Doctor.jpgIt is never easy being an employer when it comes to issues at the intersection of employees and medical issues. But at least many of these issues are based on statutes and regulations, which (more or less) outline an employer’s responsibilities. 

But a recently dismissed claim against an employer by a doctor and his medical practice offers a reminder that lawsuits arising out of employee medical issues are only limited by creativity and imagination of lawyers and their clients.

Specifically, an employer, GM, was sued for claims of defamation, business defamation, and tortious interference with a business relationship against a medical practice and its doctor. These claims arose after the employer advised its employees that it would no longer accept disability certifications or excused absences from both the doctor and the clinic. See Athar Siddiqui, M.D. & Med. Assocs., P.C. v. GM Co. 

In this case GM, as the defendant employer, sent a “notice letter” to its employees. The letter contained a list of ten physicians and stated:

Under the provisions of the General Motors Life and Disability Benefits Program for Hourly Employees, certification from the physicians listed below will no longer be regarded as proof of disability or accepted as an excused absence by General Motors.

. . . Dr. Athar Siddiqui—Internal Medicine, Ypsilanti, MI …

Plaintiffs (the doctor and the medical practice) demanded that GM immediately retract the letter and issue a corrective notice removing Dr. Siddiqui from the list of excluded physicians. GM refused and both and Plaintiffs filed a civil complaint, alleging defamation by implication, business defamation, and tortious interference with a business relationship.

Overview of Defamation under Michigan Law

Under Michigan law in order to make a valid defamation claim the Plaintiffs had to show: (i) A false and defamatory statement concerning the plaintiff; (ii) An unprivileged publication to a third party; (iii) Fault amounting at least to negligence on the part of the publisher; and (iv) Either actionability of the statement irrespective of special harm (defamation per se) or the existence of special harm caused by the publication (defamation per quod).

GM filed a Motion to Dismiss the lawsuit asserting that Plaintiffs could not state a claim for defamation. In response, the Plaintiffs argued that they had pleaded sufficient facts to fulfill the elements of defamation by implication. Specifically they alleged:

10. The Notice imputes fraud, deceit, dishonesty or reprehensible conduct by Dr. Siddiqui in his treatment of patients and/or certification of their disabilities or excused absences.

* * *

13. The Notice threatens the addressees with the statement that “disability claims requested on or after October 1, 2010 will not be payable” if certification is provided by Dr. Siddiqui, which implies that the addressees should discontinue treatment or any further dealings with Dr. Siddiqui and/or Medical Associates.

The Court Dismisses the Defemation Claim

The Court agreed with GM and reasoned its notice letter simply stated that GM would no longer accept proof of disability or excused absences from Dr. Siddiqui and that the alleged defamatory implications of the statement—that Dr. Siddiqui was guilty of fraud, deceit, or dishonesty—were simply too tenuous to support a defamation claim. 

In reaching this conclusion, the Court noted that GM’s letter contained other statements that undercut any defamation claim, including the following:

  • “Nothing in this letter otherwise changes your ability to be provided services or treatment from the above listed physicians;” 
  • “this change does not impact your ability to utilize these physicians for purposes of an FMLA leave, Workers’ Compensation leave or under the terms and conditions of the GM Health Care Program for Hourly Employees.” 
  • GM approved of the doctor’s services and treatments for purposes of FMLA leave, for Workers’ Compensation leave, and in conjunction with defendant’s Health Care Program for Hourly Employees. Thus, a reasonable person reading the statements in their proper context would not conclude that defendant intended patients to discontinue their services and treatments with the doctor and the clinic because either were guilty of fraud, deceit, or dishonesty. 
  • Further, the letter noted that “[e]ven though GM will not accept certification from these physicians for the purposes of establishing an excused absence or proof of eligibility for disability benefits, GM is not suggesting that these physicians provide inadequate care.”

The Take Away

It is no secret that employees, employers, and their respective lawyers all have their “go to” doctors for various situations. In this case, however, GM made a business decision to limit the use of the subject doctor and his practice and drafted a carefully worded notice letter explaining this decision. 

Depending upon the circumstances, employers have the opportunity to set some conditions and even have some involvement over an employee using a particular doctor when it comes to certain employment related issues. For example, employers are permitted to require an employee seeking leave for a serious health condition or to care for a qualifying family member with a serious health condition to submit a medical certification completed by a health care provider. 29 USC 2613(a); 29 CFR 825.305(a). And an employer who questions the validity of the health care provider’s determination may challenge that certification by requiring the employee to obtain a second opinion. 29 USC 2613(c)–(d); 29 CFR 825.307(b)(1).

