Does Your Company Need An Employee Probationary Period?

Life Preserver What do airplane life vests and probationary employment periods have in common? Both are ubiquitous in their respective context, both are often useless, and they may even do more harm than good.

Let me explain; the Wall Street Journal’s Scott McCartney recently wrote an article, “An Airplane Safety Measure That’s Not Much Use. In the article, Mr. McCartney notes that in the history of modern commercial flying, a life vest has never saved a life.

In fact, experts indicate that problems with their design and where life jackets are located limit their usefulness. As an example, Mr. McCartney cites to the 2009 splashdown of Flight 1549 in the Hudson River where only 33 of 150 passengers on that flight had a life vest upon being rescued. And only four of these people managed to properly don their life jacket.

As to the detriment, eliminating life vests means losing about 200 pounds of cargo on a medium sized jet. This amounts to saving approximately a million plus gallons of fuel a year for a large airline. Additionally, flight attendants must spend time checking each seat to make sure it has a vest before take-off.

The Value, or lack thereof, for Employment Probationary Periods 

Turning to probationary employment periods, they are also routinely found in many businesses. Probationary periods apply to “new hires.” They last for durations often ranging from 30, 60, or 90 days. Either expressly or implied, the employer will conduct some measure of additional evaluation and feedback during the probationary period and upon successfully completing it, the employee is no longer on probation.

So two assumptions are created with a probationary period: (1) An employee just has to make it to through probation; and (2) Upon successfully completing the probationary period, the employee’s employment is now somewhat more permanent.

But these two assumptions illustrate why probationary periods are useless. Michigan, like most states, presumes employment is “at-will.” This means a company can terminate an employee for any reason — probation or not — so long as it is not not an illegal reason, e.g., because of race, gender, pregnancy, religion or other areas protected by federal or Michigan employment laws. Further, at-will employment applies to newly hired employees or long-time employees.

So with at-will employment the default, where is the value in differentiating between your company’s new hires and your long term employees if both can already be terminated for any reason that is not unlawful?

As to the detriment, the presumption of employment at will can be overcome if an employee provides sufficient proof of either a contractual provision for a definite period or a provision forbidding discharge absent just cause. Does a probationary employment period of 30, 60, or 90 days sound like a definite period? Or is something more now required for termination after the probationary period? If the employee policies and probationary documents aren’t carefully written, it could expose your company to costly litigation to sort these issues out.

Just ask the employers involved in consolidated cases captioned Rood v. General Dynamics Corp. In those cases, the employers had the opportunity to go all the way up to the Michigan Supreme Court on the central issue of whether the probationary period for newly hired employees overcame the presumption of employment at will. The Court ultimately found it did not, but you can bet it was not a cheap determination for the employers.

A few Considerations if you Decide to Ditch the Probationary Period 

First, whether your company intends to use a probationary period or not, it still needs an employee handbook to cover all other aspects of the employment relationship. This handbook needs to be clear that employment is at will and this at will status must be consistent in your employment related documents – from applications, interviews, and offer letters.

Second, it is important to understand that eliminating a probationary period does not mean you have to treat new hires to all the perks and benefits available to longtime employees. Instead of using a probationary period for newly hired employees, simply designate the time when new employees are eligible for other company benefits, including seniority, paid holidays, and eligibility for vacation and military leave. But talk to an employment attorney about making sure that any distinction and withheld perks are lawful.

For more information about this article, as well as drafting employee handbooks and complying with federal and Michigan employment laws, contact employment attorney Jason Shinn. Since 2001, he has worked with employers to address all aspects of the employment relationship – from hiring to firing and everything in between – including litigating these issues in federal and Michigan courts.

Courts Continue to Narrow Application of Computer Fraud and Abuse Act Against Former Employees

While it is far from settled, the trend under the Federal Computer Fraud and Abuse Act continues towards narrowing the application of the CFAA in the context of the employer/employee relationship.

Specifically, a federal district court in Colorado concluded that the federal computer fraud statute was not violated by departing employees and contractors who, during their employment, used login credentials to download and disclose their employer’s proprietary information. Cloudpath Networks, Inc. v. SecureW2 B.V. 1-13-16.

