Superheros.jpg

I’m not afraid to admit that I’m a comic book geek. And while Spider Man was not my favorite superhero, a favorite quote of mine is associated with him: “With great power comes great responsibility.” 

While making the leap from superhero to lawyer probably requires some superhuman power, no extraordinary effort is needed in making the case for applying this quote to attorneys and the lawsuits they file on behalf of their clients. 

The impetus for this diatribe comes from a recent lawsuit between two co-workers – Plaintiff Farhoud and Defendant Rosario – who worked in a large Michigan hospital. Defendant Rosario had allegedly overheard Aiman ask a fellow co-worker, “Can you pull this sheath for me before I have to go shoot somebody?” 

Was this just an off-color remark or a warning sign for something more sinister? Certainly in light of the steady stream of actual and planned violence that is a tragic reality, one could accept that Rosario believed that this comment was “unsettling” and inappropriate, and understand why she reported it to her direct supervisor.

And one could certainly understand that in response to this report, why the hospital’s security would confront Aiman who would later testify that he had no recollection of making the comment, but if he did make it, the comment was only made in jest. No disciplinary action was ever taken against Aiman as a result of Rosario’s report.

Lawyers Able to Make Huge Factual Leaps in a Single Lawsuit

And at this point in our story is where a lawyer could have saved the day (or at least salvaged some respect for the profession) by exercising responsibility in using the power to file a lawsuit. 

Instead, however, Plaintiff Aiman and his wife found a lawyer who sued the co-worker, alleging that as a result of the accusation concerning the comment that Aiman suffered “substantial damages” including “embarrassment, humiliation, depression, anxiety, and missed time from work.” Aiman’s wife alleged she suffered emotional distress from the incident and the stress resulted in a heart attack.

But as so often happens in employment related lawsuits, plaintiffs and their attorneys go to considerable lengths to paint a picture of liability only to have the facts intervene and often stubbornly so.

In this regard, Aiman at his deposition conceded that he may have made a comment, that it could have been perceived by his co-worker to be inappropriate, and there was no evidence that the co-worker made a false report. Accordingly, the trial court dismissed the claim reasoning that plaintiffs’ claims “did not rise to the level of extreme and outrageous conduct …” and the Michigan Court of Appeals agreed.

The Take-Away

Perhaps I’m being overly critical and the above case is – at worst – just a “close call” as to being a lawsuit that passes the smell test. That test is the short name for the court rules that require a lawsuit to be factually and legally warranted under existing law or offers a “good faith argument for the extension, modification, or reversal of existing law.”

But the guidelines set forth in this court rule often seem to be nothing more than an elastic Rorschach test that often becomes kryptonite to reason and only serves to shield clients and their lawyers against having to to take a step back from a particular situation and meaningfully recognize that having the power to file a lawsuit also requires using that power responsibly.

I am now stepping down from my soapbox to return to preparing a motion to dismiss and request for sanctions for having to respond to a shockingly legally and factually deficient lawsuit against a client who is frustrated beyond belief (and justifiably so) at how the legal system can be used for evil. Ok, maybe this last comment is a bit of hyperbole, but somedays getting bit by a radioactive anything seems like it would be better than the day job.

Excelsior true believers (a little tribute to Stan Lee)!

Google Search.jpg

A little bit of knowledge can be a dangerous thing, especially when legal issues are involved. This truism makes the Internet a virtual minefield for the unwary looking for “free legal advice,” which often happens in the area of post employment restrictions and noncompete agreements. As discussed below, however, a noncompete lawsuit arising from incomplete or outright inaccurate information is only a Google search away.

Consider for example, a recent question submitted on a popular, public legal website. A person asked if his current employer of nine years could restrict him from starting an identical business even though he had not signed a noncompete agreement.

This question garnered a range of well-reasoned and insightful responses, as well as responses that were less so. For example, some responders offered a blanket conclusion that if the individual had not signed a noncompete agreement there wasn’t anything the employer could do to stop the individual from “switching jobs.”

Another response offered some sort of conclusion to the effect that if the individual never signed a noncompete agreement “such effect would provide no basis for construing any proviso to be engrafted solely on the whim of a former employer” with respect to restricting a person’s post-employment activities. Again, this was some sort of conclusion, but not one I would build a business around.

