TrophiesThe American Bar Association’s 2011 list of Top 100 Law Blogs (I refuse to use “blawg” whenever possible) is out.

It is a list that consist of a diverse group of top-shelf thought leaders who provide equally great insight in their respective areas of expertise. The common thread among these bloggers, however, is the passion and depth of knowledge they have for their blog’s subject matter. 

In this regard, you can’t go wrong with checking out or following any of the blogs found on the ABA’s list. In fact, I came away with a few blogs I will be adding to my list of “must reads” (like The Not-So Private Parts published by Kashmir Hill and focusing generally on privacy law).  

The following blogs, however, are either especially relevant to employment law matters or otherwise are a mainstay in my weekly routine:

  • Connecticut Employment Law Blog published by Daniel Schwartz. Aside from the great content and practical insight on employment law matters in and outside of Connecticut, Mr. Schwartz’s blog is what motivated me to start blogging.  
  • Ohio Employer’s Law Blog by Jon Hyman. Similar to Daniel Schwartz’s blog, this is just a great source of quality information and analysis of legal issues relevant to employers in and outside of Ohio. 
  • The Employer Law Handbook published by Eric Meyer. The creative headlines alone are worth the price of admission. The great content and insight offered to employers is just an added bonus. 
  • Internet Cases published by Evan Brown. This is a super informative blog and a great fix for any technology junkie. 
  • Technology and Marketing Law Blog published by Eric Goldman and Venkat Balasubramani. While this blog generally summarizes cases involving Internet, privacy, copyright and trademark law, the authors provide deep insight and analysis that go way beyond the court opinions discussed. 
  • Delaware Employment Law Blog published in large party by Molly DiBianca. This is a go-to resource for legal issues at the intersection of social media and employment law, as well as “traditional” employment law matters.  

Also, I invariably take away some valuable insight or practical advice from Kevin O’Keefe’s Real Lawyers Have Blogs. This value is relevant to blogging in general and frequently professional relationship building.

Additionally, in publishing the Michigan Employment Law Advisor blog, I’ve been a client of Kevin and his team at LexBlog for a little less than a year. Based on this experience, I definitely encourage any lawyer inspired to make a dent in the law blog universe to strongly consider discussing those plans with LexBlog. They consistently offer text-book customer service and are all around enjoyable to work with.

Disclaimer: None of the preceding authors have compensated me for any of the opinions expressed in this blog post or otherwise promised me anything of value. However, any such reimbursement will be accepted and appreciated.  

ToolboxCraig Ball, a top-shelf e-discovery thought leader, recently wrote a blog post asking “Should a Legal Hold ‘Waiver’ Be Secured from Departing Employees?” As explained below, the answer is no. 

But first for background purposes, a party – an individual or business entity – has an obligation to preserve information, in any format, e.g., documents, emails, and other digital information, that relate to anticipated or ongoing litigation. The “legal hold” is usually the first tool for meeting this obligation. 

Against this backdrop, Mr. Ball proposed the following as a proposed “legal hold” waiver: 

I do not contemplate making a claim or bringing a lawsuit against XYZ Corporation arising from my termination or other matters relating to my employment. Accordingly, I have no expectation that XYZ Corporation will preserve information in anticipation of a claim or litigation by me.

The genesis for Mr. Ball’s legal hold waiver was a recent case, NVE v. Palmeroni, in which a New Jersey District court awarded monetary sanctions and an adverse jury instruction against a former employer who had sued its former employee for claims involving breach of fiduciary duty. For a great analysis of this e-discovery case see Mark Sidoti’s blog post discussing the case. 

