, what we're going to talk about is, is employee retention and detraction, from the aspect of the legal employment relationship. So, So Josh, I think, you know, the first question there is, as you look at what's happening in the the talent market, what are some of the kind of the key legal provisions that we need to be thinking of, as we're hiring employees and trying to retain them in our organizations?

Joshua Hawks-Ladds: 4:38

Okay, so there's really two issues. There's a lot more than two but two issues that focus on in this crazy market that we're in this crazy labor market where everybody is fighting over the top talent, right and human capital is so precious. There's really two things right money. What do you what do you offer it and call Drew, you just mentioned culture and dei and all those things. But money's a focus, and of course, happiness and all of that. But then also what site of golden? Either handcuffs? Or what type of tools can you utilize right from the get go to keep your talent. So let's just start on on this issue of attracting and retaining talent. Of course, you can use bonus programs, you can use retention bonuses, you can use sign on bonuses, you can use more money. I mean, it's it's driving the the labor market and wages going up. But once you have that talent, how do you keep the talent. And again, you've got as an HR professional, you know, all the tools to that you can use to try to keep people happy both monetarily and culturally. But when do you use an agreement, a restrictive covenant agreement, to try to lock someone in to a position or prevent them from going to work for a competitor, or stealing your trade secrets or stealing your customers or employees. So there's a very, very high focus right now, on restrictive covenant agreements. And whether the focus on both sides of the fence employers are focused on and they want more and more restrictive covenants stop employees from from damaging their legitimate business interests. But the government's watching. And you probably know, in 2021, the federal government tried to pass a national Bill restricting non competes that sale. But more and more states are passing legislation restricting non competes on many, many levels. So there's this real tug of war going on between employers. I'm trying to use restrictive covenants. And by that, I mean, non compete agreements, non solicitation agreements, and, and the like. So employers using those those tools to prevent employees from what's the case law refers to using the weapons that's placed in there in the employees hands, against the employer in a competitive way. And on the other hand, the government trying to regulate that, and many, many states have been putting in place, restrictive regulations preventing noncompetes war will California, for example, completely eliminated non competes years ago, but areas like Massachusetts have greatly restricted, a non competes, Rhode Island, Maine and other states are limiting them, Illinois, Colorado, Nevada, are living in them. And in many respects, especially for hourly workers. Which, to me is an interesting issue, because I've always told my clients, you know, you can't justifiably use a non compete to prevent some low level workers, I'm gonna go work for a competitor, you have to add a legitimate reason what the courts call it legitimate business interests, to enforce a non compete. So in this market, there is a real tug of war going on between management and employees. And those governments that do not want to see anti competitive, antitrust, anti capitalistic behavior. And on that last political notion, remember, we're a capitalist society, which basically is it means that there should be a free flow and string range of goods personnel ideas, everything. So non competes are limit they limit that right so there's a there's a public policy against non competes unless the employer who's trying to enforce it can can establish there's a legitimate reason for it. And the non compete is reasonable in its scope and geographic time and what it covers so um, right now we're in a unique area because of the the battle over good employees, the employees moving the whole Piatt putting people employees are leaving for dollars, culture, et cetera. And so this restrictive covenant agreements are becoming an upcoming but they are really at the forefront right now. At least that's what I'm seeing in my practice is is national as you mentioned, and a lot of my clients are are enforcing them and on the other hand, a lot of my clients that are executives are trying to get out of them so there's it's a, it's a tug of war. Yeah, tug of war, I

Kyle Roed: 9:42

think is the is a good, good image. And I think you you know, you, there's a lot of really important points there. And I think, you know, one of the maybe things that I think is really interesting as far as where I sit and where most of the HR practice nurses, you know, a lot of times we like to think, you know, we don't need this, we want to trust people, right? But, but like you said, there's a tug of war I think about it's like, it's like a math equation, right? It has to balance out. And, yes, you need to do all the things that are really, really important to get somebody to join the company, yes, you need to have a culture of trust, need to do the right things. But there also does need to be some, some oversight, some protection for the business. And that's, you know, and that's where I think a lot of times HR is kind of in the middle of the tug of war between the, you know, the employee, the candidate, and, you know, a lot of times like the legal counsel, or CFO, or whoever's in charge of risk management, where it's like, well, let's let's, you know, we want to we want a five year, you know, non compete non solicitation, you know, then and, you know, if they, if they violate it, you know, we'll make them pay us, you know, all these, and it's like, well, wait a minute, we've got to have some guardrails here. Because I do think it's important that HR as as a risk manager needs to be, needs to also be mindful of what's appropriate for all of the parties involved. So to one of the maybe important points and points that I think really often gets overlooked, when we talk about the actual parties that we include, in a restrictive covenant agreement, what kind of jobs or functions or, you know, level of positions? Should we be considering this as a lever for retention and protection?

