Addressing Legal Issues in the Hiring Process and Your Job Search

Hiring and Legal Compliance According to the US Labor Department, employers added 156,000 jobs last month. Additionally, the participation rate increased to 62.9%. And the average hourly earnings moved 0.2 percentage points. These figures indicate a steadily increasing U.S. economy. But the Labor Department also found that the unemployment rate last month increased from 4.9% to 5%.

A rising unemployment rate means more eligible workers are seeking employment. With increased hiring, there are a few important things that both employers and employees need to take into consideration when it comes to seeking new employment.

State and Federal Laws Affect the Hiring Process

Companies, especially those without a dedicated HR staff, need to have a working knowledge of state and federal employment laws. While there are too many of these regulations to be discussed here, a few critical areas employers need to be concerned about when it comes to new hires include physical examinations,  background checks, and non-compete restrictions.

  • Physical Examinations

The Americans with Disabilities Act (ADA) and similar states’ laws, restricts when employers can conduct medical related physical examinations. An employer cannot request or require a medical examination before a prospective employee is given a conditional job offer. Employers can inquire about one’s ability to perform specific job functions before offering the job, but not about a disability. Or as the EEOC puts it:

It [the employer] cannot make any pre-employment inquiry about a disability or the nature or severity of a disability. An employer may, however, ask questions about the ability to perform specific job functions and may, with certain limitations, ask an individual with a disability to describe or demonstrate how s/he would perform these functions.

The EEOC provides a number of responses to commonly asked questions about complying with the ADA. Those responses are available here.

  • Background Checks

Employers are allowed to conduct background checks on prospective employees, but they are still legally required to follow applicable laws about discrimination throughout the hiring process. One limitation is that employers cannot use information within a background check to discriminate against a potential employee based on age, race, genetic information, age, etc.

It is also prudent to make sure that your company’s background checks are consistently applied. On this point, the EEOC warns that, “[i]t’s illegal to check the background of applicants and employees when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).” For additional information on the ADA’s restrictions on background checks, click here.

  • Non-compete Obligations

Another important consideration for both employers and employees to consider are non-compete obligations. Consider the following:

  1. Employees Seeking New Employment – Be sure to determine what, if any, non-compete restrictions you may have entered into. We often represent individuals who are threatened with litigation for breaching a non-compete agreement that they signed five, six, or even ten years ago but honestly forgot about entering into the post-employment restriction. Even so, it is important to carefully consider any non-compete restrictions before quitting your current position. Additionally, if you are switching jobs, it’s critical that you return all employer owned documentation, emails, etc. Never download or forward any company information to a personal account because, that too, could lead you to legal trouble during you job transition.
  2. Employers and New Hires – For employers, it is important to screen prospective hires for any post-employment obligations. If a potential employee has a non-compete obligation, it may interfere or restrict the candidate’s ability to perform in his or her new position. This issue should be discussed and documented in the hiring process before making an offer.

There are many other restrictions and guidelines for the hiring process, but these are a few important ones to keep in mind. For more information about complying with federal or Michigan employment laws, contact Michigan employment attorney Jason Shinn. Since 2001, he has represented businesses and individuals in non-compete disputes and claims arising under federal and Michigan employment laws.

Detroit Casino Sued for Violating Americans with Disabilities Act

Employers must have well written employee manualsDetroit’s Greektown casino was sued on October 3, 2016, by the U.S. Equal Employment Opportunity Commission (EEOC) for allegedly violating the Americans with Disabilities Act (ADA) by denying a reasonable accommodation to and then firing an employee because of his disability.

The former employee, Michael Lepine, was a pit manager for Greektown Casino. The lawsuit alleges that in February 2012 Lepine collapsed at work and was hospitalized for his stress/anxiety disorder. Lepine had previously exhausted his Family And Medical Leave Act (FMLA) time due to a previous stress-anxiety related leave in 2011.

He then requested additional medical leave to return to work and submitted leave paperwork, including a doctor’s note, indicating that he would need leave through April 30, 2012. Greektown allegedly responded by requiring Lepine to return to work without restriction by April 2, 2012, or request nonmedical leave. When this did not happen, Greektown terminated Lepine’s employment on April 3, 2012.

A copy of the complaint is available here (EEOC v Greektown Casino (10-3-2016). According to an EEOC statement, it was filed a voluntary pre-litigation settlement through its conciliation process failed to resolve the claim. The EEOC’s seeks to recover monetary compensation for the former employee in the form of back pay and compensatory damages for emotional distress, as well as punitive damages.

This case is very early in the litigation phase. However, there a few points employers should note and understand.

