New Overtime Changes on Hold… For Now

Less than two weeks before the Department of Labor’s new federal overtime rule was scheduled to take effect on December 1, a federal judge in Texas issued a nationwide preliminary injunction postponing its implementation. The new rule would have raised the minimum salary threshold to qualify for overtime pay under the Fair Labor Standard Act’s white collar exemption from $23,660 to $47,476 per year, with automatic adjustments to the threshold every three years going forward.

In his ruling granting the preliminary injunction, U.S. District Judge Mazzant stated, “Congress defined the [white collar] exemption with regard to duties, which does not include a minimum salary level.” He found that, “[w]ith the Final rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

Following this ruling, the overtime rule will not take effect on as scheduled and employers may continue to follow the existing overtime regulations until a final decision is reached by the court. Because a preliminary injunction is not permanent, it is possible that the rule will be implemented at a later date. However, the judge could not have issued a preliminary injunction without determining that the states had established a substantial of likelihood of succeeding on their claims.

We are monitoring this matter closely. Please feel free to contact our attorneys for further guidance or analysis.

Kindling Print’s Spirit: A Guide To E-Publishing

Since the release of Amazon’s Kindle in 2008, e-publishing has slowly transformed from an indie alternative into a viable mainstream distribution outlet for both new and established authors.

According to Fortune 500, e-book sales increased by a remarkable 1,260% between 2008 and 2010. With the emergence of this new market, multiple new e-publishing companies have materialized, allowing authors to self-publish their novels online and quickly share their work with the public. Although e-publishing completely bypasses many traditional aspects of book distribution, it is still smart for potential authors to consider consulting with lawyers regarding negotiation of their e-publishing contracts. In fact, most e-publishers will refuse to finalize a deal unless legal counsel is involved.

When negotiating contracts with e-publishers, it is imperative that lawyers and authors be wary of subsidiary rights.  E-publishers typically request the authority to create book clubs and adopt an author’s work into foreign language translations. Although these rights can help increase an author’s target audience, they typically don’t benefit clients monetarily and should be reasonably limited. Additionally, when bargaining, it is essential that legal counsel be considerate of miscellaneous legal provisions, such as arbitration and matters of jurisdiction, which are mechanical in nature but practically important in the event dispute resolution becomes necessary.

When working with authors, it is imperative that counsel educates clients about the publishing laws that affect their business. For example, before pitching to e-publishers, it is essential that an author’s work contains no copyrighted quotations, song lyrics, or images. Unless the author obtains a license, the exclusion of these elements may lead to an expensive and time-consuming lawsuit. It is also important for authors to understand that e-publishers almost never sign a multi-book deal. Instead, contracts usually state that renewals are completely contingent on a first book’s sale performance.

In the e-publishing industry, lawyers typically act as an author’s agent. As such, it is the attorney’s job to make sure that authors recognize the differences between each major e-publishing company. For example, Amazon Kindle Direct Publishing (KDP) offers a 35% royalty rate on their standard contract, while BookBaby advertises an 85% royalty rate for their free agreement. Additionally, each e-publishing company will offer different packages of services. Continuing with the previous example, Amazon KDP Select allows authors to earn royalties every time their book is borrowed from the Kindle Owner’s Library. In exchange, the author must agree to distribute their piece exclusively through Amazon for 90 days. In contrast, BookBaby’s package will transfer an author’s novel into an e-pub file and give authors access to a social media marketing guide, coupons for book trailer productions companies, and guaranteed book reviews. Additionally, different companies allow authors to set their own prices while others limit who an author can publish under. Understanding the difference between each e-publisher’s services and package terms determines how an author gets paid for his/her work and what he/she gets in return for allowing a given e-publisher to take royalties. When searching for the correct e-publishing company, all of these considerations are paramount in determining which option is best for a given author.

As the e-publishing market becomes more expansive, it will become even more important for authors to appreciate the publishing industry’s complexity. With a strong knowledge base regarding the legal and practical implications of e-publishing, lawyers can help their clients find the right distributer while assuring that their work is well-protected.

Matt Wagner is a law clerk at Berenzweig Leonard, LLP who is currently studying Music Business and Songwriting at Belmont University.

What Employers Need to Know About the New Defend Trade Secrets Act

Trade secret issues arise daily in the workplace with nearly every employment decision, from employee hiring and firing, to every contract that contains a non-disclosure or confidentiality provision. President Obama today signed the Defend Trade Secrets Act (“DTSA” or the “Act”), with huge implications for employers, companies, and other trade secret owners. For the first time, the Act offers trade secret owners greater access to federal court, as well as broadly impacts employee whistleblower rights. The law is designed to go into effect on the day it is enacted and will apply to any misappropriation that occurs on or after that date. Since this new law is right around the corner, it is important to be aware of its various key provisions.


Access to Federal Court

First, the DTSA extends the current Economic Espionage Act, which criminalizes certain trade secret misappropriations, to create a private civil cause of action. Trade secret owners now have the option to bring trade secret lawsuits in federal court, whereas before trade secret misappropriation was purely a matter of state law. While the DTSA does not preempt the various state trade secret rights, it provides an additional layer of protection to help safeguard companies’ unique formulas and know-how. Because of the DTSA and state law overlap, employers need to understand and conform their practices to both the new and existing laws.

Whistleblower Immunity

Second, the Act gives new immunity to certain whistleblowers who turn trade secrets over to the government to investigate potentially illegal activity. This provision grants both criminal and civil immunity to those whistleblowers under both federal and state trade secrets laws. The DTSA also requires employers to notify workers in any contract that is related to trade secrets or confidential information of their rights to turn over confidential information or trade secrets to the government if illegal conduct is suspected.