Joshua Hawks-Ladds: 11:42

A really good question, because, and actually, before that, to your point about HR being in the middle, you are 100% in the middle, and you're right, you're gonna have your I don't know your organization, but your head of sales, who's going to want a five year non compete and preventing the employee from going anywhere at any time and doesn't want to pay for it? And then you have your legal counsel, are you saying, well, we can't do that, you know, the laws won't allow it. So I, I feel for you, I feel your pain handed down. And then I come in as outside counsel, and I say me, and you did what and and you did, what type of an agreement? And one of the things I look at is the question that you just posed is, who are you as an employer subjecting to a non compete. And let's keep in mind that I want to just read through the audience, I want to differentiate between a non competition agreement, which prevents an employee from going to work for either a certain entity, or in a certain locale, or in a certain industry, or sometimes all three, versus a non solicitation covenant, which says you won't go after our employees or, or customers. That non solicitation courts look at much more, I'll say liberally, but not they don't scrutinize white, so sorry, as a non compete, which basically could take away someone's livelihood for a period of time. So we've you people out there are using non competes to force every single employee from the maintenance worker and the administrative assistant all the way up to the CEO. To prevent them from going to work for a competitor, a court will look at that extremely scant and say wait and the purpose of non compete as to be to protect a legitimate business interest. And you can stop a secretary to go and go do secretarial work at at a competitor. And you can subject her to a confidentiality agreement, no problem, but you can't prevent her from going to work. So if your company is using a non compete just to prompt try to prevent employees from leaving and going to work for a competitor, that document it will not only not work, but the fact that you this, this fictitious employer, use it for all employees, waters down the unsettledness when you really need it, for that see salesperson who has the customer relationships or the contacts in the industry, or whatever. And when you're litigating a case, which I do all the time and, and the plaintiff's lawyer points out that why don't you use this for everybody, the real reason that you use this noncompete is just to stop people from going to work. And that's not a legitimate reason. So employers must be very careful that they limit the non compete to those people who are armed with it with the weapons that can hurt the employer. The end, what are those? Those are obviously trade secrets are one but you will have confidentiality agreement, business plans, the unique business ideas and future plans for Corporation, customer relationships, of course, because companies and trust people with key relationships and they invest in those people with those relationships and that's a legitimate thing to protect, and the like. So there has to be a bonafide, important business interest to protect, and therefore, the non compete should only be given to those employees who can actually hurt you. And then of course, they have to be reasonable, as I mentioned, geographically and within time, you can't just as we joked about, say, Okay, five years, everyone's five years. And I'll just talk about that one issue for a minute, what I tell my clients is you want the non compete to be the shortest period of time that you need to maintain that business relationship that you're afraid you're going to lose. And I'll have clients come in the door and say, We want a two year non compete. And I'll say why? Why do you want it to your non compete? That's because we want it I said, let me ask you something. When if Joe Smith leaves your plant and goes to work for a competitor, how much time do you need to go out, Paul, all of those customers and make sure that they're staying with you. We're going to do that right away. We're going to do that right away. First, we're going to do that and say, okay, so then what do you need six months? A year? Yeah, probably to get it done here. So then my question is, well, why do you need any more than that? And if you can get those relationships in line, staying with you, making sure you're taking them on those golf outings and doing all those junkets and they're staying with you? Well, then why in the world, do you need two years because two years is tough. A lot of courts don't like long non compete. So. So the legitimacy of the time period? It's also a fact. I think I talked for a while, hopefully, I answered that question.

Kyle Roed: 16:33

It's, it's so much good content. And I mean, I'll be honest with you, when many of us get in HR. They're very few of us have any sort of legal background, right. I mean, there's a, there's a couple, you know, all stars out there that took business law, you know, I randomly had an elective in, you know, business school, I had to take a business law class. And I think the only thing I remember is that, you know, that torque is a thing, right? You know, it's like,

Joshua Hawks-Ladds: 16:59

it's a sweet, it's a sweet day, right?