But in addition to complying with applicable statutory and regulatory law, the above defamation claim is a good reminder that employers also need to take a comprehensive risk management perspective beyond just the applicable employment related statutes and regulations when setting conditions for employees’ selection of medical providers.

At the end of the day, regardless of your view of the subject doctor’s credentials – or lack thereof – taking a route similar to that of GM and distributing a professional, fact-based notice letter will go a long way towards avoiding a lawsuit or otherwise providing a basis for dismisal.

We must use time as a tool, not as a couch.

President John F. Kennedy

Saving Time.jpgSmart employers make it a point to use time to their advantage by limiting the statutes of limitations for filing employment-related lawsuits. Statute of limitations require a plaintiff/employee to file a lawsuit within a specified time frame. But like any tool, it is important to know how and when to use it.  

In this regard, a recent decision by a Michigan district court judge in a class action Fair Labor Standards Act (FLSA), Biggs v Quicken Loans, Inc. (PDF), barred an employer from enforcing an employment agreement that shortened the time in which an employee could bring any legal or administrative claim, including a claim under the FLSA. 

The FLSA’s period of limitation for bringing claims is limited to two years. But the employment agreement in Biggs contractually shortened this limitation period to one year from the date the employee knew of the violations. 

Procedural Rights vs Substantive Rights

An important point for employers to remember when it comes to employment contractual waivers and limitations is that waivers of substantive rights (e.g., the right to a minumum wage) as opposed to precedural rights will almost always be unenforceable. 

And that is where the employer in the Biggs case lost the battle: The Court rejected the employer’s position that the FLSA’s statute of limitations period was only a “procedural” right and not a “substantive right” under the FLSA, and therefore waivable. In reaching this decision, the Court adopted the reasoning from another Michigan Federal District Court opinion also issued in a FLSA claim (PDF) that addressed the same issue:

[A]s a general rule, contractual waivers that purport to weaken the FLSA’s substantive protections are invalid. The waivers in Quicken’s employment agreements do exactly this, by limiting the financial penalty Quicken would have to pay for violating the FLSA … 

* * *

Because the contractual limitation provisions in Plaintiffs contracts “contravene[ ] the statutory policy” of the FLSA, the Court finds them unenforceable as a matter of law…

Michigan Courts are More “Employer Friendly” when it comes to Enforcing Contractual Limitations Period. 

In contrast to the federal court decision, Michigan state courts generally take a more employer friendly view when it comes to enforcing contractual time limitations for bringing employment law claims.

  • Michigan’s Take on Substantive versus Procedural Rights

Consider for example that the Michigan Court of Appeals has essentially found that the statute of limitations provision under the FLSA is not a “minimum wage provision,” (i.e., a substantive provision). See Allen v MGM Grand Detroit, LLC, 260 Mich App 90, (2003). In that case, the Court compared the three year statute of limitations under the Michigan’s Minimum Wage Law of 1964, MCL 408.381 et seq., (the state counterpart to the federal minimum wage and overtime pay requirements of the FLSA) to the FLSA’s two year statute of limitations. In this comparison, the FLSA’s shorter statute of limitations was determined not to constitute a “minimum wage provision.” In other words, in the view of the Michigan Court of Appeals, the statute of limitations was not a substantive provision, but rather a procedural provision that is subject to contractual waiver.

Unfortunately, the Allen case was not cited and this distinction was not made in the Biggs case. While it is impossible to know if this support would have made a difference, it clearly provided persuasive support for the employer’s position and went to the heart of the issue of procedural versus substantive rights.   

  • Employer Friendly View of Contractual Limitations under Michigan Law

Also, under the direction of the Michigan Supreme Court “an unambiguous contractual provision providing for a shortened period of limitations is to be enforced as written unless the provision would violate law or public policy. Following this direction Michigan courts have upheld a six-month contractual limitation period applied to an age discrimination claim under the Elliott-Larsen Civil Rights Act (ELCRA). See Clark v DaimlerChrysler Corp, 268 Mich App 138, 706 NW2d 471 (2005). In that case, the court found that the contractual period was not contrary to law and that it did not violate public policy.

