Honesty & Crossing Fingers.jpgEmployers can face liability under the Family Medical Leave Act either by interfering with FMLA rights or by retaliating against an employee exercising FMLA rights. Under either theory, however, one of the best tools available to employers in defending FMLA claims is what is referred to as the “honest belief” defense.

For this reason, it is important for employers and their HR professionals to be in a position, if necessary, to use this defense in responding to FMLA lawsuits. 

The Honest Defense Belief in FMLA Litigation

Essentially under the honest belief defense, if an employer terminates an employee based on an honest, good faith belief that the employee engaged in wrongdoing, this belief will be sufficient to defeat an employee’s claims of interference and retaliation under the FMLA. 

The honest belief defense is extremely favorable to employers. This is because the employer does not have to prove that the wrongdoing actually occurred. Building on this point, courts hearing FMLA retaliation or interference claims will give significant deference to the employer asserting the honest belief defense. 

The Honest Belief Defense is a Potent Defense against FMLA Lawsuits  

The benefit of being able to rely upon the “honest belief” defense in FMLA litigation is illustrated by two cases decided in the federal sixth circuit court of appeals – the federal jurisdiction that includes Michigan.

In Seeger v. Cincinnati Bell Telephone Co. (2012), the defendant employer terminated the plaintiff employee for disability fraud following an FMLA leave. The employer asserted that the termination occurred after the employee was observed by co-workers walking several blocks at an Oktoberfest celebration while the employee was on leave because of severe back pain. This back pain supposedly prevented him from standing for more than 30 minutes at a time. In rejecting the employee’s arguments as to why the honest belief defense should not apply, the court responded, “Seeger’s argument and presentation of competing facts is misdirected because it does not question [the employer’s] investigatory process. The determinative question is not whether Seeger actually committed fraud, but whether [the employer] reasonably and honestly believed that he did.” 

The case of Jaszczyszyn v. Advantage Health Physician Network (2012) involved the honest defense rule and social media in a FMLA lawsuit. In this case, the plaintiff’s co-workers were “friends” with her on Facebook. These “friends” showed management pictures of the plaintiff employee drinking at a local festival at a time when she was supposed to be convalescing for several weeks due to worsening pain from a back injury. Following an investigation, the employer terminated the plaintiff for fraud. Similar to the Seeger case, the court applied the “honest belief” defense in rejecting the plaintiff’s FMLA claim reasoning that the plaintiff did not refute the employer’s honest belief that her conduct in the photos was inconsistent with her claims of total disability.

The honest defense rule is not an automatic “silver bullet” against FMLA violations; An employee may produce evidence that shows that the employer’s decisional process was not worthy of credence or other circumstances prevent applying the honest belief rule. And not all judges are equally willing to “rubber-stamp” an employer’s assertion of the “honest belief” rule because of the potential for an employer having a less than honest belief of an employee’s misconduct.

Consider for example, Judge Tarnow, a well-respected judge, wrote a stinging dissent in the Seeger case explaining why the honest belief rule should not apply:  

… the overwhelming weight of evidence supports [the employee’s] contention that [the employer’s] investigation was so poor and one-sided as to be ‘unworthy of credence’ and thus not sufficient to satisfy an ‘honest belief.’

For this reason, an employer faced with issues intersecting with FMLA leave and employee discipline should consult with an experienced employment attorney to make sure the FMLA is complied with as well as to take steps to maximize the opportunity to assert the honest belief rule in the event the employer is later sued for alleged FMLA violations. 

For more information about the Family Medical Leave Act, as well as responding to a violation of FMLA rights, contact Jason Shinn. Since 2001, Mr. Shinn’s legal experience as an employment attorney includes addressing FMLA compliance and litigation issues, as well as the full range of federal and Michigan employment law issues.

Gavel on Cash.jpgWe previously reported about a lawsuit filed against Oakland University by its former women’s basketball coach Beckie Francis. Essentially that lawsuit involved Oakland University’s decision to withhold from production of certain employee records concerning Ms. Francis, which were requested pursuant to Michigan’s Bullard-Plawecki Employee Right to Know Act. 

Following our coverage of this employment dispute, the Detroit News reported that a judge hearing the employment lawsuit issued an order in favor of the employee and against Oakland University, including paying the employee’s attorney fees.

Employer Produced Redacted Documents

The University, through its legal counsel Robert Boonin of Butzel Long, had taken the position that portions of certain records, specifically an investigation report, were exempt from production under the statute. In this regard, the University originally produced a redacted report.

