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In Oklahoma is continued employment sufficient contract consideration?

If an Oklahoma employer presents a new contract to an employee and tells the employee that he or she must sign the contract to keep their job, is the contract enforceable?

Answer:  Probably Not.

I talked about what consideration is in a contract in this blog post.  The question for this post is whether an Oklahoma employer can enforce a non-compete covenant against a former employee when the only consideration provided to the employee for agreeing to the covenant is continued employment? In other words, “sign the agreement or you will lose your job.”

And I can definitively tell you that . . . I don’t know.  From my research, Oklahoma courts have not decided this issue. While this issue has been resolved in several other states, I am not aware of any Oklahoma court decision or statute which definitively resolves this issue (this federal court case discusses the question but does not provide an answer). However, there are several decisions which suggest that the court would not consider continued employment as sufficient consideration to support a non-compete covenant.

In one of Oklahoma’s older employment law cases, Hinson v. Cameron, the Oklahoma Supreme Court recognized that one of the five critical factors in determining whether a particular set of facts may imply a contract restricting or limiting an employer’s discretion to discharge an at-will employee, was  “evidence of ‘separate consideration,’ other than the employee’s continued services, to support the implied contract . . .”

My prediction

While it is difficult to predict what any court will decide, it seems there is a decent chance considering Oklahoma’s strong public policy opposition to non-compete covenants, that if faced with the question, an Oklahoma would find that continued employment, by itself, is not sufficient consideration.
The moral of this story? Employers: Do not rely on continued employment to support a contract, get something more.
Posted by Shawn Roberts in Blogposts

Parsing the many meanings of the phrase “Oklahoma non-compete”

The phrase “Oklahoma non-compete” is thrown around quite often, indeed it is a popular Google search term.  Yet “non-compete” is often used to describe 4-5 separate employee restrictions without specifying whether it is intended to include all of or even any of the component parts of the phrase.

It is important to distinguish the type of restrictions we are discussing. Many people lump all employment restrictions under the broad term non-compete.  Below I break down what I see as the component restrictions often included in the phrase “Oklahoma non-compete”.  Then, I provide examples of contract language corresponding with each component part.  My purpose is to help you better understand and be able to parse the word “non-compete” when you encounter it.

Pure Non-Compete

There is the pure non-compete which prevents an employee from working in the industry. The pure non-compete, as I discussed in this blog post, is typically unenforceable under Oklahoma law.

Employee shall not, within a radius of fifty (50) miles from anywhere that Employer maintains an office or facility from which Employer’s business is then-conducted, serve as an incorporator, director, officer, partner, employee, manager, consultant, agent, independent contractor, advisor, stockholder or otherwise, or directly or indirectly own an interest in, provide any financing for, or perform any services for himself herself, or on behalf of any person, business, corporation, partnership~ entity or organization that directly or indirectly engages in competition with. the Business engaged in by Employer.

Non-Solicitation – employees & contractors

There is the non-solicitation restriction which generally prohibits a person from taking direct or indirect action toward an employee or contractor of the former employer, intended to convince the employee to leave their current employment and join a new venture.   Oklahoma law authorizes this type of employment restriction in this statute.
The Employee agrees and covenants not to directly or indirectly solicit, hire, recruit, or attempt to hire or recruit, any employee or contractor of the Company or any employee who has been employed by the Company in the 24 months preceding the last day of Employee’s employment (“Covered Employee”), or induce the termination of employment of any employee of the Company.

Non-solicitation – customers

There is the non-solicitation of customers restriction which prohibits a person from taking direct or indirect action intended to convince a customer of the former employer to join the former employee in a new business.

The Employee agrees and covenants, for a period of 24 months, beginning on the last day of the Employee’s employment with the Company, not to directly or indirectly solicit, contact, or attempt to solicit or contact, using any other form of oral, written, or electronic communication, including, but not limited to, email, regular mail, express mail, telephone, fax, instant message, or social media, including but not limited to Facebook, LinkedIn, Instagram or Twitter, or any other social media platform, whether or not in existence at the time of entering into this agreement, or meet with the Company’s current, former, or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.