Leave Obligations under FMLA and ADA

First, employers are often faced with overlapping and sometimes conflicting obligations when it comes to the FMLA and ADA. The FMLA offers benefits to employees with certain medical conditions. And those health conditions may entitle the individual to protection under the ADA.

Second, the threshold coverage for the ADA and FMLA are significantly different. For starters, the ADA is broader in its coverage and that it applies to any company that is “engaged in an industry affecting commerce” and that employs 15 or more employees for each working day in each of 20 or more calendar weeks in the current or previous calendar year.”

In contrast, the number of employees necessary for an employer to be covered by the FMLA is 50 or more employees within a 75-mile radius. The FMLA also imposes employment tenure, hours worked, and other requirements for employees to be eligible for leave. Thus, while the FMLA threshold requirements are more restrictive, the potential for overlapping application of the ADA and the FMLA routinely exists.

Third, the core purpose of the FMLA is to provide qualified employees with leave – a maximum of 12 weeks of leave in a 12-month period. However, the ADA does not expressly provide for leave. But many courts have held that a reasonable accommodation may involve a part-time schedule in a current position or intermittent leave.

Further, EEOC Policy Guidance on this subject provides that an employer may not apply a policy of automatically terminating employees “after they have been on leave … to an employee with a disability who needs leave beyond” a standardized period. In other words, the EEOC’s position is that an employee who exhausts his or her entitlement to 12 weeks of leave under the FMLA may still be entitled to some additional period of leave as a reasonable accommodation if that person meets the ADA’s definition of “disability.”

For more information about complying with the FMLA, ADA, or other federal and Michigan employment law statutes, contact Michigan attorney Jason Shinn. Mr. Shinn routinely works with employers with respect to understanding their obligations under these statutes. Also, since 2001, he has litigated these issues in federal and Michigan courts.


Michigan Joins Quest to Block New Overtime Rule

Uphill climb On September 20, 2016, Michigan joined 20 other states in filing a lawsuit against the U.S. Department of Labor (DOL) to block a new overtime rule that goes into effect on December 1, 2016. Here is a link to the complaint Nevada v. Labor Dept., (9/20/16).

The U.S. Chamber of Commerce and other business groups filed a similar lawsuit. Both suits were filed in the U.S. District Court in Eastern Texas. Both groups are also asking for a preliminary injunction to stop the rule from going into effect.

The states argue that the DOL exceeded its authority in rolling out the new rule. The lawsuit further argues that the DOL’s rule incorrectly focuses on the salary a worker makes instead of the duties performed, to determine overtime eligibility. They also challenge a provision that adjusts the salary threshold for inflation every three years.

DOL’s Rule Expands Eligibility for Overtime Pay

The DOL’s overtime rule would more than double the salary threshold, up to about $47,500, under which workers are automatically entitled to overtime pay. This rule focuses on shrinking what is referred to as the “white collar exemption,” which exempts employees who perform “executive, administrative or professional” duties from overtime and minimum wage requirements.

In 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards. Consistent with this Memorandum, the DOL announced this past May that,

This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

It is estimated that under the DOL’s overtime rule, about 4 million workers will be newly eligible for time-and-a-half pay for all hours worked after 40 in a week. Further, the initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Obviously, great care went into selecting where to file the lawsuits — they were filed in a federal district court division in which only one of the three serving judges were nominated by a Democratic president. As luck would have it, both cases were assigned to that judge, that judge, Hon. Amos Mazzant. Judge Mazzant also happened to be appointed by President Obama.

In a 9/20/2016 statement, Labor Secretary Perez responded to the lawsuit, in part, as follows:

We are confident in the legality of all aspects of our final overtime rule. It is the result of a comprehensive, inclusive rule-making process. Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics. Partisan lawsuits filed today by 21 states and the U.S. Chamber of Commerce seek to prevent the Obama administration from making sure a long day’s work is rewarded with fair pay.

Employers Cannot Wait to Comply with DOL Overtime Rule

We will continue to monitor this litigation. However, employers cannot put off planning for the DOL’s new overtime rule in the hope that this lawsuit is successful. First, the claims face an uphill battle – both legally and because of the judge assigned to hear the case is a President Obama appointee.

Second, even if the lawsuits are successful at the district court level, an injunction would need to be issued within about ten weeks to delay the regulation’s December 1 effective date. That is not a lot of time.

Third, if the lawsuit is not successful (highly likely) an appeal to the Fifth Circuit is almost guaranteed, but that would take time.

For more information about the DOL’s new overtime rule, the lawsuits filed challenging that rule or complying with Federal overtime requirements, contact our law firm.