The Take Away

Employers should continue to seek to limit their liability for employment lawsuits. One way to do this is by entering into employment agreements that shorten the statutory periods of limitations for all employment disputes or other aspects of the employment relationship. While cases like those discussed above illustrate that it is essential to consult with an experienced employment lawyer before drafting or entering into any employment agreement, a few points to consider: 

  • Enforcement of contractual limitations period may vary. As noted above, Michigan state courts routinely side with an employers’ ability through employment applications and handbooks to limit the time for filing an employment-related claim if the the limitations period is “reasonable.” In this regard, a six month limitations period for employment-related claims have repeatedly been found to be reasonable.
  • Contractual limitations or waivers of substantive rights, as compared to procedural rights, are almost always never subject to waiver. Further, contractual limitations or waivers for certain claims may not be enforceable for certain employment claims. For example, contractual limitations are not enforceable as to Family Medical Leave Act (FMLA) claims because employers are prohibited “from interfering with, restraining, or denying the exercise of (or attempts to exercise) any rights provided by the Act.” See 29 C.F.R. § 825.220(a)(1). 
  • Because the enforceability of contractual limitations period shortening the time to file an employment-related claim may vary, it is important to include a severability clause that provides that the illegality or unenforceability of any part of the contractual limitation period will not effect or otherwise impair the enforceability of any other part of the contract. 

For more information about updating employment agreements or implementing such agreements to avoid or minimize risks arising out of employment law claims, please contact Jason Shinn about the management employment law services offered through the E-Business Counsel law firm. 

Checklist.jpgI was recently discussing the role exit interviews should have for employers with a group of HR professionals. Their focus had generally been on what the employer can learn from the departing employee and how this insight could improve the overall operation-side of the business.  

In theory, I don’t disagree with having a genuine interest in obtaining feedback from the departing employee. But, I shared my view that a more defensive-minded approach to exit interviews is also needed. In fact, I previously wrote that employees are more disgruntled than ever according to various news sources.

Further, if the exit interview arises out of a termination situation, it is highly likely that meaningful feedback is not going to be provided.

An Employer’s Exit Interview Checklist

So from the view of a jaded pessimist ten plus year career as an employment lawyer, the following points are offered for consideration for a defensive-minded exit interview:

  1. Have a documented exit interview checklist. The reason for documenting such a checklist is so that exit interviews are consistently performed and the essentials are consistently covered. This point is underscored in The Checklist Manifesto by Atul Gawande (a great read), where the author notes “if you miss just one key thing, you might as well not have made the effort at all.” As demonstrated in the next point, the same principal applies to exit interviews.   
  2. Building upon the preceding point, an exit interview should be carefully developed with management and an experienced employment lawyer. That development and process, however, should include an internal pre-interview assessment where company IT professionals confirm (i) There have been no unusual file transfers/increased email activity with large file attachments leaving the company; (ii) No USB drives installed on the departing employee’s computer with corresponding file transfers; (iii) All passwords and any “back doors” into the network have been closed. Failing to take any one of these steps may result in the employer later discovering that a disgruntled former employee has caused significant damage and destruction to the company network and data that could have otherwise been prevented.  
  3. It is also a good idea to “remind” the departing employee of any continuing obligations under noncompete agreements and the like. Further, documenting this “reminder” may later prove to be a critical piece of evidence for an employer’s lawsuit and damages for violating a noncompete agreement.   

Additional Employer & HR Resources for Conducting Exit Interviews

Contact Jason Shinn for more information about what to include in an exit interview as a means to protect confidential company. Also follow this link for information about investigating the theft of company information by departing employees.

And for Michigan HR professionals, please consider joining our LinkedIn Group, the Michigan HR Toolbox where these and other issues relevant to HR and employers are routinely discussed. 

Hard Drive Crash & Burn.jpgAttorney Robert D. Brown, Jr. of the Gibbons law firm has a great write-up about a recent dismissal of an employee’s discrimination claim. The dismissal was granted after the plaintiff destroyed certain computer related evidence. See How a Case Can Crash and Burn: Why a Litigant Should Not Set Afire a Computer After It Crashes (Preservation 101).

The case, Evans v. Mobile County Health Department (PDF), (S.D. Ala. Jan. 24, 2012), involved a reverse discrimination and retaliation lawsuit against the former employer Mobile County Health Department. The spoliation sanctions arose out of the former employee’s intentional burning of a 13 year old personal computer that was alleged to have contained discoverable electronically stored information (ESI). 

Mr. Brown’s post provides a thorough discussion of the facts and procedural background of this case, which I won’t duplicate. 

Instead, I’d like to point out that this case also highlights two important issues for attorneys and provide e-discovery recommendations in-house counsel and plaintiff and defense attorneys.