Why a Litigation Hold Waiver is not the Right Tool for Employers 

While I agree that employers should and can do more with respect to limiting their risks when it comes to e-discovery spoliation claims, I respectfully disagree with Mr. Ball’s proposal that employers should obtain litigation hold waivers from departing employees. A few reasons to consider:     

  • First, NVE was not a typical employment discrimination claim because the employer initiated the litigation. It is reasonable to expect that a party – whether an individual or business – initiating litigation should have their preservation house in order and this preservation obligation is going to arise long before the complaint is filed. 
  • Second, in concluding that sanctions were appropriate, the court framed the company’s e-discovery preservation obligations essentially as a rudderless wreck. From here, it was easy for the court to sift through the wreckage to come up with the following points in support of its decision to sanction the employer: (i) NVE failed to institute the required litigation holds; (ii) Legal counsel failed to properly oversee the discovery process (a non-lawyer made critical litigation decisions); and (iii) NVE was unable to clearly articulate the steps it took to preserve, search and produce the requested discovery. Under these circumstances, a litigation hold waiver is unlikely to insulate any party against e-discovery sanctions.  
  • Third, employment terminations are often emotionally charged events. Also, discharged employees often do not appreciate the difference between a termination – even an “unfair” termination – and a termination arising out of unlawful discrimination. The two simply are not the same. So mixing the emotion involved in a firing and a lack of experience or understanding of the legal nuances inherent in employment discrimination and then asking for written confirmation that the person won’t sue is often going to be a recipe for disaster.

Alternative to a Legal Hold Waiver – Controlling Your Destiny

Jack Welch once said, “Control your own destiny or someone else will.” Incorporating a litigation hold waiver into the termination process, however, allows a terminated employee to control – at least in part – the employer’s e-discovery preservation response. But this risk is unnecessary if an employer proactively manages the situation by investigating the circumstances and making informed decisions from the outset. In this regard, a few points to focus on are as follows:  

  • Implement and adequately oversee a preservation program;
  • The preservation program should include informed individuals, including information technology professionals, along with managers and employees likely to have first hand knowledge about the terminated employee;
  • Experienced legal counsel will also need to be a part of the preservation program in order to make material decisions regarding preservation issues. As the NVE Court demonstrated, failing to use legal counsel to make such decisions is a major consideration in awarding sanctions; 
  • If it is a “close call,” employers should err on the side of caution and take appropriate steps to preserve information likely to relate to future litigation. This may include making a forensic copy of the discharged employee’s hard drive, preserving the terminated employee’s email mailbox, and saving server logs, or any other “digital fingerprints” that may relate to prospective litigation.     

The NVE case certainly underscores the need for properly addressing e-discovery preservation obligations and the severe, adverse consequences for failing to do so. But this case should motivate employers to refocus on their e-discovery obligations rather than doubling down on a litigation hold waiver.

 

Briefly, under Section 7 of the National Labor Relations Act (NLRA), employees are guaranteed “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection” 29 USC 157. 
It is this last provision that the NLRB and employees have latched onto as a means to protect online rants. It is important for both employers and employees to understand, however, that Section 7 of the NLRA does not protect garden variety gripes – complaints must relate to the rights under this provision.  
The WSJ’s article provides a great overview of the difficulties employers and employees face when it comes to parsing out what social media postings are or are not not protected by the NLRA. 
Recommendations 

Social Media Scrabble.jpgToday’s Wall Street Journal discussed the increased scrutiny that the National Labor Relations Board (“NLRB”) has continued to place on second-guessing employers’ terminations of employees who have bad-mouthed their employers and managers through social media outlets like Facebook or Twitter. See Workers Claim Right to Rant on Facebook, by Melanie Trottman.

Briefly, under Section 7 of the National Labor Relations Act (NLRA), employees are guaranteed “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection” 29 USC 157.

It is this last provision that the NLRB and employees have latched onto as a means to protect online rants. It is important for both employers and employees to understand, however, that Section 7 of the NLRA does not protect garden variety gripes – complaints must relate to the rights under this provision.

The WSJ’s article provides a great overview of the difficulties employers and employees face when it comes to parsing out what social media postings are or are not protected by the NLRA.