Honesty is an Employer’s Best Policy – Honest Defense Rule in Employment Discrimination

Employee Investigation ReportA recent court decision shows that the “honest belief” rule continues to be a potent defense for employers responding to employment discrimination claims. And conversely, it continues to be a frustrating hurdle for employees to overcome in proving unlawful discrimination in the workplace.

Specifically, the honest belief of a Wal-Mart manager was found to protect the company from an age discrimination lawsuit brought under Michigan’s Elliott-Larsen Civil Rights Act (ELCRA). The full court opinion is available here Richardson v Wal-Mart (9/9/16).

The Honest Defense Belief

Under this rule, employers may avoid a finding that the claimed nondiscriminatory reason was pretextual if the employer can establish its reasonable reliance on the particularized facts that were before it at the time the decision was made.

Wal-Mart’s policy calls for an employee to be terminated after four disciplinary actions. Wal-Mart’s Store manager, Mark Darby, followed the company policy when he fired Richardson after she violated a workplace safety rule that resulted in a fourth disciplinary action.

Richardson, however, claimed that she learned from a colleague several weeks before she was fired that Darby and other the assistant managers wanted her fired and “they were looking for any excuse they could find to get [her] out of the store.” In this regard, Richardson appeared to have argued that some of the disciplinary actions should have been disregarded because they were the product of unlawful discrimination by her managers.

But, Wal-Mart won in District Court after the judge granted its motion for summary judgment. In doing so, the judge found that Richardson lacked direct evidence that her termination was based on her age and she failed to establish that Wal-Mart’s stated nondiscriminatory reason for her discharge was pretextual.

The Court of Appeals agreed with the dismissal. Turning to the Wal-Marts’ “honest belief,” the court concluded that Richardson failed to present evidence calling into question Wal-Mart’s stated reason for terminating her, namely, her accumulation of four disciplinary actions.

Further, the Court concluded that even if such evidence was produced, Wal-Mart was still entitled to summary judgment under the honest belief rule.

Darby reasonably relied on the fact that Richardson had three prior [disciplinary] coachings in her record. Darby reviewed each of those coachings, and he terminated her employment based on her coaching history and her violation of Wal-Mart safety standards. Even if Darby might have concluded upon closer review that one or more of Richardson’s coachings should have been removed from her record, ‘[a]n employer’s pre-termination investigation need not be perfect in order to pass muster under the rule.’

Responding to and Establishing the Honest Belief Defense

The honest belief rule is especially difficult to overcome for plaintiff employees. To overcome an employer’s assertion of the honest belief rule, there must be evidence that demonstrates the employer did not ‘honestly believe’ in the proffered non-discriminatory reason for its adverse employment action.” But the honest belief rule continues to apply even if the employer’s conclusion is later shown to be mistaken, foolish, trivial, or baseless.

But this doesn’t mean that invoking the honest belief is a free pass for employers; courts routinely refuse to apply the defense where the employer fails to take reasonable action relative to the pre-termination/discipline investigation. In our experience, the hallmark of such reasonableness comes down to whether management disregards a readily available and potentially critical piece of information concerning the employee. In other words, if the decisional process was not reasonably informed then the honest belief rule should not apply.

For more information about this article or federal or Michigan employment law, contact attorney Jason Shinn. Mr. Shinn has focused on employment law and litigation since 2001. He routinely represents companies in complying with employment laws and employees discriminated under those laws.

Employers Have New Guidance for Avoiding Retaliation Claims

Employment Law GuidelinesOn August 25, 2016, the Equal Employment Opportunity Commission (EEOC) issued its Enforcement Guidance on Retaliation. As such, the newly published guidance should be a “must read” for HR professionals and companies (right, just want you needed going into the Labor Day Weekend). Next, HR should be prepared to follow up with a meaningful assessment of how the company’s current anti-retaliation policies concerning federal or Michigan anti-discrimination employment statutes compare to the EEOC Guidance.

Employment Retaliation Landscape – Changed and More Expansive

The EEOC notes that its new Enforcement Guidance on Retaliation was necessary because since its 1998 Retaliation Guidance the Supreme Court and the lower courts have issued numerous significant rulings regarding employment-related retaliation. Additionally, charges alleging retaliation has doubled since 1998. In fact, retaliation is now the most frequently alleged basis of discrimination in all sectors, including the federal government workforce.

The newly issues Guidance is needed in light of these changes, as well as because of how broadly the opposition clause of Title VII has been interpreted. The Supreme Court explained this definition as follows:

‘[w]hen an employee communicates to her employer a belief that the employer has engaged in . . . a form of employment discrimination, that communication’ virtually always ‘constitutes the employee’s opposition to the activity.’