Ms. Francis, however, claimed that the report was too heavily redacted and what was produced did not provide her with the context to assess the just cause issue of her firing.

Court Agreed Certain Redactions Appropriate, But Still Ordered Employer to Pay

In resolving this legal dispute the Court (Hon. Martha D. Anderson) determined that some of the University’s redactions were appropriate, including redactions to remove specific names of individuals other than Francis and its mental impressions protected by attorney-client privilege … as well as staff planning information.” 

But the Detroit News further reported that despite this finding, legal counsel for Oakland University was unable to convince the Court that the University should not be required to pay Ms. Francis’ costs and attorney fees, which have yet to be determined.  

The Take-Away for Michigan Employers

For Michigan employers this lawsuit is an important reminder of the importance of properly responding to an employee’s request for that employee’s personnel file. Failing to comply with such a request or making the wrong decision about what is withheld from production can expose the employer to having to pay costs and attorney fees, as was the result in Ms. Francis’ lawsuit against Oakland University. 

For more information about complying with Michigan employment laws, including how to properly respond to an employee or former employee’s request for their personnel file, feel free to contact Jason Shinn. Mr. Shinn is a Michigan employment attorney and since 2001, he has addressed employment legal issues under federal and Michigan employment laws.

Playbook.jpgHiring new employees ideally opens the door to new opportunities for employers. But new hires may also present litigation risks. Specifically, it is not uncommon for companies to be sued by a newly hired employee’s former employer.

Such lawsuits generally involve two common fact-patterns:

  1. Claims that the new employer interfered with or otherwise induced an employee to breach his or her obligations owed to the prior employer by accepting the new employment; or  
  2. The new employee took confidential or proprietary information (in any format, e.g., documents, emails, spreadsheets, databases, etc.) from the former employer to use in the employee’s new employment.

As to the first fact pattern, many employment agreements contain restrictions that will extend beyond the initial employment for some period of time. Common examples include non-compete and non-solicitation agreements, which often are limited to a specific duration. Other restrictions, such as confidentiality agreements, may extend indefinitely so long as the information it applies to remains confidential.

The second fact pattern may involve intentional misappropriation and also mistaken or inadvertent misappropriation of a former’s company information. In either case, however, the new employer may be exposed to legal liability. Also there are significant business risks. For example, introducing new innovations and products may be delayed during the pendency of the lawsuit or even permanently shelved if your company loses the lawsuit.  

Best Practices for Eliminating Trade Secret and Noncompete Lawsuits 

Employees are often the life-blood of companies. But when it comes to hiring new talent employers need to have in place best practices for reducing the above business risks associated with new hires. Such practices include:

  1. It is important to ensure that a newly hired or prospective employee will not breach his or her continuing obligations to the former employer. Employers should obtain written representations from the new hire or job applicant that by accepting the job offer will not violate any continuing obligations to any former employer; and
  2. It is important for employers to make it clear to new hires that they are expected to comply with their contractual obligations to their prior employers. It is also important to expressly restrict new employees from using their former employer’s confidential or proprietary information, even if they believe that the information is their own (for example, customer lists developed over the course of their career and used at their former employer). Employees should be encouraged (at the very least) that when in doubt, error on the side of caution and discuss the issue with management. 

An Example of Successfully Negotiating a Noncompete Agreement Modification

If the prospective employer would like to extend an employment offer to an individual subject to post-employment restrictions, then legal counsel should review the noncompete agreement or applicable restrictions ensuring that the job duties will not violate any continuing obligations to any former employer or to determine if there are essentially options to work-around those restrictions that are acceptable to the former and new employer.

For example, I represented a highly successful Michigan sales representative who was under a noncompete agreement. The sales representative had received a job offer from a competitor. In responding to the former employer’s cease and desist letter, I highlighted certain legal and factual shortcomings in the subject noncompete agreement that called into question its enforceability if litigation was pursued. Using these shortcomings, we negotiated a resolution that significantly reduced the post-employment noncompete restrictions owed to the former employer and that allowed the sales representative to accept the offer.

Specifically, the noncompete restrictions were significantly reduced in both duration (down from two years) and from working for “any competitor” to only restrictions against competing for a handful of specific customers. And prior to agreeing to this settlement, I had confirmed with the new employer’s legal counsel that these reductions were acceptable to the new employer. This result was dependent upon the actual circumstances, but it illustrates an example of one outcome that may be available when it comes to noncompete agreement disputes.