Noncompete and Post Employment Misconceptions 

The problem showcased by the preceding snapshot of noncompete Q&A is best summarized by a famous observation made by management guru Peter Drucker, “The most serious mistakes are not being made as a result of the wrong answers. The truly dangerous thing is asking the wrong questions.”

Applying this to the noncompete Q&A situation exposes two problems: First, the question asked is too narrow in that it focuses on a single issue – can an employer enforce a noncompete restriction if the employee never signed a noncompete agreement – and overlooks a number of other legal issues that could blow-up the questioner’s business plans.

Second, the responses – even the very good ones – may provide some measure of truth as to the specific question asked, but those responses do little to shed light on the full range of legal time-bombs that could be diffused or outright avoided.

In this regard, consider the following sampling of issues that often arise in the context of a former employee starting a competing business:

Trade Secrets. Michigan, like many states, statutorily protect an employer’s trade secrets under the Michigan Uniform Trade Secrets Act (the “Trade Secret Act”), MCL 445.1901, et seq. And while there is some overlap between trade secret protection and noncompete agreements, one does not have to have a signed noncompete agreement in order to maintain a lawsuit for trade-secret theft, which could certainly halt a former employee’s competing business because there are a number of significant remedies available to an aggrieved party, including:

  • The award of an injunction against the competing business from operating;
  • The award of an injunction against the former employee based on actual or threatened misappropriation of trade secrets;
  • The ability to compel a party to take affirmative acts necessary to protect a trade secret; and
  • An award of damages for misappropriation.

Computer Fraud and Abuse Act. We have previously discussed on this site the Computer Fraud and Abuse Act (CFAA), 18 USC 1030 (a federal statute) and its application to employees looking to help themselves to an employer’s digital goods before departing. A common argument in such sitautions is that the former employee violated the CFAA, by accessing the employer’s computer “without authorization” while individual was employed and sometimes after leaving the company. A CFAA claim in such circumstances have met with varying degrees of success (depending upon your perspective). But the fact remains, the CFAA is another tool that can disrupt plans for starting a new business that does not depend upon the signing of a noncompete agreement.    

Unfair Competition/Breach of Fiduciary Duties. These sorts of claims are more “elastic” in that they can be molded around various factual scenarios where a former employee engaged in some wrongful or “unfair” conduct that could be deemed unethical or unfair. Common examples include copying information, including information that does not meat the definition of trade secret in preparation for competing against your employer, delaying or diverting orders to benefit a new company or employer, or while employed soliciting fellow employees to leave their current employment for your new venture.

The Take-Away for Departing Employees and Would be Entrepreneurs 

Legal question and answer sites and Internet research is not inherently a bad thing when it comes to getting answers to legal issues. For instance, one of the goals for this blog is to provide a compelling reasons for people and companies to regularly read it when it comes to Michigan and federal employment law issues. And this goal was inspired by a number of other lawyers who regularly publish blogs that provide top-shelf legal analysis and excellent coverage of legal issues.

But Internet legal research should not be the only thing you do when it comes to making decisions that have legal implications for you or your business plans. I mean, if you believe enough to devote your time, money, and other resources into building a start-up or new company, does it really make sense to build on a foundation of free legal advice from the Internet?

     

Pig of a Businessman.jpgLast week this blog reported about a recent lawsuit filed by an African-American nurse against her employer, Hurley Medical Center in Flint, Michigan. The lawsuit claimed the defendant hospital agreed to a man’s request that no African-Americans care for his newborn baby and went so fare as to even post a sign to this effect.  

For any number of reasons these allegations – assuming them to be true – revealed the significant legal and evidentiary issues the hospital faced in responding to the employment discrimination lawsuit. And presumably that trouble contributed to a quick settlement of the case, which was announced on February 22, 2012 (See Dominic Adam’s reporting on this settlement). A second lawsuit (PDF), however, was filed by another African-American nurse and this case is still pending.

Regardless of what happens with this second suit or the reasons the first settled, both provide a number of points that employers and employees should understand when it comes to discrimination based on customer preferences.