Crawford v. Metropolitan Government of Nashville and Davidson County.

Recommended Best Practices

Again, HR professionals should read the Enforcement Guidance in full. It provides many helpful examples of what is prohibited, as well as discussions about non-obvious examples of employment scenarios that may give rise to retaliation violations. However, here are a few recommended best practices discussed in the Guidance for employers to reduce the risk of retaliation violations.

  1. Written Employer Policies – Employers should maintain a written, plain-language anti-retaliation policy, and provide practical guidance on the employer’s expectations with user-friendly examples of what to do and not do.
  2. Training – Employers should consider training that focus on: (i) training all managers, supervisors, and employees on the company’s written anti-retaliation policy; (ii) top management should set the tone by making it clear that retaliation is not tolerated, (iii) tailor training to address any specific deficits in employment compliance knowledge that have arisen in the workplace; and (iv) train management and human resources staff regarding how to be responsive and proactive when employees do raise concerns about potential EEO violations.
  3. Anti-Retaliation Advice and Support for Employees and Managers – In response to a complaint and investigation, employer’s should provide statements and information to all parties and witnesses regarding the company’s anti-retaliation policy, how to report alleged retaliation, and how to avoid engaging in it. Further, managers should be informed about
  4. Review Employment Actions – Before making any adverse employment decision against an employee who has filed a charge of discrimination with the EEOC or participated in an employment discrimination proceeding, companies should consult with experienced HR professionals or their employment law specialist. This caution is necessary to ensure the proposed employment action is based on legitimate non-discriminatory, non-retaliatory reasons, i.e., it will not expose the employer to further liability for retaliation. In this regard, it is critical to accurately identify the legitimate, nondiscriminatory reasons for taking any adverse employment action and ensuring to appropriately document those reasons.

There is no single best approach suitable for every workplace. And each circumstance of discrimination or retaliation will involve its own set of distinctive facts. As such, employers should first consult with experienced employment law attorneys before implementing these recommendations.

After Action Assessments

Further, employers should consider conducting an assessment after a discrimination complaint is resolved. We routinely meet with our employment law clients to share our assessments leading up to and the handling of the circumstances giving rise to the discrimination complaint. The purpose of our after action assessment is to provide the “good, the bad, and the ugly” in terms of feedback so as to prevent repeat mistakes and otherwise improve the client’s business.

For more information about complying with federal and Michigan employment laws, contact employment attorney Jason Shinn. Mr. Shinn routinely works with companies to investigate workplace issues, navigate the patchwork of state and federal antidiscrimination laws with respect to compliance, and, if necessary, litigates these issues in federal and Michigan courts.

Workplace Recommendations for Responding to the Zika Virus

Employee zika risksThe number of Zika cases being reported in the United States and its territories continues to rise. Such cases were recently reported in Michigan (Ingham County and Monroe County).  For these reasons, it is prudent for Michigan businesses to understand their obligations and precautions that may be taken to limit Zika related risks in the workplace.

In this regard, the Occupational Safety and Health Administration (OSHA) issued an interim guidance report providing employers and workers with information and advice on preventing occupational exposure to the mosquito-borne Zika virus. See OSHA’s Interim Guidance Report.

  • OSHA Recommendations are not new regulations.

At the outset, it is important to note that the OSHA recommendations are not a regulation. Thus, they do not create new legal obligations. Instead, they are only recommendations to promote a safe workplace relative to the Zika virus.

  • Preventative Measures.

Because mosquitos are central in the transmission of Zika, the dangers of contracting it are of high concern for employees working outside (think landscaping, construction workers, oil and gas line inspectors, etc.). Accordingly, employers should eliminate sources of standing water to reduce areas where mosquitos can breed. Examples include eliminating water sources associated with barrels, containers, inside of tires, or buckets.

Employees should also be encouraged to wear clothing that covers hands, arms, legs, and other exposed skin. For employees whose job duties take them outside, it may be advisable to wear mosquito netting to protect the face and neck. If your company has an outdoor/construction zone dress code that includes long sleeves and pants, it should also be strictly enforced to reduce the risk of mosquito bites. Additionally, it is important to use insect repellents.

  • Employees and Pregnancy.

For employees who are or may become pregnant, including males if their sexual partner is or may become pregnant, they should understand the virus and pregnancy. Start with the Centers for Disease Control and Prevention (CDC). If these employees have any outdoor work assignments or will be traveling to areas heavily infected with Zika, they should consider discussing the situation with their supervisors. Depending upon the circumstances, this may create obligations for both employees and employers for discussing  whether any reasonable accommodations may be available as a precautionary measure or as may be required under the Americans with Disabilities Act.