Recommendations for Addressing Social Media & Labor Rights

The best course of action for employers contemplating disciplining or firing an employee for a Facebook posting or related social media use is to examine the issue of protected concerted activity under the National Labor Relations with their labor and employment counsel to avoid ending up in the NLRB’s cross hairs. Two additional recommendations to consider:

  • For more information about the NLRB’s view of social media employee related discripline, employers and employees should review the NLRB’s report detailing the outcome of its investigations into social media policies and firings in relation to the NLRA and the U.S. Chamber of Commerce’s comprehensive Report, A Survey of Social Media Issues Before the NLRB.
  • Workplace Technology Restrictions: Employees generally do not have a statutory right to use an employer’s IT infrastructure and e-mail system for Section 7 purposes. Thus, an employer’s technology policy prohibiting employee use of the system for “non-job-related solicitations” will generally not violate the NLRA. It is important, however, that technology restrictions for non-solicitation and non-distribution rules are uniformly applied. This is because it can be argued that an employer violates the NLRA if its policy discriminates along Section 7 lines. In other words, an employer cannot permit employees to use e-mail to solicit for one union but not another, or if it permitted solicitation by anti-union employees but not by pro-union employees. 

For additional information on Social Media and the challenges and opportunities it presents for employers and employees, contact Jason Shinn. 

Eliminating IndividualsThe Detroit Free Press (by Tresa Baldas) reported that a former McDonald’s employee was recently caught stealing customers’ credit card information while working the drive through.

According to the criminal complaint filed in the Michigan Eastern District Court (PDF) the former employee, Teresa Pulliam, is charged with access device fraud after she was caught on video surveillance using a hand-held skimming device while handling customers’ credit and debit cards at an Oak Park McDonald’s restaurant. After her arrest, Pulliam admitted that she was paid more than $1,000 for providing the stolen credit card accounts. If convicted, she faces up to 15 years in prison.

Best Practices for Preventing and Limiting Liability for Employee Misconduct  

This unfortunate case illustrates three important points that any employer should consider in managing its risks associated with employees engaged in criminal or wrongful misconduct.

Eliminating Bad Apples at the Outset: First, the business necessity for conducting some form of background checks on employees or applicants for employment is critical. This is because Michigan, like many states, recognize the torts of negligent hiring, supervision and the retaining of unsafe employees. A particularly insightful analysis as to why such checks are essential in avoiding such claims was provided by the court in Verran v United States, 305 F. Supp. 2d 765 (ED Mich 2004), which explained:

To sustain such a claim, Plaintiff must produce evidence of the appropriate standard for hiring, retaining, or supervising the relevant class of employee, as well as evidence demonstrating that the employer knew or should have known of the employee’s propensity to engage in the challenged conduct. 

Therefore, the issue of liability will largely focus on the adequacy of the employer’s pre-employment investigation of applicants, which will include what, if any, background checks were conducted. 

Continuous Due Diligence in Maintaining Crime-Free Workplace: Second, background checks should not be the endpoint in an employer’s due diligence efforts to maintain its workplace. Going back to Pulliam’s misconduct, not only was it recorded by the employer’s video surveillance , but the surveillance was actually reviewed by a manager. Further, this manager understood the importance of promptly contacting law enforcement.

Insuring Risks and Make Sure Risks are Insured: Third, in addition to the bad publicity employees like Ms. Pulliam create, such misconduct may result in an employer facing civil liability. In this regard, it is important for employers to carefully evaluate their insurance coverage. This is because under most general commercial liability policies, misconduct Ms. Pulliam admitted to engaging in is often excluded under a criminal acts and negligent supervision exclusion. Generically, such an exclusion will provide that an insurance company’s duty to defend and indemnify do not apply:   

To bodily injury, personal injury, or property damage arising out of and/or resulting from any actual or alleged negligent hiring, training, and/or supervising of any former or current employee of any insured or any volunteer worker, subcontractor, or any person under the direction and control of any insured.

At the end of the day, protecting a business against employee misconduct requires a holistic, on-going commitment that begins with the application process and continues throughout the life of the employment relationship. 

Shredding Evidence

U.S. federal and state civil laws frequently overlap with criminal laws. This creates the opportunity for what is often referred to as parallel proceedings, e.g., simultaneous or successive civil and criminal proceedings.

As explained below, companies are often in a legal bear trap when caught in parallel proceedings because of the assertion of Fifth Amendment rights against self-incrimination by current and former employees.