This lawsuit also revealed a significant amount of frustration and misunderstanding among people following this story. Consider the following comments posted on the Detroit Free Press website (all comments are provided verbatim): 

  • this is rediculous !!! the racist is a horrible person. but so what. he is paying for a service.he can request anything he wants. how is the nurse at a loss for anything ?? THERE WAS NONE !! this is truely unbelievable !!!! B. Holtslander
  • She was not allowed to care for a specific child. Did she lose hours? NO. Did she lose pay? NO While the father’s request was dispicable, what was the real harm to this nurse? D. Markham
  • As much as I disagree with the father’s racist views on African-Americans, they are his views. In health care, we are taught to put aside our beliefs and respect other people’s culture and views, and not to judge. In that sense, the Hospital did the right thing. They respected the beliefs and culture of the father, and followed his wishes. As weird as that sounds, it was the right thing to do. A nurse of 25 years should be insulted by the racist father, but she should also realize that part of the job is respecting the culture of others, as weird as that feels with regards to a racist. R. Burchett
  • Being a racist aside, he probally does have the right to decide who cares for his child. No win situation. Get sued by a nurse who could have moved on and cared for another patient or get sued by the father. C. Cunningham
  • Truth be told, female patients often request care from female nurses and aides, and are probably quietly accommodated. Shhhhh. R. Rustbelt

Misconceptions About Discriminatory Customer Preferences and Employers 

First, the Hurley Hospital Lawsuit illustrates the difficult situation employers are in when a customer makes a request that would constitute unlawful discrimination under Michigan or federal law. Specifically, businesses need to keep their customers happy. They also need to comply with state and federal anti-discrimination laws. Sometimes achieving both goals is a management challenge, because customers may not always have respectable beliefs or be model citizens.

And while the Hurley litigation involved race, customer preference issues can arise under other circumstances. For instance, imagine a company’s major client representative is a man who likes to be entertained at clubs with “strip” in their title. It would be discriminatory to remove a female from this account under the belief that a “guy” would be more suited to take the male customer representative out to such clubs. 

The second point to realize is that employers cannot make discriminatory decisions motivated by considerations such as race, religion, or gender based upon a customer’s preference under either Michigan or federal anti-discrimination laws. 

Third, while employers have obligations under the preceding laws, a person has the the right to their beliefs and opinions, even if those beliefs and opinions are widely considered to be racist, objectionable, or otherwise discriminatory. But going back to the preceding point, an employer subject to state or federal discrimination laws cannot facilitate the carrying out of those opinions that would unlawfully discriminate against individuals.  

Fourth, both Michigan and federal anti-discrimination laws recognize that in certain limited circumstances, an employer may have a legitimate reason to seek an employee of a particular gender or religion, even though such a preference would ordinarily be illegal. These are called bona fide occupational qualifications (“BFOQ”). A critical determination in assessing the appropriateness of a BFOQ is whether a customer preference involves fundamental rights such as privacy. 

Examples of such privacy issues and when an employer may legitimately make a BFOQ when it comes to customer preference issues include a patient objecting to being bathed by caregivers of the opposite sex, janitors assigned to clean restrooms that cannot be closed during cleaning, or security guards assigned to perform strip searches. 

But employers must understand that under both Michigan and federal anti-discrimination laws, racially motivated decisions are not going to be considered a BFOQ. 

 For more information about compliance with anti-discrimination statutes, as well as federal or Michigan employment discrimination issues, contact Jason Shinn. 

 

 

Discrimination Underlined.jpgIs An Employer Liable for Harassment by non-employees? This question was inspired by a recent discrimination lawsuit (PDF) filed by a Michigan nurse against her employer, Hurley Medical Center in Flint, Michigan. The lawsuit claims the employer agreed to a man’s request that no African-Americans care for his newborn baby.

While most parents of newborns would be more concerned about a nurse or medical provider’s qualifications, schooling, experience, training, etc., this new father is alleged to have bypassed these details and told the charge nurse that no African Americans were to take care of his newborn. In support of this request, it is alleged the man then showed the charge nurse a swastika tattoo on his arm. It is not clear if this showing was intended to substantiate the man’s request or the ignorance behind the request.  

The Complaint further alleges that the employer accommodated the racist request and that at some point, hospital personnel expressly noted in the chart of the newborn the following, “Please, no African-American nurses to care for … baby per dad’s request” (as an aside, beginning a racist request with “please” does not make it any less racist). 

 Based on these allegations, the plaintiff nurse sued her employer for claims related to racial harassment and discrimination under Michigan and federal law by the employer in accommodating the father’s racist request.

Can Employers be Liable for Hostile Environments and Discriminatory Acts of its Customers?