  • Good Intentions Don’t Excuse Employment Discrimination

According to the CDC, if a pregnant woman is infected with the virus, Zika may result in health concerns for both the mother and fetus as well as birth defects in the fetus. However, employers cannot prevent a pregnant woman from doing particular work in an effort to reduce her chances of being infected by Zika and harming herself and her baby. Such actions may create a potential sex discrimination claim.

Specifically in a 1991 U.S. Supreme Court decision, United Automobile Workers v. Johnson Controls (1991), a company restricted its female employees without medically documented infertility from engaging in work tasks that involved exposure to lead levels that exceeded those deemed safe by the OSHA to protect them and their future babies. While the company believed it was looking out for the safety of its employees, the Supreme Court decided in a unanimous decision that the company discriminated on the basis of sex because the condition of being a woman did not interfere with one’s ability to perform the essential tasks of the job properly. More recently, in July 2016 the EEOC announced that it sued a North Carolina company for similar actions. See coverage of this suit by attorney Jon Hyman’s blog post, Paternalism vs. pregnancy discrimination.

For more information about employment law compliance and best practices for your workplace, contact employment attorney Jason Shinn. Since 2001, Mr. Shinn has worked with manufacturers and other businesses when it comes to federal and Michigan employment law compliance in all phases of the business – from hiring to firing, as well as workplace investigations.

Corporate Religious Beliefs – A New Defense in Employment Discrimination Claims?

Religious freedom and employment discrimination

The tension between employment discrimination and religious freedom recently played out in a Michigan federal district court case. In that case, EEOC v. R.G. & G.R. Harris Funeral Homes, the employer’s religious freedom won out over the rights of a transgender employee. Specifically, the judge ruled that a metro Detroit funeral home did not discriminate against an employee when it fired her for transitioning from a man into a woman.

Two important points to be gleaned from this lengthy opinion. First, the employer argued that its enforcement of its sex-specific dress code could not constitute impermissible sex stereotyping under Title VII. The district court rejected this argument.

Second, the court ruled that under the Religious Freedom Restoration Act of 1993 (“RFRA”), the EEOC was prohibited from applying Title VII to force the funeral home to violate its sincerely held religious beliefs. In reaching this decision, the District Court relied extensively upon the U.S. Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014), which concluded that a for-profit corporation is considered a “person” for purposes of RFRA protection.

As such, the district court went through the intellectual exercise of asking whether Title VII “substantially burdens” the funeral home’s exercise of religion. The answer was, yes:

The Court finds that the Funeral Home has shown that the burden is ‘substantial.’ Rost has a sincere religious belief that it would be violating God’s commands if he were to permit an employee who was born a biological male to dress in a traditionally female skirt-suit at one of his funeral homes because doing so would support the idea that sex is a changeable social construct rather than an immutable God-given gift. Rost objects on religious grounds to: 1) being compelled to provide a skirt to an employee who was born a biological male; and 2) being compelled to allow an employee who was born a biological male to wear a skirt while working as a funeral director for his business.

Should a for Profit Company Have a Religious Belief Exception to Discrimination Claims?

Employment law sage and attorney Robin Shea first reported on this case on April 19, 2016. She believes that this decision is likely to be appealed to the U.S. Sixth Circuit Court of Appeals. I hope so.

I say this because the opinion and others like it leave too many unanswered questions for employers and employees. Also, as explained below, the consequences for elevating religious beliefs of a corporate entity over the rights of people under various anti-discrimination statutes are not good.

First, the funeral home employer, R.G. & G.R. Harris Funeral Home, Inc., was organized in 1932 as a Michigan domestic profit corporation. It was never formed as a non-profit or a religious institution. Also, the funeral home’s most recent articles of incorporation, provide that the funeral home’s sole purpose is to “perform embalming, funeral burial and related services as well as all other purposes allowed under Michigan law.” (2005 restated articles of incorporation). Again, from creation to operation nothing inherent in the corporate entity demonstrates any preferred religion.

Second, the distinction between a religious institution and a for-profit corporation were succinctly explained by Justice Ginsburg in the Hobby Lobby case:

Religious organizations exist to foster the interests of persons subscribing to the same religious faith. Not so of for-profit corporations. Workers who sustain the operations of those corporations commonly are not drawn from one religious community.

Building on this point, it is corporate law 101 that a corporation is to be treated separate and distinct from its owners. Under Michigan corporate law, the corporate entity remains distinct even where a single person owns all its stock.

