Showing posts with label Mark Fijman. Show all posts
Showing posts with label Mark Fijman. Show all posts

Monday, November 28, 2016

SURPRISE RULING ON FLSA OVERTIME RULE



It continues to be a season of surprises in American politics . . . and in employment law.  Who would ever have thought that a federal judge, appointed by President Obama, would throw a money wrench in a key initiative of the Obama Department of Labor?  Not me.  As I incorrectly predicted in my November 18, 2016 article, I fully expected U.S. District Judge Amos L. Mazzant III to shoot down an injunction aimed at blocking the December 1, 2016 implementation of the DOL’s Final Rule, bumping the minimum salary level for white collar exemptions under the Fair Labor Standards Act ("FLSA") from $23,660 annually ($455 per week) to $47,476 annually ($913 per week).

What instead happened was that Judge Mazzant entered a nationwide preliminary injunction on November 22, 2016, blocking for now the U.S. Department of Labor (“DOL”) from implementing significant changes to the overtime rules applicable to white collar employees.  The ruling out of the U.S. District Court for the Eastern District of Texas held that the DOL most likely exceeded its authority by doubling the salary requirement, which would have rendered essentially meaningless the duties test, which is actually written into the FLSA.

The issuance of an injunction means that implementation and enforcement of the Final Rule by the DOL is just on hold until further notice by the Court.  The DOL has not yet announced whether it intends to appeal the ruling, and it remains to be seen if the Trump administration would have any interest in trying to implement a Rule so unpopular within the business community.  Another potential option might be a revised Rule that would include a smaller increase in the minimum salary requirement.

What I think I did get correct was my observation that “[i]f the unlikely actually happens, I expect an enormous sigh of relief from many employers, tinged with annoyance and aggravation over six months spent preparing for a rule that never went into effect.”  Annoyance aside, what should employers do at this point? 

In expectation of the December 1, 2016 deadline, many employers had bumped employee salaries to meet the new requirement, and many more had simply adjusted hour wages and work schedules in an effort to reduce overtime or keep actual wages approximately the same.  As reported in the Wall Street Journal, businesses are now faced with the difficult decision of either walking back pay increases they had already put in place, resulting in angry employees, or eating the expense of changes made in anticipation of a now uncertain requirement.

There is no right or wrong answer, and employers will have to look at a number of factors in making their decision for their particular business.  These factors include, but are not limited to: (1) whether the employer has already begun implementation of salary/exemption changes, (2) whether the employer has already communicated planned salary increases or changes even if it hasn’t actually put them in place, (3) whether the changes impact or potentially impact the company’s benefit plans, (4) the overall economic impact of the change to the client, (5) the workforce morale issues that may be implicated, (6) the temporary nature of the injunction and the fact that it could be appealed and, if so, potentially reversed on appeal.  This is an odd situation where those employers who planned ahead are faced with more issues than those companies that procrastinated and did nothing.


In response to reader requests, if you would like to receive the latest articles from "The Employee With The Dragon Tattoo" by e-mail, please send your name, your company, and your e-mail to me at fijmanm@phelps.com.  

Thursday, October 6, 2016

THE EEOC CATCHES THE FLU BUG


 
Back in June, when flu season was still just a sneeze on the horizon, I reported in “Religious Discrimination or Infectious Insubordination?” on how the Equal Employment Opportunity Commission (“EEOC”) was suing a Massachusetts hospital for religious discrimination over its policy of mandatory flu shots.
 