First, this case illustrates the important role that attorneys must play in assisting their clients to meet their judicial and ethical obligations to preserve digital information.

This point is reinforced by what the Court highlighted in ordering spoliation sanctions against the plaintiff. Specifically, the court noted that the plaintiff employee testified as follows:

Finally, although plaintiff testified that she was unaware of a court obligation not to destroy evidence and that she did not intentionally destroy her computer to cover-up unfavorable evidence, she also admitted that her attorney told her to preserve all relevant documents regarding her complaints of racial discrimination, which, of course, would include the emails she mentioned during her deposition. 

Second, this case also highlights the need for legal counsel to provide meaningful assistance that is documented. In this regard, the court opinion does not offer any further insight beyond the preceding quote in terms of what was explained to the plaintiff about her scope of preservation.

Reading between the lines, I would be comfortable assuming that not much assistance or guidance was actually provided by the attorney as to preserving electronically stored information.

This assumption is also based my experience as an associate attorney listening to clients being generally advised to “make sure to copy all the documents relevant to this lawsuit” for the attorneys to review at some later date. This recommendation evolved to “preserve all relevant documents and don’t forget about emails.”

Often, however, there was no discussion about what relevance means in the legal sense of the word or recommendations for actually preserving electronically stored information. In short, clients were left to figure the details out for themselves. But especially when it comes to e-discovery preservation, “the devil is in the details.” And these details continue to be overlooked up to the present – even by sophisticated law firms involved in employment discrimination claims.  

Best Practices for Initial Preservation of Electronically Stored Information 

The following are a few recommendations for in-house counsel and outside attorneys that should be considered when it comes to meeting ethical and legal obligations for the preservation of computer related evidence: 

  • Discuss the client’s preservation obligation at the earliest opportunity. For example, I’ve incorporated a preservation discussion into my standard retention agreement and will often raise the issue at the first client meeting.     
  • After discussing the preservation obligation, document the obligation. This documentation should be viewed as both a risk management exercise on the attorney’s part (or for cynics who don’t prefer euphemisms, a CYA) and also an attempt to genuinely assist the client in meeting their ethical obligations. For example, in addition to discussing preservation in the retention agreement, I provide a full discussion of what must be preserved and general steps to take for preserving emails and the like, including examples of categories of data to consider for preservation.  
  • For business clients, it may make sense to meet directly with IT professionals as soon as possible because they are likely to know the digital terrain. With this knowledge, an efficient and defensible preservation plan can take shape.   
  • Further, it is important to avoid lawyer jargon when discussing preservation obligations, especially with individuals who may not be accustomed to the litigation process. For example, “relevance” is a term that lawyers commonly throw around. But this may not mean the same thing to a non-lawyer who is not well-versed in the elements of the claims for defenses.     

These are just a few considerations that attorneys and their clients need to consider when it comes to preserving digital information that may be involved in litigation. For more recommendations on when a litigation hold should be implemented, contact Jason Shinn.  

Texting Hands.jpgDivorce can be a horrendous process for those directly involved. But it can also be challenging for employers who are inadvertently dragged into divorce proceedings. This is because a company’s interests are increasingly put at risks as digital evidence in the form of text messaging or emails becomes “Exhibit A” in divorce trials. 

In this regard, NPR has an interesting article discussing the increasing prevalence of using text messaging in divorce (CU In Court: Texts Can Be A Divorce Lawyer’s Dream“). For the article, NPR interviewed private investigator Stephen Ward of Pinkerton Consulting and Investigations. Mr. Ward had this to say about text messages found on smart phones: 

It’s a treasure trove of information … [but] if they’re on a company phone? You could be looking at things that are trade secrets, that you’re not entitled to see … It’s actually corporate property, it’s not yours, and you’ve done something completely illegal (referring to stealing a password to access the text messages).

Speaking from experience, I was retained a few years ago as an e-discovery consultant in substantially the identical scenario Mr. Ward described. Specifically, the wife of a rising star at a company allegedly accessed his employer provided smart phone to confirm suspicions of an extramarital affair. She was right, but the manner in which she accessed the phone created various issues under computer related statutes and other legal issues.  

I was hired to consult with the wife’s attorney to sort those issues out and collaborate with the husband’s employer to make sure emails and text messages relevant to the divorce were preserved and would be available for the pending divorce litigation. 

What Should Employers Do When Company Smart Phones and Emails are Involved in Divorce Litigation?