Contact attorney Jason Shinn for additional information about Michigan noncompete agreements, trade secret protection, including investigating a suspected misappropriation of trade secrets or violation of a noncompete agreement. Since 2001, Mr. Shinn has represented companies and individuals to address these issues, as well as defending against and pursuing trade secret and noncompete agreement violations.

Social Media on ChalkboardA recent article in the Wall Street Journal (reported on 11/21/2013 by Jennifer DeVries) discussed a study showing bias in the hiring process when social media is used to screen job applicants. Because of the potential for unlawful discrimination and losing out on otherwise qualified job applicants, the article and study should be a “must read” for every human resource professional or anyone with hiring responsibilities.

Social Media, Recruiting, and Unlawful Discrimination 

In the study, researchers at Carnegie Mellon created four distinct Facebook profiles. The content for each profile corresponded to a Christian, Muslim, heterosexual and a straight male. The researchers then created resumes corresponding to the fake profiles, except the resumes did not contain any non-professional content (i.e., nothing relating to religious beliefs or sexual orientation). These resumes were then sent in response to 4,000 job postings across the U.S. The researchers then were able to track social media searches of the “applicants” and compared these searches to the rate the applicants were contacted for an interview.

The researchers found that the Muslim “applicant” fared the worst in terms of being called in for an interview. The starkest contrast came from the 10 most Republican leaning states where Christians received 17.3% calls for interviews but Muslims recieved only 2.3% calls. As to the gay and straight “applicants,” the straight “applicant” faired slightly better than the gay “applicant.” However, the difference was not as pronounced as between the Christian and Muslim “applicants.       

Best Practices for Lawfully Using Social Media in Recruiting Employees 

The results of this study provide additional confirmation for recommendations my law firm has provided to business clients and HR professionals for years. For example, in February 2012, I presented to HR professionals and warned against the potential for unlawful discrimination in using social media to screen job applicants. See The Intersection of Social Media & Employment Law: The Good, the Bad, and the Confusing.

Some additional best practices for limiting claims of unlawful discrimination against your company’s use of social media searches of job applicants are as follows: 

  • First, if your company is going to use social media in its hiring process then it is important to have a written plan that covers how, when, and what social media will be used. Applying the findings of the above study and to reduce the potential for being accused of unlawful discrimination in the hiring process, employers should resort to social media searches until after a candidate is interviewed. This makes it less likely that your company can be accused of denying an applicant an interview because of a protected characteristic discovered in reviewing the applicant’s social media profile.
  • Second, it is also important for employers using social media in recruiting to be consistent: If your company elects to use social media in your hiring process, make sure HR or managers are conducting the same searches at the same point in the process for every applicant. And be sure to keep records of what is reviewed, especially any posts or information that raises questions about a job applicant’s candor, professionalism, or judgment.
  • Third, for Michigan employers using social media research in the hiring process it is important to understand what is and is not permitted under Michigan’s Social Media Statute applicable to social media accounts of employees and job applicants. I was previously interviewed about this statute and provided best practices for complying with it, which are at this link Employer Recommendations for Complying with Michigan’s Social Media Password Law.

For more information about creating or updating your company’s social media policy, as well as complying with federal and Michigan employment law, contact Jason Shinn. Mr. Shinn is a Michigan employment attorney who regularly assist employers and HR professionals in responding to employment law challenges, including responding to state and federal EEOC charges of discrimination and, if necessary, litigating such matters.

Record Pile.jpgOakland University, a southeast Michigan public university, was sued on November 1, 2013 by its former women’s basketball coach Beckie Francis. The lawsuit seeks injunctive relief and declaratory relief, as well as seeks to compel Oakland University to produce certain employee records concerning Ms. Francis pursuant to Michigan’s Bullard-Plawecki Employee Right to Know Act.

While this lawsuit is only in the early stages of the litigation process and is bogged down in a morass of procedural issues, it does provide Michigan employers with a good reminder as to their obligations when it comes to complying with this statute and providing former employees documents maintained in their employee file.

Factual Events Leading up to the Request for her Personnel File

Ms. Francis was previously fired in June 2013 (notably, the firing occurred within hours of her husband retiring from his position as president of the university). After her firing it was reported by the Detroit Free Press (by David Jesse) that Ms. Francis  was mentally and emotionally abusing her players, was “obsessed” with the players’ eating habits and body fat and refused to follow orders to separate her religion from her coaching.