While not as infectious as the influenza virus itself, the EEOC’s litigation over this issue also appears to be spreading across the country.  In  EEOC v. Saint Vincent Health Center, the EEOC has filed suit against a Pennsylvania hospital, alleging the facility violated Title VII of the Civil Rights Act (“Title VII”) by failing to accommodate the religious beliefs of six employees and terminating their employment.
According to the EEOC's lawsuit, in October 2013, Saint Vincent Health Center implemented a mandatory seasonal flu vaccination requirement for its employees unless they were granted an exemption for medical or religious reasons. Under the policy, employees who received an exemption were required to wear a face mask while having patient contact during flu season instead of receiving the vaccination.
In its lawsuit, EEOC alleges that the six employees requested religious exemptions from the flu vaccination requirement based on religious beliefs, and that the facility denied their requests. When the employees continued to refuse to get a flu shot, they were fired.  The lawsuit makes a point of noting that during the same period, the hospital granted 14 vaccination exemption requests based on non-religious medical reasons. 
In addition to this newest case in Pennsylvania, and the one in Massachusetts, the EEOC also has filed a similar lawsuit against a hospital in North Carolina for failing to accommodate employees’ religious objections to mandatory flu shots.
Title VII prohibits employment discrimination based on religion, and imposes on employers a proactive duty to accommodate sincerely held religious practices that may conflict with workplace practices, as long as the religious practice does not impose an undue hardship on the employer.  For purposes of religious accommodation under Title VII, undue hardship is defined by courts as a “more than de minimis” cost or burden on the operation of the employer's business. For example, if a religious accommodation would impose more than ordinary administrative costs, it would pose an undue hardship. This is a much lower standard than the Americans with Disabilities Act undue hardship defense to disability accommodation.
Whether the EEOC or the healthcare facilities will prevail in these lawsuits will likely hinge on whether it is an undue hardship to offer an accommodation to a policy aimed at protecting the health and safety of patients.  In the Massachusetts and Pennsylvania cases, an accommodation of wearing a facemask to prevent contagion was refused by employees.  In the North Carolina case, the failure to accommodate claim is based on the employee requesting an exemption after the deadline for getting a flu shot already had passed.
According to the Centers for Disease Control and Prevention, the flu is highly contagious and people with flu can spread it to others up to about 6 feet away. Most experts think that flu viruses are spread mainly by droplets made when people with flu cough, sneeze or talk. These droplets can land in the mouths or noses of people who are nearby or possibly be inhaled into the lungs. Less often, a person might also get flu by touching a surface or object that has flu virus on it and then touching their own mouth or nose.  While the effects of the flu on most people are not life-threatening, the CDCP notes that severe cases of the flu can result in death for some people, such as the elderly, young children, and persons with certain health conditions, including weakened immune systems.
Back in August of this year, a federal court in Pennsylvania dismissed a similar lawsuit brought by a hospital employee in Fallon v. Mercy Catholic Medical Center.  In dismissing the plaintiff’s Title VII religious discrimination, the court’s opinion focused on the fact that the employee’s secular objections to receiving a flu shot simply were not entitled to the religious protections of Title VII:
In sum, Fallon clearly fails to state a claim for religious discrimination under Title VII. He does not belong to a religious congregation, nor does he claim that his reasons for refusing to be vaccinated are based on “religious beliefs,” sincerely held or otherwise. To the contrary, Fallon’s stated opposition to vaccinations is entirely personal, political, sociological and economic—the very definition of secular philosophy as opposed to religious orientation. To adopt Fallon’s argument that he need only show a strongly held moral or ethical belief in lieu of a sincere religious belief would contravene Third Circuit and Supreme Court precedent and would potentially entitle anyone with “strongly held” beliefs on any topic to protection under Title VII’s religious discrimination provision.
However, it remains to be seen whether the court’s ruling in Fallon will be of much help to the Pennsylvania hospital in the EEOC’s latest lawsuit.  Title VII and courts generally construe religion very broadly, and in religious discrimination cases, courts are often reluctant to “play God” by deciding what is or is not a sincerely held religious belief or practice. 

Sunday, October 2, 2016

EEOC PAYS SETTLEMENT FOR VIOLATING OVERTIME RULES AND THE NLRB PAYS THE PRICE FOR “ADMINISTRATIVE HUBRIS”



Welcome back to another episode of “Federal Employment Agencies Behaving Badly” and in this week’s episode, we’ll start off with the Equal Employment Opportunity Commission (“EEOC”), the federal agency tasked with enforcing the nation’s anti-discrimination laws.  While the EEOC does not enforce the Fair Labor Standards Act (“FLSA”) and the laws regarding overtime pay, it is required to comply with the FLSA as it relates to the agency’s own employees. As a reminder of this fact, the EEOC has now agreed to pay a $1.53 Million settlement for failing to properly pay overtime to its employees.
The case began back in 2006, and in 2009, an arbitration ruling found the EEOC had violated the FLSA by requiring investigators, mediators and paralegals to work during lunch hours, on weekends, or after hours, and then forcing them to accept compensatory time instead of the overtime pay they were entitled to for their overtime errors.  EEOC employees described what they were subjected to as “forced volunteering.”  The ruling held:
There is an entitlement to overtime, whereas compensatory time operates as an alternative, should the employees request it . . .  Put another way, it is incorrect to view the FLSA as providing non-exempt employees with the option of selecting either overtime or compensatory time. The right is to overtime; compensatory time is the option.”