The short answer to the preceding question is “yes,” but it is a very long, factually intense, and nuanced analysis that employers need to understand in order to determine their liability and responsibilities for addressing workplace harassment or discrimination by customers or non-employee third parties.  

Overview of Hostile Work Environment Legal Issues

Generally an employer will be liable for a hostile work environment if the employee/plaintiff can establish the following elements:

  1. The individual is a member of a protected class; 
  2. The individual was subjected to harassment, either through words or actions, based on race; 
  3. The harassment had the effect of unreasonably interfering with the employee’s work performance and creating an objectively intimidating, hostile or offensive work environment; and 
  4. There exists some basis for liability on the part of the employer. 

Additionally, harassment must meet both an objective and a subjective test. This simply means that the at issue conduct must be so severe or pervasive as to constitute a hostile or abusive working environment both to a reasonable person and the actual individual.

Workplace Harassment and Discrimination by Non-Employees

In order for alleged harassment by non-employees, e.g. patients and visitors, to be actionable against an employer, the individual plaintiff must show that the defendant employer failed to remedy or prevent a hostile or offensive work environment of which management-level employees knew, or in the exercise of reasonable care should have known.

Closing Thoughts on Employer Liability for Discriminatory Conduct of Non-employees

The case against Hurley Medical Center was only filed earlier this week and, therefore, it is too premature to assess whether the employer will be held liable for the racist and discriminatory request of a non-employee. Certainly the allegations do not paint a factually favorable picture for the employer. But if you don’t have the facts on your side, then argue the law. And legally speaking, it will be interesting what, if any, evidence plaintiff will be able to point to showing a discriminatory animus on the part of management and supervisory personnel of the hospital.  

Further, this blog has previously discussed a lawsuit for discrimination based on similar facts against a hospital by its employee (also a nurse) involving discrimination and a hostile work environment created by non-employee patients. In that case, Rawls v. Garden City Hospital, the employee claimed that patients and visitors created a hostile work environment by using racial slurs.

The Rawls case, however, was dismissed in favor of the employer (PDF) and in reaching this decision, the court specifically discussed the reasonable and immediate corrective action taken by the employer. Those actions included removing or offering to remove the plaintiff nurse from the situation by temporarily assigning her to another area of the ER and then quickly treated and discharged the patients. The defendant employer successfully argued that its actions ensured that, on one hand, the plaintiff was no longer subject to further encounters with those patients or visitors, while on the other hand, the patients and visitors received necessary medical treatment.

While the plaintiff was clearly dissatisfied with her employer’s response, the Court agreed with the employer that it acted appropriately to remedy or prevent alleged harassment of plaintiff by non-employee patients and visitors.

Regardless of who wins the lawsuit, it is clear that the likely loser in this matter is the baby of the the father who ignited the discrimination lawsuit in the first place. Hopefully that kid will be able to overcome his dad’s “values.” If not, maybe they will at some point take fashion advice from Mr. Steven Colbert (watch through to the end of the video for the advice). 

Employee Manual.jpgMost employers understand that an employee manual is a cornerstone of good HR best practices. Unless, however, the National Labor Relations Board (NLRB) says otherwise, which means your company’s employee handbook could be a source of liability.

This point was recently illustrated in a recent decision where the NLRB affirmed a finding that DirectTV’s employee policies violated the National Labor Relations Act (PDF).

At issue in this matter were four rules – two provisions in the employer’s employee handbook and two corporate policies maintained by the employer’s intranet system – violated the NLRA because employees could reasonably construe workplace policies as prohibiting Section 7 activity.   

Communications with Media and Violating the NLRA

The employer’s handbook contained a provision entitled “Communications and Representing DIRECTV,” which expressly instructed employees as follows: “Do not contact the media.” The employer’s handbook also contained a provision that read: “Public Relations,” which advised employees that “Employees should not contact or comment to any media about the company unless pre-authorized by Public Relations.”

The NLRB considers any rule that requires employees to secure permission from their employer as a precondition to engaging in protected concerted activity on an employee’s free time and in non-work areas is unlawful.” Accordingly, it is not surprising that these provisions were found to be in violation of the NLRA. 

Restriction on employee communication with Law Enforcement Violated the NLRA

The employer’s handbook also contained a section that provided: “If law enforcement wants to interview or obtain information regarding a DIRECTV employee, whether in person or by telephone/email, the employee should contact the security department in El Segundo, Calif., who will handle contact with law enforcement agencies and any needed coordination with DIRECTV departments.”