Third, turning to the actual religious beliefs at issue in this case – they were asserted by the corporation’s majority shareholder, Thomas Rost. He sincerely believes that the “Bible teaches that a person’s sex (whether male or female) is an immutable God-given gift and that it is wrong for a person to deny his or her God-given sex.” However, they are his beliefs – not the corporation. And the individual discriminated against was employed by the corporation – not Mr. Rost.

Simply put, a person is not required to form a corporation or other business entity in order to conduct a for-profit business. However, there are many reasons and advantages for forming a business entity. But one should not be permitted to maintain a business structure when it inures to their benefit and then ignore the constraints of that business entity when it does not.

Further, where is the line to be drawn, if at all, when it comes to whether any business entity’s purported religious beliefs, should be respected over anti-discrimination statutes? It is important to remember that this question opens the door to any religion – mainstream religions or otherwise, including any variants. It is also important to note that not all people, gender, competing religions may be treated equally in another’s religion.

As Justice Ginsburg noted in the Hobby Lobby decision,

Approving some religious claims while deeming others unworthy of accommodation could be ‘perceived as favoring one religion over another,’ the very ‘risk the [Constitution’s] Establishment Clause was designed to preclude … The court, I fear, has ventured into a minefield.

Also, if a corporation’s religious beliefs are allowed to be an affirmative defense against discrimination, does this open the door for such beliefs to be litigated, including discovery, proofs, and legal arguments so that a judge may ultimately decide the issue?

Returning to the funeral home’s religious beliefs and actual business practices, there was no dispute that the funeral home marketed to and served customers of every religion (various Christian denominations, Hindu, Muslim, Jewish, native Chinese religions) or none at all. But the Christian Bible strictly forbids recognizing other religions. See Exodus 23:13 (“… and make no mention of the names of other gods, nor let it be heard on your lips; Isiah 45: 21 (“And there is no other god besides me … there is none besides me.” Exodus 20:3 (“You shall have no other gods before me.”). Further, Biblical passages even direct its followers to kill anyone who worships a non-Christian God. See Deuteronomy 13:9. I have yet to find any “profit” or “business necessity” exception to these Biblical prohibitions against religious acceptance or tolerance in order for a company to turn a profit.

Accordingly and returning to the EEOC’s case against the funeral home, why wouldn’t the Agency have a right to challenge the “sincerity” of the funeral home’s belief where it chose to profit by ignoring the Bible, but now claims the Bible as a defense against discrimination. Do these inconsistencies create a question of fact to be decided by a judge or jury? And are these the sorts of issues that judges should be determining?

As an attorney, I represent a number of small and medium-sized businesses similar to the funeral home. I also understand that families or small groups of shareholders often run such businesses and may share common, sincerely held beliefs. In fact, my law firm is such a business. But I would never subject my staff to my religious views by claiming that the legal entity that actually employs them has a particular religious belief. I also would not want my religious beliefs subjected to the scrutiny inherent in litigation. I just cannot accept the fiction that a for-profit business entity can have religious beliefs or that such a fiction should be elevated to take priority over people and their rights under federal anti-discrimination statutes.

Noncompete Litigation Between Papa John’s and Panera – Lessons For Protecting Competitive Advantages

Business conflictEarlier this month a federal district court judge entered a temporary restraining order (TRO) against a former Panera executive and his new employer, Papa Johns. The TRO arose out of a lawsuit to enforce the former Panera executive’s non-compete agreement. That agreement restricted him from competing against Panera for one year after his employment ended. The Order is available here, Panera v Nettles.

In sum, the TRO prohibits Panera’s former executive, Michael Nettles, and Papa John’s from working with each other, either directly or indirectly in any capacity. Papa Johns is also restricted from employing Nettles until further order of the Court. 

While this sort of non-compete lawsuit is relatively common, there are a number of points that business owners should consider when it comes to their company’s competitive advantages.

  • Trade secrets and competitive advantages – every business has them.

First, in talking about this case with some non-attorney friends and family (yes, I am THE life of a party), the discussion went along the line of, “Trade secrets and non-compete restrictions. But it’s just soup, sandwiches, and pizza (and not very good pizza at that).” This sentiment is also common among business owners concerning their companies; They often overlook or fail to realize the competitive advantages inherent in their own business.

Going back to the Panera lawsuit, yes Panera’s business is about soups, sandwiches, etc. But Nettles worked in a high-level executive position within Panera’s Information Technology department. In that role, Panera granted Nettles access to its highly sensitive confidential and proprietary information and trade secrets used across the business. Panera further described in its Complaint the competitive advantages it sought to protect as follows:

… Panera unveiled its vision for “Panera 2.0,” which consists of enhanced to-go and eat-in options enabled by a series of integrated technologies. “Panera 2.0” is an integrated, comprehensive, end-to-end solution that aims to reduce wait times, improve order accuracy, and minimize or eliminate crowding; and create a more personalized experience.