The arbitration ruling seven years ago urged the EEOC and the union representing the federal employees to reach a settlement, however, an agreement was not reached until September 22, 2016. 
Despite the settlement, the union was critical of the EEOC’s role in the long delay toward resolving the dispute.  According to National Council of EEOC Locals, No. 216 President Gabrielle Martin “It has been very frustrating to employees that this case has gone on for a decade during which employees retired or unfortunately passed away . . . It is a sad irony that the agency charged with preventing discrimination against workers violated the rights of its employees.”
Our next segment deals with the National Labor Relations Board (“NLRB”), which is the federal agency charged with enforcing U.S. labor law and investigating and remedying unfair labor practices.  A federal appeals court judge has now ordered the agency to pay a company nearly $18,000.00 in legal fees for engaging in “bad faith litigation” and engaging in “administrative hubris”
In Heartland Plymouth Court MI, LLC v. NLRB, a company sought legal fees after it had successfully appealed an NLRB ruling that incorrectly found the company had violated a collective bargaining agreement by reducing employee hours.  In the opinion, Judge Janice Rogers Brown of the United States Court of Appeals for the D.C. Circuit found that the NLRB had taken positions unsupported by the law, which placed the employer in the untenable position of having to incur the costs of an unjustified settlement demand, or the legal costs of appealing the NLRB’s improper ruling:
  Facts may be stubborn things, but the Board’s longstanding “nonacquiescence” towards the law of any circuit diverging from the Board’s preferred national labor policy takes obduracy to a new level. As this case shows, what the Board proffers as a sophisticated tool towards national uniformity can just as easily be an instrument of oppression, allowing the government to tell its citizens: “We don’t care what the law says, if you want to beat us, you will have to fight us.”  It is clear enough that the Board’s conduct was intended to send a chilling message to Heartland, as well as others caught in the Board’s crosshairs.
 
Let the word go forth: for however much the judiciary has emboldened the administrative state, we “say what the law is.” In other words, administrative hubris does not get the last word under our Constitution. And citizens can count on it.
 

A MESSAGE TO READERS OF "THE EMPLOYEE WITH THE DRAGON TATTOO"  

 A reader of this blog recently asked if she could be included on an e-mail list for new posts.  I currently do not have an e-mail service but it seems like an excellent idea and I will be setting it up in the very near future.  If you would like to be included, please send your name, your company, and your e-mail to me at fijmanm@phelps.com.  Thanks! 



Thursday, September 29, 2016

NLRB CONTINUES AGGRESIVE CRACKDOWN ON EMPLOYEE HANDBOOKS

As The Employee With The Dragon Tattoo first reported back in 2014 and 2015, the National Labor Relations Board (“NLRB”) has taken a highly aggressive position against many commonly utilized employee handbook policies.  The NLRB alleges that overbroad employment policies could have a chilling effect on employees’ concerted activities protected by Section 7 of the National Labor Relations Act (“NLRA” or “the Act”).  This applies whether employees are members of a union or not.  Under the NLRB’s 2015 interpretive guidelines, an employer’s policy will violate the NLRA if it could simply be “construed” as restricting Section 7 rights.
The NLRB has now taken it one step further.  In a recent ruling earlier this Summer, an NLRB Administrative Law Judge (“ALJ”) held that a California casino’s handbook policy that prohibited employees from conducting “personal business” while on the job on company property could be construed to be illegal under the Act.  In the ruling, the ALJ held:

[T]he prohibition against conducting "personal business" on company property and "while at work" can reasonably be read to restrict the communications of employees with each other about union or other Section 7 protected rights in non-work areas and on non-work time. The rule makes it clear that personal business is the opposite of "Casino Pauma business," thus including communications about unions or complaints about working conditions in the "personal business" category. The restriction of protected activity "while at work" is also too broad because it is not properly restricted to "work time" and thus bans protected activity during  nonwork time, such a time on lunch, breaks and before and after work.
 
At the least, the prohibitions against conducting "personal business" in Rule 2.19 are ambiguous insofar as that term may be read to include discussions about unions and other concerted activity; the rule thus puts employees at risk if they guess wrongly about what the Respondent means by "personal business." (citations omitted).