Many employers will probably be surprised to learn that the NLRB found this to be a violation of the NLRA (Section 8(a)(1) to be specific). In fact, the NLRB even acknowledged such provisions make business sense and may actually favor the employee: 

[W]e acknowledge that an employer may, in some circumstances, have a legitimate interest in knowing about law enforcement agents’ attempts to interview employees. For example, an employer may wish to ensure that the employees have the opportunity to be represented by counsel during such interviews.

However, the NLRB went on to decide the employer’s rule was “ambiguous” in that it failed to distinguish situations where it would be appropriate for an employer to first engage law enforcement from protected employee contacts with agents of the NLRB or other law enforcement officials. 

Employer Confidentiality Rules as a Violation of the NLRA

The employer’s handbook also contained a provision entitled, “Confidentiality,” that instructed employees to “[n]ever discuss details about your job, company business or work projects with anyone outside the company” and to “[n]ever give out information about customers or DIRECTV employees.”

This provision also was found to be violative of the NLRA. Specifically, the NLRB concluded that because the rule expressly included “employee records” as one of the categories of “company information” that must be held confidential, the restriction would reasonably be understood by employees to restrict discussion of their wages and other terms and conditions of employment – a right protected under the NLRA.

Intranet policy on “Company Information”

The fourth rule that the NLRB found to violate the NLRA had to do with the employer’s corporate policy displayed on its intranet that read: “Employees may not blog, enter chat rooms, post messages on public websites or otherwise disclose company information that is not already disclosed as a public record.”

The NLRB went to great lengths to conclude that while this policy itself referenced only unspecified “company information,” when it was read in connection with the employer’s handbook “Confidentiality” provision discussed above, it was presumed that “company information” includes “employee records.”

Accordingly, an employee who reads the two policies in tandem would understand the intranet policy to prohibit disclosure of “employee records,” which would include information concerning their own or fellow employees’ wages, discipline, and performance ratings, which is a violation of the NLRA.

Perhaps in recognizing that not every employee would go to such lengths to reach this conclusion, the NLRB noted that “at the very least, the scope of ‘company information’ in the intranet policy is ambiguous” and under NLRB precedent, “employees should not have to decide at their own peril what information is not lawfully subject to such a prohibition.”

The Take Away for Employers

The first point employers need to realize is that the NLRA generally applies to private sector, non-unionized workforces.

Second, the NLRB will continue to closely scrutinize employer/employee relations outside of the union environment pursuant to its promoting public awareness of rights under the NLRA strategy. In this regard, attorney John Holmquist noted that this agenda was made clear at last year’s ABA Labor and Employment Section where members of the NLRB spoke: 

[Chairman Pearce] said that the Board will continue to pursue public awareness since ‘A right only has value when people know it exists.’ In difficult economic times, employees need to see for themselves and understand what protected, concerted activity is. He said it is one of the best kept secrets of the NLRA. 

Third, similar or variations of the preceding offending provisions are common to a company’s employee manual. In light of decisions like the above and the NLRB’s intent to focus on its “public awareness” campaign, companies and their HR department need to closely review their existing employee handbooks as well as all other policies or procedures intended to apply to the employer/employee relationship. This includes technology, email, and social media policies.

For more information about drafting or updating your company’s employee manual, as well as other questions about Michigan or federal employment laws, contact Jason Shinn. 

Cheat Sheet.jpgEmployment discrimination under Michigan or federal law can be a very complex and nuanced. The following is an overview of important points employers need to be aware of under Michigan’s employment discrimination statute:

Employment Discrimination Under Michigan Law 

For Michigan employers the primary state statute that prohibits workplace discrimination is Michigan’s Elliott-Larsen Civil Rights Act (ELCRA).

