Line-of-Questions.jpgI read a very informative article from the American Conservative titled “The Deciders” by John Hay. The main thrust of the article is that Iraq policy after Saddam Hussein was ousted from leadership is more reflective of decisions made by President George W. Bush’s subordinates than the President himself. Without getting bogged down in politics or blame, I found myself reading the article as an employment attorney who regularly defends companies’ decisions to terminate or discipline an employee. From that perspective, Mr. Hay’s well-written article showcased an all too common problem facing companies when it comes to employee discipline.

Specifically, employment disputes often arise because lower level employees or managers disregard sound HR policies and best practices with little or no knowledge on the part of upper management. The result is that there is a significant disconnect between what company leaders believe is taking place and what occurs in the “trenches.” And often, this disconnect is brought to light only after a discrimination charge is made, or a discrimination lawsuit is filed.

Mr. Hay’s article puts it this way:

When you have the wrong diagnosis, you risk coming to the wrong solution, no matter how clever you think you are…This episode highlights a weakness in the executive branch that is ripe for exploitation under any administration … But for those who have a deep understanding of how the government works, it is quite possible to undermine a president, then step back and pretend to have had minimal involvement…

The problem of failing to diagnose a problem or subordinates failing to properly implement company policies routinely manifests in various circumstances. For example:

  • I recently wrote about a discrimination and retaliation claim arising out of the showing of a video depicting a competitor’s CEO as Hitler and his employees as Nazis. See Employers Cannot Afford to Ignore Even a Single Incident of Workplace Discrimination. This video was shown at a mandatory company seminar and (understandably so) offended a Jewish employee. Further, court documents reflect that the employer concluded the video was inconsistent with the employer’s policies and it should not have been shown due to the offensive subject matter. Nonetheless, the damage had already been done.
  • Another example involved a religious discrimination claim I defended on behalf of an employer. While the lawsuit was ultimately dismissed in favor of the employer, upper management was surprised that company policies for scheduling employees were not followed, which created the circumstances for the religious discrimination and failure to accommodate an employee’s religious practice in the first instance.
  • Or consider a federal jury recently ordered a trucking company to pay $240,000 to two Muslim men who were terminated from their positions after refusing to transport shipments of beer (EEOC v. Star Transport Inc., 10/20/15). According to the stipulation of facts in the lawsuit, the decision rests primarily on the fact that while Star was an experienced over-the-road trucking company with 1,150 employees, its managers had little knowledge of Title VII and the company’s obligations to accommodate employees’ religious beliefs under Title VII of the 1964 Civil Rights Act.

The common denominator in these three examples is that HR professionals or the business leaders implemented employment best practices necessary for complying with federal and Michigan employment laws. But, whether you’re the President of the U.S. or your company, it is not enough to just announce a policy and do nothing. And in keeping with the military theme as a framework for effective human resource leadership, Team of Teams: New Rules of Engagement for a Complex World, describes his approach to managing as follows:

Gardeners plant and harvest, but more than anything, they tend. Plants are watered, beds are fertilized, and weeds are removed …Regular visits by good gardeners are not pro forma gestures of concern — they leave the crop stronger. So it is with leaders … A gardening approach to leadership is anything but passive. The leader acts as an “Eyes-On, Hands-off” enabler who creates and maintains an ecosystem in which the organization operates.

For questions or more information about this blog post or improving your company’s employee operations, contact employment attorney Jason M Shinn.

A decision issued on October 22, 2015, denying an employer’s motion to dismiss a retaliatory discharge claim brought under Title VII of the 1964 Civil Rights Act and state anti-discrimination laws offers two important lessons for employers:

  • It is never a good idea to use Hitler, Nazis, or swastikas in your mandatory company seminars; and
  • A single incident may provide the basis for a hostile work environment claim if it is “extraordinarily severe.”

The decision, Orlando v. BNP Paribas N. Am., Inc., (10/22/15), involved Plaintiff, Jean Orlando, who is Jewish. He worked at BNP Paribas North America Inc. in its New York office.Ignoring Employment Discrimination Claims

Orlando alleged that his manager told him to “shut the f*ck up” when Orlando said he was “deeply offended” by a video that played at a mandatory company seminar. The video portrayed Adolf Hitler as the CEO of a BNP competitor bank, and Nazi soldiers as competitor bank executives. It also included swastikas and other references to the Third Reich. Orlando further alleged that the manager made an “absolutely bone-chilling threat” about Orlando’s career.

Approximately eight months after the training seminar incident, Orlando’s bonus was significantly reduced from the prior year and he was terminated from his New York office and given the option to be reinstated in France at a reduced salary. Orlando later filed suit claiming his termination was in retaliation for complaining about the training video.