The Cloudpath case highlighted a central issue in CFAA claims brought against former employees. That issue comes down to whether information acquired during authorized computer access but is later used for an unauthorized purpose is covered by the CFAA’s “exceeds authorized access” provision (§ 1030(a)).

There is, however, a legal split among the federal districts as to how “exceeds authorized access” should be construed concerning the employer/employee relationship. This split was succinctly described by the Cloudpath Court as follows:

“Exceeds authorized access” is a defined term. It means “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” … One collection of circuits holds that it extends to an employee/agent who use his or her access for purposes contrary to the employer/principal’s interests … the other side of the circuit split, which holds that “exceeds authorized access” only applies to an employee/agent who uses otherwise-permitted computer access to obtain data that the employer/principal has declared off-limits to that employee/agent.

Here the Cloudpath Court ultimately sided with the defendants and agreed with the Second, Fourth, and Ninth Circuit courts. These courts have adopted the narrower interpretation and held the CFAA doesn’t cover misuse of information. In other words,  liability under the CFAA is not concerned with the improper use of valuable information so long as the initial act of accessing the employer’s network was authorized.

The Take Away

The CFAA provides civil and criminal liability for accessing a protected computer without authorization or in a manner that exceeds authorized access. In light of the stiff civil and criminal penalties, one of my consistent criticisms of courts applying the CFAA to former employees is that a broad application of criminal law is primarily determined by the employer, i.e., whether employee access is authorized depends on the employer’s decision to allow or terminate access.

As the Cloudpath Court noted, this poses the risk that an employer may manufacture liability by promulgating a computer policy such as “Employees are authorized to use company computers solely to the extent they do so for company purposes?” Any employee who does otherwise is accessing a computer “without authorization.”

Understanding the CFAA’s application and limitations is critical for companies to protect their intellectual property and competitive interests. It is also essential for employees to understand the significant penalties – criminal and civil – if a CFAA case is successful.

For more information about the Computer Fraud and Abuse Act, as well as litigating claims under the CFAA, contact attorney Jason Shinn. On behalf of businesses and individuals, Mr. Shinn has brought and defended against CFAA and related trade secret misappropriation issues.

“Reasonable Accommodations” and “Undue Hardship” Defenses – It Comes Down to Money

Dollar SignA recent case involving the Americans with Disabilities Act offers employers an opportunity to consider two frequent issues under this statute: What is a reasonable accommodation and what must an employer show to establish an “undue hardship” defense to providing such an accommodation.

The case, Searls v. Johns Hopkins Hosp. (1-21-16), resulted in the U.S. District Court for the District of Maryland granting partial summary judgment for the former employee. The order found that Johns Hopkins Hospital violated the ADA, but left the issue of Searls’s damages under the ADA remained to be determined at trial.

The violation occurred after Johns Hopkins failed to provide a deaf nurse with the assistance of a full-time American Sign Language interpreter and rescinded the nurse’s job offer. The hospital had argued that it was too expensive to provide the interpreter.

What is a Reasonable Accommodation?

It is the employee’s burden to show that an accommodation is reasonable. And the reasonableness of an accommodation depends on whether it “enables the employee to perform the essential functions of the job in question.” The essential job functions under the ADA are those that the individual who holds the job must perform, with or without reasonable accommodation, to be considered qualified for the position.

The essential job functions applicable to the lawsuit were (1) communicating with patients, family members, and other hospital personnel, and (2) monitoring and responding to alarms. The parties agreed that Searls could not have performed these essential functions without an accommodation.

Here, the court found that providing Searls with a full-time interpreter wouldn’t have eliminated any of the essential duties of the position; She still would have had to rely on her “nursing judgment” and not the interpreter’s in responding to patient needs and other information conveyed to her.

An accommodation is reasonable, but is it an undue hardship?

An employer is not liable if it “can demonstrate that the accommodation would impose an undue hardship on the operation of [its] business.” 42 U.S.C. § 12112. Turning to this issue, Johns Hopkins argued that the projected $120,000 annual cost of an interpreter was prohibitive. In support of this argument, the hospital claimed it would have to fire two nurses to cover the cost.