Michigan’s ELCRA prohibits discrimination based on an individual’s race, color, sex, age, religion, national origin, height, weight, or marital status. Additionally:  

  • Filing administrative complaints under ELCRA: An individual who experienced workplace discrimination may file an administrative complaint with the Michigan Department of Civil Rrights. A charge must be filed within 180 days after the alleged discriminatory act or within 180 days after the act was or should have been discovered. 
  • Is filing an administrative charge a prerequisite before filing a lawsuit: It is not necessary to file a charge with the MDCR to preserve an aggrieved employee’s statutory claim. Instead, an such an individual may bring a civil action, request injunctive relief, damages, or both directly and initially in circuit court, without exhausting administrative remedies before filing suit. 
  • How long does an individual have to file a lawsuit for discrimination: The period of limitations for a cause of action under the ELCRA is three years. MCL 600.5805(10).
  • Determining when the statute of limitations begins to run: A claim of discriminatory discharge accrues on the date the plaintiff is discharged. And the last day worked will be considered the date of discharge. This means that an employee’s severance agreement does not affect the termination date. 
  • Can an employer shorten the statute of limiations: The short answer is that employers can generally shorten the statute of limitations. In this regard, Michigan courts have upheld six-month contractual limitations period in the context of an age discrimination claim brought under the ELCRA.
  • Jury Trials: Michigan’s ELCRA provides plaintiffs a right to a jury trial.

Obviously employers will want to have policies and procedures that will eliminate or, at the very least, reduce situations that could give rise to potential employment discrimination claims. In furtherance of this goal, the preceding points should be discussed with your company’s employment law specialist. 

For more information about discrimination issues and employment law matters under Michigan or federal law, contact Jason Shinn. 

YellowQuestionMark.jpgThe Department of Labor’s Wage and Hour Division’s acting Deputy Administrator issued an Administrator’s Interpretation (2013-1) that is intended to clarify a question employers and employees had under the Family Medical Leave Act (FMLA) and involving an employee seeking leave to care for an adult son or daughter with a disability.

Specifically, under the January 14, 2013 Interpretation, the date of onset of the disability is irrelevant to the definition of “son or daughter” under the FMLA. Prior to this Interpretation, there was uncertainty as to the FMLA’s application where a disability does not end when a child turns 18 and persons over 18 may have the same need for care as those under 18. The Interpretation also provides guidance on the application of the ADAAA to the FMLA, and FMLA protections for parents of wounded military service members.

Overview of the FMLA

Under the FMLA, an employee is entitled to take up to 12 weeks of leave from work in a 12-month period to care for a son or daughter who is an adult (18 years of age or over), if the son or daughter:

  • Has a disability as defined by the ADA;
  • Is incapable of self-care due to that disability; 
  • Has a serious health condition; or
  • Is in need of care due to the serious health condition.

The FMLA, however, and its regulations do not address the question of whether it is relevant to the definition of “son or daughter” under the FMLA if the disability begins on or after the son or daughter turns 18 years old. Because the FMLA provides parental leave rights to care for a minor child who has a serious health condition, without regard to whether the child has a disability, this question is not relevant to children under the age of 18. 

The Take-Away for Employers

The January 14, 2013 Interpretation is quite extensive and it also provides guidance on the application of the ADAAA to the FMLA, and FMLA protections for parents of wounded military service members. Accordingly, employers or their HR professionals should review it with their employment attorneys as may be needed. 

But what employers and employees need to understand with respect to FMLA issues involving children is that under the January 14, 2013 Administrator’s Interpretation, the date of onset of the disability is irrelevant to the definition of “son or daughter” under the FMLA.

For more information on the FMLA or other federal or Michigan employment legal issues, contact Jason M. Shinn, a Michigan employment lawyer who regularly represents companies and individuals in addressing employment legal matters.

Michigan employers started 2013 with a new employment law. This new regulation was signed into law by Gov. Snyder on December 27, 2012 and is called the Michigan Internet Privacy Protection Act. Readers of this blog know that I have not been a fan of this new employment statute since it was first proposed (see here and here for past discussions as to why this regulation was not good for employers or workable as origianally proposed). However, after sharing these criticisms with the legislator who initially proposed this legislation, a number of exemptions were added, which at least make the Michigan Internet Privacy Protection Act tolerable and workable when it comes to the workplace.  

Generally speaking, this new statute broadly prohibits employers from: 

  1. Demanding their employees or job applicants to turn over passwords to social media or other Internet related accounts, e.g., Facebook, LinkedIn, Gmail or similar accounts. This restriction also precludes employers from asking employees or job job applicants to log into such accounts and then allowing the employer to peruse through the social media account.
  2. Making an adverse employment-related decision with respect to any employee or job applicant who refuses to turn over log-in information.

For a more thorough overview of Michigan’s Internet Privacy Protection Act, see the short video interview I gave on this new statute. I explain the basics of the law and offer up a few critiques. 