Employers should especially keep this notice provision in mind if they are planning to pursue trade secret theft. Employers will not be able to obtain either punitive damages or attorneys’ fees if such notice was not given to employees. Besides whistleblowers, employers will also need to advise employees going forward that they may turn over confidential information to their attorneys or a court in a retaliation suit, provided the disclosure is filed under seal. In light of the DTSA’s new requirements and potential consequences, employers should review their policies for handling confidential information and whistleblowers that are provided to employees.

Civil Seizure Clause

Third, the DTSA also contains a novel seizure provision that in "extraordinary circumstances" allows plaintiffs to ask courts to order the seizure of any property "necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action" without a hearing or answer from the defendant. While this provision will be beneficial in providing employers with a forceful method to recover trade secrets from misappropriators, it should be used with caution. If a seizure is later found to be wrongful, the individual who was the subject of the seizure can seek damages such as lost profits.

Injunctive Relief against Former Employees

Lastly, while the DTSA does allow for injunctive relief, the Act makes clear that former employees cannot be restrained from working for a competitor unless it is clearly needed to protect the trade secret, and that the DTSA does not circumvent state law on restrictive covenants. One of the concerns raised against early versions of the Act was that it would empower employers to prevent employee competition. Specifically, the Act provides that injunctive relief that would “prevent (or place conditions on) a person from entering into an employment relationship” must be “based on evidence of threatened misappropriation and not merely on the information the person knows.” In addition, the injunctive relief cannot “otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade or business.”

While it is yet to be seen how the law will be interpreted, the DTSA has major implications for employers who possess and protect trade secrets. As such, employers should be mindful of the need to develop an approved process for handling the various provisions under the DTSA.

Sara Dajani is an Attorney with Berenzweig Leonard, LLP. She can be reached at sdajani@berenzweiglaw.com.

Judge Was Not Amused By Supervisor’s Smiley Face Emoticon

An executive secretary at insurance company Munich Re in New Jersey took extended leave under the federal Family and Medical Leave Act (FMLA) citing her asthma condition.  The company became suspicious that the employee was not really too sick to work, and hired a private investigator to follow her and videotape her public activities.  The investigator captured the asthmatic employee on video shopping at a mall and carrying boxes as she moved into a new home.  When the company saw this video footage, it made the decision to fire the employee for abusing its FMLA leave policy.

The employee sued Munich Re for violating her federal right to take FMLA leave for her asthma condition, claiming that the real reason the company fired her was because it was perturbed that she needed to be out on medical leave from time to time.  In explaining the damaging videos, the employee said her doctor had ordered her to stay active while out on leave, which was why she felt she could go shopping and help with the house move.  ]

During the litigation, the employee’s lawyer requested internal company e-mails sent during the timeframe leading up to the employee’s termination.  In one such e-mail, which was sent the day the employee was fired, her supervisor began with a smiley face emoticon, and asked “:-)) did Ray chat with you about Elaina?”.  Another supervisor responded with, “Yes he did.  Thank you for your help.  That deserves a big :-))!!!”  

The employee argued that the smiley face emoticons in the supervisors’ e-mails showed that the supervisors were all too happy to get rid of her, and merely used the videos as a way to make that happen.  But the company moved to dismiss the case, claiming that the smiley faces in the e-mails were innocuous at best, and that the company had solid grounds to fire the employee for abusing FMLA leave.

A federal judge in Camden, New Jersey refused to dismiss the fired employee’s lawsuit against the company for FMLA retaliation.  In doing so, the judge specifically called out the smiley face emoticons in the e-mails sent between the supervisors on the day of termination, and found that a jury could conclude that Munich Re was happy to terminate the employee because the FMLA leave was inconvenient for them—which is unlawful.  

This case is a timely reminder for companies that snarky remarks and unprofessional digs, whether expressed verbally or obliquely by use of emoticons (or their more refined cousins the emoji—i.e., J), have no place in workplace communications dealing with company business. 

Posted by Declan Leonard, Managing Partner of Berenzweig Leonard, LLP, DLeonard@BerenzweigLaw.com

Telecommuting Employees Can Pose Certain Legal Risks For Employers

United Excel Corporation, a Kansas company in the hospital construction business, employed a sales representative to solicit business from hospitals throughout the country.  At some point, the sales representative asked to work out of his home, which was located in Massachusetts.  During the three years that he worked from his Massachusetts home for United Excel, the sales representative never closed any business with hospitals in that state.

After closing a big deal for a hospital located in California, the sales representative got into a dispute over how much commission was owed to him by United Excel.  He sued United Excel in a Massachusetts state court, but the company sought to dismiss the case on the ground that the Massachusetts court had no jurisdiction over the Kansas-based United Excel for a dispute involving a project in California.  From the company’s perspective, the sales representative could well have worked from a home office in Timbuktu, as long as he closed business with hospitals around the United States.  The mere fact that the representative happened to live in a small town in Massachusetts shouldn’t mean that the company could be sued in that town’s courts, United Excel argued.

But a federal appeals court in Massachusetts recently decided that the home office where the sales representative worked was akin to a remote sales office for United Excel.  The court noted that United Excel provided equipment for the sales representative’s home office, and it placed phone calls and sent emails to the sales representative in Massachusetts during his employment tenure. The court said the fact that the sales representative never actually closed a deal for a project located in Massachusetts was not at all determinative, and that his actions in soliciting business all across the country (including Massachusetts) from his home office was enough for that state’s court to have jurisdiction over the employment case.

