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Delaware Chancery Ct. Finds No Privilege for Email Sent from Work Account

Posted by Molly DiBiancaOn September 10, 2013In: Cases of Note, Delaware Specific, Privacy Rights of Employees

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Does an employee who communicates with his lawyer from a company email account waive the attorney-client privilege with respect to those communications?  The answer is not terribly well settled—not in Delaware and not in most jurisdictions.  But a recent decision by the Delaware Court of Chancery gives Delaware employers and litigants a pretty good idea of the analysis to be applied.

The case, In re Information Management Services, is an unusual type of derivative litigation in that it involves two families, each suing the other for breaches of fiduciary duty.  Two of the company’s senior executives, who were alleged to have mismanaged the company in violation of their fiduciary duties, sent emails to their personal lawyers from their company-issued email accounts.  During discovery, the executives refused to produce the emails, claiming them to be protected by the attorney-client privilege.  The plaintiffs sought to compel production of the emails.

The court adopted the four-factor test first enumerated in In re Asia Global Crossing, Ltd. (Bankr. S.D.N.Y. 2005), and applied it to determine whether the executives had a reasonable expectation of privacy in the contents of the emails that they sought to protect.  The court determined that the executives did not have a reasonable expectation of privacy in the contents of the emails because the company’s policy expressly warned that employee emails were “open to access” the company’s staff.  The policy permitted personal use of the company’s computers “after hours” but warned that, if an employee wanted to keep files private, the files should be saved offline.  Thus, the policy was key in ensuring the company can now access emails between the executives and their counsel.

There are a few particularly notable points in the decision that are worth mention. 

First, Delaware law generally provides great deference to the attorney-client privilege.  Usually, the privilege is considered very difficult to waive.  By contrast, this case suggests that a company policy is sufficient to overcome that otherwise difficult hurdle.  The court goes so far as to say that a policy that prohibits all personal use would likely be sufficient to waive the privilege without any further analysis.

Second, the court seemed to place a high burden on the executives. Vice Chancellor Laster recognized that the executives wrote in the subject lines of the emails, “Subject to Attorney Client Privilege” but concluded that the failure to use webmail (such as G-Mail or Yahoo!) or encryption rendered the communications not confidential.  The court wrote that there could be no reasonable expectation of privacy because:

a third party to the communication had the right to access [the] emails when [the executives] communicated using their work accounts.

The “third party” in this case was the company and its IT staff. But the holding raises questions of whether use of a service such as Dropbox, which, by its terms of service, expressly notifies users of its right to access the contents of any account, would also waive the privilege.  In that case, a third party has the right to access contents so, in accordance with the court’s decision, there could be no reasonable expectation of privacy and, therefore, no privilege.

The decision is very well researched and contains a stockpile of case citations and references for those who may be interested in the subject matter.  And even for those who may not be interested in the macro view of this area of the law, there is one key lesson to take away—Delaware employers should carefully review their policies to ensure that the language clearly warns employees that the company reserves the right to monitor, access, and/or review all emails sent or received from a company email account.  Now, the question of whether a personal, web-based email account, accessed via the company’s servers, would be subject to the same analysis is an even trickier one and one that we’ll save for a later date. 

In re Info. Mgmt. Servs., Inc., No. 8168-VCL (Del. Ch. Sept. 5, 2013).

The Immediate Impact of the DOMA Ruling for Delaware Employers

Posted by Lauren Moak RussellOn July 8, 2013In: Benefits, Cases of Note, Discrimination, Sexual Orientation, U.S. Supreme Court Decisions

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Delaware began issuing marriage licenses to gay couples on July 1, 2013, less than a week after the U.S. Supreme Court's decision striking down the Defense of Marriage Act (DOMA). Delaware will no longer perform civil unions pursuant to the Civil Union Equality Act, which was passed into law in 2010. Couples who entered into a civil union prior to July 1 may convert their civil union into a legally recognized marriage or wait until July 1, 2014, when all remaining civil unions will be automatically converted.

The Court's DOMA ruling is expected to affect an estimated 1,138 federal benefits, rights, and privileges. For Delaware employers, the impact is potentially significant. Delaware employers must now extend all federal benefits to gay married couples that were previously made available to straight married couples. The impact also is immediate. Unlike with new legislation, there will be no delay between the Court's ruling and an employer's obligation to extend benefits.

Although the Supreme Court's decision will impact who is eligible for benefits, the procedures remain unchanged. For example, the process for requesting and reviewing FMLA leave, COBRA coverage, and other federally mandated benefits of employment will not change.

