Venturing Into to the World of Pennsylvania’s Wage Payment and Collection Law: Employees Can Recover Prejudgment Interest and Liquidated Damages

The Pennsylvania Supreme Court recently refused to hear an appeal from a venture capital group that had been disappointed by the Superior Court’s en banc decision that a former employee was owed liquidated damages in addition to the $1.26 million already awarded in a compensation dispute.   The case is Andrews v. Cross Atl. Capital Partners, and it is an important case for employers and employees whose compensation packages are tied to equity or otherwise subject to a contract.   Before Andrews , there was an open question in Pennsylvania whether a prevailing employee could recover a 25% liquidated damages penalty under Pennsylvania’s Wage Payment and Collection Law (“WPCL”) and prejudgment interest on the amount of unpaid compensation.   Andrews answered that question in favor of the employee, ruling that in a breach of contract case, an employee can recover both.  Nicholas Andrews worked for Cross Atlantic Capital Partners, Inc. (“Cross Atlantic”) from 1999 to 2000.   Andrews was hired to find, negotiate, and manage investments for Cross Atlantic.   The ultimate goal for Cross Atlantic was to sell the investments at a price that was sufficient to repay its investors and to allow both the investors and Cross Atlantic to realize a profit.   Compensation for Andrews was deferred until the investment funds became sufficiently profitable to make distributions.   Andrews did not have a written employment agreement and his employment ended before the funds he was involved with were sold.   Upon his departure, Andrews entered into a...
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IS IT BECOMING FASHIONABLE TO CHALLENGE NON-COMPETE AGREEMENTS?

Non-compete agreements are a common way employers seek to prevent key employees from leaving and taking away business.  Employees naturally chafe at the restrictions, but courts have stayed on trend in generally enforcing agreements if the terms are clear and the scope and duration are reasonable.  So, an employer can relax and not worry about litigation, right?  Not so fast.  A recent dispute in the fashion industry shows that an employer seeking to enforce even a well-tailored non-compete agreement may find its own conduct subject to scrutiny.  In February 2016, designer Laura Kim and a co-designer joined the Carolina Herrera fashion house following a twelve-year career with Oscar de la Renta (“ODLR”).  Herrera and ODLR are fierce rivals, so it must have been a coup for Herrera to have Kim join the team.  Kim’s employment contract with Herrera included a six-month non-compete agreement.  Here’s the key language: During your employment, and for six months after leaving the employment of the Company for any reason, you will be required not to engage in, directly or indirectly, any business in competition with the business carried on by the Company.  If the Company elects to enforce this provision and you have not received or will not otherwise receive severance payment from the Company, the Company will pay you during the six-month period of this provision a monthly payment at the rate of 50% of your monthly base salary as of the date of your termination. According to Herrera, Carolina Herrera (the person) specifically...
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