Kyle Roed: 17:01

Yeah, exactly. It's it. Yeah, it's it's. So, you know, I think this content is really, really critical and important, because what happens so often in our careers is as they progress, we start to take on like a pseudo, you know, legal representative role, and people will call us and ask us these types of questions. And if we aren't thoughtful in, especially as it relates to employment contracts, and employee agreements, you know, we could lead our organization down the wrong path, I think probably the most important thing that I want to call out here is, if you have these questions, contact an attorney that's licensed to operate in your state. You know, that's, that's probably the best answer that any HR professional that's unsure can can give when they're having a legal question. And this isn't legal advice. By the way, I'm not a lawyer. I'll keep our you know, the FCC happy there,

Joshua Hawks-Ladds: 17:56

though, but that's smart. That's smart, common sense advice. That's what that is. Yeah,

Kyle Roed: 18:00

there you go. So but I think it's really important. I mean, I distinctly I've had this conversation, I can't even tell you how many times where somebody's like, well, we need to give this person a non compete, because they are, you know, in the manufacturing sector, they're working on a machine that's new, you know, or they're, you know, they're building something, this is a new innovation. And, you know, we need to make sure that they don't tell anybody and, you know, the question is, well, does the CNC operator that's cutting out this new style of gear, really have any risk to the business? You know, in the longevity of this this product? Well, no, they're doing a really small component of a much larger innovation, and you know, that the actual risk there is pretty low. And if we were to prevent them from going to working in a competitor, we just cut out in my region, we just cut out about 60% of the available jobs, for them to go work. Right. So it's like, yeah, there's no, no way in God's green earth, is that ever going to work? Right. But one of the questions I did have, as you were talking, and just, you know, as we talked about, kind of the changes in, in the legal landscape, and the changes in you know, just in, in people's approach towards the employer, employee relationship is we're seeing so many more people with side hustles or with like, you know, maybe they work in a certain in a certain area and engineering during the W two job, but they're, you know, maybe they're consulting a little bit on the side, or maybe they're in their garage, tinkering. And, you know, and making up, you know, innovations and things like that. So, as we think about the restrictive covenants and employee agreements and non competes and and all these these types of things, how does kind of this new wave of folks who are entrepreneurial and looking to have side hustles how do we, how do we think about that as as we think about the employee employer relationships,

Joshua Hawks-Ladds: 19:58

so it's really Good question on on many levels, and I don't want to be too legal in my response, but this is, again, the overlap between legal and HR, you know, when you're calling your, your outside consultant to review your policies and procedures and all that. First thing I do is I say, Okay, well, what's your inventions agreement? What's your, what's your policy on works made for hire? Right, and I'll talk about what that means in a second for any of the folks in the audience that don't know. And one currently, what are your policy say about what an employee can and cannot do? after work or on the weekends or on vacations, um, that may pose a conflict of interest. So I'm sure many in your audience have employee handbooks, personnel, policies, all kinds of things. Sure of the problem is solved by having in place rules that employees must file, whether it is that you cannot engage in any work that is competitive with ours, without disclosing it to us getting our permission, you can't do anything for for a fee that's competitive, especially when it's I'm about to tinker. But so that shouldn't be covered by some sort of written agreement or written policy. That's the only way if you if you don't say anything, if it's not written down, well, then the employee is going to do whatever they want to do, as I'm sure you and, and the rest of your audience knows. But let's talk about inventions for a minute. Because, you know, we've had some amazing entrepreneurs, whether it's Bill Gates, or Steve Jobs, or whoever that built things out of their, their, their garage, like Amazon was built out of a garage, right and selling books out of a garage. Now, I don't think he was employed elsewhere at the time Bezos, but but if he was, that employer could say, well, wait a minute, you owed us that invention that worked you you did that for us, not for yourself. And guess what, there'd be a huge battle there. But if there was an agreement in place regarding discoveries, inventions, and works made for hire, which, maybe your company, maybe a lot of companies have this in place, well, then there wouldn't be an issue and that employee, whenever whatever is being invented, has to disclose it, and has to provide for the fact that the employer owns it if it's made during that time period, unless it's excluded. So, and this may be legalese. You know, this is why everyone hates lawyers, because I look at it black and white. And, like, we'll put something in place to protect, you talked about protecting the employer a few minutes ago, we've got to protect the employer with these agreements, these agreements are important. And if you're not taking it upon yourself to protect your company through these agreements, whether they are Totland, to conflict of interest policies and invention policies works made for hire non solicitation, confidentiality, willing, sorry, but shame on you, because you're gonna get that bad employee, that one bad employee who's going to do something that you're, you'll be like, what he or she can do that. So be proactive, get these policies in place. You don't want some Tinker tinkering and inventing something and saying, Okay, I invented this, I'm leaving, and it's competitive. Now, you may have a claim against an employee B, you have a much stronger claim through tort law, or through statutory law, but you've got a much stronger claim. If you have a written agreement, or at least a policy they violated. So be proactive, put these things in place now before they can hurt you. That's my advice. Yeah, I mean, so