One step employers should consider is possible adjustments to tax and health-insurance forms. Spouses that could not previously "claim" one another on federal tax forms may need to submit new IRS Form W-4s. In addition, if your company offers ERISA-covered health-insurance plans and did not previously extend benefits to gay couples, those plans will now be open to the enrollment of gay spouses. This means that, if your company offers health insurance coverage to the straight spouses of its employees, the same benefits must now be extended to gay spouses. In addition, gay spouses will now be the primary beneficiary on all 401(k) plans.

In the end, Delaware employers are likely in a better position to adapt to the Supreme Court's decision, since benefits have been extended under State law since January 1, 2012. Employers should keep in mind that the same benefits must be extended and the same processes will still apply to same-sex married couples. In the event that you think it may be necessary to deviate from this rule of thumb for some unusual circumstances, consider consulting legal counsel before doing so.

U.S.S.C. Clarifies the Applicable Standard for Retaliation Claims

Posted by Molly DiBiancaOn July 3, 2013In: Cases of Note, Retaliation

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In United Texas Southwestern Medical Center v. Nassar, the Supreme Court ruled that the anti-retaliation provision of Title VII requires “but-for” causation. In other words, an unlawful reason has to be the reason for the adverse employment action. The Supreme Court had previously ruled that this type of “but-for” causation also is required in cases alleging age discrimination.

It does not, however, apply to cases of discrimination brought pursuant to Title VII. In those cases, the unlawful reason need only be a reason. There may be other, lawful reasons, but if an unlawful reason plays a part in the decision, then the decision is unlawful.

Here’s how it plays out.  Let’s say that I go to work for a new law firm. My new boss doesn’t think that women lawyers are worth much. He also really hates my nose ring (despite how lovely and not at all offensive it looks in person). Based on those two prejudices, he decides to not put me up for a promotion.

If I sued for gender discrimination under Title VII, I could meet my burden by showing that I did not get the promotion because of I’m a woman—even if he also decided not to promote me because of the nose piercing. That’s a mixed motive and that’s sufficient to establish a discrimination claim under Title VII.

The burden is different, however, if I had brought the claim as an age—as opposed to gender—claim. If I had alleged that he had not promoted me because of my age and he had argued that it was only a little about it my age but most it was because of my nose ring, I’d lose.

And the same analysis now officially applies to retaliation claims under Title VII. An employee will not be able to succeed in a retaliation claim by arguing that her supervisor harbors a bias against, for example, women. Instead, that bias must be the reason for the retaliatory act.

All that being said, here’s the real deal. This is another decision by the Supreme Court this term that affects the burden of persuasion in employment lawsuits. The Nassar decision, like Vance, is a true victory for employers in defending against meritless lawsuits brought current and former employees.

You Are Not the Boss of Me

Posted by Molly DiBiancaOn June 25, 2013In: Cases of Note, Harassment, Harassment, Other (Title VII), Harassment, Sexual

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The U.S. Supreme Court issued two important employment-law decisions this week and, surprising to many of us, both came out in favor of employers. Both cases will have significant impact on employment lawsuits but one of the two is of of particular interest to me because it has been an issue I’ve faced in prior cases of my own.

In Vance v. Ball State University, the Supreme Court was asked to decide what it means to be an employee’s “supervisor” for purposes of Title VII.  In short, the Court held that an individual can be considered to be a supervisor only if he or she has been empowered by the employer to take “tangible employment action” against the employee who claims to have been harassed. 

And what, exactly, is a “tangible employment action,” you ask?  Basically, it means the power to effectuate significant change in the victim’s employment status.  So the power to hire, fire, demote, etc., is the power to effectuate a tangible employment action.  If the individual does not have the authority to fire, transfer, or demote the victim, then the individual is not considered to be the victim’s supervisor.

Now, why does this matter?  In harassment cases, the law provides for an affirmative defense in certain cases.  By “affirmative defense,” I mean that, even if harassment did occur, the employer still will not be held liable if the defense is found to apply.  Which means that the affirmative defense is absolutely critical for an employer facing a harassment claim.

But the defense does have its limits. And one of them is when a supervisor is the alleged harasser.  If the employee was harassed by a supervisor and the harassment resulted in a tangible employment action, then the defense is not available.  So, in any case involving allegations of unlawful harassment, the employer will want to show that the alleged harasser was not the victim’s supervisor.

And that’s why the definition of a “supervisor” is so important. Prior to the Vance decision, the employee is free to argue that the individual was his or her supervisor based on any number of factors.  I had a case in which the plaintiff-employee claimed that the alleged harasser was her supervisor.  The employer disputed this, contending that the individual did not have the power to hire, fire, demote, or otherwise take any tangible employment action against the employee.  In response, the employee argued that the individual trained the employee.