Based on the preceding experience and conducting other employee investigations involving technology, a number of issues arise that should be immediately discussed with legal counsel. But a couple of considerations: 

  • Spouses Aren’t The Only Ones Who are the Last to Know. 

Employers should expect that they will be at the bottom of the list to find out that company devices and the digital evidence they contain are likely to be critical evidence in a divorce proceeding. Let’s face it, not many employees or executives want to initiate the conversation about needing to preserve evidence because their spouse discovered incriminating text messages on their company provided smart phone.

In fact, knowing this in my case, the decision was made to send correspondence directly to the employer to request that it preserve the husband’s emails and text messages in order to make sure that such evidence would be there for the divorce proceeding. This not only made sense from a preservation obligation, but it also headed off potentially increased costs for retrieving such information months down the road. 

  • A Cheating Spouse is Bad. Committing a Crime is Worse.

Accessing without authorization a spouse’s smart phone, tablet, company laptop, etc. can expose a person to civil and criminal charges – even if such access proves the spouse was cheating. In other words, the ends do not justify the means.

Consider for example an ongoing Michigan case involving Leon Walker who is charged with felony misuse of a computer, which carries up to five years in prison, for his unauthorized access of his then wife’s Gmail account. This is really a tragic story in that Mr. Walker suspected that his wife was involved in an affair and he confirmed this suspicion after he logged into her email account without her permission. He was able to do this because his wife kept the password next to the computer.

To avoid potential criminal or civil liability for the unauthorized access of digital evidence, it is critical to consult with an attorney so that emails or text messages can be properly obtained through subpoenas or the discovery process. 

  • Employers Should Hope for the Best but Plan for the Worst.

Employers should take steps to educate employees about the proper use of employer provided technology devices. Equally as important, employers should frequently stress that company information should not be transferred to personal devices or otherwise commingled with personal information. But employers need to be realistic and expect that these points will be ignored.

For this reason, companies also need to impress upon employees that if they have reason to believe company devices, text messages, emails or other information may be involved in litigation, then management must be made aware in order to make strategic decisions for preserving this information in a cost-effective manner. In addition to divorce cases, trade secret misappropriation claims, employment discrimination, or harassment claims are also common examples of where such preservation obligations may be triggered.    

For more information about preserving digital evidence or conducting technology related investigations, contact Jason Shinn. 

Couple Snorkeling.jpgVacations and the weekends – it’s what we often work for. But what happens when a termination ends the work and there is unused vacation time? 

A number of employers have been updating their employee handbooks and policies. In doing so, these employers often raise questions about both vacation pay and severance packages. More specifically, when is an employer obligated to pay accrued vacation pay and what obligations, if any, are there for paying severance to an employee.  

Overview of Michigan’s Wage & Fringe Benefits Act  

The starting point for both questions is the Michigan Wage & Fringe Benefits Act, MCL 408.475(1).

As to severance pay, an employer must pay to an employee voluntarily leaving employment or discharged from employment all wages earned and due, as soon as the amount can (with due diligence) be determined. MCL § 408.475(1) and (2).

In other words, under both circumstances (a voluntary or involuntary termination) an employer is not required to pay an employee any wages that are not earned or due.

This is important where an employee provides two weeks notice before ending his or her employment relationship, but the employer elects (usually for business reasons) to terminate the individual prior to the running of the two week notice period. Under those circumstances, there is no requirement to pay an individual for the entire notice period (e.g., two weeks) for any wages that are not earned or due to be paid, assuming there is no employment or collective bargaining agreement to the contary. 

Payment of Accrued Vacation under Michigan Law

The other common question Michigan employers have asked is if a person’s employment is terminated, under what circumstances must that person be paid for any vacation time that may have accrued?  

The short answer is that an employer is only legally required to pay an individual accrued vacation time if the applicable employment agreement or policy provides for it. Specifically, the Michigan Wage & Fringe Benefits Act provides that an employer must pay fringe benefits to or on behalf of an employee in accordance with the terms set forth in the written contract or written policy.

Additionally, Michigan’s Wage & Fringe Benefits Act defines fringe benefits as compensation other than the wages or salary paid to an employee and specifies such items as vacation time and sick time. MCL 408.471(e).

Creating Incentives to Provide Advance Notice Before Terminating Employment 

With the preceding in mind, Michigan employers actually have opportunities for implementing termination policies and procedures that encourage individuals to provide advance notice (e.g., two weeks notice) before ending their employment relationship.