Kyle Roed: 23:41

it's, for me, it's, it's really just, it's, it's, it's an internal struggle, because I'm one of these. I'm one of these guys that like, I don't love policies, you know, I certainly don't love 100 Page handbooks that you just like, throw at people and say, Here, read this and sign this acknowledgement, you know, check the box on orientation day one, you know. But, you know, I think if this is a concern for your business, certainly if it's a concern for your, your executive team, the expectation is that you have some of this in place as an HR professional, right? I mean, I think that it's kind of it's what I would call like, the your blocking and tackling, right, like you need to make sure that you've got, you've got the basics documented. And as I think about the level of importance of policies, like I'm okay with policies when you absolutely need a policy. But, you know, I think if you're listening to this and you're in a situation where you've got a high risk of, you know, IP theft or, or you've got, you know, you've got people doing side hustles that could be directly competitive to, to your core business. It's probably something you need to think about. And, and potentially, it's something that is that somebody else is concerned about us Well, so, you know, talk to it, talk to a business partner within your organization and see if there's something you need to do. But good advice. And, and good, good reminder. You know, I'm just making a note right now to go see what our see what our inventions agreements look like, I don't remember, it's been a few years, but

Joshua Hawks-Ladds: 25:17

I'm not charging. Okay, thanks.

Kyle Roed: 25:20

I appreciate that. I appreciate that. Yeah, I forgot to mention, you know, this, this isn't actually a real podcast, I just don't want to pay, you know, the hourly fee. It's way too expensive. Not kidding. Everybody else. Though, it's really great advice. And I think, I think it's really well, really well stated, you know, I do want to ask a question, because I know, you know, you get into, you get into, you know, litigation, collective bargaining agreements, you know, you've you've probably seen, seen it all and more than you wanted to see, in some cases. So, I'm curious, just over the last few years, if you're seeing any sort of trends in your world, you know, because of kind of the changes that we've seen in the workplace, and, and the, you know, the really the dynamics around, you know, the talent market, you know, any any kind of macro, macro changes that you're seeing out there.

Joshua Hawks-Ladds: 26:19

And this is, this is not related to the topic we've been talking about. I'm really completely separate, but I see a major trend in the discrimination and harassment arena, that and I think it started with me to where things really blew up after me too, and rightfully so in many respects, where you had, you know, every other celebrity and politician being, you know, accused of assault and all that. And then many, many states changed their harassment laws to require training, sexual harassment, training, and other and discrimination training and, and posters and all of that. And I think what arose out of that the publicity around it was more litigation. Some of it valid, some of it with people using the discrimination laws as a sword instead of a shield and really going after employers. We're seeing a lot more litigation in that arena. Also, the whole push towards dei and wokeness. And political correctness has contributed to our claims and and allegations that employers are not being politically correct and not culturally sensitive. And so. So we're seeing, I will tell you this, we're doing a lot more training than we've ever done. Every every employer now wants more and more training. But I'm also seeing, I think, on the negative side of things, more and more litigation. Now, there was always in the East since you know, since the 60s, and since these laws came into place at the federal level and state level, but I'm seeing the harassment and discrimination claims more frequently. And like I said, I'm not sure whether or not it's because people just are now so much more familiar with their rights, which is possible, because I don't think and by the way, to all the employers out there, if your people are still harassing sexually harassing employees, in this day and age, there's something wrong because everything after me to that sexual harassment is, is remote. And so make sure your folks are trained, but it's out there. So I think that's, that's a major trend. And I'm not sure exactly whether all of these factors I named are contributing to it, or it's also the fact that post COVID people are more sensitive to so much, you know, if you look on on Tik Tok or Instagram, there are just so many so many instances of insensitivity out there and people being aggressive and, and some of that obviously spills over into the workplace. Absolutely.

