Author Archives: Jason Gilbert, ESQ

New Law Regarding Franchise Joint Employer Liability

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The Office of the General Counsel of the National Labor Relations Board (NLRB) recently issued 13 complaints against McDonald’s franchisees as well as their franchisor, McDonald’s USA, LLC alleging various labor law violations.  The complaints follow the NLRB General Counsel’s announcement in July 2014 that McDonald’s USA may be held to be liable as a “joint employer” for unfair labor practices committed by its individual franchisees. This represents a departure from a long-standing precedent regarding franchise joint employer liability.

The 13 complaints allege that the individual franchises violated their employees’ right to engage in protect concerted activity. In other words, they took actions against them for engaging in activities aimed at improving their wages and other terms and conditions of their employment. This includes participating in nationwide fast food worker protests during the past two years. If successful, this would mean that under certain circumstances, a franchisor can be held liable for any unfair labor practices perpetrated by any of its franchisees. Such a precedent would have have a significant impact on franchise joint employer liability.

The NLRB posted on its website a “McDonald’s Fact Sheet” in which it  claims McDonald’s USA “through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees” sufficient to share liability for its franchisees’ violations of the National Labor Relations Act.

The results of these complaints will not be determined for some time. Franchisors should take note, however, there are steps a franchisor can take to mitigate its risk of being declared a joint employer of its franchisees’ employees under the current law, as well as potentially under any new law.  These steps will also lessen the risk of a finding of common law vicarious liability for a franchisee’s employment practices in most states.

For more information regarding franchising and/or ways to avoid being declared a joint employer and therefore avoid liability for a franchisees’ employment issues call Gilbert Law Group today. 631-630-0100.

An Epic Heist: Nike Trade Secrets and Breach of Non-Compete

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Nike has sued three former employees who left to work for Adidas. The company is suing for breach of contract, theft of trade secrets, fraud, conspiracy and more. In the Complaint, Nike details fairly shocking allegations against the defendants who launched a plot to leave the Company, steal numerous Nike plans and products and then parlay that into lucrative new careers at Adidas.

The three employees all have a relatively long tenure at Nike. Two of the defendants have worked at Nike for 9 years. The remaining defendant has worked there for 6. Their collective experience covers soccer, football, basketball, cross-training, women’s apparel, running. All three of them climbed the corporate ladder. It is unsurprising that the defendants signed agreements that contained non-compete and non-disclosure provisions. Those provisions themselves were quite reasonable: a one-year non-compete, a one-year non-solicitation and a two-year non-disclosure.

During their years at Nike, all three of these individuals exemplified a great deal of talent and intellect—which explains them reaching such high-level positions within such a major corporation. But greed and arrogance can quickly cancel out other positive qualities like talent and intellect. In April 2014, the defendants began executing the plan for their departure from Nike.

Noteworthy is the fact that defendants launched this plan while still working for Nike. In May 2014, after one of the defendants had a visa issue, Nike paid more than $50,000 to relocate him and his family to Italy, on the understanding that one of the defendants would remain employed with the Company long-term. Upon securing Nike’s commitment to fund his relocation to Italy, the defendants allegedly discussed how the move to Italy would serve their scheme well because Italy was one of those “countries where [Nike’s] non-compete is difficult to enforce.”

While still at Nike, the defendants signed lucrative deals with Adidas. Shortly after resigning from Nike, the defendants began a sloppy attempt to steal as much Nike information as possible and then destroy any evidence.  One defendant copied all of his laptop’s contents onto an external hard drive, then damaged the laptop to a point he thought would render it inoperable and shipped it back to Nike. The defendant sent an email to his personal email address containing a zip file with design drawings for an unreleased shoe tied to a prominent, Nike-sponsored athlete. Unlike in most such instances, where the plaintiff offers vague assertions about confidential information and trade secrets, the materials at issue in this case are certainly confidential and  trade secrets. Between their collective efforts, the Defendants walked away from Nike with a treasure trove of information, including:

  • High-level strategic development plans for the next 3 to 4 years. These plans included proposed and prospective product offerings and the timing of releases.
  • Unreleased product design materials for the next 2 to 3 years. This included models, sketches and designs for soccer footwear and other soccer related products (e.g. team uniforms). These design plans included very detailed information on fabrics, cuts, colors, manufacturing and more.
  • Financial data including both a historical breakdown of all Nike footwear sales by product for the past year and a forward looking projection of growth my product for the next twelve to eighteen months.
  • Documents regarding Nike’s product marketing strategies including documents on product promotions, in-store presentations, pr campaigns, product launches, plans for specific sponsored athletes and plans for specific Nike-sponsored sports teams.