Overview of Fifth Amendment Rights

Under the Fifth Amendment and Mich. Const. art 1, § 17, no person can be compelled to be a witness against him or herself in a criminal trial. The privilege may be raised in civil as well as criminal proceedings and applies to all stages of the litigation process. A few more important points pertaining to asserting Fifth Amendment Rights include the following: 

  • An individual may assert the Fifth Amendment privilege against self-incrimination. A business entity such as a corporation, however, generally does not have any Fifth Amendment rights.  
  • The Fifth Amendment privilege extends not only to “answers that would in themselves support a conviction under a federal criminal statute” but also to answers “which would furnish a link in the chain of evidence needed to prosecute the claimant…” Hoffman v. United States, 341 U.S. 479, 486 (1951).

Unique Issues Employers face when Employees Assert Fifth Amendment Rights 

Information Blackout: When a current or former employee asserts his or her Fifth Amendment rights in civil litigation it is like an aneurysm in that it signals something very serious but it is unknown when it will cause trouble and the scope of that trouble. For companies, their first notice of this litigation “aneurysm” is not until long after a criminal investigation has begun and, more likely than not, after the government has arrested an individual employee. At that point, it is common for this arrest to also include the seizure of records, computers, documents, and other information that were in the possession of the person arrested. 

The end result is that the company will not be in a position to effectively investigate the alleged wrongful conduct involved in the civil action without access to the seized information and without the assistance of its indicted employee. This may also effectively preclude the company from presenting an effective defense because current or former employees would not be able to testify or to provide responsive declarations in response to the civil litigation without placing themselves at risk of self-incrimination.

Negative Inferences: Unlike criminal cases, reliance on the privilege in civil cases may give rise to an adverse inference against the party claiming its benefits. See Baxter v. Palmigiano, 425 U.S. 308, 318 (1976). What this means is that a decision to plead the Fifth in response to a question at a civil deposition or trial may give rise to an adverse inference that the answer to the question would have been unfavorable to the individual or a legitimate inference that the witness was engaged in criminal activity. Although courts will generally require that an adverse inference may only be drawn from the defendant’s assertion of Fifth Amendment rights in response to evidence offered against the person asserting the privilege, this is not a high standard to overcome.

Also, courts do not automatically preclude drawing an adverse inference against a company based on a current or former employee’s invocation of their Fifth Amendment privilege against self-incrimination. This negative inference coupled with the fact that the employer may be unable to adequately investigate the matter and circumstances is especially crippling in the context of civil litigation. 

Recommendations 

Decisions for responding to parallel proceedings must be made with the insight and collaboration of both civil and criminal legal counsel. Points to consider, however, include: 

  • Quickly Investigate before the Information becomes Unavailable: As noted above, it is likely that access to both your former or current employee will be significantly limited. For this reason, it is important to promptly investigate the facts and circumstances at soon as the opportunity presents. Having a good understanding of the facts before the government gets involved and before an employee invokes his or her Fifth Amendment Rights allows the employer to critically assess its vulnerabilities and strategic decisions about how to address the prospective litigation or criminal proceeding.
  • Stay of Proceedings: Although courts have the power to stay civil proceedings, it is not constitutionally required to do so. But if this strategy is chosen, an effective argument is that the resolution of the criminal action will likely efficiently resolve the civil proceeding in that it increases prospects for settlement of the civil case. It will also result in many of the civil issues being disposed of in the criminal proceeding. Conversely if a civil proceeding goes first, a significant amount of information would likely be withheld” due to the invocation of the Fifth Amendment privilege against self-incrimination.
  • Preservation Obligations: No matter the ultimate strategy chosen, companies must quickly implement a litigation hold in order to preserve information relevant to both the criminal and civil proceedings. 

Jason Shinn has worked with corporate clients to conduct internal investigations in response to parallel proceedings, including multi-million dollar civil fraud claims subject to a criminal probe by the Federal Bureau of Investigation. In that particular case, the FBI probe resulted in the indictment and eventual conviction of several former employees while the corporate client was not charged of criminal wrongdoing and was able to settle the civil claims for extremely favorable terms. 

The preliminary results of the U.S. Department of Labor’s National Census of Fatal Occupational Injuries for 2010 showed mixed results as to workplace violence.

Specifically, workplace homicides declined 7% in 2010 to the lowest total ever recorded by the fatality census. But workplace homicides involving women increased by 13%. 