The key missing ingredient in this case was the fact that United Excel did not have a forum selection clause in its employment agreement with the sales representative dictating where a lawsuit must be filed.  If the agreement had said all disputes must be brought in Kansas where United Excel was headquartered, the Massachusetts case would likely have been dismissed.  All companies, and particularly those who allow employees to work remotely or who otherwise employ people out of state, should strongly consider having a forum selection clause as well as a choice of law provision.

Posted by Declan Leonard, Managing Partner of Berenzweig Leonard, LLP, DLeonard@BerenzweigLaw.com

Company and CEO Held Jointly Liable for Minimum Wage Violations

A federal district court in Pennsylvania has held American Future Systems, Inc., and its CEO jointly liable for Fair Labor Standards Act (“FLSA”) violations arising from the company’s break policy. That policy required employees to log off of their computers and forgo compensation for all breaks, even short ones lasting fewer than 20 minutes. The CEO, as a 98% owner of American Future Systems and the “final authority” for compensation and break policies, was found to be a joint employer and therefore personally on the hook for these FLSA violations.

The company’s written compensation policy, which had been in place since 2009, required employees to log off of their computers during all breaks, including short personal breaks to use the restroom or get a cup of coffee. Because the company only compensated employees for the time they spent logged into their computers, all breaks were rendered unpaid. Such a policy clearly contradicts the FLSA, which states that short breaks between 5 and 20 minutes are considered compensable work hours. As a result of failing to pay employees for their short personal breaks, American Future Systems allowed employee compensation to dip below minimum wage over the course of each pay period, prompting the lawsuit, which was brought by the U.S. Department of Labor.

While a company facing liability for violating FLSA minimum wage and recordkeeping requirements is nothing new, the fact that the CEO was held personally on the hook as a joint employer is an interesting wrinkle that business leaders should take note of. In this case, American Future Systems’s CEO was a principal owner of the company, had hiring and firing authority, controlled compensation and break policies, and was ultimately responsible for company strategy and the activities of its employees. By having that level of control over the day-to-day operations of American Future Systems, the CEO was liable, along with the company itself, as a joint employer. Complying with the FLSA is always imperative, but for owners who exercise a high degree of control over their businesses, this decision provides a new sense of urgency in the form of potential personal liability. It also highlights the importance of having employee handbooks and workplace policies reviewed from time to time, as seemingly innocuous policies such as “always log off from your computer before going on break” could result in significant consequences for the company as well as its owners.

Frank Gulino is an attorney with Berenzweig Leonard, LLP. He can be reached at FGulino@BerenzweigLaw.com.

"Don't Ask, Don't Tell:" New Virginia Law Limits Access to Employee’s Social Media Accounts

The use of social media has become pervasive in today's workplace. As a result, employers have a strong interest in making sure employees are following company policies and preserving the confidentiality of company information while online, and in maintaining a positive public image on social media−while being careful not to interfere with employees’ rights under Section 7 of the National Labor Relations Act. In addition, employers have a responsibility to investigate social media behavior if they become aware of alleged misconduct and to exercise due diligence to protect other employees. In a press release last year, the EEOC noted that employers’ oversight responsibilities to monitor and remedy workplace harassment could extend to social media. For example, if an employee uses a company laptop to post harassing or discriminatory comments about a co-worker, the employer may not escape liability under Title VII merely because the harassment happened online.

Concerned with their employees’ potentially detrimental social media activities and also in order to screen potential job candidates, many employers require access to their applicants’ and employees’ social media accounts. However, Virginia is now the nineteenth state to impose limits on employer access to such accounts. The new law, Va. Code 40.1-28.7:5, which took effect July 1, 2015, prohibits employers in Virginia from requiring current or prospective employees to disclose the usernames and passwords for their social media accounts. The law also prevents employers from requiring employees and applicants to permit managers and supervisors to "follow" them on social media. The law’s definition of “social media account” is broad and includes any personal account where users can create, share or view: videos, photographs, blogs, podcasts, messages, emails or website profiles or locations.

However, the law does carve out employer activities associated with compliance with federal, state, or local laws and employer investigations of certain misconduct. Therefore, an employer’s right to request username and password information is not affected where such information "is reasonably believed to be relevant to a formal investigation or related proceeding by the employer of allegations of an employee's violation of federal, state, or local laws or regulations or of the employer's written policies." Yet, if an employer exercises its rights under this investigatory exception, the employer is prohibited from using the employee's information for any other purpose.

If an employer inadvertently receives an employee's username and password to the employee's social media account through the use of an electronic device provided to the employee by the employer, the employer will not be liable for having the information.  However, the employer is required to refrain from using the information to gain access to an employee's social media account.

Employers should review their social media policies and hiring procedures to confirm they are in compliance with this new law. Employers should not ask for, or seek access to, employee and/or applicant social media accounts unless there is a solid business justification that fits squarely within the exceptions provided. Employers should also remember that just because an action may not violate this new law, it does not insulate the employer from liability under the NLRA or other employment laws.  Facebook, Twitter, and other social media comments can be protected concerted activity or union activity under the NLRA.

Sara Dajani is an associate attorney with the business law firm, Berenzweig Leonard, LLP. Sara can be reached at sdajani@berenzweiglaw.com. 