Kyle Roed: 29:21

I've certainly seen that internally, I think. Yeah, I think me too, was was a turning point. I think in many ways, a really good, a good turning point does shine some light on some of these these things that were occurring that that just weren't okay. But, but I do also think it's a, you know, another good reminder that as as we think about the employer employee relationship, you know, the expectations on both sides are continuing to increase in you know, and that, you know, that's something where we need to be balanced in how we approach it. I'm glad to hear there's more training happening because I think you You know, for my money, that's one of the best investments you can do is to to make sure people are clearly understand the expectations that deal with it before it gets to a courtroom. Right. Agree I'm sure you probably agree. Although, you know, although I bet you do enjoy litigating here and there, right.

Joshua Hawks-Ladds: 30:14

I do I do. You know, we say about litigation is, you know, you do it, you're overwhelmed. That's it. You don't swarm client relationships over litigation like, well, that's the litigator. Most of the lawyers in my field want to make relationships with their clients. And litigation is so stressful and so expensive that it often hurts more relationships that it builds. But yes,

Kyle Roed: 30:39

I've seen those bills.

Joshua Hawks-Ladds: 30:41

Yeah.

Kyle Roed: 30:43

All right. Well, we are, we are just pushing up to the end of our time together, and I want to get your responses to the rebel HR flash round. So are you ready?

Joshua Hawks-Ladds: 30:53

I'm ready. All right. We'll

Kyle Roed: 30:55

go through the closing arguments here. All right. Question number one, where does HR need to rebell.

Joshua Hawks-Ladds: 31:02

So I don't want to be cliche with my response, but employers need to stop being held hostage by problem employee needs. Employers need to do their fact fine. Make a decision make the right decision and act. You know, so many times I get involved in matters reclines, Vaseline, Vaseline vacillated, and they've got a bad employee, when you know, you've got a toxic employee. Don't be held hostage act and call your lawyer for admins. Absolutely. And your HR physician? Yeah, yeah.

Kyle Roed: 31:42

I've seen it so many times. And a lot of times we think if we, you know, ignore it, it'll go away, or the person might eventually just get fed up and quit. But the what happens, the trip, the trickle down effect to the rest of the team, when that like that negativity, can be extremely harmful to your culture, if you don't address it, or you know, your business interests as well. Question number two, who should we be listening to?

Joshua Hawks-Ladds: 32:10

So, um, that's a tough question, especially because I'm not I'm not a huge listener, I'm more of a reader. But there are certain things that I go to, for example, anytime the Harbinger Institute, has some has a podcast or has something on on YouTube, regarding an outward mindset. I'd listened to them. I listened to there's a good again, I don't want to talk too much about any of your competitors out there. But Jonathan Westover has a very good human capital, innovations, podcasts that is great for HR folks. And then I read, I read voraciously. And I love George F wills opinions, and I'm not even a real I'm not a conservative, but he and Peggy Noonan Wall Street Journal, their opinions on our culture, our politics, and where we're going, are very useful as well. Absolutely.

Kyle Roed: 33:09

Yeah, we don't have any non competes in the podcast world, at least not that I'm aware of. So I think I think it's all good. And yeah, anyway, that's, that's driving innovation in the HR space, wear it, you know, Brothers in Arms, as far as I'm concerned. So last question, how can our listeners connect with you?

Joshua Hawks-Ladds: 33:24

Well, they can, they can find me on LinkedIn, of course, and my, my firm's web page, which is poll, Comm, pu, Ll clm.com. They can check me out there and email me obviously doesn't hit my spam account. But those are two of the best ways. And we might firm also our blogs. And we have, we have a working together blog that talks about all these issues. So folks can read that as well.

Kyle Roed: 33:51

Awesome. And we will have that information in the show notes. Josh. It's just been absolutely wonderful getting to connect with you and learn a little bit more about something that we don't discuss frequently on this show, but something that I think is really critically important. So thanks so much for joining us.

Joshua Hawks-Ladds: 34:05

been my pleasure, really appreciate it and enjoyed it. Thanks, Josh. Take care. Take care.

Kyle Roed: 34:12

All right. That does it for the rebel HR podcast. Big thank you to our guests. Follow us on Facebook at rebel HR podcast, Twitter, at rebel HR guy, or see our website at rebel human resources.com. The views and opinions expressed by rebel HR podcast are those of the authors and do not necessarily reflect the official policy or position of any of the organizations that we represent. No animals were harmed during the filming of this podcast. Maybe