Ok, so it isn’t quite as exciting as Colonel Sanders’ 11 secret herbs and spices or the famed Coca-Cola trade secret formula, but it is information that provides value to Panera.

  • Protecting business assets – you have to know what you have.

Second and building on the preceding point, businesses should make it a priority to conduct an assessment of its intellectual property (IP) and what provides a competitive advantage to the company. I often recommend owners think about what information they would take if they had to do their job for a competitor. This question focuses attention on what a company should be protecting to maintain its competitive advantage.

  • Protection starts with a non-compete agreement.

Third, once your business has identified its competitive advantages and valuable IP, the next step is to implement policies and agreements to protect this information. Non-compete restrictions, confidentiality provisions, and non-solicitation prohibitions will often be a cornerstone of your company’s IP protection plan. For this reason, it is important to have your employment agreements and post-employment restrictions tailored to your business by an experienced employment attorney.

Going back to the Panera lawsuit, would Panera’s information be valuable to a pizza chain (the status quo at Papa Johns certainly hasn’t worked beyond producing something approximating an edible food product)? Maybe, maybe not and this will likely be a question addressed in the litigation.

But by having Nettles sign a non-compete agreement, Panera reinforces its belief that the information is valuable and it took some effort to protect the value of that information. This fact alone is often not enough to win or lose a TRO hearing; We have successfully obtained TROs where there was no non-compete restriction. And we have successfully defended against TROs where there was a signed non-compete restriction. But even so, a signed non-compete agreement is always a compelling exhibit for any judge in considering whether a TRO should be issued.

For more information about drafting and enforcing non-compete agreements, as well as protecting trade secrets, contact attorney Jason Shinn. Mr. Shinn has focused on these legal issues since 2001 on behalf of companies and individuals.

Michigan Employees Find Themselves on the Chopping Block after Dow Corning Layoff Notices

Employees on Chopping BlockM-Live, by Heather Jordan, reported that Dow Corning Corp. has formally notified the state of its plans to lay off 348 Michigan employees. This layoff follows the June 1, 2016, announcement of the successful completion of restructuring the ownership of Dow Corning joint venture with Midland-based Dow Chemical. Under that restructuring, Dow Chemical Company assumed full control of Dow Corning Corporation.

Having worked with numerous business owners, it is an agonizing decision when the company finds itself in a layoff or reduction in force (RIF) situation. Conversely, employees who find themselves on the chopping block often feel betrayed, blindsided and motivated to sue for discrimination. Accordingly, such conditions make for the potential for an explosive situation.

Here are a few legal issues companies must carefully evaluate when laying off its employees:

  1. Notices: Employers must determine whether they are subject to the Worker Adjustment and Retraining Notification (WARN) Act.  Employers must comply with WARN notice requirements if they have 100 or more full-time employees or 100 or more full- and part-time employees who work a combined total of at least 4,000 hours per week (excluding overtime). In general, WARN’s notice requirements apply to plant closings involving 50 or more employees and layoffs involving 50 or more employees and at least 33 percent of employees during any 30-day period (the 33 percent requirement does not apply to layoffs involving 500 or more employees).
  2. Layoff Policies and Employment Agreements: If your company determines layoffs/RIF are necessary, then it is important to review all policies, agreements, or collective bargaining agreements with employees before beginning the process.
  3. Determining the Order of Layoff: Layoffs or large-scale RIFs are generally the results of economic necessity. But employers cannot rely exclusively on this explanation. This is because companies must still be prepared to explain why particular employees were selected for economic layoffs; an employer cannot decide which employees to lay off on the basis of considerations that are prohibited by law, such as age or other unlawful discrimination. Accordingly, companies must decide the order of layoffs based on non-discriminatory factors, such as skills, knowledge, and abilities that are necessary for the company to operate. Further, these factors must be documented. In our experience, the criteria and decision-making process for determining layoffs can be the employers greatest defense against subsequent employment discrimination claims or an equally great hindrance to that defense.

These are only a few issues that need to be considered when a workforce is downsized through layoffs or RIFs. Above all, it is essential that at all times in determining the order of layoffs or criteria for any RIF that your business adheres to its commitment to provide equal employment opportunity for all employees.

For more information about this article or legal issues involving downsizing workforces through employee layoffs or RIFs, contact Michigan employment attorney Jason Shinn.