The court rejected this argument because the hospital focused solely on the budget of the unit and the hiring department. It did not, however, concentrate on the hospital’s overall $1.7 billion budget. Further, the court found that accepting the hospital’s argument at face-value meant that it seemingly had no money allocated for providing workers with reasonable accommodations, as required by federal disability bias law.

Take-Away

There are three important points that companies should carefully consider when assessing a request for a reasonable accommodation under the ADA:

  1. First, this case reinforces that an “undue hardship” defense, will be available to employers only upon a showing of significant difficulty or expense in providing a disabled worker an accommodation.
  2. Second, in making the assessment, the “financial realities of the particular employer” will be taken into account.
  3. Third, “undue hardship” generally means “unduly expensive” by considering an employer’s overall operational budget and financial standing — not just the finances of a single department or unit employing the individual.

For more information about complying with the ADA, as well as responding to accommodation request under the ADA, contact employment attorney Jason Shinn. Since 2001, he has worked with both employers and employees in addressing ADA issues and, if necessary, litigating those issues.

New Guidance On “Joint Employment Status” Likely Means More Liability for Companies

Targeting Employers President Ronald Reagan famously noted that the “most terrifying words in the English language are: I’m from the government, and I’m here to help.”

Well, the Department of Labor (DOL) announced on 1/20/2015 that they were here to help clarify when a joint employment relationship exist under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSA).

Specifically, the DOL issued its administrator’s interpretation (Administrator’s Interpretation No. 2016-1), which essentially concluded that the scope of joint employment is broader than many employers believe it to be under the FLSA and MSA; the DOL enforces both statutes.

What this likely means for companies is that they should be prepared for expanded liability for statutory violations associated with third party vendors, such as staffing companies or contract workers.

The stated reason for issuing the administrator’s interpretation is because the DOL,

… regularly encounters situations where more than one business is involved in the work being performed and where workers may have two or more employers. More and more, businesses are varying organizational and staffing models by, for instance, sharing employees or using third-party management companies, independent contractors, staffing agencies, or labor providers.

The interpretation further concluded that “as a result, the traditional employment relationship of one employer employing one employee is less prevalent … The growing variety and number of business models and labor arrangements have made joint employment more common.

The Take Away

The full administrator’s interpretation should be thoroughly discussed with your company’s legal counsel. But two agenda items that should be part of that discussion are as follows:

First, the DOL went out of its way to emphasize that the “appropriate” test to determine joint employment under the FLSA and MSA is much broader than what is used under the National Labor Relations Act (NLRA) and similar employment statutes. In that regard, the NLRA (enforced by the National Labor Relations Board) focuses on the extent of control or possible control one business has over employees of another.

In contrast, the DOL’s position is that courts must focus on “economic dependence,” i.e., whether someone employed by one business is economically dependent on another company involved in the work, similar to a traditional employer/employee relationship. This focus, in turn, must, according to the DOL, examine seven factors collectively referred to as the “economic realities factors.”

Second, the DOL’s administrator’s interpretation clearly signals that companies should be prepared for federal regulators seeking to hold more businesses accountable for people whose employment conditions they control to some degree, but do not claim as employees. Prime examples of such relationships will involve staffing firms or employee leasing companies.

Bolstering this conclusion, Melanie Trottman of the Wall Street Journal reported that business leaders (among those she interviewed was Beth Milito, senior executive counsel of the National Federation of Independent Business) believe the DOL’s administrator’s interpretation:

… is just another threat to the business model of many small firms in our country, because larger companies are probably really going to question whether they take the risk of contracting with a smaller company” or whether they bring the work in-house instead … [and] it would hurt large and small businesses’ flexibility to outsource functions that aren’t part of their main mission such as information technology or cleaning …

See Ms. Trottman’s article, Labor Department to Suggest Designating More Businesses ‘Joint Employers.’ For more information about this article, joint employment, and what your company can do to limit its risks associated with a joint employment determination, contact employment attorney Jason Shinn. He regularly works with staffing firms and employee leasing companies.

Should Employers Reconsider Using Mandatory Arbitration Provisions in Employment Agreements?