Employee Can Sue More Than One Employer For Discrimination

For the first time, the U.S. Court of Appeals for the Fourth Circuit has expressly adopted the joint employment doctrine for Title VII cases.  Now, an employee can potentially go after more than just the company that pays her when bringing a claim for unlawful discrimination or harassment.  The Fourth Circuit joins the Second, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits in holding that more than one company can be held liable for an employee’s claim under Title VII.

Brenda Butler was hired by ResourceMFG, a temporary staffing agency, to work at the Drive Automotive Industries (“Drive Automotive”) factory in South Carolina.  During her time at the Drive Automotive factory, Ms. Butler wore a ResourceMFG uniform, her paycheck came from ResourceMFG, she parked her car in a special ResourceMFG lot, and ResourceMFG had the power to discipline and fire her.  But Drive Automotive set Ms. Butler’s work schedule and arranged portions of her training, and Drive Automotive employees supervised Ms. Butler when she was on the factory floor.

Ms. Butler claimed that one of her Drive Automotive supervisors verbally and physically harassed her on the job.  She said that the supervisor commented on many occasions about her physical features, particularly her rear end, even giving her the nickname “big booty Judy.”  According to Ms. Butler, the supervisor also rubbed up against her in a sexually suggestive way.  She complained about the sexual harassment to management at ResourceMFG, but she says they did nothing.  After further complaints from Ms. Butler, Drive Automotive made a request to Resource MFG that she be terminated.  Shortly thereafter, Ms. Butler received a call from ResourceMFG terminating her employment at Drive Automotive.

In response, Ms. Butler brought Title VII claims against not only her official employer, ResourceMFG, but also against Drive Automotive, since it was a Drive Automotive supervisor who she claimed sexually harassed her.  A South Carolina district court dismissed Ms. Butler’s claims against Drive Automotive, after determining that ResourceMFG was her sole employer for purposes of liability under Title VII.  But on appeal, the Fourth Circuit reversed this dismissal of Ms. Butler’s Title VII case against Drive Automotive, after finding that Drive Automotive could be liable under the joint employer doctrine.

This decision is the first time that the Fourth Circuit has expressly adopted the joint employer doctrine for Title VII cases, joining several other federal appellate jurisdictions across the country.  The Court reasoned that, given the remedial purpose of Title VII in stamping out discrimination in the workplace, the joint employer doctrine prevents a company from evading liability by hiding behind another employer such as a staffing agency.

In order to determine whether a company is a joint employer for purposes of liability under Title VII, the Fourth Circuit adopted what it called the “hybrid test,” which is comprised of nine enumerated factors, to consider the level of control a company has over a particular worker.  The Court said that of those nine factors, the most important are the following three: 1) whether the entity has the power to hire and fire; 2) whether the entity has supervisory power over the employee; and 3) whether the entity controls the place and way in which the employee performs the work.  The Court made it clear that the degree of control that an entity exercises over a worker remains the principal guidepost for determining joint employment under Title VII.

While the impact of this case for staffing companies is obvious, this case could reverberate far beyond the staffing industry.  In the government contracting arena, it is common for prime contractors to use subcontractors whose employees are closely controlled by the prime.  Similarly, in the construction industry, the employees of prime contractors and subcontractors are often closely intertwined.  These types of companies will need to be extra careful not to exercise too much control over non-employees, or they may find themselves on the receiving end of a Title VII suit.

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com. 

Employee Who Could Not Get Along With Co-Workers Was Not Protected By Federal Disabilities Law

Marissa Walz was a long-time employee of financial planning giant Ameriprise, and for most of her time there she received positive reviews.  But more recently, Walz began to engage in erratic and disruptive behavior due to a bipolar condition, which she did not disclose to Ameriprise.  She interrupted meetings, disturbed her co-workers, and disrespected her supervisor.  During one company meeting, Walz told a co-worker to “stop interrupting me, you don’t know what you are talking about.”  When the supervisor confronted her about her inappropriate conduct, Walz rudely responded that “no one thinks your position is necessary” and “there is no sense of direction since you came on board.”

After further complaints, Walz was issued a formal behavioral warning.  In response, Walz applied for and was granted a leave of absence under the Family and Medical Leave Act (FMLA).  Because Ameriprise’s FMLA policy was administered by a third party vendor, the company never learned the mental health basis for why Walz went out on leave.  When Walz returned, she presented a note from her doctor simply saying that she “has been stabilizing on her medicine” and could work full-time.  But a few months after her return from FMLA leave, Walz began to engage in the same disruptive behavior as before, and Ameriprise fired her.

Watz sued Ameriprise, claiming that her firing was due to her mental disability in violation of the Americans with Disabilities Act (ADA).

But a federal appeals court recently ruled that because Walz could not get along with her co-workers, she could not perform an essential part of her job and therefore was not protected under the ADA.  The court rejected Walz’ argument that Ameriprise should have known about her mental disorder due to her taking FMLA leave and the note from the doctor.  The court acknowledged that Walz’ supervisor had testified in his deposition that he assumed she was being treated for her mental health, but still found that the company was not placed on notice of any limitations that Walz had in the workplace.  Interestingly, Walz argued that Ameriprise should have forced her back on FMLA leave when she began acting erratically again, but the court said there is no duty for an employer to force an employee out on leave.

Declan Leonard is a managing partner at the Washington, DC business law firm, Berenzweig Leonard, LLP. Declan can be reached at DLeonard@BerenzweigLaw.com.