Non-disclosure

The non-disclosure restriction prohibits a person from using or disclosing a former employer’s confidential information.
Except when directed in writing to do otherwise by EMPLOYER, and except as required by law, court order, or subpoena, EMPLOYEE shall keep confidential and shall not divulge to any other person or entity, during the time of the Agreement any Confidential Information.  In any case where EMPLOYEE is compelled by law, court order, or subpoena to disclose any Confidential Information to a third party, EMPLOYEE shall advise EMPLOYER in advance of such requirement and shall permit EMPLOYER to object, contest, intervene, and/or obtain appropriate protection of such information prior to disclosure to any person unless commanded by law officials or advised against doing so by legal counsel representing EMPLOYEE.
Posted by Shawn Roberts in Blogposts, Oklahoma non-compete

Closing down an Oklahoma business with the IRS

When you are closing your Oklahoma business (corporation, limited liability company or other), the one party you want to be certain to square up with is the Internal Revenue Service. Fortunately, your friends at the IRS provide a checklist to guide you through the process of closing down your Oklahoma business.

The meat of the IRS Checklist is included below for your viewing convenience:

Posted by Shawn Roberts in Blogposts

The Oklahoma series LLC is not only for real estate but also for . . .

Bernard Spragg. NZ

You probably know that an Oklahoma series limited liability company provides excellent protection for owning multiple tracts of real properties (think rental homes).

But did you know that the Oklahoma series limited liability company may very well work with other non-real property assets and forms of doing business such as:

◊High value medical & business equipment.

For example, a doctor or dentist who owns medical imaging equipment valued six figures, where such equipment can (in remote scenarios) generate substantial liability. Think diagnostic imaging where the machine doesn’t deliver a reliable image . . .

◊Separate divisions of a company

A business owner might use an Oklahoma series LLC to segment a large business in separate departments or divisions. In this context, the terms “department” or “division” don’t have a particular legal meaning but rather describe business segments.

◊Separate product lines offered by a company

You can create a department (or a division – they mean similar things and are sometimes used interchangeably) without filing or drafting any legal agreement at all. However, some companies appreciate the formal separation that accompanies separate series. You can do the same thing for product lines, employee teams, projects, business locations and for other business components.”

◊Equity Compensation Program within a business

As a spinoff of the separate product lines topic about, this use might work in a business with multiple divisions. With each division segregated into a separate series, the LLC can give the key employees of each series some sort of equity interest tied to that series only rather than equity interests in the entity as a whole. This rewards employees in productive divisions and protects them from the potential downside of other divisions.

The Oklahoma law series LLC law allows real property and other assets to be owned by a series. This means that the possible series LLC uses listed above are but a few items. I touched on this topic briefly in this post on the practical uses of an Oklahoma series limited liability company.

By the way, in listing these items I am not endorsing them as the correct use for you or your property. Before you implement a series LLC, take the time to talk with an attorney to discuss the plusses and minuses based on your specific set of circumstances.

Posted by Shawn Roberts in Blogposts, Oklahoma limited liability company

Checklist of documents to secure upon someone’s death in Oklahoma

In the process taking care of things after the death of a friend or loved one in Oklahoma, there are certain documents which you, the person likely to help administer the estate, will need to have.  Below is a list of some of the documents you need to collect and secure following a person’s death:
  • Copies of the death certificate
  • Insurance policies
  • Investment account statements such as IRAs, 401(k)s, mutual funds, pensions
  • The last checking and savings account statements
  •  Last mortgage statement
  • Last two years tax returns
  • Automobile titles
  • Marriage and birth certificates
  • An up-to-date credit report of the decedent.
Posted by Shawn Roberts in Blogposts

What is a default judgment in an Oklahoma lawsuit?

To answer that question, we need to start by understanding what a “judgment” is and what it means to be “in default” in an Oklahoma lawsuit.

A judgment is a formal decision by the court that tells who won the case and what the winner gets.  To the judgment phase in a lawsuit . . .

The party that files the lawsuit, the Plaintiff, file a Petition to kick off the process.  In the Petition, the Plaintiff lays out it claims and what it wants to get paid based on its claim.  The Plaintiff is required to “serve” the Petition on you.  This means either you will receive a visit from a licensed Oklahoma process server or a certified mail envelope that you need to sign for.

You have 20 days from the date the Plaintiff can prove you were served to file an answer to the Petition with the court where the case is filed and send a copy to the Plaintiff.  If you do not file an answer within 20 days, you are in default.