Signing-Contract.jpgThe Wall Street Journal recently ran an editorial titled, “Why the Trial Bar and Its Friends Detest Arbitration” by James R. Copland. Mr. Copland’s editorial highlighted some high-profile lawsuits to conclude that the court system often fails companies. Business owners frequently share the same belief and assume their businesses will fare better in arbitration rather than going through the courts. But is this a correct assumption?

As with many issues in life, it depends. But based on our experience, we more often than not recommend our small and medium-sized business clients to forego arbitration and rely on the courts for resolving disputes. Here are a few considerations for why we make this recommendation:

  • Cost of Litigation Versus Arbitration

Arbitration proceedings require the parties to pay the arbitrators’ fees and often other administrative expenses. In contrast, in a court proceeding, no one is paying the judge assigned to the case. Instead, using courts often only requires the paying of a filing fee to initiate the lawsuit and nominal fees for motions that may be filed.

Additionally, arbitration proceedings often have an escalating fee schedule, which is not always equally shared by the parties. For example, the American Arbitration Association’s fee schedule for employer arbitration plans provides that:

In cases before a single arbitrator, a non-refundable filing fee capped in the amount of $200 is payable in full by the employee when a claim is filed, unless the plan provides that the employee pay less. A non-refundable fee in the amount of $1,500 is payable in full by the employer, unless the plan provides that the employer pay more.

To put this fee schedule in perspective, the filing fee and jury fee for a lawsuit filed in a Michigan Circuit Court is only $235 and the defendant is not required to pay any fees to respond to the lawsuit or even to file a counter-claim in that lawsuit.

Accordingly, any company considering arbitration for handling employment claims should carefully consider the out-of-the-box cost for such a program.

  • Length of Time to Obtain a Resolution

Arbitration is often assumed to be a quicker process for resolving disputes. Historically, this was probably a correct assumption. However, especially here in Michigan with the implementation of Business Courts, we have seen the length of time to close a case drop significantly. For example, we recently represented a client in a pregnancy discrimination lawsuit that involved an arbitration provision. Arbitration was filed for on November 5, 2014, but the arbitration hearing did not take place until December 2015.

For example, we recently represented a client in a pregnancy discrimination lawsuit that required arbitration. Arbitration was filed for on November 5, 2014, but the arbitration hearing did not take place until December 2015.

In contrast, we have had many business court cases that have resolved within 6 to 7 months. Admittedly, many of these cases are non-compete disputes that are often on a fast-track because preliminary injunction issues are handled early on in the litigation and often dictate how a case resolves.

But even so, our experience appears to be consistent with that of other cases filed in Michigan business courts, which are reported to close within an average of approximately 5 to 7 months.

Conclusion

Before assuming arbitration is the best option for your company, it is worth testing this assumption against recent data. This is especially true in light of innovations like the business court docket Michigan now uses.

For more information about improving your contracts and employment agreements, limiting employment law risks, as well as proactively managing employment law claims, contact attorney Jason Shinn.

CEO’s “Reckless Texting” Wrecks Lawsuit to Enforce Noncompete Agreement

Texting as a reckless activity is well-documented when it comes to driving. It is also noted as an increasing health hazard for “petextrians” (pedestrians who are texting, clever huh?) according to Ben Zimmer of the Wall Street Journal in his article “What Do You Call a Reckless Texter?”

But can it be “reckless” for your company’s non-compete agreements? The short answer is yes if your CEO decides to negotiate the termination or modification of a non-compete restriction. I’ll leave it to someone far more clever to come up with a name for this texting danger.

“Shoulda, woulda, coulda” is no way to manage your company’s non-compete agreements. 

Our law firm recently represented a former employee in a non-compete dispute. After the employment relationship ended the former employer’s CEO (Ken in the black font of the text message below) texted the former employee about how the non-compete restriction would be treated going forward. This exchange resulted in an evidentiary gem for defending the non-compete lawsuit.

Specifically, a written agreement confirming the CEO would not “stop you from working if you decided to start your own [competing] business …” Lapierre_TextAnother text message from the CEO also confirmed that the non-compete restriction would not be enforced if the former employee worked for a competitor.