Lawyer not liable when his independent contractor process server was killed serving divorce papers

A Virginia lawyer hired a process server as an independent contractor to personally serve legal papers on a husband in a tense divorce case.  The lawyer knew that the husband owned a gun and had expressed concern that the husband could potentially become violent, but he did not relay this information to the process server.  The process server tried a number of times to personally serve the husband without success.  The lawyer got wind that the husband might try to leave the country, so he told the process server to do what he had to do to serve the husband quickly.  During his final attempt at service, the process server was shot and killed by the husband, and his body was found by police three days later in the trunk of his own car in Harrisonburg, Virginia.

The process server’s widow sued the lawyer for wrongful death, on the ground that he should have warned the process server that the husband was potentially dangerous and carried a gun.  The lawyer countered that because the process server was an independent contractor and not an employee, the lawyer had no legal duty to relay what he knew about the husband to the process server.

Last week, the Supreme Court of Virginia ruled that the lawyer had no legal duty to warn the process server about the potentially dangerous situation, and therefore that the lawyer was not liable under a negligence theory for the process server’s death.  As the court noted, in most situations a person does not have a legal duty to warn or protect another person from the criminal acts of a third person.  It is only when a special relationship exists that a person may have a duty to warn or protect another from danger.  Some of the special relationships that Virginia has recognized as creating such a duty are: employer/employee, hospital/patient, innkeeper/guest, and common carrier/passenger.  In this case, the widow was asking the court to expand this duty to the employer/independent contractor relationship, but the court declined to do so in this particular case.  The court noted that the process server was experienced in his job, and that, while he took some direction from the lawyer, for the most part he retained control over how he did his work.

This case would likely have been decided in the widow’s favor if the process server had been an actual employee of the law firm and performed his services specifically at its direction.  Therefore, employers must be aware that they do have a special relationship with their employees, and should take reasonable precautions to make sure their employees operate in a safe work environment and are warned of any unique risks they may face on the job.

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com. 

Cantankerous Employee With ADHD Not Considered Disabled

A police officer in Oregon who had trouble getting along with his fellow officers was described in his performance reviews as “abrasive,” “intimidating,” and “overly aggressive.”  After a subordinate officer filed a grievance against him for poor treatment, the police officer was suspended.  During the ensuing investigation, the police officer provided a diagnosis from a clinical psychologist that he suffered from adult ADHD which led to his poor interpersonal skills.  He requested “all reasonable accommodations” to help him cope better in the workplace.  But the police force found that his ADHD diagnosis was no excuse for causing a hostile work environment, and terminated him.

The police officer sued for disability discrimination under the Americans with Disabilities Act (ADA), claiming that he was fired because he had the disability of ADHD which limited his ability to get along with others in the workplace.

The police offer did win at trial and was awarded over three quarters of a million dollars as damages, but a federal appeals court recently reversed that sizable jury award after concluding that the police officer was not disabled as that term is defined under the ADA.  The appeals court drew a distinction between an inability to “get along” with others and the inability to “interact” with others, and that only the latter could rise to the level of a disability.  The court found that the police officer did have trouble getting along with his co-workers, but there was no evidence that he suffered from social withdrawal or problems with communication that would severely impact his ability to interact with others to merit protection under the ADA.

A word of caution: This case does not stand for the proposition that adult ADHD is not a disability under the ADA.  Rather, the courts are clear that employers must consider the facts and circumstances of each particular employee when making this determination.

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com.

A Cautionary Tale For Employers to Make Sure Your FMLA Policy Is Up-To-Date

A recent case from the 6th Circuit shows just how important it is to make sure your Family and Medical Leave Act (“FMLA”) policy is up to snuff. In the case of Tilley v. Kalamazoo County Road Commission, an employee requested time off after a suspected heart attack. The company granted the request and sent the employee FMLA paperwork, representing that he was eligible for FMLA leave. Additionally, the company’s personnel manual contained a statement that employees who “accumulated 1,250 work hours in the previous 12 months” were eligible for FMLA leave, yet importantly omitted the third requirement for FMLA eligibility, namely that there be “50 workers within a 75 mile radius” in order to be covered. The employee was ultimately terminated after failing to complete a specific task on time, which the employee claimed was due to his need to take time off. The employee filed a lawsuit claiming that the company interfered with his right to FMLA leave and retaliated against him for taking FMLA leave.

The lower court dismissed the lawsuit relying on the undisputed fact that at the relevant time, the company did not employ at least 50 workers within a 75 mile radius - a necessary condition for FMLA eligibility. Therefore, because all three criteria needed for FMLA eligibility were not met, the district court dismissed the employee’s FMLA claim. The employee appealed the decision and the US Court of Appeals for the 6th Circuit reversed and held that the employee’s claim must proceed to trial. The 6th Circuit ruled that because a reasonable person in the employee’s shoes could reasonably believe that he was protected by the FMLA due to the company’s personnel handbook and its own misstatements regarding FMLA eligibility, the employee was allowed to proceed with his FMLA claim. In essence, even though the employee was technically ineligible for FMLA leave, because the employer made misrepresentations that the employee reasonably relied upon, the court found that the FMLA claim would survive and go to trial.

This case shows that courts can be extremely unforgiving when mistakes are made regarding coverage of federal employment laws. Misstatements made either in employee handbooks or providing the wrong paperwork can serve as a reasonable justification to allow an otherwise ineligible FMLA claim to proceed to trial. This case should serve as a wake-up call for employers to heed their attorneys’ advice to frequently make sure their employee handbooks are up-do-date. In the case above, a quick consult with their attorney could have saved thousands of dollars in litigation fees that the company is now faced with because they had an incomplete employee handbook.