The ALJ’s opinion also noted that under the Act, employees are generally free to distribute union literature on company property during such nonwork time as long as it is in nonworking areas of the company facility.
In its 2015 interpretive guidelines, the NLRB listed a series of other commonly implemented employment policies that it maintained were illegally overbroad.  Examples of such policies include:

·         Do not discuss "customer or employee information" outside of work, including "phone numbers [and] addresses."

·         "You must not disclose proprietary or confidential information about [the Employer, or] other associates (if the proprietary or confidential information relating to [the Employer's] associates was obtained in violation of law or lawful Company policy)."

·         Prohibiting employees from "[d]isclosing ... details about the [Employer]."
·         "Sharing of [overheard conversations at the work site] with your co-workers, the public, or anyone outside of your immediate work group is strictly prohibited."
·         "Discuss work matters only with other [Employer] employees who have a specific business reason to know or have access to such information.. .. Do not discuss work matters in public places."
·         "[I]f something is not public information, you must not share it."
The ALJ’s opinion that a policy against conducting personal business “while at work” likely seems nonsensical to employers who are legitimately trying to prevent employees from spending their work hours on Facebook, shopping on Amazon, or chatting with friends on the phone.  However, this latest ruling is a wake-up call for employers to review their employee handbooks to address any purported ambiguity that the NLRB might “construe” as being overbroad.
A MESSAGE TO READERS OF "THE EMPLOYEE WITH THE DRAGON TATTOO"  

 A reader of this blog recently asked if she could be included on an e-mail list for new posts.  I currently do not have an e-mail service but it seems like an excellent idea and I will be setting it up in the very near future.  If you would like to be included, please send your name, your company, and your e-mail to me at fijmanm@phelps.com.  Thanks! 



Saturday, September 24, 2016

THE EEOC GETS A DREAD (LOCKS) RULING


Back in October 2013, The Employee With The Dragon Tattoo told you about how the Equal Employment Opportunity Commission ("EEOC") had filed suit against Catastrophe Management Solutions Inc. (“CMSI”), an Alabama based insurance claims company.  The lawsuit alleged the company violated Title VII of the Civil Rights Act by discriminating against an African-American job applicant on the basis of race because she wore dreadlocks. The case highlighted the employment issues that can arise over workplace grooming policies, and also sparked sharp criticism against the EEOC’s position from the business community, as well as on the pages of the Wall Street Journal.
 
However, in a recent ruling, the U.S. Court of Appeals for the Eleventh Circuit has upheld the employer’s workplace ban on dreadlocks and rejected the EEOC’s hard-edged position that a mutable choice, such as hairstyle, equals an immutable trait such as race.
 
The case began back in 2012.  Chastity Jones was offered a position with CMSI as a customer service representative. At the time of her interview, Jones, who is black, had blond hair that was dreaded in neat curls, or “curllocks.” CMSI’s grooming policy required employees to be “dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines . . . [H]airstyles should reflect a business/professional image.  No excessive hairstyles or unusual colors are acceptable.”  When the manager in charge told Jones that the company did not allow dreadlocks and that she would have to change her hairstyle in order to obtain employment. Jones declined to do so, and the manager immediately rescinded the job offer.
 
In the lawsuit, the EEOC argued that CMSI’s ban on dreadlocks and the imposition of its grooming policy on Jones discriminated against African-Americans based on physical and/or cultural characteristics.  At the time of the filing of the lawsuit, Delner Franklin-Thomas, district director for the EEOC's Birmingham District Office, stated, “Generally, there are racial distinctions in the natural texture of black and non-black hair. The EEOC will not tolerate employment discrimination against African-American employees because they choose to wear and display the natural texture of their hair, manage and style their hair in a manner amenable to it, or manage and style their hair in a manner differently from non-blacks.” 

The lower federal court later dismissed the lawsuit on the basis that unlike race, “a hairstyle, even one closely associated with a particular ethnic group, is a mutable characteristic.”  The EEOC appealed to the Eleventh Circuit, arguing that dreadlocks are a natural outgrowth of the immutable trait of race and that a policy forbidding dreadlocks could be a form of racial stereotyping.
 