NLRB Once Again Wades Into the Lawfulness of Employer’s Workplace Policies

NLRB wades into lawfulness of employee policies under NLRAOnce again a company’s workplace policies were found to have violated the National Labor Relations Act (NLRA). This time on July 29, 2016, the U.S. Court of Appeals for the District of Columbia Circuit endorsed the National Labor Relations Board’s (NLRB) view that an employer violates the NLRA by maintaining workplace policies that employees may reasonably view as coercive.

Workplace Confidentiality and Nondisparagement Policies Violated NLRA

Specifically, Quicken Loans’ confidentiality and non-disparagement policies were found to have violated the NLRA because they interfered with workers’ rights to discuss labor unions and their job conditions. See Quicken Loans, Inc. v. NLRB, (7/29/16). Quicken Loans required employees to sign an employment agreement that had two disputed provisions.

  • Quicken Loans’ confidentiality rule prohibited employees from disclosing “personnel information” to any person “except as may be authorized by the Company in writing.” Personnel information was defined to include employee lists and rosters and information about co-workers such as home and mobile phone numbers and e-mail and home addresses.
  • Quicken Loans’ mortgage bankers were also required to agree to its non-disparagement rule. That rule prohibited employees from acting alone or in cooperation with others to “publicly criticize, ridicule, disparage to defame the Company or its products, services, policies, directors, officers, shareholders or employees.”

Both provisions were found to violate employees’ Section 7 rights. In reaching this decision, the Court rejected Quicken Loans’ argument it had never enforced the rule in a manner that restricted NLRA-protected activity and its contention that employees didn’t understand the rule as limiting their statutory rights. Here is an excerpt from the Court’s opinion:

… Quicken contends that the Board should have considered whether Quicken employees actually construed the Confidentiality Rule to prohibit Section 7 activity … or Quicken had ever enforced the Rule to interfere with Section 7 activity. Those arguments, however, fail to come to grips with the governing law. The validity of a workplace rule turns not on subjective employee understandings or actual enforcement patterns, but on an objective inquiry into how a reasonable employee would understand the rule’s disputed language. Thus [the NLRB] is merely required to determine whether ’employees would reasonably construe the language to prohibit Section 7 activity … and not whether employees have thus construed the rule.

The Court reasoned that such an objective assessment of employer rules “serves an important prophylactic function,” the court said because the NLRB has a “proactive role in safeguarding employees’ rights.”

For similar reasons, the court concluded that the non-disparagement rule also violated Section 7 rights. In so doing, it again rejected the employer’s argument that there was no evidence it ever used the disputed rule to restrict employees from exercising their rights. “The absence of enforcement could just as readily show that employees had buckled under the Employment Agreement’s threat of enforcement.”

Professional Pointers – Plan For NLRB Scrutiny of Employee Agreements

For me, this opinion illustrates two strategies that  companies can take in response to an aggressive NLRB: Hope that your company’s employee policies and agreements aren’t ever under the NLRB’s microscope or respond to the challenge and plan for such scrutiny. I say this because we have repeatedly represented employers in Quicken Loans position and covered on this blog similar results. See NLRB Makes Gambling with Your Company’s Employee Handbook a Risky Bet, NLRB Finds Employer’s Workplace Rules Violated Federal Labor Law, or Employee Manuals Need Spring Cleaning Thanks to the NLRB.

Here are three additional points to consider:

  1. First, I would almost a guarantee that restrictions in your company’s employee policies or agreements are going to run afoul of the NLRB. As the Quicken Loans’ opinion emphasized, such anti-disparagement policies “[fly] in the teeth of Section 7.”
  2. Second and of significant note for employers and HR professionals is that Quicken Loans unsuccessfully argued that it had never enforced the rules in a manner that restricted NLRA protected activity and that there was no evidence that employees construed understood the rules to restrict rights under the NLRA. Companies should take this finding as a neon, bulletin board sign to go through your employee agreements and policies to remove similar language that could be construed to violate the NLRA.
  3. Third, we collaborate closely with employers to draft employee policies and provisions with the goal of avoiding NLRB violations. Additionally, we encourage employers to include an express statement to the effect that nothing in a particular workplace rule is intended to interfere or otherwise restrict an employee’s statutory rights under Section 7 of the NLRA to engage in union activity or concerted activity for their mutual aid and protection. In contrast, it does not appear that such language was found in Quicken Loans’ policies (at least there was no argument to such a savings provision in the opinion). Such a provision when coupled with the evidence Quicken Loans presented that its rules had not been enforced in referenced to Section 7 activity may have made a difference in the outcome.

For more information about this decision or updating your company’s employee manuals and agreements to avoid NLRB violations and compliance with other employment laws, contact employment attorney Jason Shinn.