Nick Johnson is an attorney with Washington, DC business law firm Berenzweig Leonard, LLP. He can be reached at njohnson@BerenzweigLaw.com. 

EEOC Suffers Defeat in Ongoing Attack on Separation Agreements

The EEOC’s 2013-2016 Strategic Enforcement Plan identified as one of its top priorities the regulation of overly broad separation agreements that allegedly interfere with employees’ Title VII rights to file discrimination charges. Recently, the agency sued several employers for using what appear to be fairly standard separation agreements. The EEOC’s lawsuit against CVS, which has received the most attention, was dismissed last month when an Illinois federal court granted CVS's Motion for Summary Judgment on procedural grounds. Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., No. 14-cv-863 (N.D.Ill.2014).  While this was a technical ruling, it bodes well for employers that this standard separation agreement was not invalidated, and in fact, the Court appeared to criticize the agency’s case on the merits. Nonetheless, we do not expect the EEOC to back off from its new aggressive position, and employers should conduct a careful review of their separation agreements.

The CVS case was closely followed by employers and employment law attorneys alike because the terms of CVS's Severance Agreement are commonly used in separation agreements, namely, a cooperation clause, a non-disparagement clause, a confidentiality requirement, and a release with a covenant not to sue. The EEOC argued that the agreement was overly broad, misleading, and unenforceable because it interfered with an employee’s right to file a charge, even though the agreement provided that it did not prohibit the employee from participating in an investigation by a federal, state, or local agency that enforces discrimination laws. This disclaimer language is routinely included in separation agreements, and was previously deemed enforceable by the EEOC.  As such, many employers’ separation agreements were put in jeopardy by this case. If these terms were declared unenforceable, the incentive for most employers to pay employees monetary settlements in exchange for a release of claims and an agreement to not sue would be lost. In view of this dismissal of the EEOC's lawsuit, this will not be the case—for now.

The Court did not reach the issue of whether or not the terms of CVS's Severance Agreement are enforceable.  Instead, the lawsuit was dismissed on the ground that the EEOC did not fulfill the administrative prerequisite of attempting to conciliate with CVS before filing the suit.  Still, the judge added footnotes, that although not binding authority, seemingly do not bode well for the EEOC’s position. The judge noted the disclaimer to CVS’s general release language, the passage protecting the individual’s right to participate in agency proceedings, and reasoned that the language plainly encompasses the employee’s right to file an EEOC charge.

Notwithstanding the procedural defeat in this case, the EEOC has indicated that it continues to hold to its position, and may appeal the dismissal to the 7th Circuit. Looking ahead, we will wait and see what happens with the EEOC’s lawsuit in Denver against College America for its use of a severance agreement that also has non-disparagement as a condition for paying severance, and required that employees represent that they have no pending claims, including administrative actions, against the company. Ironically, the employee at issue in the College America case filed three EEOC charges after she signed the purportedly restrictive agreement. In the meantime, it is more important than ever for employers to have a well-crafted and comprehensive separation agreement that will withstand challenge.

Sara Dajani is an associate attorney with Berenzweig Leonard, LLP. She can be reached at sdajani@berenzweiglaw.com.

Can You Fire An Employee for A Facebook “Like”?

Since the arrival of social media sites such as Facebook and Twitter, employers have worried about protecting themselves from disparaging comments by their employees. Meanwhile, the National Labor Relations Board (NLRB) has intensified its scrutiny of employers’ social media policies and whether such policies prohibit employees from discussing the terms and conditions of their employment. The National Labor Relations Act (NLRA) gives employees the right to act together “to improve terms and conditions of employment or otherwise improve their lot as employees,” and social media has become one of the main avenues through which employees do so. An employer who violates this right and disciplines or fires an employee for engaging in protected activity faces big penalties, including having to reinstate the employee.

In a series of rulings over the past few years, the NLRB has taken the position that social media sites are “virtual water coolers,” and whatever employees have a right to discuss around the workplace with respect to the terms and conditions of employment, they may also discuss on social media. In an August 22, 2014 decision, the NLRB decided that “liking” a Facebook post that deals with working conditions is also “protected concerted speech.” Three D, LLC (Triple Play), 361 NLRB No. 31 (2014). The NLRB found that Triple Play Sports Bar and Grille violated the NLRA when it terminated two employees for participating in a Facebook discussion about the additional state income taxes they owed because of the employer’s withholding mistakes, including the one who had only “liked” the post.

The NLRB concluded that the Facebook discussion was protected activity because “the purpose of [the] employee communications is to seek and provide mutual support looking toward group action to encourage the employer to address problems in terms or conditions of employment, not to disparage its product or services or undermine its reputation….” The judge found that the employee’s “like” “expressed his support for the others who were sharing their concerns and therefore ‘constituted participation in the discussion that was sufficiently meaningful as to rise to the level of’ protected, concerted activity.” In balancing the interest of Triple Play’s owners in preventing harmful comments by their employees, the NLRB held that the comments were not “so disloyal” as to lose protection under the NLRA.

The NLRB also reviewed Triple Play’s Internet/Blogging Policy, and found that restricting online communications involving “confidential or proprietary information about the Company, or…inappropriate discussions about the company, management, and/or co-workers” violated the NLRA because it could reasonably include protected discussions. While the NLRB acknowledged that the policy did not “explicitly restrict protected activity,” it was still problematic because employees could reasonably interpret it as “proscribing any discussions about their terms and conditions of employment [that the employer] deemed ‘inappropriate.’”