Employer Considerations In Response to the Michigan Internet Privacy Protection Act 

After reviewing the interview, there are a number of “best practices” employers will want to make sure are in place with respect to social media and employment practices, especially in the context of hiring decisions and investigating employee misconduct involving social media.

A few points, however, that Michigan employers should immediately consider in response to Michigan’s new Internet Privacy Protection Act include:

  1. It is important all levels of management know and understand what is and is not permitted under Michigan’s Internet Privacy Protection Act. This is because the statute provides severe penalties against employers and potentially managers who violate it, including making it a misdemeanor punishable by a fine of up to $1,000.00, as well as giving a private cause of action to the individual who is the subject of a violation along with the recovery of “reasonable attorney fees and court costs.”
  2. The Michigan Internet Privacy Protection Act includes a number of exemptions for when employers may lawfully ask for access to an employee social media or Internet account. One very important restriction permits employers to investigate and requiring an employee to cooperate in an investigation if there is information on the social media account of the employee that is necessary to investigate to ensure compliance with applicable prohibitions against work-related employee misconduct. Employers should, therefore, review their existing policies, handbooks, and employee agreements to make sure they are drafted to address and specify work related misconduct issues in order to fall under this potentially broad exemption.

For more information on Michigan’s Internet Privacy Protection Act, contact Jason M. Shinn, who regularly represents companies and individuals in responding to workplace privacy and federal and Michigan employment laws and regulations.

 

New Year Baby.jpgBusiness owners had a lot to cry about when it came to 2012 Michigan court decisions addressing noncompete agreements.

But, as discussed below, a lot of this frustration arose out of poorly drafted noncompete agreements and failing to fully evaluate the relevant circumstances involving changing employment relationships before reducing those changes to written employment agreements. 

Landscape Forms v. Quinlan, (Oct. 2012): This case involved a number of legal issues arising out of a dispute between William Quinlan, who had been employed by LFI, a closely held Michigan corporation. During his employment, Quinlan obtained stock in LFI pursuant to an employee compensation plan, which also included noncompetition provisions forbidding LFI shareholders from competing with LFI for a period of five years after ceasing to be a shareholder. Quinlan was permitted to retain his stock when his employment with LFI ended, but he contended that the noncompetition provisions were unenforceable.

For Michigan business owners, this case should be carefully understood in relation to offering employees stock options or other company ownership interests and imposing future employment restrictions under a noncompete agreement.

This is because the court concluded that the noncompetition provision at issue was not an employer-employee agreement subject to Michigan’s noncompete statute (MCL 455.774a). At first, this result may seem surprising because Quinlan originally became a stockholder based on his employment and could not have become a stockholder in any other way.

But the Court’s conclusion was based on the wording of the noncompete restriction, which specifically provided they were made between the company and the shareholders not employees. Accordingly, an entirely different analysis was required with respect to enforcing the noncompete restriction at issue.

The Take-Away: Companies offering employee stock or other ownership interests need to carefully evaluate such transactions in their entirety. One such consideration is whether any noncompete restrictions will be based on an employee/employer relationship or based on company ownership. Generally speaking, there may be more strategic reasons for a company to base noncompet restrictions on shareholder/ownership status as opposed to the employee/employer relationship, including the potential for obtaining broader restrictions.  

Van Tol v. Woodward, (Oct. 2012): This noncompete arose out of a very common fact pattern: An individual and employer enters into one agreement with noncompete restrictions and then later both enter into a new agreement. The question often becomes what, if any, noncompete restrictions survive. 

To illustrate this point, John L. Woodward began working for Van Tol, Magennis & Lang, Inc. (Van Tol) as an insurance agent in 1996. In September 2004, Woodward signed a new employment agreement with Van Tol. In the 2004 employment agreement, Woodward agreed that he would not compete with Van Tol for a period of three years after leaving Van Tol’s employ. 

In January 2009, Woodward entered into a “Stock Redemption Agreement” with Van Tol. The agreement contained the following paragraph:

Merger. It is understood and agreed that all understandings and agreements heretofore had between the parties hereto are merged in this contract which alone fully and completely expresses their agreement. This Agreement may not be changed or terminated orally.

Ultimately, the Court decided that because there was an ambiguity as to the scope of their agreement to nullify earlier agreements, including the covenant not to compete, further litigation was necessary to resolve these fact issues.

The Take-Away: The situation of employers and employees entering into multiple agreements over the life of an employment relationship is a common occurrence. This is especially important in the context of terminations and severance packages.

In this regard, I’ve had a noticable uptick in the number of matters where disputes arose concerned whether prior noncompete restrictions survived a severance agreement. In representing individuals in these situations, in almost every instance a negotiated resolution was reached where the employer ended up with less in terms of noncompete restrictions than had been originally drafted.  

To avoid the uncertainty and litigation costs, any time an employer or employee is entering into an agreement, careful consideration should be given to what prior agreements may have been reached and whether any such agreements are intended or not intended to survive or otherwise be left undisturbed.

For more information about Michigan noncompete law or , contact Jason M. Shinn, who regularly represents companies and individuals in responding to Michigan noncompete issues and noncompete lawsuits.

Facebook Like.jpgProposed Michigan Social Media legislation is back in the headlines. Specifically, Chris Gautz of Crain’s Detroit Business reported that Michigan Senate House Bill 5523, (sponsored by Rep. Aric Nesbitt, R-Lawton), was approved unanimously by the House in September and is now sitting on the Senate floor. 

This bill would “outlaw” employers from requiring employees and prospective hires to turn over their passwords to social networking sites, like Facebook, as a condition of employment.

Michigan Proposed Legislation Banning Employers from Accessing Employee Social Media Sites 

This post previously reported about (and criticized) this proposed legislation banning employers from asking employees and applicants for their social media passwords.

Under the proposed legislation, employers would be prohibited from (1) requesting an employee or applicant to disclose access information associated with a social network account, and (2) from discharging, disciplining, failing to hire, or otherwise discriminating against an employee or applicant for failing to disclose access information.

The problem, however, is that this really is not a problem. 

Legislative Solutions Still in Search of a Problem?

I offered a number of criticisms that are worth reviewing and reasons why employers should be concerned about this proposed legislation, e.g., employers found in violation of the act would be guilty of a misdemeanor and subject to imprisonment up to 93 days and/or a maximum fine of $1,000.

These criticisms and concerns still exist. But what I’ve found interesting about this proposed legislation is the scant evidence suggesting that it is even needed. And the actual genesis for this proposed legislation is even less compelling: It originated on hearsay and the reasoning that other states were enacting similar legislation so Michigan should too. In this regard, Crain’s Detroit reports:  

The impetus for the bill, Nesbitt said, came from constituents in his district that had heard about such practices going on in other states and asked him to work to make sure it could not happen in Michigan. He said other states, among them Maryland and Illinois, have been working on similar policies.

Certainly these are good intentions, but such intentions should not substitute for reason when it comes to imposing additional regulations on employers, especially regulations that impose criminal sanctions. 

Instead, the question that should be asked is whether employers asking for social medial password information of employees or applicants is an actual problem in Michigan. The answer appears to be “no.”

Consider the following from the Crain’s Detroit article: 

  • Mary Corrado, president and CEO of the Livonia-based American Society of Employers, said her organization does background checks for member companies, and social media passwords have not been requested before.
  • Charlie Owens, state director of NFIB-Michigan, said his members largely felt it [asking for employee passwords] wasn’t something they would need to do anyway.

Closing Thoughts from the Soapbox

I certainly applaud Mr. Nesbitt and other stakeholders who are looking to protect Michigan employees and to maintain a productive workplace environment that respects individuals. But my experience in working with employers and employees is consistent with the preceding conclusions that employers demanding access to social media accounts of employees and job applicants is not something that is taking place. And there are any number of reasons why this would be a bad idea: Requiring Employees or Job Applicants to Turn Over Facebook Passwords? Three Reasons Why This is a Horrible Idea. 

However, there are circumstances – which the proposed legislation does not allow for – where it may be appropriate for an employer to ask for access to an employee or job applicant’s social media account: 

  • Investigating customer complaints or complaints of workplace harassment or discrimination may require access to an employee’s social networking account; or
  • An employer may feel the need to review an employee or job applicant’s social networking account if a position involves working with children or vulnerable populations like the elderly.

At the end of the day, employers that do decide to incorporate a measure of social media due diligence into hiring and employment decisions need to have in place the proper procedures for complying with existing and evolving obligations that already cover social media. But we don’t need to add to the list of regulations.