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.

Can An Employee be Fired for Marijuana Use?

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With marijuana use becoming legal in an increasing number of states, the courts will become the battleground for deciding whether an employee may be fired for marijuana use. In fact, Colorado’s highest court will decide that very issue in a state where both medicinal and recreational marijuana use have been legalized. The issue: whether a workers’ off-duty, off work-site use of medical marijuana is protected by law. The facts: Brandon Coats is a quadraplegic medical marijuana patient who was terminated from Dish Network after failing a drug test in 2010. Coats never got high at work, but pot’s intoxicating chemical, THC, can stay in the system for weeks. The employer claims that it has a zero-tolerance drug-free workplace policy, and it is therefore irrelevant if Coats was impaired at work.

Coats, 35, was paralyzed in a car accident as a teenager. In 2009, he found that pot helped dissipate violent muscle spasms. Coats was a telephone operator for Dish for three years before he failed a random drug test. He told his supervisors in advance that he would probably fail the test. The lower courts upheld the firing, holding that pot use cannot be considered lawful so long as it violates federal law.

Aside from the narrow issue of state law, there are several important issues in this case. Colorado, like New York and several other states, has a Legal Activities Law which prevents employers from discriminating against employees who engage in off-duty, off work-site activities which are legal. New York also recently made legal the medicinal use of marijuana under certain conditions. Also, under the Americans With Disabilities Act (ADA) as well as New York’s Human Rights Law, Dish’s termination of Coats may constitute unlawful disability discrimination based on his disability.  There is also the issue of reasonable accommodation of Coats’ disability.

It would appear that where workers are employed in nonhazardous jobs, unless there is some negative impact in the workplace, an employee’s marijuana use may not serve as a basis for discharge. Negative impacts may include smoking or ingesting at work, impairment or being ‘hung over’ at work, poor performance linked to the use, or time and attendance issues.

Also, if the employer receives federal funding, condoning known pot use may jeopardize a federal subsidized project, contract, continued receipt of federal funds, or status as a federal agency employer inasmuch as federal law still prohibits pot use.

This case clearly has nationwide implications as it will impact how companies and other employers treat employees who use the drug both medically and recreationally. It will therefore be interesting to see how Colorado’s Supreme Court rules. Stay tuned.

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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