Michigan Law and an Employee’s Right to Review his or her Personnel Record

Specifically, under Michigan’s statute, an employee may review his or her personnel record at reasonable intervals, generally not more than twice in a calendar year. The employer must make the record available at a location reasonably near the employee’s place of employment and during normal office hours.

The Act limits the definition of a “personnel record” to “a record kept by the employer that identifies the employee, to the extent that the record is used or has been used, or may affect or be used relative to that employee’s qualifications for employment, promotion, transfer, additional compensation, or disciplinary action.” MCLA 423.501(2)(c). Importantly, some documents which may otherwise fall within this definition are still excluded from production under the Act.

Examples of what employers may properly exclude from production include:  

  • Employee references supplied to an employer if the identity of the person making the reference would be disclosed;
  • Materials relating to the employer’s staff planning with respect to more than one employee, including salary increases, management bonus plans, promotions, and job assignments;
  • Medical reports and records made or obtained by the employer if the records or reports are available to the employee from the doctor or medical facility involved;
  • Information of a personal nature about a person other than the employee if disclosure of the information would constitute a clearly unwarranted invasion of the other person’s privacy;
  • Information that is kept separately from other records and that relates to a criminal investigation by the employer;
  • Records limited to grievance investigations that are kept separately and are not used to determine the employee’s qualifications for employment, promotions, transfer, additional compensation or disciplinary action;
  • Records maintained by an educational institution that are directly related to a student and are considered to be education records under the Family Educational Rights and Privacy Act; and 
  • Records kept by an executive, administrative, or professional employee that are kept in the sole possession of the maker of the record, and are not accessible or shared with other persons.

However, what may ultimately be properly excluded is a common issue employers face and that issue is the cornerstone of the dispute in the Francis lawsuit. In that regard, it appears from the court records filed in this lawsuit both parties are fighting over what is required to be produced and what may be withheld with respect to an investigation report created by Oakland University.

The University has taken the position that a report at issue details an investigation that was not just regarding Ms. Francis, but also concerned the program and conduct of other employees. Further, the allegations triggering the investigation–particularly the allegations relating to Ms. Francis –were asserted by students about her treatment of them as students. Oakland University also claims the report contains the conclusions, impressions, and recommendations of legal counsel, which is another basis for withholding the production documents under Michigan’s employee personnel file disclosure statute.

Penalties for Violating Employee’s Right to Review their Personnel File

If an employer is found to have failed to comply with Michigan’s Bullard-Plawecki Employee Right to Know Act, a court may order the employer to comply with it, as well as holding the employer in contempt. In addition, an employee is entitled to recover actual damages plus costs. Further, for a willful and knowing violation of the act, the penalty is $200 minimum damages plus costs, reasonable attorney fees, and actual damages.

For these reasons, it is important for your company to have in place a proper employee record keeping system, understanding what and what should not be kept in an employee personnel file, and a system in place for responding to employee requests to review their personnel files. 

If your company needs to respond to an employee’s request for his or her employee file or if you have questions about best practices for maintaining employee personnel files and records, feel free to contact Jason Shinn. He is a Michigan employment attorney who regularly handles federal and Michigan employment law compliance issues.

Checklist.jpgJob applications commonly have a question in the form of checking a box to indicate whether an applicant has a criminal record. If the applicant checks “yes,” the applicant is asked to explain the circumstances.

In reality, however, checking the box ends the employment opportunity for the applicant because it is likely that a prospective employer will deny the applicant employment even with a compelling explanation for the criminal record. For this reason, there has been a push to eliminate the question, which have been commonly referred to as “Ban the Box.”

Target ends its use of “Check the Box”  

Target is ending on a national basis its use of its standard form question that asks if a job applicant has a criminal history. This move is in response to a Minnesota law passed enacted earlier in 2013 that requires private employers in Minnesota to remove the criminal history question off applications by the end of the year. However, Minnesota NPR reported that Target is voluntarily expanding that approach for all U.S. applicants.

Michigan and Criminal Background Checks

For Michigan employers, there are restrictions concerning what criminal background information about an applicant may be asked for in the employment application process. For example, under Michigan’s civil rights statute (the Elliott-Larsen Civil Rights Act also called the “ELCRA”) an employer cannot in connection with an application for employment or with the terms, conditions, or privileges of employment make a “request, make, or maintain a record of information regarding a misdemeanor arrest, detention, or disposition where a conviction did not result.” MCL 37.2205a(1).