As this decision makes clear, because a “like” standing alone can be protected, employers should tread carefully when considering taking action against employees for their social media activities and employer social media policies should be narrowly tailored to avoid prohibiting protected discussion. The NLRB will likely continue to scrutinize employer social media policies, and now is the time for employers to assess how to properly limit and respond to employees’ social media use.

Sara Dajani is an Associate Attorney with the DC region business law firm of Berenzweig Leonard, LLP. Sara can be reached at sdajani@BerenzweigLaw.com. 

Depressed Employee Wants Irregular Work Hours

A budget analyst for the Department of Agriculture with a long history of severe depression asked the agency for permission to work irregular hours each day depending on how she was feeling on a given day.  On some days, the depressed employee woke up too sick to work until the afternoon, when her condition would improve and she could get her work done; on other days, she was able to work in the morning but then had to stop in the afternoon when her depression got too bad.  Although she missed a lot of time at work due to her illness, the employee always completed her assignments on time and there were no complaints about her work product.  Even so, the agency insisted that she be at work during regular hours like her colleagues, and they denied her request for an irregular schedule.

The employee sued for disability discrimination, arguing that as long as she got her work done, it should not matter when during the day she did her work.  The agency countered that it should be able to insist that its employees be at work during normal set hours each day.

The employee’s position prevailed.  The federal appellate court for the District of Columbia recently ruled that an irregular schedule, such as the one sought by the budget analyst in this case, can be an appropriate accommodation under federal disability law.  The appeals court rejected the agency’s argument that irregular work schedules pose a per se unreasonable burden on employers.  Rather, there must be a fact-specific inquiry done on a case-by-case basis to see whether an irregular work schedule will work in a particular workplace for both the employer and disabled employee.  The appeals court noted that technological advances and the expansion of teleworking have already contributed to a more flexible work schedule for many employees.

Most companies want the discretion to set regular work hours for their employees, and this decision still allows them to do so as long as companies can show that a predictable work schedule is essential to the job an employee is doing.  In other words, companies need to be able to explain why it is critical for all employees, even disabled ones, to work during set hours.  Some reasons might include fostering workplace discussions or ensuring that employees are responding to client communications in a reliable and timely manner.  Such reasons should be conveyed to any employee who is seeking a deviation from his or her normal work schedule.

Declan Leonard is a Managing Partner of Washington, DC area business law firm Berenzweig Leonard, LLP. Declan can be reached at DLeonard@BerenzweigLaw.com.

Company Cannot Prohibit Employees From Disclosing The Personal Contact Information Of Other Employees

Tiffany & Company, the famed jewelry store, has a confidentiality policy that states, among other things, that its employees are prohibited from publicly disclosing other Tiffany employees’ contact information, including their names, addresses, telephone numbers, and e-mail addresses.  Though Tiffany is a non-union workplace, its policy recently came under scrutiny by the federal National Labor Relations Board (NLRB) after it received a complaint that the policy could interfere with an employee’s federally protected right to make the workplace better.  Tiffany countered that employment records are proprietary to the company, and allowing public disclosure of personal contact information could violate the privacy rights of its employees.

Tiffany’s policy was recently deemed unlawful.  According to the NLRB, the policy could prevent an employee of Tiffany from sharing co-worker information with a prospective union potentially looking to organize the workforce at Tiffany.  There was no evidence presented of any such union activity afoot at Tiffany, but the NLRB found that the mere existence of the confidentiality policy might chill an employee from collaborating with a union to organize at Tiffany.  The NLRB did caution that an employee would not be permitted to unlawfully access Tiffany’s employment records to get the contact information.  But if the employee was able to obtain employee contact information in the normal course of work, Tiffany cannot have a policy that prohibits the employee from publicly disclosing that information.

This is yet another case that reflects a growing trend in decisions by the NLRB of clamping down on companies that seek to restrict employees’ public discussion of workplace matters.  Companies need to carefully review their handbook and employee contract provisions to make sure they can withstand legal scrutiny by the federal government.

Declan Leonard is a Managing Partner of Washington, DC area business law firm Berenzweig Leonard, LLP. Declan can be reached at DLeonard@BerenzweigLaw.com.

FBI’s More Rigorous Physical Testing For Male Applicants Deemed Unlawful Gender Discrimination

All new applicants for the FBI have to pass a physical fitness test in order to be hired as an agent.  Men have to do a minimum of 30 push-ups, while female applicants only have to do 14 push-ups.  A male applicant, who had been selected “leader” and “spokesperson” of his applicant class by his peers, passed all other tests to become an agent with the FBI.  But he could only do 29 push-ups—one shy of the minimum requirement-- and therefore, he did not get an agent position with the FBI.  

He sued, arguing that the FBI’s higher push-up requirement for men than women was discriminatory.  The FBI responded that the different push-up requirement merely reflects the innate physical differences between men and women, and the FBI needs to ensure that all new agent hires have the requisite physical stamina to do the job.

A federal judge in Alexandria, Virginia found that the higher push-up requirement for male applicants was indeed discriminatory based on gender.  The judge recognized that in some instances, it might be permissible to have different physical fitness tests for men and women where the job requires men to exert more physical strength and stamina than women.  But in this case, the FBI expects both male and female agents to perform the same physical tasks at the same level of job performance.  Furthermore, the FBI does not require ongoing physical fitness testing by agents after they are hired.   Therefore, the FBI could not justify its policy of making men do more push-ups than women in order to be hired for the same position.