Without the precedent to support our argument on what defines a supervisor, we were left only with “common-sense” arguments.  And, maybe it’s just me but “common sense” doesn’t get me very far with the court on most days.  Generally speaking, judges prefer to see a legal citation at the end of the sentence instead of a footnote that says, “Well, obviously.”

So although I do think that the Court’s opinion is one that derives a great deal of its holding from common sense, I am no less excited about it. 

Promissory Estoppel Is Alive and Well In Delaware Employment Law

Posted by Sheldon N. SandlerOn March 17, 2013In: Cases of Note, Delaware Specific

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In a reminder to Delaware employers that what you say can come back to bite you, the Delaware Supreme Court reinstated a Superior Court jury verdict in favor of a plaintiff, after the trial court had determined that his claim failed as a matter of law. The plaintiff, Donald Harmon, had been the Presiding Judge of the Delaware Harness Racing Commission, and was fired as a result of an allegation that he had changed a judging sheet for a race, as a favor to the horse's owner. Harmon was charged with crimes and was suspended without pay pending the outcome of the criminal case.

He asked another employee to find out from the Racing Commission whether he would be reinstated if he was acquitted on the criminal charges. The employee testified that he put that question to the Commissioners and they "looked at each other and then said [Harmon] would be reinstated." The Commission later decided not to reinstate Harmon and he sued, obtaining an award of $102,273 after a 5 day jury trial. The trial court overturned the verdict and Harmon appealed to the Delaware Supreme Court.

In essence, promissory estoppel in the employment context means that the employer has made a representation to an employee that the employee reasonably relied on to his or her detriment. While that theory can apply to private employers, the general rule in the public sector, as asserted by the Racing Commission in this case, is that "the state is not estopped in the exercise of its governmental functions by the acts of its officers."

Relying on two rather hoary school-district cases, the Delaware Supreme Court recognized that there is "an exception to the general rule in the employment context." In, Keating v. Bd. of Educ. of the Appoquinimink Sch. Dist., and Crisco v. Bd. of Educ. of the Indian River Sch. Dist., the court rejected the claim that promissory estoppel does not apply to a "creature of the State."

The Takeaway

What is striking about all three cases is the casual manner in which the employers' representatives acted. If a clear, written statement had existed in Keating that it was only the decision of the Board that determined who would be rehired, and in Crisco that persons with standard certificates would have preference under the RIF policy, and if the Racing Commission had, instead of "looking at each other," made it clear that it was not committing to rehiring Harmon without a more formal investigation, the outcome almost surely would have been different.

Harmon v. State of Delaware, (PDF), No 676, 2011 (Del. Feb. 15, 2013).

3d Cir.: You Are a Manager. Deal With It.

Posted by Molly DiBiancaOn February 26, 2013In: Age (ADEA), Cases of Note

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Today’s post is about another recent employment-law decision from the Third Circuit.  For those of you who want the shortened version, feel free to skip to the end of the post for the valuable Lesson Learned

Background

The plaintiff-employee, Mary Burton, founded and ran two companies, which were sold to the defendant-employer, Teleflex. Following the sale, Burton became employed by Teleflex pursuant to a written employment agreement.  Burton was 67 years old. 3d Cir. ADEA Resignation

From the start, Burton did not get along with her new supervisor, Edward Boarini. Their relationship was already strained when Boarini told Burton that he wanted to meet with her to discuss her performance. At a trade show, Burton asked Boarini when he wanted to meet. When he couldn’t give her an immediate answer, Burton responded by asking whether he wanted her to resign. He said that he did not but she repeated the question several times.

By the end of the conversation, Boarini believed that Burton had resigned. Burton, on the other hand, felt that she’d been fired. 

Following a previously scheduled vacation, Burton received a letter from Teleflex’s HR Department, “accept[ing] her resignation.”  Despite being “in disbelief” about the letter, Burton did not call Teleflex or attempt to return to work. Instead, she called her lawyer, who attempted, unsuccessfully, to negotiate a separation agreement.

The Claims

Burton filed suit, alleging that she had been fired because of her age in violation of the ADEA. Teleflex claimed that Burton had not been fired but had resigned and, therefore, Burton had not been subject to any adverse action.  The trial court, the Eastern District of Pennsylvania, granted summary judgment to Teleflex, finding that Burton had resigned and that, even if she had not, there was no evidence that its letter was a mere pretext.  The Third Circuit reversed, finding that there “clearly” was a dispute of material fact as to whether Burton resigned or was terminated.