In his recent article discussing the Eleventh Circuit’s ruling against the EEOC, my colleague Day Peake, in Phelps Dunbar’s Mobile, Alabama Office, explained the appellate court’s rationale:
 
The Eleventh Circuit held that Title VII’s prohibition on intentional discrimination does not protect hairstyles culturally associated with race. Rather, it prohibits intentional discrimination based on immutable traits such as race, color or national origin. By this rationale, the court explained, discrimination based on black hair texture, such as a natural Afro, would violate Title VII. A prohibition on an all-braided hairstyle, however, addresses a mutable choice and does not implicate Title VII’s proscription of intentional race discrimination.
This decision offers an important exploration of the definition of “race,” which is not defined in Title VII. EEOC relied on its Compliance Manual definition, which provides that “Title VII prohibits employment discrimination against a person because of cultural characteristics often linked to race or ethnicity, such as a person’s name, cultural dress and grooming practices, or accent or manner of speech.” The court chose not to give this guidance much deference or weight in its analysis because the court found the guidance to be contradictory to a position taken by EEOC in an earlier administrative appeal.
The Eleventh Circuit also rejected and criticized the EEOC’s argument on appeal that CMSI’s grooming policy was illegal under a theory of disparate impact, which does not require proof of discriminatory intent, as opposed to disparate treatment, which would constitute intentional discrimination.
In addition to a victory for CMSI, the Eleventh Circuit also vindicated the Wall Street Journal’s assessment of the EEOC’s lawsuit back in 2013:
Apparently Ms. Franklin-Thomas has never seen dreadlocked whites (like the Counting Crow's Adam Duritz) or Latinas (like Shakira). Catastrophe's policy is in fact racially neutral because it enjoins all employees, regardless of race, "to be dressed and groomed in a manner that projects a professional and businesslike image," including "hairstyle." The company determined that dreadlocks don't meet that standard, as is its right . . . The larger travesty of this case and other misbegotten EEOC crusades of late is that they take time and resources away from individuals with legitimate claims of employment discrimination. Banning dreadlocks doesn't qualify.
Notwithstanding the Eleventh Circuit’s ruling, issues of workplace grooming and dress codes are often case and fact specific, and can easily turn into a litigation minefield, particularly over issues of religious accommodation.  This was highlighted recently in the United States Supreme Court’s ruling in EEOC v. Abercrombie & Fitch Stores (2015). 
Employers should carefully and regularly review such policies, and consult with counsel prior to taking adverse employment actions based on violations of such policies that might implicate a protected class of employees under Title VII.
A MESSAGE TO READERS OF "THE EMPLOYEE WITH THE DRAGON TATTOO"  
 A reader of this blog recently asked if she could be included on an e-mail list for new posts.  I currently do not have an e-mail service but it seems like an excellent idea and I will be setting it up in the very near future.  If you would like to be included, please send your name, your company, and your e-mail to me at fijmanm@phelps.com.  Thanks! 

 


Tuesday, September 20, 2016

EEOC SUES EMPLOYER OVER POSITIVE DRUG TEST FOR PRESCRIPTION OPIOID PAINKILLER



            In recent years, the abuse of prescription opioid pain medication has become a widely reported national epidemic. The New England Journal of Medicine reports millions of Americans are addicted to prescription pain medications, and The Centers for Disease Control and Prevention finds that more people died from drug overdoses in 2014 than in any year on record, with the majority of deaths from opioids, and 78  Americans die every day from an opioid overdose.  Prescription opioid abuse also has been linked to the national increase in heroin addiction.  Commonly prescribed opioid painkillers include Hydrocodone (Vicodin), Oxycodone(OxyContin, Percocet), morphine (Kadian, Avinza) or medications containing Codeine.
            However, a recent lawsuit by the Equal Employment Opportunity Commission (“EEOC”) against a Sioux Falls, South Dakota Casino reveals the tension between an employer’s concern about prescription drug abuse in the workplace and complying with the Americans with Disabilities Act (“ADA”).
            According to the facts given in the lawsuit, Kim Mullaney applied for a position with Happy Jack’s Casino.  The EEOC’s lawsuit states that Mullaney had a recognized disability under the ADA involving chronic pain, and had a valid prescription for the prescription drug Hydrocodone.  Mullaney received a job offer from Happy Jack’s, but the offer was withdrawn after a routine pre-employment drug test came back positive for Hydrocodone.  According to the lawsuit, Mullaney told Happy Jack's Casino that the test reflected prescription drugs that she took for her disability, and even though she told them that she would provide additional information if needed, Happy Jack's Casino refused to hire her.  According to the Complaint:

Because [Happy Jack’s] didn’t offer Mullaney a chance to offer proof that the drugs were prescribed by a doctor for a medically-recognized condition, the company violated the Americans With Disabilities Act.  Blanket drug-testing rules that cover legally-prescribed medications do not comport with the law


            Typically, most company drug testing policies include provisions that allow employers to either disclose their legally prescribed prescription in accordance with the ADA, or to otherwise explain or contest a positive test result.  However, this lawsuit should service as a notice for employers to review their current drug testing policies.  This workplace issue is further complicated by the ongoing decriminalization of marijuana in the United States.   Approximately half the states already have legalized marijuana, for either medical or recreational use, and another eight states will be voting on the issue in November.
 

A MESSAGE TO READERS OF "THE EMPLOYEE WITH THE DRAGON TATTOO" 

 A reader of this blog asked if she could be included on an e-mail list for new posts.  I currently do not have an e-mail service but it seems like an excellent idea and I will be setting it up in the very near future.  If you would like to be included, please send your name, your company, and your e-mail to me at fijmanm@phelps.com.  Thanks! 

 


Wednesday, August 31, 2016

NON-COMPETE AGREEMENTS UNDER ASSAULT


In my blog of May 26, 2016, I discussed a report released by the White House, highly critical of the non-compete agreements commonly used by American employers.  I noted at the time that the Administration could not take any direct action, because such agreements are governed under the individual laws of each state, and are not governed by federal law.  However, the report made it clear that the White House intended to:
[I]dentify key areas where implementation and enforcement of non-competes may present issues, examine promising practices in states, and identify the best approaches for policy reform”, suggesting plans to lobby state legislators and policymakers in the individual states.

It appears that the White House’s efforts already have borne fruit in the President’s home state of Illinois. Earlier this month, Illinois Governor Bruce Rauner signed into law the “Illinois Freedom to Work Act”, which will go into effect January 1, 2017.  The Act would prohibit employers from requiring employees to sign non-compete agreements if they make less than $13 per hour.  The new law is not supposed to have any effect on the enforceability of confidentiality agreements designed to protect trade secrets or other confidential business information.
The recent uproar over non-competes began over a sandwich, or more accurately, a sandwich maker.  Back in 2014, I reported how sandwich chain Jimmy John’s had attracted some unwelcome attention by requiring low-level employees to sign two-year non-compete agreements as a condition of employment.  After the story first broke nationally, Congressional Democrats sent a letter to the Federal Trade Commission (“FTC”)  and the U.S. Department of Labor (“DOL”), describing the restrictive covenants as “clearly anti-competitive and intimidating to workers.” The House Democrats asked for the FTC and the DOL to investigate the sandwich chain. 
Illinois Attorney General Lisa Madigan upped the ante, and on June 8, 2016, filed a lawsuit against Jimmy John’s, alleging the sandwich maker’s non-compete agreements were illegal under Illinois law “[b]y locking low-wage workers into their jobs and prohibiting them from seeking better paying jobs elsewhere, the companies have no reason to increase their wages or benefits.” Under Illinois law, non-compete agreements must be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place. The State of New York was apparently about to take similar legal action, however, Jimmy John’s reached an agreement in June with New York Attorney General Attorney General Eric Schneiderman, in which the sandwich chain agreed to stop including sample non-compete agreements in hiring packets it sends to its franchisees. Jimmy John’s also agreed to inform its New York franchisees that the Attorney General has concluded the non-compete agreements are unlawful and should be voided.
It bears mention that in New York and Illinois, and most other states, non-compete agreements, in of themselves, are not illegal and are enforceable under the appropriate circumstances.  The real focus here, and the basis for the hostility from elected officials, is requiring low-level and low-paid employees to sign such agreements without a legitimate business purpose.  I anticipate more states will be taking legislative action similar to the new Illinois law.
While such restrictive employment covenants are generally not favored by the courts, they will be enforced if the terms of the agreement are reasonable under the particular circumstances.  Generally, there are three requirements: (1) the employer has a valid interest to protect; (2) the geographic restriction is not overly broad; and (3) a reasonable time limit is given.  The employer bears the burden of proving the reasonableness of the agreement.  The reason these types of agreements are construed very narrowly is that most courts recognize that an employer is not entitled to protection against ordinary competition from a departing employee.  Non-compete agreements can be valuable tools to protect an employer’s legitimate business interests, but generally, it is inadvisable to have low level employees sign such agreements, because they are typically not going to possess the confidential information that would warrant enforcement of the agreement. 
In most of the matters I’ve handled involving non-compete agreements, the employees in question were either highly trained individuals in technical or creative fields, with direct access to their employer’s trade secrets, or were high level sales people with similar access to confidential customer information.  I would be hard pressed to come up with a scenario where a fast food employer would legitimately need  to have a crew worker enter into a non-compete agreement, no matter how good the sandwich.
The lesson to be learned is that the use of these agreements should be confined to key employees whose knowledge of trade secrets and other confidential information could cause serious damage if they went to work for a competitor.  In light of the recently enacted federal Defend Trade Secrets Act ("DTSA") of 2016, businesses now have greater protection, but need to take affirmative steps as soon as possible to take advantage of all the provisions of the new law.  For more information on DTSA, see my recent article in the Mississippi Business Journal.