Declan Leonard, Managing Partner of Berenzweig Leonard, LLP, can be reached at DLeonard@BerenzweigLaw.com.

Employee’s Facebook Posting Not Enough To Put Her Employer On Notice Of Sexual Harassment

A restaurant employee, who claimed she was groped and fondled by a fellow employee, posted her complaints about the poor working conditions at the restaurant on Facebook.  The Facebook page was one that had been set up by employees of the restaurant to communicate about scheduling issues, but it also contained posts on problems in the workplace.  The employee conceded that she did not directly inform management at the restaurant about the sexual harassment prior to her termination, but she said that posting her complaints on the employee Facebook page was enough to put the restaurant on notice of what was going on.  She sued the restaurant for sexual harassment.

A federal judge in Indiana ruled that simply posting the complaints on a Facebook page set up by restaurant employees was not enough to show that the restaurant had notice of the conduct in order to find it liable, and dismissed the claim.  The judge noted that the restaurant employees made a concerted effort to keep restaurant management off of the Facebook page.  The judge also pointed to the fact that the restaurant had a specific handbook provision directing employees to report all incidents of harassment to management, and even had a hotline that employees could use for anonymous reporting.  Because the employee did not follow these established procedures for reporting the harassment, the judge refused to hold the restaurant liable.

This case underscores just how important it is for employers to have an established written policy for employees to use to report complaints, and to make sure that the policy is followed.

Posted by Declan Leonard, Managing Partner of Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com.

Company Facing Age Discrimination Claim after Offering Conflicting Reasons for Terminating Employee

James Pierson worked at the Tennessee plant of a large national printing company for nearly forty years, when he was suddenly laid off at the age of 62. The company initially told Pierson that his layoff was due to a company-wide cost-cutting move, and that others were also being laid off to save the company money. But a human resource manager at Pierson’s plant prepared a document in support of the layoff that described Pierson as not being a “team player” and as lacking good interpersonal skills. At no time did anyone at the company mention Pierson’s age or longevity at the company as a reason for the layoff.

Pierson sued the company for age discrimination, but a Tennessee federal court dismissed the case prior to trial because Pierson was not able to point to any statement or document where the company took his age into account during the process of the layoff. Pierson appealed the dismissal of his case, and he won the appeal.

The federal appeals court in Tennessee ruled that because the company offered several different reasons to justify its decision to lay Pierson off, a reasonable jury could infer that these shifting reasons were intended to cover up the real reason for his lay-off: that being age discrimination. So even though there was no evidence of age discrimination presented to the court, the fact that the company did not speak with a unified and consistent voice as to why it laid Pierson off opened the company up to legal liability for age discrimination.

This case underscores just how critical it is for companies who are conducting a layoff or termination to be consistent from start to finish about why it is taking the personnel action. Even if the real reason for the termination is poor performance or misconduct by the employee, the company needs to make that reason clear at each phase of the separation process, or risk potentially exposing itself to legal liability for discrimination.

Declan Leonard is a Managing Partner of the business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com.

Daughter’s Facebook Post Reveals Father’s Breach of Settlement, Costing Dad $80,000

Confidentiality clauses are typical in settlement, severance, and separation agreements, as employers typically want to avoid a situation where a former employee openly discloses the amount of a settlement or severance payment. Employers often offer significant monetary consideration in exchange for, among other things, the employee’s discretion. Recently, a Florida appeals court found that a former school headmaster violated the terms of a confidential age discrimination settlement with the school, after his daughter jokingly mentioned the settlement in a Facebook post saying “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.” The settlement required the employee and his wife not to reveal the existence and terms of the settlement agreement to anyone other than their attorneys or professional advisers. As a result of his daughter’s gleeful disclosure, the employee’s payout was reduced by $80,000!

For employers, this case highlights the importance of including confidentiality language in settlement agreements which clearly communicates what conduct is prohibited and who can learn information about the settlement. In addition, if an agreement indicates that others are expressly permitted to learn of the agreement’s terms, such as a spouse or immediate family member, it is prudent to also specify that a breach by any of those individuals will be considered a breach by the employee, and as a result, will subject the employee to the same penalties. Moreover, adding an express reference to social media may be worthwhile. The agreement at issue in the Florida case did not, and it took two courts to finally determine, much to dad’s chagrin, that disclosure on Facebook constituted a breach.

The case also shows a willingness of courts to enforce reasonable confidentiality terms, especially in a situation where the result of the breach is exactly the type of harm the company sought to prevent. When considering what types of penalties to include for a breach, it is important to ensure that the penalty is not oppressive and/or punitive. In this case, the company paid the employee the agreed-upon back pay and attorneys’ fees and sought only to recover the amount provided for punitive damages. However, a court may be less likely to enforce a penalty for a breach that goes well beyond the amount contemplated by the settlement agreement.

Lastly, as this case demonstrates, even inadvertent disclosures, whether online or in some other forum, can prove costly and result in legal and financial liability. Consequently, companies should take proactive steps to prevent such disclosures. For instance, companies should put physical and electronic safeguards in place to protect confidential information, only disclose confidential information to employees with a need to know, and if such information is disclosed, ensure that employees understand their obligations to keep the information confidential.  Following basic rules and common sense can avoid odd conclusions the dad was forced to live with in Florida.

Sara Dajani is an Associate Attorney with the DC region business law firm of Berenzweig Leonard, LLP. Sara can be reached at sdajani@BerenzweigLaw.com.