As one can imagine, at an evidentiary hearing to determine if the former employee should be enjoined from operating his “competing business” the CEO’s text messages took center stage.

In this regard, the CEO testified extensively about what he “should” have texted, and what he “would” have clarified in his text, and if he “could” just explain that he intended first to sit down and talk before a decision was to be made about waiving the non-compete restriction.

Now as all good attorneys do, it was argued that the text messages don’t really mean what they say, and let’s not forget that these are “just text” messages that are more like “verbal” communications, and the non-compete agreement expressly prohibits oral modifications (I’m greatly simplifying opposing counsel’s arguments for effect. But in reality, he did an excellent job of advocating for his client and minimizing the damage from the CEO’s text messages – being an attorney would be so much easier – but a lot less profitable – if clients would stop creating bad facts).

But at the end of the day, the Judge denied the Plaintiff’s motion for an injunction, in part because the factual issues created by the CEO’s text messages.

You get a Mulligan (or two) in Golf, but not non-compete lawsuits.

Anyone who golfs with me knows that a Mulligan is “par for the course,” i.e., you can always count on a do-over for a less than stellar tee-shot. But business and, more specifically, non-compete lawsuits aren’t like golf with judges eager to hand out a Mulligan for situations like the one described above.

Adding injury to insult, the judge in this matter noted that the non-compete restriction appeared to have been drafted with care by an attorney. As such, it would have likely been otherwise enforceable, but for the CEO’s text messages seemingly promising to forego enforcement of the company’s non-compete restriction.

Conclusion

For companies, technology often creates conveniences. But convenience needs to be exercised with caution. And even if texting is increasingly an acceptable form of communication, it is no way to conduct business – How many deals do you think Warren Buffet has closed or terminated with a quick text that included a happy or sad emoji?

Employment decisions, as with most business decisions need to be carefully made with equal care in how the decision is communicated. Otherwise, you end up with a situation like that described above.

For more information about Michigan non-compete law, including best practices for drafting and implementing a non-compete component into your company’s existing HR policies, contact attorney Jason Shinn.

Dissecting an Injunction Hearing for Enforcing a Non-compete Agreement

In noncompete lawsuits, whether a preliminary injunction should be issued is a critical battle that in large part determines the direction of the lawsuit. For this reason, a recent decision denying a former employer’s motion for injunctive relief in a non-compete enforcement action provides critical insight for companies and individuals.

Court Denies Preliminary Injunction in Non-compete Lawsuit. 

As to the background, our law firm closed out 2015 with a significant preliminary win iScalpel.jpgn a non-compete lawsuit for our client; a former employee who is alleged to have started a business that directly competes against the former employer.

As is typical in this type of litigation, the former employer filed a motion for preliminary injunction, i.e., an order from the court to prevent the defendant from continuing to operate the new business and working for the company. But at an evidentiary hearing on 12/28/2015, the court agreed with our arguments that an injunction should not be granted for the former employer.

However, at an evidentiary hearing on 12/28/2015, the court agreed with our arguments that an injunction should not be awarded to the former employer. While the litigation continues, this ruling means our client may continue to operate his business during the pendency of the litigation.

Be Prepared Before filing the Complaint. 

For companies, a motion for injunctive relief to enforce a non-compete should be like a perfectly executed haymaker punch – it takes time to set up, but if it connects the result is devastating. The preparation for throwing such a punch, however, begins with investigating the former employee’s departure. This includes looking for any digital fingerprints, e.g., emails, downloaded files, installing any USB drives/portable hard drives, records, customer lists, etc. Having such “smoking-gun” evidence is invaluable for the entire case and not just the preliminary injunction phase. Also, in situations where the judge may waiver on granting the injunction (i.e., where the non-compete is overly broad, concerns about whether the non-compete protects a reasonable business interest or merely restricts competition, etc.) evidence of improper conduct is often a trump card.

From the individual’s perspective, even if there were initially legitimate business reasons for you to access, download, email yourself a company file, such actions will be your employer’s “exhibit a” of your sinister scheme to wrongfully or unfairly compete. By way of example, a few years ago we represented an executive who had sent email communications to the executive’s personal email account. These emails were just forwarded email communications between the executive and an HR manager. Further, these emails only involved compensation and benefits issues arising under the executive’s contract. However, the employer went to great (and dubious lengths) claiming that its confidential business information had been misappropriated and relied upon this email chain as proof.