In addition to Michigan or other state law, the Equal Employment Opportunity Commission (the federal agency responsible for carrying out most federal employment-related employment laws) issued guidance in April 2012 about the use of criminal background checks in employment applications. And failing to comply with the EEOC’s guidance has resulted in significant monetary settlements; Pepsi previously agreed to settle with the EEOC for over $3 million for running afoul of the EEOC’s policy. This guidance, however, has not been well-received by federal courts in addressing employment discrimination claims relating to criminal background inquiries.

Closing Thoughts on Criminal Background Checks

For these reasons and because of the dynamic and sometimes conflicting results reached by different courts, employers who are considering implementing a criminal background check policy should discuss the proposed policy with an experienced employment attorney to ensure compliance with federal and state law. And for more information on what may or may not be lawfully asked of job applicants, see our prior post Can An Employer Ask a Job Applicant … The Nuts & Bolts of Legal Pre-employment Inquiries.

Feel free to contact Jason Shinn, a Michigan employment attorney who regularly addresses complying with federal and Michigan employment legal issues and litigating these issues in state and federal courts. 

Pig of a Businessman.jpgWorkplace bullying was front and center this week as the Miami Dolphins organization scrambled to address reports that its starting offensive tackle Jonathan Martin left the team indefinitely because of bullying from teammates.

ESPN reported that this bullying included Mr. Martin’s teammate, Richie Incognito, leaving Martin the following (disturbing) voicemail after Mr. Martin was drafted by the Dolphins:

Hey, wassup, you half n—– piece of s—. I saw you on Twitter, you been training 10 weeks. [I want to] s— in your f—ing mouth. [I’m going to] slap your f—ing mouth. [I’m going to] slap your real mother across the face [laughter]. F— you, you’re still a rookie. I’ll kill you.

ESPN initially reported that Mr. Martin did not file a formal complaint against Mr. Incognito or the Miami Dolphins. However, NFL.com reported that the Dolphins were apparently aware of Mr. Martin’s situation since the spring. Mr. Martin has since filed a formal complaint that is being reviewed by the NFL and Mr. Incognito has also been suspended.  

Workplace Bullying and Legal Risks

Certainly Mr. Martin’s situation is an unfortunate and illustrates the acidic environment that is created by workplace bullying. Such mistreatment can range from verbal abuse, intimidation, humiliation, or outright sabotage. And an employee on the receiving end of such bullying may suffer a loss of self-esteem, long-term physical or mental health issues, and a loss of productivity.

But while workplace bullying is unfortunate, employment attorneys, including me, generally focus on eliminating or reducing workplace bullying mostly because of the threat of litigation that employers face – not to right every workplace wrong. Building on this point, the reality is that federal and Michigan employment law is not perfect and is certainly not intended to promote a utopian workplace. And not every instance of workplace bullying or mistreatment will be unlawful under federal or employment law. 

Workplace Bullying and Workplace Disruption

Even so, the reality for employers is they simply cannot afford to ignore the high cost of bullying. And it has a real and substantial cost to employers. Consider the following: 

  • Employees that experience workplace bullying often take time off to cope with the behavior. Case in point, Mr. Martin opted to not play against the Cincinnati Bengals last week and has left the team indefinitely. Prior to this incident, Mr. Martin had started all 21 games of his NFL career. 
  • The costs associated with disability leaves and absenteeism can be substantial and goes straight to the employer’s bottom line. Returning to Mr. Martin, according to Spotrac, he signed a 4-year contract upon entering the league in 2012 worth $4.8 million with $2.9 million guaranteed. Mr. Martin was to be paid for the remainder of the 2013 NFL season $607,466. If Mr. Martin never returns to Miami and even if Miami is only out the guaranteed portion of this contract this is obviously a substantial financial investment lost on the part of the Dolphins organization because of workplace bullying. But it is far from clear, however, that Miami – under the circumstances – would limit its financial loss to the guaranteed portion of Mr. Martin’s contract.    
  • On top of the salary issues, the Miami Dolphins will have to expend time and money on managing the public relations aspect of this situation. 
  • In addition to quantifiable monetary losses, Miami Dolphins, like any employer, compete for talent. And organizations that become known for having a bullying culture or are indifferent to such a culture should expect to be at a disadvantage in terms of recruiting and retaining that talent.