Thursday, June 30, 2016

FIFTH CIRCUIT SLAMS THE DOOR ON CRIMINAL RECORD DISCRIMINATION LAWSUIT



The United States Court of Appeals for the Fifth Circuit has rejected an unsuccessful job applicant’s claim that he was denied employment because of his criminal record.  The Plaintiff in Noris Rogers v. Pearland School District unsuccessfully argued that his history of felony convictions for drug offenses, including the sale of heroin, amounted to race discrimination under a disparate impact theory of liability.

In recent years, the Equal Employment Opportunity Commission (“EEOC”) has filed a number of high-profile lawsuits against companies, taking the position that utilizing criminal background checks in making employment decisions may be a violation of Title VII of the Civil Rights Act of 1964.  The stated rationale for the EEOC’s stance is that employers’ reliance on criminal records as a factor in hiring decisions disproportionately affects, or has a “disparate impact” on African-Americans and Hispanics, who statistically have higher rates of arrest and criminal conviction. 

In Rogers, the African-American Plaintiff applied for a job as a master electrician for a Texas school district.  On the application, Rogers responded “No” to all questions regarding criminal history, including whether he had ever been convicted of or pled guilty to a criminal offense, and gave his consent for a criminal background check.  The background check revealed that Rogers had multiple felony drug convictions.  When asked by the school district’s human resources director about the incorrect information, Rogers became angry, raised his voice and had to be asked to leave.  The school district later hired an African-American male for the position.

A few months later, the successful applicant resigned and the position again became available.  Rogers reapplied, this time disclosing his criminal record on the application.  The school district did not hire Rogers because of his “lack of candor” in disclosing his criminal record the first time.  In his lawsuit, Plaintiff claimed the real reason was race discrimination based on his drug arrests, and not on the fact he lied on his job application.  The Texas trial court granted the school district’s summary judgment motion, dismissing the case, and Rogers appealed the ruling to the Fifth Circuit.

In holding that the trial court was correct in dismissing the case, the Fifth Circuit rejected Rogers’ claim that the School District maintains a policy of “excluding from consideration for employment all persons who have been convicted of a felony.”While the Fifth Circuit noted that under the school district’s actual policy, a felony conviction would be an adverse factor in an application, it is  “not an automatic bar to employment.” In addition, the record shows that the School District follows procedures that require the opportunity for an in-person meeting with any applicant to discuss the applicant’s criminal history. The record also shows that the School District recently hired several employees who had felony and misdemeanor convictions.  The Court discounted Rogers’ comparator of a white school district employee who failed to disclose on a job application a misdemeanor charge of marihuana possession thirty years earlier.

While not discussed in detail in the Fifth Circuit’s Opinion, it appears the school district’s policy was in line with the recently updated EEOC guidelines, which put the burden on employers to develop screening guidelines to individually assess each applicant/employee to determine whether a criminal history may be used as a factor in any employment decision.  Under the EEOC’s guidelines, for an employer to avoid Title VII disparate impact liability for excluding an individual with a criminal record, the employers must show that any reliance on a criminal history is job related and consistent with business necessity.  In doing so, an employer must show that it considered three factors: (1) the nature and gravity of the offense, (2) the amount of time since the conviction, and (3) the relevance of the offense to the type of job being sought. 

The case highlights the need for employers to have such screening guidelines in place, proper documentation to support any employment decision based on a criminal history, and not to have any blanket-ban on employing individual with a criminal history.