Similar situations have also come up in litigation where an employee was going to be away from the office and downloaded employer information to a USB drive for use while away from the office. Again, individuals should assume actions that may have had a legitimate business purpose will be (mis)characterized when it comes to litigation. And it is important to disclose any such issues to your attorney so that it can be squarely and honestly addressed.

The value of a negotiated resolution vs. gambling for a favorable judge’s decision.

No matter how strong you believe your case for a preliminary injunction may be, there are always risks in letting a judge decide the issue.

For example, returning to the 12/28/2015 evidentiary hearing, before issuing his decision, the judge noted that it appeared an injunction for the employer was appropriate. However, we focused heavily in our opposition memorandum on three arguments for why an injunction was not appropriate under Michigan law.

These were arguments that we believed were compelling and persuasive. But even so, we also made several attempts (including voluntarily producing documents that undercut the plaintiff’s claim the non-compete had been breached) to communicate with opposing counsel for negotiating a short-term resolution or stipulated order. Fortunately for our client, the plaintiff had no interest in negotiating and the Judge agreed with some or all of our arguments in denying the motion. Accordingly, both companies and individuals should always meaningfully explore a negotiated resolution that, even if it while not ideal, is something that both sides can accept if only for a temporary basis.

For more information about defending against a non-compete lawsuit or enforcing a non-compete agreement, contact Michigan attorney Jason Shinn. He frequently represents both companies and individuals in non-compete litigation, as well as working with employers on the front end to draft enforceable non-compete restrictions.

Key to Successfully Assessing ADA Accommodations Starts with Individualized Inquiry

Key.jpgAn area under the Americans with Disabilities Act that can be problematic for employers and employees alike concerns conducting the individualized inquiry that is required to determine if an employee’s disability or another condition disqualifies the employee from a particular position. This issue recently played out in a federal district court case of (Siewertsen v Worthington Steel Co, 9-25-2015).

In this case, the plaintiff, Nicholas Siewertsen, is deaf. He worked for the Worthington Steel Company, since 1999. Among his other duties as a Worthington employee, Siewertsen regularly and without incident operated forklifts, overhead cranes, and other heavy motorized equipment.

In 2011, however, Siewertsen’s supervisors learned – incredibly for the first time – of Worthington’s corporate policy prohibiting deaf employees from operating forklifts. The supervisors immediately barred Siewertsen from operating forklifts and cranes. They also determined, in light of that corporate policy, Siewertsen was ineligible to perform all but four jobs at the plant.

Siewertsen filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission (EEOC) and similar state agency. He alleged Worthington had discriminated against him on the basis of his deafness with respect to “discipline, promotion, and reasonable accommodation.” He further claimed the company’s decision to ban him from performing any job requiring him to operate forklifts or cranes constituted discrimination on the basis of a disability.

The Court easily found there was no dispute that Siewertsen was disabled, or that Worthington took the adverse employment action solely because Siewertsen is deaf. But the issue of whether the employer made the required individualized inquiry to comply with its ADA obligations was left to be resolved.

The ADA’s Requirements

At its core, the ADA makes it unlawful for an employer to “discriminate against a qualified individual on the basis of disability.” See 42 U.S.C. § 12112(a)). Accordingly, an employer must provide reasonable accommodations for the known limitations of an otherwise qualified employee with a disability unless doing so would impose an undue hardship. 42 U.S.C. § 12112(b)(5)(A). And for an employee to prevail on an ADA claim the employee must prove: 1) he or she has a disability; 2) the employee was otherwise qualified for the position; and 3) the employer excluded the employee from the position because of the disability.