Workplace Bullying and Workplace Recommendations

For business owners, before losing a good worker or having the workplace environment deteriorate into an acidic one, it makes sense to include bullying – even conduct that may not be unlawful discrimination – into the standard human resource reporting and investigation procedure, along with conduct that may amount to unlawful discrimination. Setting aside the positive benefits of maintaining a bully-free workplace, it is unrealistic to assume that bullying or similar mistreatment will not cross over to unlawful workplace harassment.  

Additionally, management should be educated about being aware to proactively being on the lookout for inappropriate workplace misconduct. This is especially true as the Jonathon Martin case illustrates because not every employee will come forward to report workplace bullying. And while failing to take advantage of an employer’s anti-harassment policies certainly provide legal defenses, employers still must deal with the internal disruption caused by such conduct, whether reported or not. Just ask the Miami Dolphins. 

For more information about the legal issues relating to workplace harassment, investigating workplace misconduct, or drafting anti-harassment policies and employee manuals, contact Jason Shinn. Mr. Shinn is a Michigan employment attorney. He routinely provides employment law counseling to companies and represents them and individuals in employment discrimination claims filed in federal and Michigan courts.  

Rainbow Flag.jpgTomorrow Royal Oak (Michigan) votes on a local ordinance that would prohibit discrimination in housing and employment against gays, lesbians, bisexuals and transsexuals.

The Royal Oak City Commission passed the ordinance in March, but enough residents signed a petition to keep it from taking effect. If this ordinance is enacted, Royal Oak would join approximately 29 other Michigan municipalities that have adopted ordinances adding language including sexual orientation to bans against discrimination, including employment discrimination. 

This blog previously discussed the significant negative economic impact failing to prohibit sexual orientation discrimination has on Michigan. See Sexual Orientation Discrimination and Michigan Law – Is it a Time for a Change? In sum and setting aside one’s view on sexual orientation, permitting sexual orientation discrimination is increasingly shown to be objectively bad for Michigan’s economy and a company’s overall employment relations.   

On the federal level, Congress is also considering legislation, called the Employment Non-Discrimination Act (ENDA), that would prohibit discrimination in hiring and employment on the basis of sexual orientation or gender identity by civilian, nonreligious employers with at least 15 employees. ENDA has been introduced in every Congress since 1994 except the 109th.

National Public Radio reported that ENDA is only one vote shy of a filibuster-proof majority. Senate Majority Leader Harry Reid said earlier this week that he will push for a vote as early as next week. However, it’s unlikely that ENDA will be taken up in the Republican-controlled House. But it would force Senate Republicans to take a stance on the issue, and could paint House Republicans as being out of step with the majority of Americans by obstructing a bill aimed at ending workplace discrimination.

We will continue to follow this legislation and the impact it would have on Michigan employers and employees. For more information about such legislation or legal issues and policies involving sexual orientation discrimination, contact Jason Shinn who focuses on federal and Michigan employment law issues. This experience specifically includes advising companies going back to 2001 on responding to same-sex marriage and sexual orientation issues that arise in the workplace.   

Injured by Chance.jpgWhistleblower claims routinely make the headlines. And for employers, whistleblower claims increase the chance of liability even in what should be otherwise routine adverse employment decisions.

By way of example, a number of years ago, I represented an employer in what should have been a garden variety wrongful discharge lawsuit. However, because of some “unfortunate” facts and circumstances this claim also implicated the Whistleblowers’ Protection Act. And this this significantly changed the liability calculus as well as the claim’s settlement value in what could have been a discrimination lawsuit that settled for nuisance value or been dismissed by way of motion.  

Michigan’s Whistleblower Protection Act 

Whistleblower claims may arise under a patchwork of state or federal law. In this regard, Michigan has a Whistleblowers’ Protection statute.

Under this act, an employer cannot discharge, threaten, or discriminate against an employee regarding employment, compensation, or a term, condition, location or privilege of employment because of protected activity. While this explanation of Michigan’s Whistleblowers’ Protection Act makes it appear to be straightforward employment protection statute, the devil is in the details and in its application. 