Historically, 11,613 workplace homicide victims were reported between 1992 and 2006 according to the Bureau of Labor Statistics’ Census of Fatal Occupational Injuries (CFOI). 

Against this dark backdrop, it is apparent that for any business workplace violence must be a top concern. This is especially true for smaller business organizations who are often hit by violent incidents much harder. Based on experience and personal observations, smaller companies typically do not have the resources to employ security, invest in work place violence prevention training, or employee counseling services. Nonetheless, there are measures that any business – regardless of available resources – should take so it does not become another grim workplace homicide statistic.

Identifying Warning Signs of Workplace Violence

Employers cannot guarantee workplace safety. But there are red flags and behaviors employers should recognize to minimize the chance that an employee’s actions do not boil over into a violent altercation. For example, the National Institute for Prevention of Workplace Violence identifies 13 signs to look for:

  1. Employees making threats;
  2. Acting unreasonably;
  3. Intimidating or controlling other employees;
  4. Exhibiting paranoid behavior;
  5. Acting irresponsibly;
  6. Exhibiting angry or aggressive behavior;
  7. Showing a fascination with or acceptance of violence;
  8. Holding grudges;
  9. Exhibiting generally bizarre behavior;
  10. Exhibiting signs of depression;
  11. Demonstrating obsessions;
  12. Demonstrating signs of substance abuse; and
  13. Demonstrating signs of desperation.

But recognizing violent tendencies is only the first step. Employers must also enforce workplace violence policies.These policies should be applied uniformly, and should be based upon an objective analysis of the employee’s present tendencies to commit a violent act. 

Implementing an Anti-Work Place Violence Policy

Effective anti-violence policies should generally include the following:

  • The policy should clearly establish that violence will not be tolerated in any manner from any employee. The policy should also provide a non-exhaustive list of violent acts, including verbal threats or harassment;
  • The policy should explain that prohibition on violence also extends to customers, clients, patients, or guests;
  • The policy should plainly state that employees who engage in workplace violence are subject to discipline, up to and including termination. Further, employees should be advised that appropriate law enforcement agencies may be contacted; and
  • The policy must also establish a convenient method of reporting any examples of violence. The policy should also promise that all reports will be taken seriously and promptly investigated. Because employees may be reluctant to turn in a fellow employee, the policy should also provide a confidential means of making good faith complaints.

Sample Workplace Ant-violence Policy

Here is a free sample Workplace Anti-Violence Policy (PDF). This policy is intended for educational purposes only and is not a substitute for a one-on-one discussion with a competent attorney.

This is because there are many subtle pitfalls when it comes to the interplay with various employment statutes and implementing workplace violence policies.

For example, the Americans with Disability Act (ADA) prohibits discrimination on the basis of a disability (whether actual or perceived) or a record of disability. This prohibition could complicate the enforcement of a work place violence policy if misconduct was the result of an employee’s disability. Both the Equal Employment Opportunity Commission (EEOC) and courts generally take the position that employers are almost always entitled to enforce workplace violence policies pursuant contains a “direct threat” exception, and if the policies are enforced uniformly. But courts have found that taking an adverse action against a current employee for past conduct related to a disability may violate the ADA. See Josephs v. Pacific Bell, 443 F. 3d 1050 (9th Cir. 2006) (Employer violated the ADA by refusing to rehire a former employee based upon the former employee’s history of violence).

Cases like this make it critical for employers to fully understand what are often subtle pitfalls when it comes to how various employment laws may interact. For questions or more information, contact the attorneys at E-Business Counsel, PLC. 

Dilbert.com

Certainly social networking sites like Facebook, LinkedIn, blogs, and Twitter provide employers with opportunities to obtain useful, legitimate, and relevant information about a job applicant. But the above Dilbert comic by Scott Adams underscores that there are also risks in using such social media outlets to screen job applicants.  

Specifically, if employers use social media sites to go beyond a job candidate’s resume, they may be opening a Pandora’s box full of information about an applicant’s status in certain protected categories. Examples of such categories include discovering a job candidates’ personal attributes such as race, gender, age, marital status, medical condition, religion, pregnancy status, sexual orientation, disability and political affiliation. All of these characteristics may be protected categories under federal or state law. 