Nike is suing the defendants for every claim imaginable, and rightfully so. Turns out, Nike was, rather obviously, able to retain enough electronically stored data to present a very compelling Complaint. In many cases, especially many non-compete and trade secret cases, there is another side to the story. In many cases, the Complaint talks vaguely about wrongful conduct, confidential information and trade secrets, but never really gives specifics. Here, Nike’s complaint is filled with specific, credible and highly damaging allegations. There is unlikely to be anything the Defendants can say that would mitigate their liabilities.

Employers, Religious Discrimination, and Accommodation

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The U.S. Supreme Court is about to clarify an employer’s obligation to provide accommodations for religious discrimination under Title VII.

In E.E.O.C. v. Abercrombie & Fitch Stores, Inc., the Court will determine whether a retail store in Woodland Hills Mall in Tulsa, Oklahoma discriminated by failing to accommodate a young woman who was refused hire as a “model” or sales associate because she wears a head scarf, or hijab, for religious reasons. The head covering violated Abercrombie’s “Look Policy,” which applies prohibits employees from wearing certain attire, such as black clothing and caps. Violation of the Look Policy subjects an employee to disciplinary action, up to and including termination.

Pursuant to Abercrombie’s policy, the assistant store manager who interviewed the applicant did not ask her questions regarding her religion. Moreover, the applicant never referenced her head scarf, and she did not ask any questions regarding the dress code, although it was discussed.

After the interview, the assistant store manager was advised that the applicant should not be hired because the head scarf was inconsistent with Abercrombie’s Look Policy.

The EEOC brought suit for religious discrimination insofar as it failed to hire her because she wore a head scarf and that it failed to accommodate the applicant’s religious beliefs.

The trial court found that the store did in fact discriminate based on religion. Of interest is the fact that the trial court reasoned that the decisive factor was not whether the applicant explicitly requested an accommodation, but whether the employer had enough information to be on notice that a religious accommodation was needed.

The truth is it would have been easy for Abercrombie to avoid this lawsuit. If they had been properly advised, they would be aware of simple steps that can be taken which would not give rise to a claim of religious discrimination and failure to accommodate. Employers facing discrimination issues should always consult a knowledgeable attorney.

If you or someone you know is facing issues relating to discrimination based on religion, race, gender, sex, ethnicity, or disability call Gilbert Law Group today at (631)630-0100.

Offensive, Discriminatory Costumes At Work: From the Racist to the Racy

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Halloween is a good time for children and adults alike. But what the holiday represents to children can be far different than what adults look forward to come the end of October. Typically, adults perceive Halloween as an opportunity to get creative with their costumes while taking advantage of the fact that it is easier to get away with wearing an outfit which may not be considered appropriate at any other time of year. In one’s free time and in the company of their friends and family, surely this mindset should not be a problem, most of the time. Frequently however, employees attending Halloween parties at the office or at a work function take it too far by wearing costumes which could easily offend a co-worker. In doing so, one can open themselves or their employers up to liability for harassment and discrimination and and can be disciplined or terminated.

Costumes which should not be worn to work include those that are overly violent, gruesome, controversial, insensitive or grotesque. Some examples include bloody zombies, terrorists, police brutality victims, ebola patients, etc.

Other categories of costumes which will not be tolerated in the office or at a work event range from the racist to the racy. Obviously, if you dress as a nazi or kkk clan member, and the employer allows it, that can be considered blatant and willful discrimination based on race, color, national origin, etc. Likewise, inappropriate, sexually lewd or explicit costumes will lead to allegations of sexual harassment.

Another issue to consider is those employees who may be religious. If employees dress as the anti-christ, or a character from the Book of Mormon, it may lead to some claiming discrimination based on religion.

From an employer’s point of view, one need not be the costume police. An employer does not have to give a list of costumes which will not be tolerated. If you are going to have an event, tell employees that they are to use proper judgment and common sense; that any costumes deemed to be offensive or inappropriate, will lead to a supervisor inevitably telling the employee to change. It is always helpful to encourage employees to ask questions in advance. If there is an HR Department, it may be a good idea for them to speak to an HR rep before they show up in a hazmat suit, as not everyone will find that to be funny or appropriate. It is also important that employers have a policy as it relates to social media. Posting photos of Halloween costumes at work can lead to a negative perception of the company among other unintended legal consequences.