The Court denied summary judgment to BNPP Paribas on Orlando’s retaliatory discharge claims brought under Title VII of the 1964 Civil Rights Act, reasoning:

Courts in this Circuit and elsewhere have noted that the Nazi regime and swastika are symbols of hatred capable of arousing fear and intimidation.

Orlando’s federal hostile work environment claim, however, was was time-barred because of a shorter filing period for Equal Employment Opportunity Commission charges.

The Court also allowed Orlando to proceed under New York state, and city law with his hostile work environment claims stemming from the training incident. In this regard, the Court reasoned that a single incident may provide the basis for a hostile work environment claim if it is “extraordinarily severe.”

BNPP argued that showing the Hitler video at the off-site training in Amsterdam wasn’t sufficiently severe or pervasive to create a hostile work environment under the New York State Human Rights Law or the New York City Human Rights Law.

Take Aways

In the category of “water is wet,” businesses should never think that incorporating Hitler and his Nazi regime into mandatory company materials. This goes for any hate group or symbols associated with such groups.

Also on a more serious note, it is important to understand that normally isolated incidents of discriminatory comments or conduct are not sufficient to establish a hostile work environment. Instead, incidents generally must be more than episodic; they must be sufficiently continuous and concerted to be deemed pervasive.

But there are situations where a single incident is “extraordinarily severe” to create a hostile work environment. The Court understandably had no difficulty concluding that single incidents involving Nazi-related materials and swastikas may create a hostile work environment.

For employers, however, it is important to treat every complaint or incident – regardless of the perceived severity – with the same focus of uncovering the facts and taking any corrective action that may be appropriate.

If you would like more information about investigating complaints of employment discrimination, contact employment attorney Jason Shinn. He works with employers and employees in addressing issues arising under federal and Michigan employment laws.

Facebook firingAn employer illegally fired two employees for criticizing the company on Facebook. This decision comes from the U.S. Court of Appeals for the Second Circuit, which affirmed a National Labor Relations Board decision (NLRB). Three D, LLC v NLRB (10-21-2015). This decision also highlights the need to meaningfully evaluate conduct giving rise to employee discipline, including conduct taking place through social media.

Facebook Criticism of the Employer

Three D, LLC did business as Triple Play Sports Bar and Grille. One of its former employees (LaFrance) posted a “status update” on her Facebook page that Triple Play’s owners failed to properly handle her payroll taxes resulting in her having to pay more income taxes than she anticipated. A current employee, (Spinella) added a Facebook “like” to LaFrance’s posting. Another current employee, (Sanzone) also added to LaFrance’s post stating, “I owe too. Such an a**hole.” In response to these Facebook postings, Triple Play fired Spinella and Sanzone.

The NLRB found these employees were engaged in a work-related discussion that was protected by the National Labor Relations Act. Specifically, the NLRB found Triple Play had violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by discharging these two employees for their Facebook activity. The NLRB also found that Triple Play violated Section 8(a)(1) of the NLRA by maintaining an overbroad Internet/Blogging policy.

Court Affirms NLRB Decision

Three D did not fare any better on appeal where the Court affirmed the NLRB’s decision. In doing so, the Court rejected Triple Play’s argument that because Sanzone’s and Spinella’s Facebook activity contained obscenities and were viewed by customers that the NLRB should have found that this activity lost the protection of the NLRA. Instead, the Court ruled:

The Facebook discussion clearly disclosed the ongoing labor dispute over income tax withholdings, and thus anyone who saw Spinella’s “like” or Sanzone’s statement could evaluate the message critically in light of that dispute.

Although customers happened to see the Facebook discussion at issue in this case, the discussion was not directed toward customers and did not reflect the employer’s brand … the Facebook activity at issue here did not lose the protection of the Act simply because it contained obscenities viewed by customers accords with the reality of modern‐ day social media use.

As to the employer’s social media/blogging policy: (i) it did not expressly restrict the exercise of Section 7 rights; (ii) it was not promulgated in response to union activity;  and  (iii) it was not applied to restrict Section 7 rights. However, the employer’s policy restricted any discussions about the employer’s terms and conditions of employment deemed ‘inappropriate’ by [the employer].” For this reason, the Court also agreed with the NLRB’s decision that the social media/Internet policy also violated the employees’ rights under the NLRA.

Take Aways

Every company – including non-union employers – are subject to the NLRA. In this regard, the ruling is a reminder for employers that there is no such thing as a “safe” termination or disciplinary action. This includes when the at-issue conduct occurs away from the workplace through social media.

