Covid Religious Discrimination ClaimsOn May 17, 2022, the Mayo Clinic was sued by a former employee who believes her religious freedoms were violated by the Clinic’s workplace vaccine policies. Notably, Mayo Clinic accepted the plaintiff’s request for a religious exemption from its vaccine requirement. But the employee, Sherry Ihde, claims Mayo Clinic’s requirement that employees exempt from the vaccine requirement must undergo weekly testing also conflicted with her interpretation of Scripture.

Why it Matters:

In response to the Covid-19, employers implemented policies like the Mayo Clinic. And like the Mayo Clinic, many employers agreed to provide some measure of religious exemption from vaccine requirements but not from testing requirements. While many of these vaccine requirement policies have been withdrawn, in their wake employers will likely see more religious discrimination litigation that second-guesses how they responded to the Covid-19 pandemic.

Going Deeper:

The Mayo Clinic implemented a workplace vaccine requirement in October 2021. Under this policy, employees had to be vaccinated against Covid-19 by December 3, 2021, or be terminated. Or employees could be approved for a medical or religious exemption. In this regard, Mayo Clinic even provided employees with exemption forms for requesting such exemptions.

When Mayo implemented its vaccine policy, Ihde worked as a supervisor in Mayo’s Bacteriology Lab in Rochester, Minnesota. While Ihde did not have direct contact with patients, she supervised the Bacteriology Lab and had to meet with staff.

In her complaint, Ihde explains she considers herself to be a Christian. She did not identify any branch of Christianity she follows, any church she attended, or any congregation she belonged to. Instead, Ihde believes, “based on her interpretation of Scripture, that her body is a Temple to the Holy Spirit and it violates her conscience to take the vaccine.”

Fortunately for Idhe, her request for a religious accommodation from taking the Covid-19 vaccine was granted. Yet this was not good enough. Specifically, Ihde  believes under her interpretation of Scripture that “frequent medical testing for Covid-19 also violates her religious beliefs.” Thus, she should have also been exempted from this requirement. Mayo disagreed and placed Ihde on administrative leave and then in February 2022, Mayo terminated Ihde.

So she sued claiming Mayo failed to tailor its workplace policy to accommodate her religious beliefs under Title VII of the Civil Rights Act, and she was discriminated against under the Americans with Disabilities Act, and related state law claims.

This lawsuit was just filed on May 17, 2022. No response has been filed by the Mayo Clinic. Thus, it is way too early to make any predictions about how it will turn out.

Thoughts on the Lawsuit:

Religious discrimination often represents the most challenging workplace issue employers face. This is because a “religious belief” may be widely accepted or unique to a single employee. Either way, employers are generally prohibited from discriminating or retaliating against employees based on sincerely held religious beliefs.

Under Federal law, employers must provide employees or prospective employees “reasonable accommodations,” unless to do so would create “undue hardship.” In contrast, Michigan’s anti-discrimination statute imposes no affirmative duty to accommodate an employee’s religious beliefs.

With this background, the “body is a Temple to the Holy Spirit,” line that sprung up in response to workplace vaccine policies. I’m mostly an amateur Bible scholar, but I understand it mostly stems from  1 Corinthians 6:19-20. In that verse, Paul says, “do you not know that your body is a temple of the Holy Spirit within you … therefore glorify God in your body.” The quote, however, is under the heading “Flee Sexual Immorality.” And Paul was giving this warning in the context of discussing why exploiting prostitutes is not really something God goes for. There is no mention of vaccines. Even so, judges often avoid weighing in on the details, merits, or use of out-of-context Bible verses that may be used to support a particular claim.

Instead, judges and defendant employers will often focus on whether the religious accommodation imposes an undue cost or burden. This is shorthand for more than an insignificant, minor hardship on the employer. Examples of such costs and burdens include workplace efficiency and workplace safety.

In our representation of a company sued over religious discrimination, we successfully argued the plaintiff should lose on the accommodation issue, as well as for other reasons. See Mathews v Lavida Massage Franchise Development, Inc. Case No. 13-cv-12587, where the Court granted our motion for summary judgment. Similarly but even more persuasively, the Mayo Clinic vaccine testing policy was made in the context of a worldwide virus that has killed millions. So its vaccine or testing requirement will likely be a challenge for employees like Ihde to overcome.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment laws. Since 2001, Mr. Shinn has represented companies and individuals in religious discrimination claims, including obtaining dismissals of such claims for his business clients.  

COVID vaccine regulation

On September 9, 2021, we explained that OSHA would be issuing an emergency rule requiring companies with 100 or more employees to require their workforce to be vaccinated or to undergo weekly testing. See OSHA to Issue Vaccine and Testing Mandates to Large Employers. And we also predicted that the rule would generate legal challenges.

As to both points, OSHA issued its rule on November 5, 2021. And on Saturday, November 6, 2021, a U.S. Court of Appeals for the Fifth Circuit in Louisiana temporarily blocked a new coronavirus vaccine requirement for certain businesses.

In issuing the ruling, the Fifth Circuit panel only offered the statement that it “believe[s] there are grave statutory and constitutional issues with the mandate.” While short on reasoning, the Order also directed the government to respond by 5 PM on Monday to the lawsuit’s request for a permanent injunction.

The ruling has no immediate effect on employers or individuals. This is because companies affected by it had until December 5 must require unvaccinated employees to wear a mask indoors. Next, companies would have until January 4 two require employees to be vaccinated or start weekly testing of employees who refuse to be vaccinated.

Going Deeper:

OSHA issued its regulation under the Occupational Safety and Health Act. In response, the lawsuit was filed by a group of businesses, religious groups, advocacy organizations in several states including Louisiana and Texas challenging OSHA’s use of this Act. The lawsuit argues the coronavirus vaccine mandate should be passed by Congress, not OSHA. So the core issue that the Court should ultimately focus on is whether OSHA exceeded its authority in issuing its vaccine requirement rule.

What does this mean for you: 

First, this ruling has nothing to do with a vaccine requirement a company decided to implement on its own initiative. Our office has fielded many inquires following this ruling from individuals interested in avoiding an employer’s vaccine requirement using the Fifth Circuit ruling.

Second, it is unclear whether this Temporary Restraining Order will be extended. An injunction is a very high bar to reach. And, as we previously noted, there are several facts for why an injunction should not be extended. Consider for example:

  • OSHA is permitted to issue temporary emergency standards to new hazards that pose a risk to employees.
  • The first COVID-19 emergency standard was issued by the Trump administration; and
  • OSHA has previously mandated vaccines in relation to hepatitis B.

In sum, while OSHA’s COVID-19 rule is expansive, it is not one without precedent, it originated from President Trump’s administration, and is now carried out by President Biden’s administration based on both precedent and actions by the prior administration. If OSHA’s regulation is delayed by the Fifth Circuit, the Biden Administration is signaling it will appeal the ruling to the U.S. Supreme Court. Whether a majority of the Justices will side with these facts or choose to clear another legal path is anyone’s guess.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment laws. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws. And since the coronavirus pandemic began, he’s helped many employers and employees navigate COVID-19 obligations and regulations with an honest, spin-free assessment.

Springing noncompete restrictions on job applicantsCVS Pharmacy Inc. sued online pharmacy retailer Capital Rx Inc., claiming the web-based business is trying to keep a former employee from working for CVS. The lawsuit, filed on 9/16/2021, claims Capital Rx’s noncompete agreement violates Massachusetts law.

Why It Matters:

CVS’ lawsuit highlights an all-too-common issue new hires often face – the surprise non-compete restriction. Unfortunately, this surprise is often sprung after someone accepts a new job and gives their resignation notice to their employer. It is a bad situation for the person who now has little to no practical options. And it is not good for the new employer to start an employment relationship like this. 

Going Deeper:

Suresh Yarlagadda, a pharmacist, briefly worked for Capital Rx from May until late July. The suit alleges Dr. Yarlagadda worked exclusively from Massachusetts. Captial Rx is based in New York.

In August, when he joined CVS, Capital Rx told him he could not work for CVS because of the noncompete restriction. According to the lawsuit, that restriction was “buried” in an 11-page document he signed just before he started working at Capital Rx.

The lawsuit claims the noncompete restriction is illegal under Massachusetts law for several reasons. Among those reasons, CVS argues Capital Rx gave it to Yarlagadda too late in the hiring process. The Massachusetts law requires a noncompete agreement to be provided to an employee when the job offer is made or 10 days before the employee starts, whichever is earlier. But Capital Rx gave Dr. Yarlagadda the noncompete restriction about a month after making the offer and one day before he started work for Capital Rx. 

This case is pending in U.S. District Court for the District of Massachusetts, CVS Pharmacy Inc. et al. v. Capital Rx Inc., Case number 1:21-cv-11526.

What you can do:

Fortunately for Dr. Yarlagadda, CVS decided to sue to invalidate the noncompete restriction. Just as often, the job applicant in Dr. Yarlagadda’s position has the job offer rescinded or delayed (without pay) and is left to fend for themselves.

There are no requirements for when a noncompete agreement must be disclosed to a new hire under Michigan law. It is no wonder workers often feel they have been “trapped” – having accepted the offer and given notice of their resignation, they cannot go back to the old job. And their voluntary resignation means they won’t be eligible for unemployment. For employers, is this how you want to begin the new employment relationship? 

Many noncompete disputes we become involved in begin with the facts described above. Yet it is unfortunate because many of those disputes could be avoided with better HR procedures; just disclose up-front that a job offer will require signing a noncompete or other post-employment restriction. For these reasons, a prescribed mandatory disclosure requirement like the Massachusetts law could make a lot of sense (but other provisions of the law not so much).

In the meantime, those considering new job offers should:

  • Ask upfront if the position will require a noncompete or other post-employment restrictions.
  • If a noncompete restriction will be required, get a copy early in the interview process.
  • Take time to understand the restrictions. We routinely collaborate with job applicants on whether the restrictions are too onerous or otherwise problematic.
  • Try to negotiate those restrictions into something more reasonable. If the restrictions can’t be scaled back, at least you know before effectively closing the door on your current job with a resignation notice.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or Michigan’s noncompete law. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.

Dreadlock race discrimination A Michigan bill to amend Michigan’s principal anti-discrimination statute to explicitly ban race-based hair discrimination, e.g., prohibiting discrimination based on hair texture and style, has stalled in the state legislature.

Specifically, Michigan House Bill 4275, also called the CROWN Act (an acronym standing for Creating a Respectful and Open World for Natural Hair), was introduced in the House of Representatives in February 2021. However, since then, the bill has yet to move through the Republican-controlled Judiciary Committee.

Michigan’s Elliott-Larsen Civil Rights Act prohibits discrimination in employment, education, and housing based on “religion, race, color, national origin, age, sex, height, weight, familial status, or marital status.”

The CROWN Act would amend Michigan’s Elliot-Larsen Civil Rights Act to add:

“Race” is inclusive of traits historically associated with race, including, but not limited to, hair texture and protective hairstyles. For purposes of this definition, ‘protective hairstyles’ include, but are not limited to, such hairstyles as braids, locks, and twists.”

A leading hair discrimination case illustrates the challenges facing employees. The case, EEOC v. Catastrophe Mgmt. Solutions, involved a black female job applicant whose offer of employment was rescinded under the employer’s grooming policy and after she refused to cut her dreadlocks. At the time, the employer, Catastrophe Management Solutions (CMS) had a grooming policy which read as follows:

“All personnel are expected to be dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines. . . . [H]airstyle should reflect a business/professional image. No excessive hairstyles or unusual colors are acceptable[.]”

The EEOC argued that the policy banning dreadlocks in the workplace constituted race discrimination because dreadlocks are a racial characteristic — they “are a manner of wearing the hair that is physiologically and culturally associated with people of African descent.” The district court disagreed and dismissed the case.

On appeal, the Court agreed with the dismissal, holding that while dreadlocks were a manner of wearing hair that was common for black people and suitable for black hair texture, they were not an immutable characteristic of black persons. And therefore, an adverse employment action based on a black hairstyle (a mutable choice) is not protected under Title VII. In 2018, the U.S. Supreme Court declined to hear the case.

Without legislation like the CROWN Act and because of cases like EEOC v. Catastrophe Mgmt. Solutions, employers will often be able to use guidelines that call for “professional” or not “extreme” looks to prohibit hairstyles that disproportionately lead to bias against black employees. Yet for many reasons employers should consult with their employment law specialists before implementing or enforcing such policies. Here are two reasons:

First, city and county governments may have explicit prohibitions against taking adverse employment actions relating to hair. For example, earlier in 2021, Ingham County passed – the first in Michigan – a resolution banning hair discrimination. Ann Arbor followed with its own ban against race-based hair discrimination.

Second, if a grooming policy is not properly implemented or enforced, then a company could be looking at defending a race discrimination lawsuit. This is what the defendants in Hyundai Motor and other defendants are facing after their motion to dismiss a discrimination lawsuit stemming from – in part – a black woman’s dreadlocks was partially denied. See Key v Hyundai Motor Mfg. (pending in Alabama District Court). There, the Court concluded in its August 2021 opinion that unlike EEOC v. Catastrophe Mgmt. Solutions, an alleged statement by a supervisor suggests that the enforcement of the anti-dreadlock policy, as applied to the plaintiff, was not solely about her hair—but was instead a proxy for her race.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment laws. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.

Covid-19 Vaccine MandateOn September 9, 2021, the Biden Administration announced the U.S. Labor Department (DOL) will issue an emergency rule requiring companies with 100 or more employees to ensure employees are either fully vaccinated or test negative for Covid-19 at least once a week.

This emergency rule was one part of a series of aggressive initiatives to combat Covid-19 issued by the Biden Administration. President Biden explained the motivation for the DOL’s upcoming rule:

This is a pandemic of the unvaccinated.  And it’s caused by the fact that despite America having an unprecedented and successful vaccination program, despite the fact that for almost five months free vaccines have been available in 80,000 different locations, we still have nearly 80 million Americans who have failed to get the shot.

*   *   *

The bottom line: We’re going to protect workers from unvaccinated coworkers. We’re going to reduce the spread of Covid-19 by increasing the share of the workforce that is vaccinated in businesses all across America.

It is estimated that the rule will apply to more than 80 million private-sector workers.

No doubt this announcement will be subject to intense debate, likely legal challenges, and campaign fodder for political talking heads. But before getting to substantive and meritorious questions about the actual rule, it is helpful to consider the following:

  • OSHA is permitted to issue temporary emergency standards to new hazards that pose a “grave danger” to workers. See Emergency temporary standards under 29 U.S.C. 655. Under this provision, OSHA will argue Covid-19 poses a grave danger to employees as the number of Americans who have died from Covid-19 or strive to recover from it continues. At the time of President Biden’s announcement, the U.S. is seeing about 150,000 new cases of the virus and 1,500 fatalities a day. This is up from an average of 300 deaths each day a few months ago, which will further bolster the justification for the emergency rule.
  • The DOL’s Occupational Safety and Health Administration first issued Covid-19 emergency standards under the Trump Administration. However, the Trump Administration’s OSHA Covid-19 rule, it was limited to many healthcare employers. And it vaguely required such employers to safeguard employees from Covid-19 infection without specifying how to do so. For Michigan employers, MIOSHA also promulgated Covid-19 Rules, which were applicable to all employers with additional requirements for particular industries. But the MIOSHA rules are set to expire on October 14, 2021.
  • OSHA’s last Covid-19 guidance from August 2021 emphasized that vaccination was the most effective way to protect against severe illness or death from COVID-19. But it imposed no obligations on employers to require employees to be vaccinated or tested.
  • Long before Covid-19, OSHA imposed workplace vaccination rules. Specifically, OSHA mandates that employers whose employees may be exposed to Hepatitis B offer free vaccinations to employees. Employees choosing not to be vaccinated for Hepatitis B must sign a form acknowledging that they were offered the shot and declined.

Here is what the Biden Administration said about the DOL’s prospective Covid-19 rule:

  • President Biden is directing OSHA to require businesses covered by the rule to give employees paid time off to get vaccinated and to recover from any side effects.
  • Administration officials also said individuals working for companies subject to the regulation who refuse to get vaccinated would need to show proof of a negative virus test at least once per week before reporting to work.
  • Administration officials have said OSHA could fine non-complying businesses up to $14,000 per violation.

Yet, without more details, including the actual rule, many questions exist. Here are some of the questions I have:

  • How will vaccination status be verified?
  • Who will pay for Covid-19 testing?
  • Will employers covered by the rule be able to deduct or otherwise pass the cost of weekly testing to those employees who refuse to get vaccinated?
  • Will mask mandates be included in the rule?
  • How will individual exemptions – legitimate and manufactured – be handled under the rule?

Squables over legal and policy merits of the rule have begun and they will continue. But for business owners focused growing and protecting their business, now is the time to consult with their employment law specialists about having a vaccine and testing policy. That policy should allow for appropriate exemptions for people with qualified disabilities, under Michigan or federal laws like the Americans with Disabilities Act. And employers should be prepared to handle employee claims about sincerely held religious beliefs that may qualify for exemptions to their employer’s vaccine policies.

Since 2001, attorney Jason Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws. Contact Jason if you have questions about this article or complying with Michigan or federal employment laws.

unfair competition
commercial illustrator

President Biden signed an Executive Order broadly targeting anti-competitive tactics that disadvantage smaller businesses and people.

One aspect of this order targets the use of noncompete agreements. Under the Order, the Federal Trade Commission (FTC) is encouraged to ban or limit noncompete agreements.

The noncompete provision of the Order is intended to promote competition and economic growth by making it easier for workers to change jobs. The Order also encourages the FTC to limit employers’ ability to share wage and benefits data to prevent employers from collaborating to suppress wages and benefits.

Why it matters:

According to the Order:

Roughly half of all private-sector businesses require at least some employees to enter non-compete agreements, affecting 36 to 60 million workers [and] third parties … make wage data available to employers—and not to workers—in certain circumstances without triggering antitrust scrutiny. This may be used to collaborate to suppress wages and benefits.

Yet many businesses are using post-employment restrictions simply to limit wages. For example, we recently obtained a ruling from Michigan’s Wage and Hour Division against an IT subcontractor over its use of a noncompete and other post-employment restrictions.

The subcontractor claimed our client improperly disclosed “confidential information,” which consisted of the employee’s own compensation rate and terms. The subcontractor further claimed the employee breached the agreement and engaged in unfair competition by obtaining a higher-paying job with a competitor. But such restrictions are not permitted under Michigan law, which provides that employers may not, as a condition of employment, prohibit employees from discussing their wages or benefits.

How the Order will Affect Noncompete Agreements:

It’s not clear how the Executive Order will affect noncompete restrictions used by businesses.

One reason for this uncertainty is that noncompete agreements are mainly subject to state laws. And states vary significantly in how noncompete agreements are treated.

For example, California generally bans their use in employment situations. Other states have limitations based on wages. States like Michigan allow for their use if specific requirements are met involving “reasonableness.” And other states have no specific laws for or against noncompete restrictions.

Second, aside from the Order focusing on “unfair” use of noncompetes restrictions, it is unclear how broad the ban would be.

We think it is unlikely that the FTC will move to eliminate post-employment restrictions. But because the Order focuses on protecting mobility and the ability of lower-wage workers to get higher-paying jobs, we believe the FTC will likely concentrate on limiting noncompete restrictions imposed on low-wage workers.

Yet even with the uncertainty over how President Biden’s Order will apply, employers should review their noncompete agreements.

How Should Employers Respond:

President Biden’s Order follows a trend towards scrutinizing the use of noncompete restrictions in general, but especially in lower-wage jobs. Such scrutiny has come from egregious misuse of noncompete restrictions like Jimmy John’s imposing them on sandwich makers (See Jimmy John’s Sued (Again) Over its Noncompete Restrictions) or actions by state legislatures or attorney generals limiting their use or suing under anti-competition theories.

We will be counseling businesses on how noncompete restrictions are currently used. One focus area will be whether our clients impose noncompete restrictions across the board for all employees or (preferably) in a more surgical manner consistent with reasonably protecting the business from unfair competition.

If you would like more information about best practices and legal strategies for maximizing post-employment protections or understand if your noncompete agreement is enforceable, use this link to contact Michigan attorney Jason Shinn. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.

Vaccine MandateThis past week Trinity Health announced it would require its employees and contractors to be vaccinated against COVID-19. Under a rolling schedule, current employees must comply with the policy by September 21. People hired after September 1 must be vaccinated within 14 days.

Trinity’s announcement follows Henry Ford Health System’s decision announced in June that its workforce must get vaccinated by September 10, 2021. See Dustin Walsh from Crain’s Detroit Henry Ford Health System to require COVID-19 vaccine for all employees.

Why it Matters:

These vaccine mandates by Trinity and Henry Ford are part of a larger, national trend where companies require employees to be vaccinated or face termination. I expect this trend will continue along with challenges by employees who oppose any mandate to get vaccinated.

Going Deeper:

Our office has fielded many questions over the past weeks about whether employers can require employees to be vaccinated. If there is a “short answer,” it is “yes, probably, but with some exceptions.” In May, we explained that employers could require their employees to be vaccinated and encourage doing so according to guidance from the Equal Employment Opportunity Commission (EEOC). See EEOC says employers can require and encourage employees to get vaccinated.

And consistent with our analysis, on June 12, 2021, a Judge (a Reagan appointee) dismissed a lawsuit over Houston Methodist Hospital’s requirement that its employees must be vaccinated or face discharge. In that opinion, the Judge ruled Houston’s vaccine requirement does not violate state or federal law or public policy.

But we also explained that any vaccine mandate will also likely need exemptions. Likely exemptions would be for medical or religious reasons.

While we have not reviewed Henry Ford or Trinity’s policy, Dustin Walsh of Crain’s Detroit reported that both vaccine policies include procedures for employees seeking an exemption for medical or religious reasons. Trinity’s exemptions are discussed here and Henry Ford’s are here.

Other Considerations on Vaccine Requirements:

Trinity employs about 24,000 people in Michigan. And Henry Ford employs about 33,000. While many of these people have been vaccinated, a sizeable portion has not. So these vaccine mandates affect a lot of employees.

It is also not clear how many of the unvaccinated employees would choose termination over getting vaccinated. Going back to Houston Methodist, it was reported that out of approximately 25,000 employees, 153 chose resignation or termination over getting vaccinated.

It is also worth noting that Michigan employees would likely be ineligible for unemployment benefits if they chose not to follow their employer’s vaccine requirement.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment laws. Since 2001, Mr. Shinn has represented companies and individuals about the issues discussed above and other employment matters under federal and Michigan employment laws. Further, in response to the coronavirus, he has represented both employers and companies to respond to it, including drafting COVID-19 related policies and addressing vaccine exemption issues.

Defend Trade Secrets ActA court decision from the Third Circuit clarified requirements for making a trade secret misappropriation claim under the Defend Trade Secrets Act (”DTSA”). 

At the pleading stage (the beginning phase of a lawsuit), the Court allowed a plaintiff to pursue its claims under a less demanding threshold of proof of the actual trade secrets and evidence of misappropriation than the lower court had required. 

Trade secret plaintiffs will still need to provide the detailed factual support required to maintain a trade secret misappropriation claim, but that measure of proof can come later in the lawsuit. 

While good for plaintiffs, this is not good news for trade secret defendants. This is because defendants will likely expend more legal fees and resources in discovery before moving to dismiss DTSA claims, including weak or even frivolous DTSA claims.   

Going Deeper:

In 2017, Oakwood Laboratories, L.L.C. sued its former Vice President of Product Development, Dr. Thanoo. It also sued Dr. Thanoo’s new employer, Aurobindo Pharma U.S.A., Inc., and its parent and affiliated companies (collectively Defendants). Oakwood sued these Defendants for trade secret misappropriation under DTSA and related claims. 

However, over the next two years, the district court dismissed Oakwood’s complaint and three other iterations for “failure to state a claim.” Dismissals, for this reason, relate to sometimes complex civil procedural issues; essentially, a plaintiff failed to provide sufficient factual support needed to establish the legal elements of a claim. 

On that point, Oakwood stumbled in showing two elements needed to make its DTSA claim: 

  • the existence of a trade secret — information with independent economic value that the owner has taken reasonable measures to keep secret (18 U.S.C. § 1839(3)); and 
  • the misappropriation of that trade secret involves showing the defendant knew about the improper acquisition, use, or disclosure of the secret (§ 1839(5))

On appeal, the Court reversed the district court’s decision. The Court found Oakwood had sufficiently alleged the identity of its trade secrets claimed to have been misappropriated. It also reversed the lower court’s decision that Oakwood failed to offer direct proof of how the competitor’s product used Oakwood’s trade secrets without permitting the discovery essential to uncovering the evidence for proper consideration of the merits.

Here is a copy of the Court of Appeals decision, Oakwood Labs. LLC v. Thanoo (3d Cir. June 8, 2021).

Trade Secret Litigation Trends:

As the Lex Machina Report confirms, DTSA litigation is not going away; during the pandemic, it made up 72.9% of trade secret suits in 2020, compared with 72.5% in 2019.

And the Oakwood case is not an anomaly. Instead, it echoes significant trends highlighted in Lex Machina’s 2021 report on the DTSA and other trade secret litigation insights. Specifically, Lex Machina identified from 2016 to 2020, that courts found in 114 cases a failure to identify a trade secret such that the claim could not go forward. And in 63 cases, courts found a failure to maintain secrecy as the reason to dispose of the trade secret claim. 

Next Actions for Companies:

Even under a lower evidentiary standard like that provided for in the Oakwood opinion, trade secret plaintiffs still must support their DTSA claims even if they get past the pleading stage. Yet successful trade secret litigation begins before suits are filed. Accordingly, proactive companies should act now to shore up the company’s trade secret protections and policies. Such actions are needed if (or when) your intellectual property is misappropriated. 

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying. Since 2001, Mr. Shinn has collaborated with companies and entrepreneurs to perform trade secret audits and implement protection plans for such intellectual property. He also litigates these disputes in federal and Michigan Courts, including recently getting a DTSA and Michigan trade secret claimed dismissed for his clients.    

Michigan Unemployment BenefitsMichigan’s Unemployment Insurance Agency (UIA) reinstated its work search requirements for unemployment benefit claimants. This reinstatement went into effect on May 31, 2021. Exceptions and exemptions remain.

Beginning in March 2020, the UIA suspended its work search requirements. This suspension stemmed from the significant number of Michiganders facing unemployment because of the Coronavirus pandemic.

Work Search Requirements

Claimants, however, must now actively seek work and report at least one work search activity per week for each week they claim benefits. A work search activity may include:

  • Submitting a job application;
  • Attending a job fair or employment workshop; or
  • Interviewing with prospective employers.

There are COVID-19 exemptions. These exemptions are generally for:

  • Self-employed people;
  • People unable to work due to COVID-19; and
  • Parents with children attending school remotely because the school is closed.

If an individual has an approved waiver, they are exempt from the work search requirement. Claimants must apply for a waiver before their certification for benefits.

Besides COVID-specific waivers, claimants may also be exempt from the work search requirement if they are granted a temporary layoff waiver. The employer must request this type of waiver before a worker is laid off. The Registration and Seeking Work Waiver may be approved for 45 days. The criteria for establishing a waiver are:

  • The separation must be a layoff for lack of work;
  • The layoff is temporary (work will be available within 45 days); and
  • The request must be received before the layoff occurs (no later than the week before the layoff).

If the waiver is not requested before the layoff, it cannot be retroactively applied.

Refusing an Offer of Suitable Work

Suppose an employer offers suitable work to an employee or makes an offer for an employee to return to their previous job. In that case, the employee may lose unemployment benefits if the person refuses.

Both employers and employees must report offers and refusals of suitable work to the Agency. The employer should notify the UIA by submitting details of the rejection to the UIA’s MiWAM.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment laws. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.

Employee Computer HackingOn June 3, 2021, the U.S. Supreme Court issued a ruling that significantly limits the “exceeds authorized access” clause of the Federal anti-hacking statute called the Computer Fraud and Abuse Act of 1986 (CFAA). Here is a copy of the opinion (Van Buren v U.S.)

Why the CFAA Opinion Matters:

Without proper planning, this ruling will drastically limit remedies and strategies employed by companies against former employees accused of wrongfully accessing information stored on company networks.

Going Deeper – Understanding the CFAA.

The CFAA is the main federal anti-hacking law. The CFAA imposes liability in two situations: any one (1) who “intentionally accesses a computer without authorization; or (2) exceeds authorized access.” 18 U. S. C. §1030(a)(2). The Supreme Court addressed the second situation in its ruling on Thursday.

The CFAA is often the go-to claim prosecutors use when someone “hacks” into computer networks covered by the CFAA. But over the years, the CFAA became a favorite tool for businesses to use against former employees accused of wrongfully accessing company data for personal gain. Or in other instances, CFAA claims were brought against employees with authorized access to company data, but exceed that authorization by misappropriating the employer’s trade secrets or other confidential information before leaving to work for a competitor.

By adding a CFAA claim, a business could easily sue in federal court and gain significant leverage using the CFAA’s provisions for damages and recovery of attorneys’ fees.

Exceeding Authorization to Access the Computer Data.

Van Buren is a former Georgia police sergeant. He used his police account to access a law enforcement database to retrieve information about a license plate number in exchange for $6,000.00. But the money, however, came as part of an FBI sting operation.

So Van Buren had the authority to access the database for police purposes and he used his valid log-in credentials to perform the search. But his access was for personal use and gain. This conduct violated a department policy against obtaining database information for non-law-enforcement purposes.

For this, he was charged with a felony violation of the Computer Fraud and Abuse Act of 1986 (CFAA) and later convicted. The Eleventh Circuit upheld the conviction in 2019. But in a 6-3 split opinion, the Supreme Court Justices reversed the CFAA conviction.

Limits to “Exceeding Authorization” Claims?

Van Buren was not a sympathetic defendant. But much of the majority opinion, in excruciating detail, focused on the language of the CFAA statute (I lost count of how many times various dictionaries were cited). And the majority of the Supreme Court Justices were troubled about how easily “exceed authorization claims,” could be weaponized against fairly standard, everyday conduct.

In fact, much of the majority opinion’s concern over the broad scope of the CFAA advocated by the Government came from everyday employment situations. Here’s how Justice Barrett (the author of the majority opinion) explained this concern:

If the “exceeds authorized access” clause criminalizes every violation of a computer-use policy, then millions of otherwise law-abiding citizens are criminals. Take the workplace. Employers commonly state that computers and electronic devices can be used only for business purposes. So on the Government’s reading of the statute, an employee who sends a personal email or reads the news using her work computer has violated the CFAA.

The other concern involved the “terms and conditions” on websites or social media platforms (those things that no one pays attention to, but everyone accepts). Here’s what Justice Barrett had to say on this topic:

Or consider the Internet. Many websites, services, and databases—which provide “information” from “protected computer[s],” §1030(a)(2)(C)—authorize a user’s access only upon his agreement to follow specified terms of service. If the “exceeds authorized access” clause encompasses violations of circumstance-based access restrictions on employers’ computers, it is difficult to see why it would not also encompass violations of such restrictions on website providers’ computers.

Closing Thoughts:

I’ve represented parties pursuing and defending civil CFAA claims. Those lawsuits involved fact patterns remarkably similar to both scenarios Justice Barrett described. Based on this experience, the CFAA can be an appropriate tool to protect businesses from unscrupulous employees exploiting their employer’s digital assets. But it is equally (if not more so) a tool inappropriately used by overly aggressive lawyers asserting questionable claims on behalf of their clients.

With this insight, the Supreme Court ruling should be mostly a welcome limit for when exceeding authorized access suits can be pursued.

And it is important to note that such claims can still be pursued under this ruling. But to do so, employers will likely need to revise workplace policies and how company information is stored and accessed. This will require access control or other technological barriers around confidential and trade secret information with an emphasis on making such information accessible only on a “need to use” basis.  But such limits should already be in place. And those limits are already needed to pursue traditional trade secret misappropriation claims. If not, employers now have a good excuse to make their company information more secure from internal and external threats.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.