The ADA’s Individualized Inquiry

Turning to the issue of whether Siewertsen was qualified for the applicable positions and how Worthington determined he could not work in those positions, the court noted that, “[t]he ADA mandates an individualized inquiry in determining whether an employee’s disability or another condition disqualifies him from a particular position.” This means:

A proper evaluation involves consideration of the applicant’s personal characteristics, his actual medical condition, and the effect, if any, the condition may have on his ability to perform the job in question … people with disabilities ought to be judged on the basis of their abilities; they should not be judged nor discriminated against based on unfounded fear, prejudice, ignorance, or mythologies; people ought to be judged on the relevant medical evidence and the abilities they have.

In sum, the individualized inquiry requires the employer to consider whether the employee, despite his disability, is capable of performing the essential functions of the job, which Siewertsen argued Worthington failed to undertake. In support of this position, Siewertsen argued:

  • His managers and supervisors relied on the company’s blanket policy forbidding deaf employees to operate forklifts or cranes rather than on an individualized assessment of his ability to operate forklifts and overhead cranes;
  • He also emphasized that he operated forklifts and cranes for several years without incident; and
  • He also contended that his employer never asked Siewertsen about those experiences or allowed him to demonstrate his proficiency on a forklift or crane.

The Court acknowledged that the employer presented sufficient evidence, “though perhaps just barely,” to support a reasonable finding that Worthington performed the required inquiry to determine which positions in the plant he could perform with or without accommodation. Accordingly, the individualized inquiry issue would proceed to trial to be determined by the jury.

Take Aways

First, employers and employees need to understand that past work experiences of employees in the applicable position, or similar position must be considered when making an individualized inquiry. Here, Siewertsen had safely and successfully operated forklifts and overhead cranes at the plant without sustaining or causing an injury from a piece of heavy equipment due to his inability to hear.

Second, your managers need to have a working knowledge of your company’s policies. Here the court was troubled by the fact that the managers were relying on a blanket company policy forbidding deaf employees to operate forklifts or cranes. However, for years, these same managers were entirely ignorant of that policy.

For more information about complying with the federal ADA or Michigan’s counterpart, as well as assessing reasonable accommodation requirements under both employment statutes, contact Michigan employment attorney Jason Shinn. Since 2001, he has worked with employers to comply with ADA obligations, and litigated ADA lawsuits on behalf of both employers and employees.

The Price Tag for Settling Sex Discrimination Claims

Gavel-on-Cash.jpgA long-running sex discrimination lawsuit filed by the Equal Employment Opportunity Commission (EEOC) came to an end on November 25, 2015, when a Michigan federal district court approved a consent decree. Under that decree, Cintas Corporation agreed to pay $1.5 million in addition to a numerous other requirements for years to come. A copy of the full consent decree is available here EEOC v. Cintas Corp., 11/25/2015 Consent Decree.

Women who applied to work at a Cintas rental facility in the state of Michigan but were not hired for the position of service sales representative from January 1, 1999, through March 31, 2005, are eligible for monetary relief under this Decree.

The decree arose out of the EEOC’s claim that since at least June 1999 and through March 31, 2005, Cintas unlawfully discriminated against females in recruiting and hiring route sales drivers and service sales representatives throughout the state of Michigan.

In addition to Cintas’ agreement to pay the monetary relief to rejected female job applicants, the consent decree further included Cintas’ agreement to:

  • Enhanced record retention requirements for all applications for the applicable position submitted to a specified Cintas division in Michigan, and it agreed to maintain those records in a specified digital format that would be produced upon request during the consent decree.
  • Cintas’ agreement to hire an outside specialist to validate its applicant screening and hiring criteria and will provide training to its hiring managers in Michigan on the requirements of Title VII of the 1964 Civil Rights Act.
  • Cintas will conduct outreach recruitment to attract qualified women for applicable openings.
  • Pay up to $50,000 for the EEOC to retain the services of a third-party claims administrator to assist in obtaining information from class members and providing that information to Cintas.
  • Submit a detailed report to the EEOC concerning its compliance with the consent decree within 180 days after entry of that decree. After that, Cintas must provide a laundry list of required information in December 2016 and 2017.

The consent decree is scheduled to last the later of 28 months following the date of entry of the decree or March 15, 2018.

Take Aways

The EEOC has broad statutory authority to pursue this sort of enforcement initiative. That authority includes Section 707 of Title VII, which gives the EEOC the ability to file “pattern or practice” lawsuits against employers like Cintas.