Employers also need to carefully evaluate when employees are disciplined for social media comments. Comments involving an ongoing labor dispute or that provide mutual support or seeking group action in relation to employment-related conditions are likely to be viewed as involving employee rights under the NLRA, which cannot be lawfully subject to employer discipline. Further many states, including Michigan, have social media employment laws that may restrict the use or investigation of private social media accounts.

For more information about employee social media issues, as well as investigating employee misconduct, contact Michigan employment attorney Jason Shinn.

noncompete agreement

Earlier this week I had the opportunity to take in an oral argument on a motion to dismiss filed in a non-compete lawsuit filed in Wayne County Circuit Court’s business court (yes, this is what I do in my free time and yes I’m a nerd when it comes noncompete law). The argument was heard by Wayne Circuit Court’s newest business court judge, Hon. Lita Popke. Her analysis and ruling offer important considerations for both business owners and their former employees when it comes to the enforcement of non-compete restrictions.

Background of the Non-compete Lawsuit

BHB Investment Holdings, LLC d/b/a Goldfish Swim School of Farmington Hills, operated a swim school in Farmington Hills, Michigan. It filed its lawsuit against its former employee, a twenty-something former swimming instructor, and his new employer, Aqua Tots Canton, LLC. The individual defendant had signed a one-year noncompete restriction that prohibited him from working within so many miles of the plaintiff. Goldfish had terminated the defendant who then began working for Aqua Tots, which was within the restricted geographic radius and line of business. Before working for plaintiff, the former employee swam competitively in high school and to some extent in college.

As previously noted here, non-competition restrictions prohibit an employee from going to work for a competitor of a former employer. However, non-competition restrictions are often carefully and critically scrutinized by Michigan Judges because they restrain trade. For this reason, in analyzing the enforceability of noncompetition provisions, a judge focuses on balancing the protection of the legitimate business interests of the employer against the public policy prohibiting restraints of trade.

The Judge’s analysis at the hearing made many important points relevant to enforcing non-compete restrictions. Here are two points that stood out:

  1. First, it was evident from Judge Popke’s questions and comments that she had spent time reviewing the briefs and exhibits. And this level of preparation made it clear that an employer hoping to enforce a noncompete agreement cannot expect to just show up with a signed noncompete agreement and expect to have the court rubber stamp it for enforcement. In this regard, Goldfish claimed it had a legitimate business interest in restricting its former employee from working for Aqua Tots and from using Goldfish’s 40+ page swimming instructional manual. Goldfish emphasized it considered the manual, its customer list, and its swimming strokes to be proprietary and confidential (swim strokes like “monkey arms”). But Goldfish failed to offer any evidence that it’s former employee took Goldfish’s instruction manual or customer list. It also could not show it had lost any customers. Conceding this point, Goldfish next argued that its former employee’s access to and knowledge of the instructional materials made it inevitable that he would use the “confidential” materials for the benefit of his new employer. This argument was also quickly shot down as Judge Popke noted that the swim strokes taught by Goldfish – whether called something unique or not – were the same strokes taught at any other swim school. Further, any parent sitting through their child’s class would be exposed to the instructional materials, including the “proprietary” swim strokes used by Goldfish. In other words, once taught to the kids, this information was in the “public domain.”
  2. Second, the Court then turned to whether Goldfish’s non-compete restriction protected a legitimate business interest as required under Michigan non-compete law. The short answer was “no.” Specifically, Judge Popke noted that Goldfish had hired the defendant employee for his considerable competitive swimming experience. In other words, the employee brought his expertise to Goldfish, not the other way around. As such, Goldfish was merely seeking to restrict its former minimum-wage employee from using his skills to earn a living.

For these reasons and other reasons stated on the record, the court granted the motion to dismiss Goldfish’s lawsuit to enforce its noncompete agreement, noting that under the facts presented, it was not even a “close call” when it came to enforcing the post-employment restrictions.

Take Aways about Enforcing Non-compete Restrictions

In listening to the oral argument, it was clear that Judge Popke was not overtly hostile towards non-compete restrictions or their intended use, noting that such agreements will be enforced pursuant to Michigan law. But Goldfish’s problem was it did not pay close attention to that law with respect to supporting its claim. Employers frequently make this mistake (See Enforcing a Noncompete Agreement Takes More Than Bluffing).