But simply because there are risks in using social media does not mean that these sites cannot be valuable tools or that they should never be used for recruitment purposes. Instead, employers who recruit or screen job applicants through social media and other online sources need to understand these risks and develop policies to manage the potential pitfalls.

Recommendations for Using Social Media to Screen Job Applicants 

A few recommendations that employers should consider when it comes to using social media to screen job applicants: 

  • Before initiating an online search (or any search), employers should consider the job description to be filled and evaluate the objective characteristics a candidate should have, e.g. experience and skills. In addition to narrowing the employer’s focus on the ideal candidate, this may also help focus the social media screening process. For example, if effective written communication skills is essential to the position to be filled, then scouring the Web for blog postings by the candidate makes sense. But if engineering experience specific to micro-tunnelling is critical to the position, than researching a job applicant’s personal likes on Facebook may not make sense.    
  • If screening job applicants through social media will be permitted, then the employer’s policy should clearly identify what information or sites will be reviewed, why these sites are chosen, and what records will be maintained (i.e., screenshots, access dates, etc.). It may make more business sense to only visit professional/career orientated sites like LinkedIn as opposed to a more traditional social networking site like Facebook.
  • Employers may use third-party service providers to review social media and social networking profiles to screen job applicants. If so, it is important to understand that they may have obligations under the Fair Credit Reporting Act.  
  • Above all else, it is critical that employers are able to articulate a legitimate, nondiscriminatory reason for any employment decision and retain appropriate documentation to support that decision. This is true for any medium.

These are only a few points that employers should consider in developing a procedure for using social media/social networking to screen potential job applicants. For more information about best practices for screening job applicants through social media, feel free to contact Jason Shinn. 

Contract Documents.jpg

Under Michigan law, noncompetition agreements (sometimes referred to as covenants not to compete or restrictive covenants) are generally enforceable as long as the restriction is reasonable as to subject matter, geographical scope, and duration.

But recently proposed legislation would significantly limit Michigan’s noncompete law, which is found in Michigan’s Antitrust Reform Act (MARA), MCL 445.771 et seq.

Specifically, the proposed noncompete amendment (S.B. 0786) reads as follows: 

An employer shall not require and a Court shall not enforce an agreement or covenant under this section as a condition of employment if the employer did not inform the employee of the requirement at or before the time of the initial offer of employment. 

This proposed amendment would apply only to agreements entered into after the effective date of the amendment.  

Criticisms of the Proposed Noncompete Legislation 

As proposed, both employers and employees should be concerned about limiting the enforcement of noncompete agreements. Consider for example the following: 

First, the proposed amendment is overly restrictive in that employers get one shot at the beginning of the employment relationship to obtain an enforceable noncompete agreement. This may lead employers to simply require noncompete agreements for all new hires, irrespective of the actual position. 

Second, the proposed noncompete legislation does not make any exceptions for situations where an employee is hired into one position not subject to a noncompete agreement but is later promoted within the company into a position that is covered by a noncompete agreement.

For example, a noncompete agreement may not be necessary for a person hired to simply perform administrative work/data processing in a sales office. But an employer would likely want that employee to agree to a noncompete agreement if he or she is later promoted to a sales position where there is direct access to customers, highly confidential pricing information, product or service development, customer databases, marketing information, etc.

Under this scenario and the proposed legislation, an employer may bypass internal promotions and look to hire a new employee who could then enter into the required noncompete agreement?

Improving the Proposed Amendment Noncompete Legislation  

The proposed noncompete legislation was introduced by Michigan Senators Tory Rocca, Steven Bieda, and Rebekah Warren.

I spoke with a representative from Senator Rocca’s office (who was very helpful and knowledgeable) about the motivation for the noncompete legislation. In sum, Senator Rocca’s focus for proposing this amendment is to protect individual employees with little to no leverage after being hired who are then asked to enter into a noncompete agreement.  

But rather than handcuffing both employees and employers, I would rather see an amendment that simply specifies the consideration that is required for a noncompete agreement obtained post hire to be enforceable. 