This is because under Michigan’s Wage & Fringe Benefits Act it is possible to draft employee termination provisions that create a financial incentive to provide the requested notice. Consider for example that with proper drafting, employers could make payment of accrued vacation time contingent upon providing a designated notice before ending the employment relationship and failing to provide such notice forfeits any right to accrued vacation pay.  

For more information on drafting employee policies, including provisions for encouraging employees to provide advance notice before ending their employment relationship, contact Jason Shinn.   

 

Ghost-Rider-Marvel-1.jpgA lawsuit, Friedrich v Marvel Entertainment (PDF), filed by a former employee claiming ownership rights to intellectual property was recently dismissed in favor of the employer.

This suit also provides valuable lessons for employers about the importance of securing ownership rights in intellectual property created by employees and independent contractors, and making sure that ownership is documented. 

Background of the Ghost Rider Intellectual Property

Gary Friedrich sued his former employer comic book publisher Marvel Entertainment, LLC claiming that he created the comic book character Ghost Rider back in the early 1970s. The value of the Ghost Rider character significantly increased since the 1970s because of increased revenue from movies, video games, and promotional products. In fact, Ghost Rider, as played by Nick Cage, returns to the big screen beginning this weekend in the “Spirit of Vengeance.” 

The Copyright Infringement Claims Against Marvel & the “Work Made for Hire” Defense

Under the Copyright Act, a copyright normally vests initially in the author or authors who created the work. 17 USC 201(a). But when the copyright work is a “work made for hire,” the employer or other person for whom the work was prepared is considered the author. 17 USC 201(b).

In regards to employers, under 17 USC 101, a work is considered a work made for hire if it is:

  1. A work prepared by an employee within the scope of his or her employment; or 
  2. A work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Marvel took the position that the Ghost Rider character was created as a “work for hire” under the copyright laws and, therefore, Marvel and its successor companies continued to be the owner of all rights and interests in the intellectual property. 

What Can Go Wrong in a Work Made for Hire Defense 

Normally establishing a “work made for hire” defense is relatively straight forward, e.g., you produce the written agreement establishing the fact. But Marvel ran into a number of issues that jeopardized its defense:  

First, Mr. Friedrich signed a “work made for hire” agreement in 1978. But Ghost Rider was created in the beginning of the 1970s. 

Second, at the time Mr. Friedrich would have created Ghost Rider, he claimed he was employed to read and respond to fan mail and, therefore, the Ghost Rider character was created outside the scope of his employment.  

Third, Marvel attempted to support its “work made for hire” defense, based on its practice at the time of placing a legend on the reverse side of all checks used to pay individuals like Mr. Friedrich who had made creative contributions to Marvel. That legend provided that the payee acknowledged the rights in and to the work for which payment was being made belonged to Marvel. Marvel, however, ran into a problem supporting this defense because the checks issued and presumably signed by Mr. Friedrich no longer existed (remember, these checks would have been issued back in the 1970s).

Despite these issues, Marvel was able to eventually (after over four years of litigation) convince the Court that Mr. Friedrich had in fact accepted and negotiated the checks that contained the language relinquishing all rights to the subject intellectual property. 

Closing Thoughts

While the employer (Marvel) eventually prevailed in the ownership dispute over the intellectual property, it is important to note that it took over four years of litigation to do so. In all likelihood the time and expense for this litigation could have been significantly decreased had the ownership issues involving the intellectual property been better handled and documented.  

In this regard, for companies that want to make certain they are the owner of a work – whether the work is created by an employee or independent contractor – the best advice is to require employees and independent contractors to execute an assignment and work-made-for-hire agreement at the outset of the relationship so that copyright ownership vest in the company.

For more information about drafting work made for hire agreements and other employment-related agreements, contact Jason M. Shinn.  

Social Media Scrabble.jpgOn February 6, 2012 I had the opportunity to speak to human resource professionals about legal issues at the intersection of social media and employment law. This HR group is lead by the B2B Connection and its president Gail Sanderson. A special thanks is also owed to Molly DiBianca over at the Delaware Employment Law Blog for her permission to use her posts about social media employment legal issues (Molly has a wealth of information that is definitely worth referencing).  

It was a great turn-out and the group’s collective knowledge and insight greatly added to the discussion. If you are a human resource professional in the Metro Detroit area, I would highly recommend you contact Gail Sanderson about joining her HR group and joining the LinkedIn group I moderate, Michigan HR Toolbox (would love to have you join the discussion). 