In fact, in numerous instances we have challenged non-compete restrictions by focusing on the purported business interest to be protected by the non-compete agreement. For example, this strategy recently paid off in a non-compete lawsuit filed in July 2015 in Oakland County Circuit Court. In that case, we defended a former IT professional sued by his former employer, HTC Global Services, Inc. The IT professional had been recruited and eventually hired by HTC Global’s customer, State Farm. HTC Global claimed this direct hire violated its standard non-compete restriction.

We argued in court filings, however, that the non-compete restriction did not protect a legitimate business interest as required under Michigan non-compete law (MCL 445.774a) because HTC Global’s former employee was not working for a competitor but, instead, HTC Global’s customer. Multiple instances from Plaintiff’s corporate representative’s deposition testimony supported this argument. In sum:

Again, I’m saying that while he was with State Farm, he also gained knowledge and everything of HTC.  So working at a competitor at that same client, we would be concerned of what was being shared. (Defendant’s Supplemental Opposition to HTC Global’s Motion for Preliminary Injunction) (empasis added).

In other words, the stated “legitimate business interest” HTC Global sought to protect was preventing its employees from working for a competitor to the disadvantage of HTC Global. However, in this instance, the customer made the decision to recruit and directly hire HTC’s former employee. And under those circumstances, HTC only sought to restrict its former employee from working for a company that did not compete against HTC Global and from using his considerable IT related education, skills, and knowledge.

The judge initially assigned to this non-compete dispute had denied HTC Global’s motion for preliminary injunction, which was later scheduled for an evidentiary hearing. However, after making the above arguments and a week before the evidentiary hearing was to take place, HTC Global agreed to settle on favorable terms. But had this matter gone forward, we were confident that the evidence supported a finding that HTC Global’s non-compete restriction would have been found unreasonable because it did not protect a reasonable competitive interest under the circumstances presented.

For more information about enforcing or disputing non-compete restrictions, contact Michigan attorney Jason Shinn. Mr. Shinn routinely represents both companies and individuals in non-compete lawsuits. This litigation experience also allows Jason to collaborate effectively with employers in drafting non-compete agreements tailored to business needs and minimizing the risks that such post-employment restrictions will not later be enforceable.

Signing-Contract.jpgCompanies commonly rely on non-compete restrictions to protect their competitive business interests. But if such post-employment restrictions are not properly drafted, those agreements may not be enforceable if challenged in court.

Overview of Non-compete Restrictions

Briefly, non-competition restrictions prohibit an employee from going to work for a competitor of a former employer. Such post-employment restrictions are for a defined period following the end of the employee’s employment.

However, non-competition restrictions are often viewed as restraints of trade, meaning they are often carefully and critically scrutinized by Michigan courts. In analyzing the enforceability of noncompetition provisions, a judge will (or should) balance the legitimate interests of the employer in protecting its property against the public policy prohibiting restraints of trade.

Therefore, an employee’s promise not to compete is likely to be valid only if the court concludes, after balancing the hardships, which the employer’s legitimate interests outweigh the hardship to the employee and possible injury to the public.

A Non-compete Agreement’s Langauge Matters

Against the backdrop of these competing issues, often the biggest enforcement issue comes down to how the judge interprets it and whether the judge will ultimately enforce it.

So when it comes whether a judge will enforce a non-compete restriction, what sort of considerations come into play? Each noncompete dispute will often turn on its unique facts and circumstances, but last week at an early status conference in a noncompete dispute in which our law firm was the attorney of record, we took the position that it came down to the future versus present tense of the word “competing.”

This distinction was critical because our client, the former employee, was going to work in a university setting, conducting research and development (R&D). After attempts to negotiate an amendment to the noncompete restriction failed, our law firm filed a lawsuit for declaratory relief and related claims challenging the enforceability of the employer’s noncompete dispute.

While the R&D may eventually result in new products or product innovations in the future, we argued that the non-compete restrictions only read in the “present tense” not “future.” We also argued that the definition of a “competitive enterprise” found in the non-compete agreement did not extend to a non-profit institution like a university. Last week at a status conference, the judge’s questions directed to opposing counsel seemed to signal the judge’s concerns as to whether the non-compete agreement was enforceable based on these arguments.

Take-Away

The noncompete lawsuit described above is early in the litigation process. And whether the above legal assertions eventually result in a favorable ruling by way of a dispositive motion or a trial remains to be seen. But having indications that your judge minimally appreciates whether the disputed noncompete agreement is enforceable has indeed set the stage for the case going forward.

However, this example should serve as an important reminder for business owners. Specifically, if your company intends to protect business advantages and competitive interests through non-compete restrictions, those restrictions need to be carefully drafted to provide reasonably, but broad protection. Otherwise, your company may find out too late that the non-compete agreement it intended to rely upon is not going to be enforced.

For more information about Michigan non-compete law, as well as enforcing or challenging a noncompete agreement, contact Michigan attorney Jason Shinn. Since 2001, he has focused on representing companies and individuals when it comes to drafting, interpreting, negotiating, and litigating non-compete agreements.

Employee social media issues recently made headlines in the most deplorable way when an employee was fired on September 29, 2015, after he posted a picture of himself online with a colleague’s 3-year-old black son. The picture taken by Gerod Roth, the former employee, resulted (for reasons unknown) numerous bigoted and racists comments from the former employee’s friends.

The picture taken by Roth was facially unassuming and he claims the entire post was taken out of context. But he did little to redeem his cause in light of his reply to a Facebook friend asking “Dude where the hell did you get a black kid??” Roth responded by saying, “He was feral.” Many of the other comments are just despicable and rightfully call into question the character of those responsible.

Polaris Marketing Group President, Michael Da Graca Pinto, responded to the Facebook posting and comments as “disgusting,” and released the statement provided in the inset. Polaris Facebook FiringHowever, Pinto later insisted Roth’s 9/29 termination, two weeks after the post, was the result of unrelated issues at work. In any event, Mr. Pinto made the right business decision to issue a strong statement condemning the Facebook posting and making it clear his company in no way approves of such trash.

Social Media and Employees

Social media creates any number of headaches for employers and their human resource professionals. For starters, employers barely have the time to continuously monitor normal business operations for employee misconduct. So to add policing off-duty or social media employee conduct is a burden that most employers are not excited to undertake, nor want to. But as the Polaris Marketing company example illustrates, a company’s success and legitimate business interests are often directly associated with its employees – for better or worse.

Also, when it comes to discrimination, harassment, retaliation, etc., such misconduct increasingly takes place, in whole or in part, through social media. And such misconduct could be imputed to the employer. Accordingly, proactive organizations focused on preventing wrongful employee misconduct and/or limit their liability for it will want to have a plan in place for investigating and redressing issues of unlawful harassment,  discrimination or other workplace-related misconduct. Also, such issues – aside from potentially being unlawful – can impair employee productivity.

But employers cannot simply implement broad employee restrictions when it comes to social media. Employers also cannot just discipline employees who may post or say things on the Internet that are seemingly adverse to the employer’s legitimate business interests, but may be considered protected “concerted activity” under applicable labor laws. This is especially important in light of the National Labor Relations Board’s active interests in applying Section 7 of the National Labor Relations Act to Facebook and social media postings involving union and non-union employees.

What Should Your Company Social Media Policy Say?

With this in mind, it is easy for employers to feel as if they are “damned if they do, damned if they don’t.” But that shouldn’t be the takeaway. Instead, employee social media issues – like most business operations – take careful planning to identify the risks, understand what can be done to eliminate those risks or, minimally, reduce those risks, and then implement plan. And that plan begins with developing written policies for employee social media use.

In this regard, I caution employers against drafting a social media policy that covers too much but says too little with respect to what is expected of an employee when it comes to social media. In other words, it is impossible to meaningfully identify every example of what an employer considers appropriate or inappropriate when it comes to social media postings. Also, attorney Dennis Merley writes at the MN Employment Law Report about the importance of being able to document that employees have read the policy. See An Unread Policy is No Policy At All.

Drafting a social media policy should begin with assessing the business needs and concerns in order to determine what, if any, social media limitations make sense for your business. But a few areas that almost every policy should cover to some extent include:

  • The treatment of confidentiality and trade secrets on social media. Confidentiality may extend to company resources, as well as customers, vendors, and patients.
  • Clarifying ownership of social media accounts.
  • Most importantly, careful attention needs to be given to drafting your company’s social media policy to avoid violating employees’ NLRA Section 7 rights to engage in protected activity. See Employer’s Social Media Policy Found Not To Violate Employees’ Rights.

For more information about employee/employer social media issues, including drafting social media policies for your business, contact employment attorney Jason Shinn. Mr. Shinn regularly addresses social media HR issues. He has also spoken to various HR organizations on the subject of employment law best practices for dealing with social media in the workplace.

WhistleblowerA decision released on 10/1/2015 from the Department of Labor’s administrative review board (the “Board”) highlighted employment law issues arising at the intersection of whistleblowing, retaliation, and reasonable accommodation involving telecommunication. (Stewart v. Lockheed Martin Aeronautics Co., released 10/1/15). In the decision, the Board affirmed an administrative law judge’s ruling against Lockheed’s former employee.

The ruling held the former employee failed to establish claims that the company violated the Sarbanes-Oxley Act’s (SOX) whistle-blower protections by rescinding her approval to telecommute, harassing her, and constructively discharging her after she raised concerns about workplace audit.

Employee Whistleblower

As to the facts leading up to the claim, Stewart worked for Lockheed for 20 years, serving as a certified public accountant and then lead of its subcontracts audits group. In 2009, Lockheed began offering telecommuting for employees. Stewart had a neurological disorder and she began teleworking several days a week.

In late 2011, Stewart was assigned to audit a joint venture between Lockheed and Tata Advanced Systems. She raised a number of concerns during the audit, including the management team’s purported lack of subcontract audit experience, a lack of data to conduct the audit and potential conflict of interest issues.

Thereafter, Stewart claimed that Lockheed management rescinded her ability to telecommute and harassed her. She took medical leave in April 2012 and didn’t return to work, eventually resigning in December. Stewart brought a SOX Act whistle-blower claim against Lockheed, but a Labor Department ALJ ruled in the company’s favor in January 2014.

No Causation Between Adverse Employment Decisions and Whistleblowing

The Board found substantial evidence that Stewart failed to show that her protected activity contributed to any of the adverse employment actions she alleged. Specifically, it found that Lockheed had:

  • Suspended telecommuting before Stewart submitted her audit complaints;
  • Any purported harassment resulted from the telecommuting denial; and
  • Stewart had voluntarily decided to retire at the end of a medical leave of absence.

For these reasons, the Board agreed that there was no causation with respect to the claimed protected activity and the adverse employment decision.

Takeaways

Would-be whistleblowers need to evaluate numerous factors before blowing the whistle. In sum, the complex legal and ethical landscape will determine whether to blow the whistle and under what circumstances.

For companies, it is important to realize that employees may be less likely to publicly blow the whistle if they believe that their companies have effective internal mechanisms for raising concerns about perceived misconduct. For this reason, an important objective of companies in handling internal whistleblower complaints should be to do so in a manner that convinces employees that the companies fairly and effectively address employees’ concerns.

This also has the added risk-management benefit to the extent a court or jury believes the employee did not exhaust existing internal channels for complaints.

For more information about whistleblowing laws and complying with employment legal requirements prohibiting the retaliation against whistleblowers, contact employment attorney Jason Shinn. Mr. Shinn has assisted employers and employees since 2001 in the area of federal and Michigan employment law issues.

Contract-Documents.jpgEmployers often overlook the opportunity to limit liability against their business when it comes to employment agreements. And one of the most common ways in which a business can limit its liability is through a contractual limitations period. A recent Michigan Court of Appeals highlights this point.

Specifically, a shortened limitation period in an employer’s policy handbook barred a plaintiff’s lawsuit for wrongful discharge in retaliation for filing a workers’ compensation claim. (Hier v. Douglas J. Management LLC (9/15/2015). In this case, Plaintiff was injured at work in February 2011 and received worker’s compensation benefits. She was later terminated.

Plaintiff claimed she was wrongfully terminated because she asserted her rights under the Worker’s Disability Compensation Act (WDCA), MCL 418.101 et seq. In response, the employer relied upon its employee manual, which provided that an employee must commence “any claim, complaint, action or suit relating to their employment with the Company” within 182 days of the event “giving rise to the claim, complaint, action, or suit.”

The Court took a very “employer friendly” view for determining when the clock began to run on Plaintiff’s claim. Specifically, the Court concluded the “event” giving rise to Plaintiff’s claim, i.e., the day on which Plaintiff’s claim for retaliatory discharge accrued, occurred on July 26, 2011, when she was allegedly terminated. Plaintiff filed her lawsuit on June 26, 2013, which was more than 182 days after July 26, 2011. Further, the Court rejected Plaintiff’s argument that she complied with the contractual limitations period based on the worker’s compensation application that was filed on July 18, 2011 (eight days before the alleged termination of her employment), which was within 182 days of her injury.

The Take-Away

All employment related claims are subject to limitations period established by statute, i.e., the time period in which an employee must take legal action, which is often measured from the time the injury or events giving rise to the claim occurred. In Michigan, this may be as short as 90 days in the case of a claim under the Whistleblower Protection Act Claim or Worker’s Disability Compensation Act. In contrast, employees have a three year statutory limitation period for bringing actions alleging employment discrimination in violation of the Michigan Civil Rights Act.

But, as the above case illustrates, employment agreements can call for a shorter limitations period for many – but not all – employment-related claims.  It is critical to discuss with your employment attorney what claims may be shortened and what shortened limitation period will likely be acceptable to a court.

Also, as an aside, the case discussed above referenced the employer’s limitation period as being in an employee handbook. As a general strategy, I strongly recommend companies avoid using an employee manual or employee handbook for the source of contractual limitations or other provisions that the employer may want to enforce.

The reason for this strategy is that often such manuals contain language expressly noting it is not an enforceable contract. And under Michigan law, provisions in a handbook will not create enforceable rights if the manual provides it is not intended to create an employment contract. In fact, earlier this year, we used this argument to successfully defeat a motion to dismiss brought by the defendant employer against its former manager in a pregnancy discrimination lawsuit.

In that particular case, the employer’s manual specifically provided, “I understand that the associate handbook is not an employment contract but does provide an overview of [Company’s] employment guidelines and procedures.” Without that argument, our client’s pregnancy discrimination claim was able to proceed. On the other hand, a well-drafted limitation period could have allowed the employer to avoid costly litigation.

This also brings up another important point for employees; Waiting to contact an attorney may jeopardize your legal claims if there is a shortened statute of limitations period buried in your employment agreement or employee manual.

For more information about improving your company’s employment agreements and HR operations, contact employment attorney Jason Shinn. Since 2001, he has worked with employers to comply with federal and Michigan employment laws, as well as implementing HR best practices for avoiding or limiting HR-related risks.

Office MeetingRecently an employer, Pepsico Pepsi Beverages Company, won a summary disposition in an age discrimination claim filed under Michigan law. (Damghani v Pepsico, 9/10/2015) But the real significance of this case has to do with the court rejecting the application of a common employment discrimination theory often referred to as the “cat’s paw liability.”

Background of the Employment Discrimination Lawsuit

As to the facts in the Pepsico case, the plaintiff claimed her supervisor, Jerry Caswell, was sarcastic and critical of her but “kind and happy” with other younger employees. Under Caswell, she was put on a performance improvement plan (PIP). And while on this PIP, another manager (Amy Heiney) removed plaintiff as a head cashier. Plaintiff claimed this same supervisor asked plaintiff when she would retire. Caswell – not the manager who made the allegedly discriminatory statement – eventually terminated plaintiff’s employment because she was unable to satisfactorily complete her PIP.

Plaintiff later sued her employer and her supervisor, Caswell, for age discrimination and retaliation under the Civil Rights Act (ELCRA), MCL 37.2201 et seq.

Cat’s Paw Theory and Employment Discrimination

Plaintiff argued that Heiney’s statement was direct evidence of discrimination with regard to her termination under a theory of “cat’s paw liability.” Under this theory, plaintiff argued that Heiney’s comment was direct evidence of discrimination with regard to plaintiff’s subsequent termination. The underlying premise of the “cat’s paw theory” is that the discriminatory animus of one individual (Heiney) who is not the ultimate decision-maker can trigger liability when the individual has singular or substantial influence over the actual decision-maker (Caswell) and uses that influence to cause the adverse employment action.

The Michigan Court of Appeals, however rejected both the argument and its application under the circumstances presented because no evidence was presented to support that Heiney’s discriminatory animus as reflected by her comment influenced or related to Caswell’s decision to terminate plaintiff.

The Take Away:

Senior managers and human resources personnel often rely on first line managers. And with ever increasing workloads, managers often lack the time or resources to conduct independent reviews of personnel decisions recommended or initiated by such managers.

While this court opinion is favorable for employers, it is unpublished, which means it has limited authority. With this in mind and as a best practice, companies need to guard against simply having managers “rubber-stamping” such recommendations. Instead, it is important role that upper management and human resources making employment decisions take care to conduct an independent inquiry of the alleged facts.

This means if witnesses are involved, they should be interviewed. And if documents are relied on, they must be reviewed. And in almost every instance it will be important to talk to the employee and get his or her side of the story before an adverse employment decision is made. While such efforts will no doubt take time, it may result in avoiding litigation or prevailing if a lawsuit were to be filed.

For more information about employment discrimination, contact attorney Jason Shinn. Since 2001, he has counseled many employers through investigations and termination decisions.

Rosary BeadsA nursing home activities aide who was fired for refusing to pray the Rosary with a resident failed to prove job bias because she didn’t present sufficient evidence that her employer, Woodland Village Nursing Center Inc., knew before it decided to discharge her that plaintiff’s refusal to pray the rosary was based on her religious beliefs (Nobach v Woodland (2015)). As a result, a $69,584 jury verdict in favor of the plaintiff under Title VII of the 1964 Civil Rights Act was reversed by the Fifth Circuit Court of Appeals.

Employee Refuses to Read the Rosary Because it Conflicts with Her Religion

The plaintiff former employee had worked for Woodland just over a year before being told that she was fired for refusing to read the Rosary to a resident. This incident arose after a resident complained to Woodland management when no one prayed the rosary with her that day. Following an investigation, management decided to fire plaintiff.

Plaintiff filed her religious discrimination claim under Title VII. This federal employment statute makes it unlawful, among other areas, for an employer to discharge an individual “because of such individual’s . . . religion.” 42 U.S.C. § 2000e-2(a)(1). In obtaining the jury verdict, the plaintiff pointed to the following to support her claim:

  • When asked to read the Rosary, plaintiff told a co-worker, who didn’t have any supervisory authority over plaintiff, “I’m not Catholic, and it’s against my religion.”
  • She was fired for not praying the Rosary with a resident;
  • Her supervisor said in regard to the Rosary incident, “I don’t care if it’s your fifth write-up or not. I would have fired you for this instance alone. I don’t care if it is against your religion or not. If you don’t do it, it’s insubordination.”

Procedural Background

On Appeal, the Court held the jury was mistaken in awarding the verdict as there was no evidence that Woodland was motivated by plaintiff’s religious beliefs before it discharged her.

The plaintiff then petitioned and was granted a rare ruling from the Supreme Court, which vacated and remanded the case for reconsideration in light of the U.S. Supreme Court’s ruling in EEOC v. Abercrombie & Fitch Stores Inc., (2015). In that case, the Supreme Court Justices held that actual knowledge by an employer of a conflict between a worker’s religious practice and job requirements isn’t required to prove a failure to accommodate under Title VII’s religious discrimination provision.

But in applying the Abercrombie decision, the Court of Appeals still reached the same result favoring the employer as its earlier decision. In doing so, it reasoned that under the Abercrombie decision:

When evaluating causation in a Title VII case, the question is not what the employer knew about the employee’s religious beliefs. Nor is the question whether the employer knew that there would be a conflict between the employee’s religious belief and some job duty. Instead, the critical question is what motivated the employer’s employment decision … We simply cannot find evidence that, before her discharge, [Plaimtiff] ever advised anyone involved in her discharge that praying the Rosary was against her religion.

(internal citations omitted).

Applying this spin, the Court of Appeals, found that unlike the Muslim employee in Abercrombie who was denied an offer after wearing a religious head scarf to her job interview, the plaintiff aid worker couldn’t show any Woodland decision maker came to know of or suspect her religious objection to praying the rosary before she was told she was fired.

The Take-Away

This decision did not sit well with me for a number of reasons. First, this was a jury trial; Whether you agree or disagree with a jury verdict, its determination must generally be given great deference, especially when it comes to evaluating evidence and witness credibility. But the Court of Appeals, concluded that “no reasonable jury” could have reached this decision and, therefore, it set aside that decision.

Second the employer in this case all but admitted that plaintiff’s failure to perform the Rosary was the reason – if not a factor – that precipitated her discharge. Returning to the Abercrombie case, the Justices held that actual knowledge was not required to prove a violation under Title VII’s religious discrimination noting:

… an applicant need show only that his need for an accommodation was a motivating factor in the employer’s decision, not that the employer had knowledge of his need …Thus, rather than imposing a knowledge standard [Title VII] prohibits certain motives, regardless of the state of the actor’s knowledge: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions. Title VII contains no knowledge requirement.

Yet, the Court of Appeal concluded that there was “no evidence” that the plaintiff advised anyone involved in her discharge that praying the Rosary was against her religion. In reaching this decision, however, the Court completely ignores the Abercrombie case and the fact that the Rosary is a quintessential and inherent religious observance of the Catholic Church.

Third and building on the preceding point, the Court of Appeals noted that the evidence showed the employer conducted an “investigation” into the incident prior to terminating plaintiff. The scope of that investigation, however, appears to be extremely superficial; There is no mention that plaintiff or her co-worker were interviewed. In fact, it is not even clear plaintiff knew she was being investigated.  With this in mind, the Court of Appeals seems to give the green light to employers to conduct a superficial and limited investigation designed to avoid learning fundamental facts in order to insulate an adverse employment decision from becoming unlawful discrimination. Conversely, the Court sends the message that employees who refuse to practice/observe a core religious function at work to expressly make a declaration to management that the refusal is based on one’s religious beliefs in order to be protected under Title VII.

For more information about complying with Title VII’s anti-religious discrimination provisions, as well as accommodating an employee’s religious beliefs, contact Michigan employment attorney, Jason Shinn.