In this regard, Michigan, like most jurisdictions, routinely enforce noncompetition agreement signed by newly hired employees because employment alone is sufficient consideration for the noncompetition commitment. 

But the enforceability of noncompete agreements entered into by individuals already employed and later asked to sign a noncompete agreement in exchange for only continued employment is not so clear under Michigan law.

This is because Michigan’s highest court has not addressed this issue. And lower courts have done so only in unpublished opinions, which have have no precedential effect under the Michigan Court Rules (See MCR 7.215(C)(1)).

As to those unpublished opinions, Michigan Courts have concluded that continued employment is sufficient consideration to support the validity of a noncompetition agreement. See Camshaft Mach Co v Rose, No 114314 (Mar 7, 1990). Camshaft involved an at-will employee who was already employed and later was required to sign a noncompetition agreement. The employee received nothing other than continued employment in exchange for signing. One year later the employee resigned and joined a competitor in violation of the noncompete agreement, which resulted in litigation and eventual court opinion that the noncompete agreement was enforceable. 

Conclusion

Based on my experience in representing both employers and employees in noncompete legal issues, imposing an outright ban on enforcing noncompete agreements after the initial hire will not benefit either employers and employees. 

Instead, both sides would be better served with a clear delineation as to the circumstances of when a post hire noncompetition agreement will be enforceable. Regardless of whether it is legislatively determined that continued employment will be sufficient or if some other additional consideration will be required, e.g., a one time payment, a promotion, or other benefit, at least both employers and employees will have the certainty that is presently lacking under current Michigan noncompete jurisprudence.     

The proposed legislation has been referred to the Economic Development Committee and we will continue to monitor it. 

Sexual harassment.jpgWhat’s a Presidential campaign without sex? Or at least allegations of sexual harassment?

In this regard, Politico reported that Herman Cain, a Republican presidential hopeful, engaged in conduct that resulted in at least two out-of-court settlements with women who complained they were subjected to inappropriate conduct by Mr. Cain. These settlements occurred while Mr. Cain was heading up the National Restaurant Association.

When Can an Employer Be Liable for Sexual Harassment by a Manager or Supervisor? 

Setting aside politics, Mr. Cain’s reported indiscretions are a good reminder for when an employer may be liable for the sexual harassment of a supervisor. Generally, such liability occurs in two situations: 

First, an employer is liable for quid pro quo harassment by its supervisors. Quid pro quo harassment exists when a supervisor makes a subordinate’s job security or benefits conditioned on acceptance of the supervisor’s sexual overtures and then penalizes the subordinate for refusing them.     

Second, an employer may also be liable for a supervisor’s conduct that creates a sexually hostile work environment for a subordinate. This sort of sexual harassment, however, provides an employer with an affirmative defense and thereby avoid liability if the employer proves the following: 

  1. The employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and 
  2. The plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer. 

See the landmark U.S. Supreme Court decisions Burlington Indus v Ellerth, 524 US 742, 790 (1998) and Faragher v City of Boca Raton, 524 US 775 (1998). 

What Steps Should Employers Take to Limit Their Exposure to Sexual Harassment Liability?

The first line of defense in reducing an employer’s exposure to sexual harassment liability is having in place a well-publicized and effective sexual harassment policy. This policy should be developed with experienced legal counsel and should include the following topics: 

  • Statement that the employer will not tolerate sexual harassment;
  • A definition of prohibited conduct;
  • A direction that employees who feel they have been sexually harassed are to make a complaint to specific individuals. The policy, however, should also include several alternative avenues for making a sexual harassment complaints;
  • The employer’s commitment to investigating sexual harassment complaints;
  • The employer’s commitment to maintaining confidentiality of the reporting employee to the extent possible;
  • A statement that that sexual harassers will be subject to disciplinary action up to and including discharge; and
  • The employer’s commitment that there will be no retaliation for making a complaint or assisting in a sexual harassment investigation.

The second line of defense is educating managers at all levels so they have a solid understanding of:

  • What constitutes unlawful discrimination, including sexual harassment;
  • What decisions should be cleared with the human resources department or higher-level management; and 
  • What complaints, including “rumors” that should be reported for appropriate action. This is especially important where the employer’s prompt investigation and remediation may help to avoid or substantially limit the employer’s exposure to discrimination claims.