For employers, it is important to understand that the EEOC has repeatedly pursued systemic investigations like that involved above in which the underlying allegations contain “pattern or practice” claims. Further, systemic investigations may also result where the EEOC expands its investigation to include “pattern or practice” claims based on allegations raised in a single charge. But regardless of how the systemic investigation begins, it often ends expensively for the employer as the $1.5 million settlement illustrates. Further, that settlement does not reflect the attorney fees and lost opportunity costs for this decade plus long litigation.

For more information about complying with federal or Michigan ant-discrimination laws, and for implementing HR best practices to insulate or minimize the chance your company will be the focus of an EEOC investigation, contact Michigan employment attorney Jason Shinn.

Botched Employment Contract Cost Employer Over $200,000

Banana PeelCompanies commonly offer salary advances or financially invest in an employee’s education, training, or certification. But a recent decision by the Michigan Court of Appeals is a good reminder of how missteps in accurately documenting such advances or investments can be costly. In this case, an employer was out over $200,000 after investing in education and salary advances for its former employee because of the wording of its agreement.

The case in question, Riversbend Rehabilitation v Enos, involved Riversbend Rehabilitation, which provided physical therapy services. Riversbend, through its owner, Michael Wilson, entered into a written agreement with Enos whereby Riversbend would pay the full amount of Enos’s tuition and other educational expenses associated with obtaining a doctoral degree in physical therapy.

The agreement also provided that Riversbend would provide Enos with $40,000 per year as a “salary advance” while he was in school. In exchange, Enos after graduation would work for Riversbend for a salary less than what therapists are paid and the amount of that reduction would be credited against the salary advances until the full amount of the advances had been repaid.

However, the relationship between Wilson and Enos later deteriorated and Riversbend, in an email from Wilson, rescinded its employment offer to Enos. Wilson also emailed Enos a proposed amended agreement and promissory note reflecting that Enos would not work for Riversbend. However, Enos did not execute them. After that, Riversbend did not pay Enos’ tuition for the Fall 2012 and Spring 2013 terms. It also ceased paying Enos a salary in December 2012. Enos in turn refused to repay the salary that Riversbend advanced to him, and Riversbend eventually filed a lawsuit.

The trial court sided for Enos. Specifically, the court concluded that “the parties did not contemplate what would happen if Riversbend refused to employ Enos or refused to make the required payments.” The court, however, concluded that under the plain terms of Riversbend’s contract, Enos had no obligation to repay the advanced salary.

… Enos’ obligation to repay the advanced salary … did not include Riversbend’s refusal to employ Enos or make the contemplated payments … [Enos was obligated] to repay Riversbend by accepting employment with Riversbend, which repayment would be made through acceptance of a reduced salary for a period of time, or, in the event that Enos breached the agreement or elected not to work for Riversbend, he had an obligation to repay Riversbend with payments over time. … Enos did not refuse employment with Riversbend or otherwise engage in acts that would trigger his obligation to repay the advanced salary.

Riversbend also lost on appeal after the Michigan Court of Appeals affirmed the trial court’s decision.

Take Aways

One of the judges on the panel that affirmed the trial court’s decision filed a separate concurring opinion. That opinion expressed disappointment with the outcome, but nonetheless agreed with the result:

… I find myself compelled to concur in the result in this case, but I have serious doubts about whether we have served justice … In my view, the better outcome in this case would be to remand to the trial court to reform the contract so as to provide reasonable terms of repayment of the advance salary, but I do not believe we have the authority to do so.

Businesses rightfully expect a return on their investment, including investing in an employee’s education, training, certification, or when making an advance. But, as this case illustrates, it is important to have in place the proper agreements to protect such investments. And employers can’t (and honestly shouldn’t) expect judges to fix a situation that results in an unfair result like that experienced by Riversbend. Instead, employers need to have a well-written employment agreement or related contracts in place.

For more information about this article or documenting investments in employee training, education, certifications, as well as salary advances, contact Michigan attorney Jason Shinn. He routinely represents both employers and executive employees and sales representatives in documenting and, if necessary litigating contract claims arising out of such issues.

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