For questions or concerns relating to discrimination, sexual harassment, other workplace, or labor and employment issues, call Gilbert Law Group: (631)630-0100.

Sex Discrimination and Frozen Eggs In the Workplace

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Discrimination because of sex related to pregnancy is unlawful under both Federal and State law. See, Civil Rights Act of 1964, § 701(k), 42 U.S.C.A. § 2000e(k), McKinneys Executive Law § 296 et seq. This is a form of discrimination that can be considered both sex discrimination and/or disability discrimination.

Pregnancy in the workplace was in the news this past week as several large employers made headlines for their respective policies relating to egg freezing. Indeed, companies are offering to pay for women to freeze their ova so that they can work through their most productive and fertile years, without losing the ability to have children.

First, it was announced that Facebook and Apple will begin offering insurance coverage for female employees to freeze their eggs for later fertilization and implantation, a procedure that can cost as much as $20,000. Then Citigroup announced the same plan.

This is naturally controversial.  While some women will be grateful for the fully paid-for benefit, others, as noted in this New York Times blog post, could perceive this as putting pressure on women to stay childless as long as they want to advance their careers.

This issue has not been litigated as of yet mostly because these work policies are germinal and have just been implemented. While there is nothing facially unlawful about these policies, it could become evidence in a lawsuit brought by a woman who is turned down for a promotion, terminated, or harassed because of pregnancy, or because of actual or perceived “maternal” responsibilities.

Call Gilbert Law Group today for counsel related to pregnancy issues in the workplace, sex discrimination, or disability discrimination: (631)630-0100

Just Cause and Wrongful Termination: Mutually Beneficial

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When one hears the terms “just cause provision” or “wrongful termination,” the natural reaction is to associate these terms with protecting employees from being unfairly fired, harassed with unwarranted discipline, or discriminated against by their employers. This is a rather narrow view however, of the true effect of these types of provisions.

A just cause provision is a contract clause which is frequently included in employment contracts. Typically, for an employee to be terminated, or in some cases disciplined, a just cause provision requires  that the employer  supply a legitimate reason related to that employee’s work.

Although it may seem counter-intuitive, a just cause provision can provide an employer with just as much insulation from unwanted problems as it does employees.

For example, after it was found that a former head basketball coach at a small college verbally abused his players, assistant coaches, and employees, the institution terminated the coach’s contract. As it relates to employment law, such abuse would surely qualify as “just cause.” At the time of termination, the coach had three years left on his contract and was reportedly going to be paid nearly $1.2 million. Unfortunately, the coach’s contract failed to include a “for cause” termination clause that would have allowed the college to terminate him for this type of behavior. As such, when the coach threatened a wrongful termination and breach of contract lawsuit, the college was forced to pay a sizable settlement.

Indeed, when an employee with a multi-year contract is terminated with no just cause provision, the employer may be liable for a “wrongful termination” and the the remaining term of the contract.

As such, if found in a situation like this, it is critical that you seek expert counsel.

Call Gilbert Law Group today: 631.630.0100

Labor Law Update: Independent Contractor Status

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The National Labor Relations Board has “redefined” the test it uses for determining whether workers performing services for an employer are to be considered employees, who are covered by the National Labor Relations Act, or independent contractors, who are not.  The case is FedEx Home Delivery, 361 NLRB No. 55 (2014). This is a significant decision because of its broad application in labor law in determining the status of workers in both representation cases and in unfair labor practice cases.

The Board took the opportunity in this case to make some key legal points about the evidence of economic opportunity for gain or loss from the perspective of the worker:

(1)  The multifactor test articulated in the Restatement (Second) of Agency § 220 (1958) has traditionally been employed by the NLRB and the courts in making and reviewing employee/independent contractor determinations under the NLRA. The Board stated that it would simply consider entrepreneurial opportunity along with the Restatement factors, but would not grant it overriding “animating” importance, as it accused the DC Circuit of doing.