As to the presentation, HR and Social Media: The Good, the Bad, and the Confusing, it focused on an overview of the risks created by social media for employers, applicants, and employees. The presentation concluded with an overview of “best practices” and practical recommendations for minimizing social media risks.

If you would like a copy of the presentation, complete with links to materials referenced in the discussion, complete this minimalist contact form and reference “social medial presentation” in the notes section.  

Here are a few highlights from the discussion: 

  • Hiring Decisions: I don’t know if it is accurate to say that social media is a “new” technology, but it does create new wrinkles on old HR issues. Even so, when it comes to making employment decisions, employers must continue to be prepared to articulate a legitimate, nondiscriminatory reason for any employment decision and retain appropriate documentation to support that decision. This reminder is particularly important given the treasure trove of information that an employer may learn about an applicant or employee, e.g., race, age, pregnancy status, religion, disability status, etc.
  • Employment Decisions & Social Media Record Keeping Requirements: Building upon the preceding point, if social media information is used in making an employment related decision, e.g., hiring, promotion, termination, etc. then employers and their HR professionals must be mindful of the Equal Employment Opportunity Commission’s (EEOC) record keeping regulations. The EEOC’s regulations generally require that “any personnel or employment record made or kept by an employer…shall be preserved by the employer for a period of one year from the date of the making of the record or the personnel action involved, whichever occurs later….Where a charge of discrimination has been filed, or an action brought by the Commission or the Attorney General,…the respondent employer shall preserve all personnel records relevant to the charge or action until final disposition of the charge or action.” 29 C.F.R. §1602.14. There are also similar requirements under the Age Discrimination in Employment Act. See 29 C.F.R. § 1627.3.
  • Review existing policies (and if you don’t have one, get one): As previously discussed in various posts on this blog, the National Labor Relations Board (NLRB) has put a lot of attention on scrutinizing employers’ social media policies, especially non-union employers (see NLRB Releases Second Social Media Advisory Report: What It Means for Employers ) and Social Media and the NLRB: Two Must Read Reports for Employers and HR Professionals). This NLRB scrutiny is one reason why employers must have a carefully and artfully drafted social media policy in place. Equally important (if not more so) employers must make certain that discipline and termination decisions arising out of social media (think Facebook rants) are not going to inadvertently violate an employee’s rights under applicable employment laws and regulations, including the National Labor Relations Act (NLRA). 

For more information on employment law and social media issues, including steps for minimizing your social media legal risks, please see information about our employment law services and contact Jason Shinn. 

Red Email ButtonEven now email continues to have an “informal” character, business transactions occurring over email thread may, in certain circumstances, create a binding contract. 

With this in mind, companies can avoid significant expense in relation to unintended contract obligations and litigation by simply addressing how their employees – especially those in sales or purchasing – conduct business through email.

The backdrop for this recommendation arises out of a matter where I’ve filed a motion to enforce a settlement agreement. The attorneys of record who were involved with the underlying case and in the circumstances leading up to and resulting in the settlement had seemingly reached the agreement now being disputed through email. One party, however, is claiming that the email arguably forming the acceptance should be disregarded.  

The offer and acceptance comprising the settlement agreement was not as “clean” as I would have preferred. For example the acceptance was an email from the Plaintiff’s attorney that was simply signed “Jim.” Also, the terms of the settlement payment had been previously reached at a deposition so the email simply referred back to those discussions.

Michigan Law Generally Enforces Electronic Signatures

Even so, under Michigan’s Uniform Electronic Transactions Act (UETA) a “record or signature shall not be denied legal effect or enforceability solely because it is in electronic form.” MCL § 450.837. In other words, a party cannot argue that an email acceptance of an agreement (in this case a settlement agreement) should be disregarded simply because the acceptance occurred by way of email. 

While there are nuances to this general rule, Michigan courts have addressed my particular issue on substantially similar facts. In Kloian v Domino’s Pizza, LLC, 273 Mich App 449, 454; 733 NW 2d 766 (2006), the court enforced a settlement agreement reached through email communications. 

Email Signatures and the Workplace

The above discussion about email contracting takes place in the context of settling a legal claim. But the same principles generally apply to private parties forming and enforcing a contract.

Interestingly the Wall Street Journal recently published an article deriding the use of inflated email disclaimers (subscription required). But I think the better practice is to view email disclaimers as a very cheap insurance policy against a company’s employee inadvertently entering into an enforceable contract through email communications.

Accordingly, businesses should consider including a disclaimer, or take other steps to demonstrating that an e-mail is not intended to bind the sender. For example, I use the following language in my email disclaimer: 

Also, nothing in this e-mail is intended to constitute an electronic signature for purposes of the Electronic Signatures in Global and National Commerce Act (E-Sign Act), 15, U.S.C. §§ 7001 to 7006 or Michigan’s Uniform Electronic Transactions Act, MCL § 450. 831, et seq., unless a specific statement to the contrary is included in this e-mail.

Would this disclaimer defeat a contract claim? Perhaps. But in answering this question, I’m reminded of a very underrated movie, True Romance. In this movie, the lead character, Clarence Worley played by Christian Slater, delivers the following line: “If there’s one thing this last week has taught me, it’s better to have a gun and not need it than to need a gun and not have it.” 

Turning back to the motion to enforce the settlement agreement, there is no email disclaimer whatsoever that would arguably give the court a reason to disregard the email acceptance (the email was sent from the attorney’s Yahoo! account, which is another story). But I’m sure the party opposing the settlement now wishes there was such a disclaimer.

Chalk PlaysA meaningful analogy can be made between the this year’s eventual Super Bowl winner and a company successfully responding to an allegation of sexual harassment.

Consider for example that according to research (WSJ subscription required) the most defining and critical plays of a professional football game come down to success on first down. More specifically, the most telling benchmark for determining the team that will ultimately be successful is first down efficiency.

In this regard, the New York Times reports that the Patriots have a slight edge on first down efficiency: 

The Patriots average 6.7 yards per play on first down, the Giants 6.2 yards per play, and much of the Giants’ production came from a handful of big plays.

Successfully Responding to an Allegation of Sexual Harassment

Similar to this first down football success factor, the most important factor for successfully responding to a sexual harassment allegation is how effective a company’s response is when a sexual harassment claim is first lodged. This is because it is not uncommon that more attention will be given to the employer’s initial action or inaction than is given to the alleged harassing conduct itself.

For this reason, the steps the employer takes pre-complaint to maintain a workplace free from harassment, and the steps it took in response to a complaint, can turn an otherwise manageable harassment complaint into the football equivalent of third and long. 

The following are a few of the most critical points that a company should consider at the outset of responding to an allegation of sexual harassment:  

  • Responding to the Complaint: A sexual harassment complaint will not always be neatly presented to an employer with the “who,” “what,” and “when” type of facts clearly identified. Instead, a sexual harassment complaint may appear in various forms, such as rumors, informally shared information, anonymous letters, calls to a company’s employee complaint hot line, or a direct in-person complaint. Another common fact-pattern are complaints that come to light during exit interviews with departing employees. For these reasons, before a complaint is received, employers should train managers and supervisors to respond to any information indicating possible inappropriate conduct. 
  • Selecting the investigator: The most important consideration in selecting the investigator is to insure that the investigation is credible and bias free. It is also imperative that high level insiders in the company do not have any influence over the investigator or the investigation. For this reason, using an outside, neutral investigator will almost always be preferable to having someone from inside the company investigate the sexual harassment allegation. A few other tactical considerations that should go into the assessment of an investigator:         
    • Knowledge of Employment Discrimination Law: The investigator should have a working knowledge of discrimination and harassment law, as well as experience in conducting investigations; 
    • Likely Court Room Presence: Employers should also consider whether the investigator will make a good witness at trial if there is future litigation concerning the complaint’s allegations. This is because the investigator will likely be a key witness for the employer and essential for establishing the employer’s defense. 
  • The Investigation should be viewed as “Exhibit A” in future litigation: It should be assumed that the employer’s investigation will be used as a defense in future litigation. It is, therefore, important for the investigator to be mindful of this fact before committing anything to writing during the investigation: A wrongly or poorly chosen word or sentence, an omission, or an inaccurate description by the investigator may result in significant legal issues down the road.

Conclusion

While the focus of this Super Bowl will likely be on the quarterback play of Tom Brady and Eli Manning, it is the battle for first down efficiency that will often determine a team’s success for failure.

Similarly, a company’s success or failure in responding to a sexual harassment allegation against one of its executives, managers, or supervisors will often turn on its initial response and not on the actual harassment. For this reason, the company’s investigation must be beyond reproach with employers committed to taking appropriate steps in fulfilling their legal obligation under state and federal discrimination laws to conduct a prompt, meaningful, and thorough investigation of the circumstances and, if necessary, take appropriate remedial action. 

For more information and additional recommendations on how to conduct a successful sexual harassment investigation, contact Jason Shinn.