The Inbox: May 30, 2014

It's that time again... time to check in on the week's news in Suits by Suits:

The United States Court of Appeals for the First Circuit issued its opinion in Velazquez-Perez v. Developers Diversified Realty Corp, No. 12-2226 (May 23, 2014), holding that an employer can be liable for sex discrimination under Title VII of the Civil Rights Act of 1964 when an employee is terminated at the instigation of a “jilted co-worker intent on revenge.” (We wouldn’t have used the word ‘jilted.’) Surprisingly, this is a case of first impression.
We’ve frequently discussed the controversial case of Fifeld v. Premier Dealer Services, 993 N.E.2d 938 (2013), in which an Illinois appellate court invalidated a noncompete clause for lack of mutual consideration. One wrinkle we told you about occurred in Alabama, in which a federal court refused to enforce a noncompete that was signed after the employee had already began working for his employer. Last week, the Superior Court of Pennsylvania followed suit in Socko v. Mid-Atlantic Systems of CPA, Inc., 2014 PA Super 103 (2014), holding that such clauses are void unless supported by independent consideration.

Ok, so we discuss noncompetes a lot here on this blog -- but even we were surprised by this next story. Apparently God himself -- or herself; we're open-minded types -- has now gotten in on the act. Patheos blogger Warren Throckmorton discusses the interesting case of Phil Poirier, a community group pastor who was essentially fired from the Mars Hill megachurch in Everett, Washington for his refusal to sign a non-compete agreement that would ban him from taking a “next church ministry” within ten miles of any Mars Hill church (which has hundreds of “branches” across the U.S.). Throckmorton is continuing to update the fascinating saga, including creating a “no-compete zone” map highlighted in red that illustrates the practical consequences of the clause Poirer refused to sign. (Hint: it's virtually all of the state of Washington.)
Now that we’ve discussed religion, I suppose we can check in on a hot-button political issue, too. Stoking the debate over executive pay inequality is a recent survey of CEO pay conducted by the Associated Press (using data provided by Equilar, an executive pay research firm). The AP’s findings are that that the median CEO received $10.5 million in compensation in 2013, up 8.8% from the previous year. Of that, $1.1 million is in base salary (up 4.8% from 2012), with the largest incentive-based components being cash bonuses (median $1.9 million, up 12.6%) and stock awards ($4.5 million, up 4.2%).

In light of the public outcry over CEO pay, we’ve learned that California is considering a bill, SB 1372, that would offer tax breaks to companies based on the “compensation ratio” between the amount paid to that company’s CEO (or highest-paid employee) and the median income level of all of the company’s employees. The new law would create nine tax brackets (subsection g(2)); the bottom line is that companies where the CEO earns 100x or less than the average employee would get a break in their marginal tax rates, while those paying more would see their tax rates increase. As the Washington Post put it: this bill “is the first in the nation that seeks to mitigate economic inequality through corporate tax reform.”