Five Things to Know under Michigan’s Whistleblower Protection Act

Here are four things Michigan employers and employees should understand when it comes to the Whistleblowers’ Protection Act: 

  1. “Protected activity” means: (i) An employee or a person acting on behalf of an employee reports or is about to report (either verbally or in writing) a violation or a suspected violation of a law, regulation, or a rule promulgated pursuant to the law of the state, a political subdivision of the state, or the United States, by the employer, a third party, or a co-employee to a public body, unless the employee knows that the report is false; (or) (ii) An employee participates at the request of a public body or has been requested by a public body to participate in an investigation, a hearing, or an inquiry held by that public body or a court action. (iii) A request for the employee to participate in an investigation, or a hearing, an inquiry, or a court action is considered protected activity even though the employee does not actually participate in any such investigation, hearing, inquiry, or court action.
  2. To prove causation for purposes of the Whistleblower Protection Act, the adverse employment “because of” means that protected activity must be one of the motives or reasons the defendant discharged, threatened, or discriminated against the plaintiff. Protected activity does not have to be the only reason, or even the main reason, but it does have to be one of the reasons that made a difference in defendant’s decision to take any such adverse employment actions against the plaintiff.
  3. Also, proving causation requires the plaintiff to show that a decision-maker or a person who influenced the decision knew of plaintiff’s protected activity. Knowledge may be shown by direct evidence or circumstantial evidence.
  4. A Whistleblower plaintiff must reasonably believe that a violation of law or a regulation has occurred. However, it is not necessary that an actual violation of law or a regulation has occurred, but the employee cannot have a reasonable belief if the employee knows the report is false.
  5. A Whistleblower claim must be brought within 90 days after the occurrence of the alleged violation of the WPA. 

Closing Thoughts on Whistleblower Protection Claims

Again, issues relating to the Michigan’s Whistleblowers’ Protection Act can be complex and if you or your company is within an area code of a potential Whistleblowers Protection claim you should contact an experienced employment attorney to discuss your situation. This is especially true for employers because liability under the Act may expose your company to damages, as well as paying the reasonable attorney fees and costs of the plaintiff.

For more information about Michigan’s Whistleblowers’ Protection Act or other federal or Michigan employment law questions, contact Jason Shinn. He is a Michigan employment attorney who has been addressing these employment legal issues since 2001.

Key.jpgA recent Michigan trial court decision from the Oakland County Circuit Court illustrates the significance that noncompete agreements can have for employers and individuals who sign such agreements. 

Specifically, Crain’s Detroit Business reported that an Oakland County Circuit court entered a judgment in excess of $2 million against Matt Prentice, a former employee and a well-known Metro Detroit restaurateur. This judgment arose out of a lawsuit filed against Mr. Prentice for claims of breach of a noncompete agreement and other related claims. 

The lawsuit against Mr. Prentice was originally filed on July 11, 2012. It claimed that Mr. Prentice failed to comply with a noncompete agreement he signed in 2009 after the Matt Prentice Restaurant Group assets were acquired by an entity called Trowbridge Restaurants Inc. that was created by Stan Dickson. Mr. Dickson then hired Mr. Prentice to operate the restaurant assets. However, Mr. Prentice left Mr. Dickson’s company on March 29, 2009 to open up a restaurant called Morels and a steakhouse that would be called Detroit Prime (As an aside, both provided phenomenal dining experiences).

In handing down the decision, the Oakland County Circuit Judge, Michael Warren, framed the issue to be decided as: 

At stake in this case is whether a sophisticated business owner can negotiate and sign a clear and unambiguous agreement (in which he agrees its terms are reasonable) and purposefully breach it without consequence? Because the answer is ‘no,’ the Court renders the judgment in favor of the Plaintiffs. 

As noted above, that judgment was in excess of $2 million against Mr. Prentice. 

Closing Thoughts

A common question our law firm is asked by companies, usually start-ups, and individuals is what is the value or significance of having a noncompete agreement.

For companies, the question is usually asked in order to understand the business justification for expending resources for incorporating a noncompete agreement into their employment practices. For individuals, the question is often asked because the employee has previously signed a noncompete agreement but is now thinking about competing against his or her current employer by taking a job with a competitor or starting a new business.

In addressing both the company and individual interests, a decision like this is a good reminder that regardless of the perspective, i.e., a company seeking to enforce a noncompete agreement or an employee accused of breaching a noncompete agreement, the value and significance of having an enforceable noncompete agreement cannot be understated because it can have significant ramifications in terms of damages and eliminating competition. 

For more information about enforcing noncompete agreements see our prior post: My former employer can’t prevent me from working, right? Dissecting the Enforceability of a Noncompete Agreement, search this site for other noncompete agreement articles, and contact Jason M. Shinn to discuss noncompete agreement law specific to your situation.