For questions on preventing sexual harassment or for more information on employer liability for sexual harassment, please contact Jason Shinn. 

one-flew-over-the-cuckoos-nest.jpgKen Kesey, an American author best known for his novel One Flew Over the Cuckoo’s Nest (1962), once exclaimed “To hell with facts! We need stories!”

Mr. Kesey’s exclamation often becomes the storyline when a party to litigation mismanages their e-discovery preservation obligations and is then forced to respond to sanctions and spoliation claims.

This truth recently played out when a Michigan federal court ordered (PDF) the city of Detroit to pay costs and attorney fees for its failure to preserve emails relevant to litigation. The tab for both stands at approximately $735,000. The Court also ordered an adverse jury instruction for its e-discovery preservation failures.

Background Leading up to the E-Discovery Sanctions

To appreciate why Mr. Kesey’s exclamation comes to mind in response to mismanaged e-discovery preservation, a little background on the underlying dispute is necessary. 

Specifically, the e-discovery sanctions were ordered in a case involving claims brought by the children of an exotic dancer who was murdered in Detroit. Normally (and unfortunately) this would not be news.

But according to the Third Amended Complaint (PDF), the slain dancer was alleged to have “performed” at a 2002 party “hosted” at the Manoogian Mansion, which was the residence of Detroit’s former Mayor, Kwame Kilpatrick.

It is alleged that attendees at this party included Kwame Kilpatrick, his entourage, Detroit police officers, and exotic dancers. It is further alleged that the party was “crashed” by Kwame’s wife who then physically attacked the slain dancer (Tamara Greene). Shortly afterwards Ms. Greene was shot, which fueled speculation that her death was somehow tied to the party.   

The Lawsuit Behind the E-Discovery Sanctions 

This party and subsequent homicide – or so the lawsuit story goes – was the subject of a massive cover up involving the Mayor, police officers and other high ranking city officials loyal to the mayor. As part of this cover up Detroit city officials, police officers, and others deliberately and repeatedly delayed and obstructed the murder investigation and actively concealed material evidence in the investigation of Greene’s death in order to protect those involved in the infamous “Manoogian Mansion Party.” 

E-mail Spoliation – When the Facts Take a Backseat to the Story 

As conspiracy theories go, this arguably falls short of a second gunman and grassy knolls. But going back to Mr. Kesey, the facts of the underlying claim (whether a fight between a mayor’s wife and a stripper took place at an illicit party) become less important when the storyline turns to deleted emails and destroyed evidence. 

In this regard, Michigan’s then Attorney General Mike Cox, Michigan state police, news organizations, and others investigated whether an illicit party at the Detroit mayoral mansion ever took place. These investigations showed no such party occurred.

In fact, the 2003 investigation by Michigan’s Attorney General consisted of examining over 30 witnesses under oath; over 120 witnesses were interviewed; approximately 90 subpoenas were issued for witnesses and documents; forensic analysis of computers was performed; and over 10,000 pages of documents and records were reviewed.

But when deleted or missing emails come into play, the facts are not the story. Instead, the story as told by the Court is that a defendant failed (miserably I might add) to preserve emails and now must pay attorney fees and costs and go into trial with an adverse jury instruction against it.

The story in the media is even worse: [Lawyer] wants Detroit to pay his firm $735,622 over destroyed e-mails“, “Judge scolds city over trashed e-mails in Tamara Greene case,” or Federal judge slams City of Detroit for destroying e-mails in stripper slaying case.” 

The Take Away

The bottom line is that stories like this – monetary sanctions and negative headlines – underscore the need for properly responding to e-discovery preservation obligations. Recommendations for properly addressing e-discovery matters in response to employment litigation have previously been provided here, here and here.

Additionally, feel free to contact me for more information. I’ve been responsible for responding to e-discovery challenges on behalf of corporate clients going back to 2001. I have also implemented best practices and protocols for law firms and been hired as an e-discovery trial expert in state and federal employment litigation matters.