(2)  The Board further held that any claimed entrepreneurial opportunity of the individuals in question must be real, not merely theoretical.  The Board will look at employer imposed and other structural factors which act as an impediment to the genuine existence of entrepreneurial opportunity.  Further, in representation cases, the Board will consider evidence regarding only the individuals in question (here, those in a requested bargaining unit), and not system wide or extra-unit evidence.  (It is to be expected that a similar limitation will be imposed in unfair labor practice proceedings where no bargaining unit issue is in play.)

(3)  Finally, Board said that it will look at the work being done by the individuals in question and ask whether they are truly performing it in the same way as a bona fide independent business would.

Non-Compete Agreements and Preparing to Compete

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Have you ever left a job because you were offered a better position or compensation by a competitor within the same industry? Many people are required to sign an agreement restricting their ability to work in competition to their current employer. These non-compete agreements, when presented at time of hire, during employment, or upon termination, resignation, or layoff, are based on the possibility that an employee might gain a competitive advantage by using knowledge of their former employer’s operations.

As a result, when an individual has decided to leave his or her current employment and transition to a position working for a company which directly competes with his or her current employer, there are contractual issues which must be considered.

During the term of a post-employment non-competition covenant, what are considered to be lawful acts in preparing to transition to working for a competitor and what is unlawful? Where does one draw the line separating lawful non-competitive preparatory planning to compete and prohibited direct competition? There is no definitive answer. Recent New York State case law has shed some light on the issue, however.

“Although an employee may, of course, make preparations to compete with his employer while still working for the employer, he or she may not do so at the employer’s expense, and may not use the employer’s resources, time, facilities, or confidential information.” Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 813 F.Supp.2d 489 (S.D.N.Y. 2011).

Some examples of unlawful competitive actions include when an employee copies his employer’s business records for his own use; charges expenses to his employer that were incurred while acting in furtherance of his own self-interest; actively diverts his employer’s business for his own personal benefits or the benefit of others; or conspires to bring about the mass resignation of his employer’s key employees.

Although case law varies to some extent, it is clear that the language of the restrictive covenant (the non-compete) will dictate in determining what activities are considered impermissible competition.

Therefore, employers who desire to prevent departing employees from gaining a competitive advantage while still employed as well as employees who wish to learn what acts they are permitted to do in preparing to transition to a job with a competitor would greatly benefit from seeking counsel with the experience and knowledge to properly advise them of their rights.

EEOC Files First Ever Sex Discrimination Suit On Behalf of Transgender Employee

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Title VII of the Civil Rights Act of 1964 prohibits an employer from discriminating against an employee based on his or her race, color, sex, religion or national origin (see 42 U.S.C. § 2000e-2).

The U.S. Equal Employment Opportunity Commission (EEOC) alleged in a lawsuit filed today that a Detroit-based funeral home operator discriminated based on sex in violation of federal law by firing a Garden City, Michigan, funeral director/embalmer due to the fact that she is transgender, because she was transitioning from male to female, and/or because she did not conform to the employer’s gender-based expectations, preferences, or stereotypes.

In December 2012, the EEOC adopted a Strategic Enforcement Plan (SEP) for sex discrimination to include “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions…” as a top Commission enforcement policy.

Harris is a funeral home company with multiple establishments in and around the Detroit area. Amiee Stephens had been employed by Harris as a Funeral Director/Embalmer since October 2007. During her tenure, she had always adequately performed the duties of that position.  In 2013, she gave Harris a letter explaining she had decided to undergo a gender transition from male to female, and would soon start to present (e.g., dress) in appropriate business attire at work, compatible with her gender identity as a woman.  Two weeks later, Harris’ owner fired Stephens, telling her that what she was “proposing to do” was intolerable.

The Commission has relied on rationale from well-settled Supreme Court precedent regarding sex discrimination. The Commission and the Court recognize that when an employer considers an employee’s sex in taking an adverse action – for example, if an employer terminates a transgender employee based on its judgment that the employee does not conform to the employer’s stereotypes regarding how someone “born” that sex should live or look – the employer will violate Title VII.

source:http://www.eeoc.gov/eeoc/newsroom/release/9-25-14d.cfm

Welcome to the Gilbert Law Group’s Labor and Employment Law Blog

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Welcome! This blog will disseminate and discuss current events and developments within the labor employment sector. We will provide commentary on happenings in  the courts, economy, and local community which will have a real impact on businesses and careers. When looking for content on labor news, employment legislation, or current events, Gilbert Law Group’s Labor and Employment Law Blog is your one-stop site for everything Labor and Employment and Workplace Law.

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