So, default means you didn’t answer within the required time period and the court decided you lose because of your failure to answer.  The Plaintiff wins without finishing out the game.  The Plaintiff can take its default judgment and begin to try to collect on it.  An example of what a default judgment looks like is below:

Default judgment
Posted by Shawn Roberts in Blogposts

Sports respite: 30 years ago today . . .

As a brief respite from my musings about Oklahoma law, I share this slice of disappointment from childhood . . .

 

30 years ago today I watched live as Kirk Gibson break my heart and the hearts of thousands of A’s fans by doing this off the best reliever in baseball . . .Kirk Gibson’s game winning home run 1988 World Series

Posted by Shawn Roberts in Blogposts

Can you sell property that is in an Oklahoma probate case?

Most people have either heard stories about your experience firsthand and estate going through the probate process. Often those experiences are not positive ones.

One of the questions that often comes up is “can I sell this item that is part of the probate case? “

The answer is yes but the process is different depending on what type of item it is. Below is a brief overview of how property can be sold out of probate depending on what type of property it is.

1.  Real property

Real property includes items such as houses, land with nothing build on it and mineral interest. For items such as these, you almost always have to get the written approval of the judge and the probate case before making a sale.

2.  High-value personal property

High-value personal property includes things such as automobiles, jewelry, it’s in recreational vehicles and usually any item that has a paper title issued by the government.  As with real property, and written approval is typically required from the court prior to selling this type of property. However, there may be a few exceptions that fall into the category for below.

3.  Lower value personal property

This category includes items that have no paper title issued by the government such as household furnishings, tools, any other odds and ends that a person may have collected throughout their life.

4.  Personal property that must be sold quickly to protect its value

As with most things in the law, there are a few more details and I can share in a blog list. For that reason, if you encounter the issue of selling something out of probate be certain to talk to an attorney about it before you take any kind of action.

 

If you want to know more about the Oklahoma probate, consider checking out these posts:

Will the Oklahoma summary probate process help you?        When you might need to do an Oklahoma probate             

Five Questions and Answers about Oklahoma probate

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

Oklahoma Estate Administration: The Mortgage follows the Property

 

You are dealing with the death of a love-one or friend, which is very sad.

During the process, you find out that your relative left their home to you (maybe using a transfer-on-death deed, explained here).

You are going to inherit a house, that is good.  Then you find out you are also inheriting a mortgage on the house.   Why?

Well, the easy answer is because there is a mortgage on the house and the bank wants to be paid.  The more legalized answer is that Oklahoma law makes you responsible for the mortgage as well:

When real property, subject to a mortgage, passes by succession or will, the successor or devisee must satisfy the mortgage out of his own property, without resorting to the executor or administrator of the mortgagor, unless there is an express direction in the will of the mortgagor that the mortgage shall be otherwise paid.

Okla. Stat. Ann. tit. 46, § 5 (West)

So, if you inherit the mortgage, you must pay for it from your own money unless your relative left a last will and testament.  And, that last will and testament must provide that the relative’s estate pay for the mortgage.

Potentially, a good news/not-so-good news scenario:  It is good you are the owner of a home, it is not as good you are the owner of a mortgage as well and a new monthly payment to the bank.

Posted by Shawn Roberts in Blogposts

The Oklahoma transfer-on-death deed: Smart Probate Avoidance

What happens to a person’s property when they die in Oklahoma?

There is a detailed answer in this post, What happens to a person’s property when they die?

The shorter answer is that it goes to your relatives, the people you chose in your last will and testament or Oklahoma revocable trust. If you own real property outright and pass away you will need a court order in an Oklahoma probate case to change the title from the person who passed away to his heirs.  There are several ways to avoid this results.  One way is the Oklahoma transfer-on-death deed.

Oklahoma Transfer-on-Death Deed

The Oklahoma TOD allows you to set up your real property to pass to another person after you die.  You sign and record the Deed with the Oklahoma county clerk in the county where the property is located. The person you giving the property to does not become the owner until you pass.  But, when you pass away, . . .

Transfer of the Property after death

The property passes almost automatically, with the person inheriting the property only need to file an affidavit stating that person died, whether the person was married and a legal description of the property.

 

If this is something that interests you or you like to talk about Oklahoma estate planning, please contact me.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate