clawback bonusSeverance agreements have recently made headlines in Michigan after it was reported that three high-ranking departing state officials were paid severance amounts ranging from slightly more than $11,000 up to $155,506.00.

In this regard, I was recently interviewed by the Detroit News reporter, Craig Mauger, about using severance agreements concerning the payout to Robert Gordo, the former state health department director. Here’s an excerpt of what I said:

… executive separation agreements usually include a release from potential future legal claims, compensation details and non-disparagement requirements, which bar the two sides from talking negatively about each other … separation deals within the government are not unheard of among high-level officials …. There are benefits to both parties to having it in place…

But the confidentiality terms often found in these agreements, while common in the private sector, are less so for governmental employees.

Clawing Back Payouts

If a company is paying out money – either as severance or bonuses – then a “clawback” provision should be used. For bonus payouts, that provision can foster long-term business goals and avoid rewarding bad behavior. And for severance situations, it is a means to recover money if the other party violates the agreement.

A clawback provision was recently described in The Economist, “How to design CEO pay to punish iniquity, not just reward virtue, “as follows:

If business had a Moses, “Thou shalt link pay to performance” would be on his tablet. Compensation committees have, however, tended to stick to a narrow reading of the commandment. Whereas they reward good behaviour, deterring the bad is an afterthought measures designed to ensure that misconduct does not pay are becoming central to the debate about how to craft bosses’ salary plans.

In other words, clawbacks are intended to balance long-term business goals against self-interested managers taking unsustainable shortcuts to get a bonus for short-term, individual gain.

Key Takeaways for adding a clawback to your employment agreement.

In our experience counseling businesses and managers on improving employment agreements, we routinely discuss these points:

  • First, make sure your clawback provisions cover all areas of compensation that would be subject to recovery. This extends to cash bonuses, equity awards, or both.
  • Second, if it has been some time since you’ve updated your employment agreements, “bad-conduct” may need to be expanded. For example, clawback provisions should not just cover criminal or financial misconduct. Instead, your business should extend the requirement to any conduct that might damage your business’s reputation. Examples include managers who create a toxic corporate culture, engage in sexual harassment, make racist comments, engage in sexual harassment, or engage in insurrection or similar domestic terrorism like that taking place on January 6 at the Capital.
  • Third and building on the preceding point, make sure you carefully look at the definition “for cause” used in the agreement. “For cause” should define the conduct and circumstances when a bonus or other compensation is forfeited or must be returned.

At least for bonuses, another option is to lengthen deferral periods for paying cash bonuses or the vesting date for equity grants. This has the advantage of reducing the chance that your company will pay money before bad conduct is discovered.

Considerations for Individuals Negotiating Employment Agreements.

On the other hand, when we represent individuals in negotiating employment agreements, we focus on making sure clawbacks are not used as a backdoor way to avoid paying money otherwise owed.

And we also make it a point to negotiate language so a clawback provision does not become a punishment for a flawed decision or bad luck. On this point, it is essential to emphasize in negotiations that a heavy-handed, one-sided clawback provision is likely going to drive away talented individuals.

Another thing to consider is researching the company’s litigation history regarding paying bonuses, commissions, or similar matters. This may provide insight into the company’s trustworthiness (or lack thereof) for properly paying such compensation or trying to recover it.

Thank you for reading this post. Please 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 in negotiating and litigating disputes over employment agreements.

Time for suing employment discriminationA recent Michigan Court of Appeals decision shows the value in smartly drafting your employment applications and related hiring documents so they double to protect the business from employment discrimination claims.   

Going Deeper: 

Specifically, a case captioned McMillon v. City of Kalamazoo, (MI Court of App. Jan. 21, 2021) involved a plaintiff who applied for a position with the Kalamazoo Department of Public Safety in 2004. As part of the 2004 hiring process, she filled out and signed an employment application. Under the application, Plaintiff agreed that any lawsuit against the City arising out of her employment or termination must be filed within nine months of the event giving rise to the claims or be forever barred. 

The City declined to offer her a position on July 21, 2004. But it kept her application and other hiring documents on file. 

Later in mid-2005, the City re-interviewed Plaintiff for another position. The City did not require her to fill out another application and used the same background check used in 2004. But this time, Plaintiff was offered employment in September 2005.

Fast forward to May 2019, and Plaintiff sued the City. She alleged six claims for various forms of discrimination, retaliation, and harassment. However, the City moved to dismiss those claims by arguing Plaintiff’s 2004 employment application shortened the applicable statute-of-limitations (the time when a lawsuit must be filed) to nine-months. 

The Plaintiff’s attorney responded that the 2004 employment application was not binding because the City denied her employment in 2004, and it hired her about 18 months later. Thus, the City should have been required to “restart” the hiring process, including having Plaintiff “repeated all requirements for employment.”  

The Court rejected this argument. It reasoned there was no “restart,” because the City did not require her to complete a new employment application or require her to undergo the various requirements imposed on other applicants. 

Presumably, if plaintiff ‘repeated all requirements for employment,’she would have also completed a new employment application, defendant would have conducted a second background check on her, and she would have been required to submit to the same previously completed tests. But she did not.

Thus, the Michigan Court of Appeals agreed with the trial court’s dismissal because the nine-month limitations period in the employment application barred her employment discrimination claims. 

Why this Matters for Employers and Employees:

In reading the McMillon opinion, the City dodged a bullet. And I think there are issues in the opinion that suggest the decision should have gone the other way. But it is unclear from the opinion if those issues were overlooked by Plaintiff’s legal counsel or were raised and the Court disagreed.

In any event, for employers, this case is an excellent reminder to ensure your hiring documents and procedures maximize protections against liability under applicable federal and Michigan employment discrimination laws. 

Consider, for example, the plaintiff suing the City of Kalamazoo would have had three years to pursue her claims under Michigan’s primary anti-discrimination statute (Elliott-Larsen Civil Rights Act or ELCRA). But the City smartly shortened the limitation period down to just nine-months, which allowed it to avoid costly and uncertain litigation on the merits. Even so, adding language to your employment documents to shorten the statute of limitations requires careful planning. This is because the filing period for some employment claims cannot be shortened. Thus, employers must understand how to properly draft for those exceptions.   

Conversely, this case should be a stark warning for employees to make sure they understand what you sign. Whether it is non-compete restrictions, employment agreements, or employee handbooks, we routinely turn-away matters because rights or remedies have been signed-away or are limited by what the person previously signed. 

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws, or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.   

Noncompete Ripple EffectA recent court opinion is a cautionary tale for business owners and entrepreneurs and their attorneys about the importance of protecting attorney-client communications. It is also a reminder of how easily that privilege can be inadvertently waived and the downstream impact it can have on noncompete disputes.

The Decision

The court opinion comes from a case in Michigan federal court, Prudential Defense Solutions, Inc. v. Graham et al., Case No. 20-11785. The opinion stemmed from a subpoena on the defendants’ former business attorney. At issue was whether that attorney must produce documents and information relating to the noncompete and trade secret misappropriation claims. Here, the attorney-client privilege was inadvertently waived because of poor pre-business planning by the entrepreneurial defendants.

Why it Matters

Usually, the attorney-client privilege bars the disclosure of “confidential communications” between an attorney and client on matters that relate to the representation. Specific requirements must exist for this privilege to apply. But once established, clients can waive it without proper care and attention. Once waived, devastating results often follow.

Going Deeper

After Prudential Defense Solutions Inc.’s former VP signed a noncompete agreement, Prudential alleges he breached it by establishing a competing security company and misappropriated trade secret information to use in the competing business. Prudential sued the former vice president and his business partners for trade secret misappropriation claims under federal and Michigan law. There are many moving pieces to this case, including the typical request for injunctive relief, motions to dismiss, and other procedural matters.

But as it relates to the waiver of attorney-client communications, one of the defendants emailed his business partners about specific customers to pursue and profit margins for those customers. The email was sent before Prudential filed its lawsuit. However, and here’s where the critical mistake was made, the defendant disclosed the content of discussions with legal counsel:

I spoke with [the attorney] he says go get them. They are fair game. No contracts exist so [the attoreny] says it’s all good news.

In addressing the waiver issue, the Court first noted that the email was produced by the Defendants’ litigation counsel. The Court also underscored that the production by litigation counsel was made with no objections, conditions, or qualifications by counsel before “it was handed over.” ECF No. 42, p. ID 1411. Thus, the waiver was “intentional.”

Second, the email was not sent by the attorney. Nor was the attorney included as a recipient.

Third, the email disclosed the attorney by name, it described the attorney’s advice about three specific customers, and it referenced the attorney’s conclusion.

And here is why it is so crucial for entrepreneurs to protect the attorney-client privilege; once waived it extends to all information related to the subject matter of the details on which the waiver occurred. Thus, the defendants and the attorney had to produce “all documents or communications” relating to the “topics and substance” of the email.

Take-aways on the attorney-client privilege

Presently, I am lead counsel in a trade secret misappropriation claim where we are now litigating and briefing the issue of whether the attorney-client communication was waived. But in my case, I am arguing the former employer waived its attorney-client communication in relation to its trade secret misappropriation claims. This waiver and anticipated information concern whether the former employer improperly pursued trade secret misappropriation claims in bad-faith against my client.

So based on the Prudential case and our experience, here are three recommendations for protecting the attorney-client privilege if litigation later arises:

  1. We discuss with our business clients at the beginning of an engagement the importance and parameters of the attorney-client privilege. We also discuss who should be part of any legal discussions. We also stress what to say and not to say to employees or others outside the business-legal team. Make sure you do the same with your attorneys. And if in doubt, ask.
  2. For startups, make sure you and any business partners are appropriately represented by counsel so the attorney-client privilege can be properly documented if it later needs to be asserted. Don’t assume because one person has legal counsel that the privilege will extend to all business partners.
  3. For entrepreneurs and business owners, it is also important to consult with counsel before making any disclosures that could inadvertently open up the door for waiving attorney-client communications. On this point, the Prudential opinion listed many examples of where businesses inadvertently waived their attorney-client privilege because of discussions with third parties. Some examples included a business that disclosed a PowerPoint presentation made as part of an investigation into its earnings. The presentation described interviews and investigative findings made by legal counsel. In another instance, a business owner met with government investigators over Medicare billing. The owner disclosed its marketing plan covering services billed to Medicare and represented it “legally compliant” per the business’ attorney’s conclusion. This disclosure waived the attorney-client privilege. Again, improper disclosures may not be obvious. And the ripple effect from inadvertently waiving the privilege may prove devastating.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or litigating noncompete, trade secret, or other business claims. Since 2001, Mr. Shinn has handled these matters on behalf of companies and individuals throughout Michigan in both state and federal courts.

Trade Secret MisappropriationTesla sued a former engineer for trade secret misappropriation on January 21, 2021. It obtained an ex parte temporary restraining order the next day.

Why it matters:

In our experience representing clients in pursuing and defending against these kinds of claims, this case is a good reminder for companies and former employees about the importance of protecting trade secrets and risks when it comes to taking – intentionally or otherwise – an employer’s trade secrets.

Going Deeper:

Tesla hired the defendant engineer on December 28, 2020. It claims within three days of being hired the defendant began stealing “thousands of highly confidential software files from Tesla’s secure internal network, transferring them to his personal cloud storage account on Dropbox …” The files consist of “scripts” of proprietary software code. Tesla asserts it has spent years of engineering time building these scripts.

Tesla’s information security personnel confronted Defendant on the unauthorized downloads. During this interview, Defendant repeatedly claimed he had only transferred a couple of personal administrative documents. However, Tesla’s security discovered “thousands and thousands of Tesla’s confidential computer scripts in his Dropbox.”

Tesla alleges Defendant then claimed he “forgot” about these files. Yet Tesla found the defendant had attempted to destroy the digital evidence by deleting files from the Dropbox account at the beginning of the interview. This was discovered when Tesla’s investigators tried to access his computer remotely during the investigation.

A few points to consider:

First, Tesla appears to provide a text-book example for protecting company data. The Complaint explained that as soon as Tesla became aware of unusual access activity, it immediately investigated the incident. And before the misappropriation, Tesla had limited access to the information in question to select employees. Limiting access underscores the value of the information and protective measures to protect that value.

Second, individuals should assume there will always be “digital fingerprints” or other evidence an employer can use to support a misappropriation claim. And the same evidence will almost always exist if you try to “cover-up” the misappropriation. Conversely, it is important if you are pursuing a trade secret misappropriation claim that the absence of this evidence can be used to defeat the claim. On this point, I’ve successfully used the absence of such evidence to win dismissal of trade secret misappropriation claims.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or litigating the issues discussed in this post. Since 2001, Mr. Shinn has represented companies and individuals in trade secret disputes.

Trade secret competitionEcolab Inc. sued a former marketing manager, Preston Alexander, alleging he used stolen trade secrets to set up a rival business in violation of the federal Defend Trade Secrets Act and related claims. Ecolab seeks the immediate return of its confidential information and damages for contract breach and trade secret misappropriation.

Why it Matters:

Ecolab’s lawsuit offers several lessons for companies and individuals about the importance of protecting intellectual property rights like trade secrets and what may happen when those rights are violated.

Going Deeper:

Ecolab and the new competing company, called One Degree Medical, both sell products and systems for managing the temperature of patients and body tissue during surgery. Ecolab asserts Alexander emailed himself confidential files containing Ecolab’s detailed product sales and information the day before he ended his employment. Later, Ecolab began losing business. One former customer, Charleston Area Medical Center, began purchasing fluid products from One Degree Medical.

Ecolab’s files were misappropriated when Alexander emailed them to his personal email account and contained information on Charleston. This information included Charleston’s (i) sales history with Ecolab; (ii) products it bought; (iii)  how many products were bought; (iv) the price paid for those products; and (v) when the purchases were made.

Ecolab argues Alexander had no legitimate business purpose accessing the confidential files that he emailed to himself. And that those files were also protected under Alexander’s employment agreement, which contained restrictions on competition and trade secret protections.

This lawsuit is pending in the Northern District of Georgia, Ecolab Inc. v. Alexander et al., case number 1:20-cv-04687.

What should you take away from the case:

Ecolab raises issues companies and departing employees often confront in trade secret litigation. For a company, it is critical to take appropriate measures to identify its intellectual property and how best to protect it. And because of the unique nature of trade secrets, your company must show it implemented meaningful protections to maintain the confidential and secret nature of the trade secret information before it was wrongfully used.

For individuals, it is equally critical to understand what you can and cannot do after ending your employment. This means understanding your non-compete restrictions, as well as other contractual restrictions on using company information or soliciting your former employer’s customers.

Additionally, when litigation stemming from the misappropriation of business information arises, the investigation and preservation of digital evidence are paramount to both plaintiffs and defendants. These “digital fingerprints,” or lack thereof, will make or break a trade secret lawsuit.

Our recent experience in successfully defending against federal and Michigan trade secret claims bears this out. Specifically, the plaintiff cried foul after losing a contract to our client. Like Ecolab, the plaintiff and its big law firm attorneys sued for trade secret misappropriation. But after discovery, the federal judge adopted our argument and found “… even if the materials in the Dropbox account do amount to trade secrets, no reasonable jury could find that these materials were misappropriated by the Defendants.” Order from Qualite Sports Lighting, LLC v. Ortega et al., Case No 17-cv-00607. Simply put, trade secret plaintiffs and their attorneys can’t lose focus on the fundamentals of a misappropriation case: is the information trade secret, and was it misappropriated?

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or litigating trade secret claims. Since 2001, Mr. Shinn has represented companies and individuals involved with these types of claims under federal and Michigan employment laws.

coronavirus business proections

Michigan Governor Gretchen Whitmer signed into law bipartisan legislation known as the “COVID-19 Response and Reopening Liability Assurance Act” (COVID Assurance Act).

Why it Matters:

This Act provides protections to Michigan workers relating to the spread of COVID-19 and protecting businesses that implement strict safety measures to keep workers, customers, and their families safe. Further, it is retroactive to March 1, 2020.

The Act was praised by labor and business organizations alike. It is supported by the Michigan Chamber of Commerce and Governor Whitmer’s press release included favorable quotes about the legislation from Michigan AFSCME Council 25’s President Lawrence A. Roehrig.

Going Deeper:

Under the COVID Assurance Act:

  • Employers must allow workers who are exposed to COVID-19 or exhibit the symptoms of COVID-19 to stay home, and prohibit retaliation against employees for staying home when sick or exposed to the virus.
  • Employers may face bills also provide a minimum damages award of $5,000 for violations. Awards may be higher than that in the event of more serious conduct or injuries.

The COVID Assurance Act does not affect rights, remedies, or protections under Michigan’s worker’s disability compensation act.

What’s more, if a Michigan business complies with all federal, state, and local statutes, rules, regulations, executive orders, and agency orders related to COVID-19, including epidemic orders and rules, they are not liable:

  • For a person becoming sick at the business; or
  • Under the Michigan Occupational Health and Safety Act for a worker becoming sick at work.

Also, employers do not even need to be in complete compliance with applicable rules or regulations to benefit from the Act’s protections: An “isolated, de minimis deviation from strict compliance” from applicable COVID-19 statutes, rules, regulations, executive orders, and agency orders that is “unrelated” to the plaintiff’s injuries will not eliminate immunity provided by the Act.

Thoughts on the Legislation – Potentially Confusing and likely an Insurmountable Hurdle to Liability

If you are a business owner, the COVID Assurance Act is great news. It will protect against frivolous lawsuits. But it will also likely essentially eliminate liability for most plaintiffs suing over contracting COVID-19.

Here’s why:

  1. First, in all except extreme situations of self-isolation, proving where you contracted the virus may be an insurmountable hurdle for plaintiffs. And a plaintiff will need to be prepared to show they did not bring the virus into the business.
  2. Second, the “substantial compliance” component of the COVID Assurance Act will be a go-to defense. It’s unclear how businesses will be graded on this (e.g., if 85% of employees wear masks, is that good enough? If social distancing is mostly enforced, is that “substantial compliance?”) but it will likely be a favorable curve.

So what’s not to love? The Act’s requirement to comply with applicable COVID-19 regulations from federal, state, and local governments will be problematic. This is a lot of regulation to track. And these regulations change as more is learned about the virus.

Further, the regulations from the various branches of federal, state, and local governments don’t always match up. At the federal level, you see this almost every time President Trump speaks or Tweets; He’s routinely contradicting or even denigrating subject matter experts at the Centers for Disease Control or state health departments, including on things as basic as wearing a mask to prevent the spread of the virus.

Or consider his past promotions of unproven or outright hazardous practices. Remember when he (in)famously opined that injecting disinfectant into the body could be “tremendous.”

Nonetheless, to benefit from the protections under this legislation, business owners must invest in staying on top of applicable coronavirus legislation, rules, orders, and regulations. And they will need to show they regularly enforced those COVID-19 rules in the workplace. Both won’t always be easy, but the protections should be well worth the effort.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws, or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.

COVID-19 Employment Obligations
Face Mask Halloween

The Michigan Supreme Court, in a divided opinion, recently invalidated  Michigan’s Emergency Powers of Governor Act of 1945, MCL 10.31 et seq. This was the statute under which Governor Whitmer issued a number of COVID-19 executive orders. Those orders, therefore, will now be void by the end of October. The case is Midwest Inst of Health, PLLC v Governor of Michigan (In re Certified Questions from the United States Dist Court), _ Mich __, __ NW2d __ (Oct. 2, 2020).

Why it Matters:

The Governor, through various executive Orders, imposed many COVID-19 restrictions and mask requirements for Michigan businesses and employees.

Voiding these executive orders, however, does not mean Michigan employers will be unregulated when it comes to COVID-19. Instead, businesses must continue to comply with administrative regulations from Michigan agencies and county health departments and be aware of new such regulations that will likely fill the vacuum created by the Michigan Supreme Court.

Go Deeper: What this means for employers and employees.

With Governor Whitmer’s executive orders no longer in place, many other regulations remain or have been issued following the divided Supreme Court Opinion. Here are regulations employers should understand:

  • Michigan Department of Health and Human Services

On October 5, the Michigan Department of Health and Human Services (Human Services) issued an order intended to partially fill the gap created by the Supreme Court’s opinion. The emergency order provides in relevant part:

  1. Limitations on attendance at certain gatherings.
  2. Face covering requirements, except for limited circumstances.

As to face masks and business operations, the Human Services’ order requires the wearing of face coverings for indoor gatherings at businesses, government offices, schools, and “other operations.” There are exceptions to the face covering requirements; masks are not required for children younger than five, individuals who cannot medically tolerate a face covering, and when eating or drinking while seated at a food service establishment.

In contrast to the former executive orders, the Human Services’ Order does not allow an exemption from the mask requirement at “gatherings” even if the participants are maintaining social distancing of six feet. The order went into effect on October 5, 2020, and remains in effect through October 30, 2020.

Violation of the Human Services’ order is a misdemeanor. It is punishable by imprisonment for not more than six months, a fine of not more than $200, or both. Law enforcement officers may enforce the order or coordinate with other entities on enforcement.

  • MIOSHA COVID-19 Employment Regulations

On June 17, 2020, the Michigan Occupational Safety and Health Administration (MIOSHA) adopted a COVID-19 Interim Enforcement Plan. Many requirements in the now voided executive orders are found in MIOSHA’s guidance. For example, the MIOSHA plan includes example citations for failing to implement a protocol to protect employees from coworkers with COVID-19.

The plan also establishes policies and procedures for handling COVID-19 issues, including fatalities, hazards, and how citations for COVID-19 workplace hazards will be handled.

  • County Health COVID-19 Regulations

Additionally, many counties issued orders after the Michigan Supreme Court’s opinion. These counties include Washtenaw, Ingham, and Oakland County. But Oakland has since rescinded its order since the Michigan Department of Health and Human Services issuance of its order. Employers should anticipate other Michigan counties will continue to adopt their own order.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims  under federal and Michigan employment laws.

Virus protectionToday, Mr. Trump was released from the hospital after three days of being treated for COVID-19. He returned to the Whitehouse to immediately provide an egregious example that no company should follow when it comes to COVID-19.

Specifically, Mr. Trump decided to pose for an obvious photo and video shoot in the Whitehouse by removed his mask. This happened at a time when there is increasing concern by White House staffers and employees who have seen their workplace emerges as a virus hot spot thanks to the decisions of its Resident in Chief.

The coronavirus is a highly contagious virus. It is spread through airborne particles that can linger in the air “for minutes or even hours” — even among people who are more than 6 feet apart. Wearing a mask is one way to limit the spread.

Mr. Trump, as the President of the U.S., is not your average employer. But for most employers, commitment to the health and safety of employees and customers should be a top priority. To commit to that priority means lessening the risk of exposure. If basic human decency is not enough of a reason to wear a mask, then consider any number of legal or regulatory issues most employers face.

To limit the risks of spreading the virus, follow the latest guidance from federal, state, and local governmental health authorities, including, but not limited to, the Centers for Disease Control and Prevention (CDC). And at this point, if in doubt, do the opposite of what Mr. Trump does. Presently, the CDC has identified two options for when employees may discontinue in-home isolation for individuals who are not immunocompromised: (1) symptom based strategy and (2) test-based strategy.

This post is written, in part, out of frustration. For over six months now, my family and I have worn masks when we go out in public. Thankfully, we are not likely to be in a high risks category if we were to contract the COVID-19 virus (although the math around “likely” changes when it involves one’s family). Yet we follow the recommendations and the science behind the recommendations for wearing a mask. And we do this for those we may encounter. You could even call it a duty demanded by basic human decency.

We will continue to play by the rules, follow the science, and lead by example for our child and avoid the political theater. Hopefully, most will do the same.

restaurant closed by covid-19A Michigan based company was recently sued for allegedly firing its assistant manager after contracting the COVID-19 virus. The suit claims this firing violated the Families First Coronavirus Response Act, the Emergency Paid Sick Leave Act, the Family Medical Leave Act, and Michigan Executive Order 2020-36.

Why It Matters:

Two things stand out about this lawsuit. First, you have an employer who appears to have gone to significant lengths to protect customers and staff from being exposed to COVID-19. Second,  trying to do the right thing still means an employer must pay attention to the details. And those details involving employee disciplinary action will be more complicated when it comes to COVID-19.

Go Deeper:   

According to the complaint, Prada v. Trifecta Productions, LLC (d/b/a Tomukun Noodelbar) the plaintiff worked for a noodle bar in Ann Arbor as a waiter and assistant manager. The suit alleges the plaintiff told his manager that he was not feeling well around June 24, 2020. And he was diagnosed with COVID-19 on June 27, 2020.

The restaurant then announced on July 1, 2020, that it had learned an employee tested positive for COVID-19 and that it would close so that employees could get tested and the restaurant could be professionally cleaned. About a week later the restaurant reopened for carry-out.

Meanwhile, the plaintiff claims he had recovered from COVID-19 without further complications. Yet Plaintiff alleges that the restaurant did not pay him for sick leave, fired him, and told him “For PR reasons it would be best for you not to come back.”

As to the legal claims, the plaintiff asserts Trifecta’s termination violated:

  • Michigan Executive Order 2020-36, which prohibits “discharging, disciplining, or otherwise retaliating against an employee . . . for staying home from work …” for times covered in under the statute.
  • The Families First Act, which provides for up to 80 hours of paid sick time to employees who are unable to work due to the effects of COVID-19.
  • And the Families First Act makes it unlawful under the Act for any employer to “discharge, discipline, or in any other manner discriminate against any employee” who exercises his right to “take leave in accordance with this Act.” Violations are subject to the penalties described in sections 16 and 17 of the FLSA (29 U.S.C. § 216, 217).

This lawsuit was filed at the end of August 2020 and Defendant answered the complaint a few weeks later. So both litigants likely have a long, expensive road of litigation ahead of them before a final decision is reached.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.

CoronavirusMichigan’s Dept. of Labor and Economic Opportunity (LEO) and Michigan Occupational Safety and Health Administration (MIOSHA) launched a new program focused on supporting Michigan businesses to reopen safely in response to the COVID-19 pandemic.

The program is called the MIOSHA Ambassador Program. It offers education and one-on-one guidance to help businesses understand regulations on workplace safety.

Why it Matters:

Whenever a state or federal government announces programs to assist companies, I’m reminded of Ronald Reagan’s quote, “[t]he nine most terrifying words in the English language are: ‘I’m from the Government, and I’m here to help.'”

However, from our own experience in assisting our business clients, this program could offer meaningful help. These clients have consistently sought to understand the regulations and implement best practices for complying with them. And both employers and employees routinely want to know how these regulations apply to their situation. So, Michigan’s Ambassador Program could provide a bridge between the uncertainty and what is required for businesses across the state.

Go Deeper: 

Here are other guidance and resources from the Michigan Government for responding to COVID-19:

As Michigan continues to reopen the economy, employers will need to comply with the Michigan and federal policies, as well as to implement safety directives to help ensure a safe workplace for employees and customers. These resources – whether used with the Ambassador Program or just internally – are a good starting place to achieve a more safe environment for workers and customers.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.