Lesson Learned

Instead of discussing the intricacies of the Third Circuit’s holding (i.e., whether there is sufficient evidence that Burton resigned) I think there is a more immediate lesson to be learned from this case:

Being a manager is tough.  Deal with it. 

Or, to put it differently:

There are serious and costly consequences for employing managers who are conflict adverse.

I certainly understand Boarini’s desire to interpret Burton’s comments as a resignation.  But she didn’t come right out and say it, she didn’t call later and confirm it, and she didn’t submit a resignation letter (even though she was required to do so pursuant to her employment contract). Just because you want to hear her say she’s quitting doesn’t mean that is what she actually said.

The right way to handle this would have been to meet with Burton and address the performance issues that she’d been having. Just pick a time, set the meeting, and deal with it. Don’t wait for her to come to you to schedule a time. And, when she does, don’t say you’re too busy or be reluctant to commit to a time.

And then, when you have the little spat and she says, “Do you want me resign? Is that what you want,” understand that the conversation is not over. Be the manager. Tell her that she can calm down and collect her thoughts and that you will discuss the situation on Monday morning, 10 a.m., in your office.

Don’t close your eyes and hope the whole mess just disappears. It won’t. Being a manager is no easy business. But you can handle it—that’s why they gave you the job. So toughen up and deal with it head on.

(PDF) No. 11-3752 (3d Cir. Feb. 21, 2013).

See also

3d Cir. Issues a Bitchin' Constructive-Discharge Decision

3d Cir. Confirms EEOC's Broad Subpoena Power

3d Cir. Decides Certification Standard for FLSA Class Claims

3d Cir. Finds Individual Supervisor Liable Under FMLA

3d Cir. Employees Fired for Pornographic Emails Lose Age-Discrimination Case

3d Cir. No Protection for an Employee Who Lies

Del. Supreme Court Warns Lawyers to Mind the Clock

Posted by Molly DiBiancaOn January 10, 2013In: Cases of Note, Delaware Specific, Purely Legal

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The Delaware Supreme Court started the New Year with a resolution of sorts for lawyers. In a decision issued on January 2, 2013, the Court instructed that, if counsel agrees to alter a deadline in the trial court's scheduling order, all remaining deadlines will be rendered inapplicable:

Henceforth, parties who ignore or extend scheduling deadlines without promptly consulting the trial court will do so at their own risk. In other words, any party that grants an informal extension to opposing counsel will be precluded from seeking relief from the court with respect to any deadlines in the scheduling order.

The Court also stressed the priority of avoiding any changes that would affect the trial date:

. . . [I]f the trial court is asked to extend any deadlines in the scheduling order, the extension should not alter the trial date. Counsel may face a compressed time period to complete discovery, or the filing of dispositive motions, but the most important aspect of the scheduling order--the trial date--will be preserved.

And, the Court warned, where the trial court does elect to postpone the trial date, the parties should expect that their new date will be after "all other trials already scheduled on the court's docket." In other words, there's no butting in line.

The Court's admonition is a welcome one. All too often, counsel wants to extend a deadline that truly should not be extended. There seems to be a belief by some practitioners that all requests or extension must be granted. This simply is not true. In fact, a lawyer may not agree to extend a deadline that would detrimentally affect his client's case.

Moreover, the parties negotiate the scheduling order--it is not a set of arbitrary deadlines forced upon them by the court. It is a set of obligations created entirely by agreement. Thus, I tend to have a fairly low tolerance for the opposing counsel who cries that he just couldn't meet the deadlines and whines that I'm such a monster for not agreeing to extend them. In my book, a deal's a deal and there's a lot to be said for keeping your promises.

Christian v. Counseling Resource Assocs., Inc., C.A. 460, 2011 (Del. Jan. 2, 2013).

In the U.S. Unlawfully But Eligible for Workers' Comp?

Posted by Molly DiBiancaOn October 25, 2012In: Benefits, Cases of Note, Delaware Specific, Hiring

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Is an employee who is in the country illegally a covered "employee" under the Workers' Compensation laws? That was the question of first impression presented to the Delaware Superior Court in Del. Valley Field Servs. v. Ramirez, (PDF) No. 12A-01-007-JOH (Sep. 13, 2012). The court concluded that the answer is "yes," and ordered that the former employee, who has since been deported to Honduras, is eligible to receive benefits under Delaware's workers-compensation statute.

Facts
The employee, Saul Melgar Ramirez, was hired in April 2010 as an "independent contractor'"--which the term the court uses to say that Ramirez was paid in cash. In January 2011, he was converted to a regular employee and added to the payroll. When told by his boss that he would need a Social Security number for his I-9 documentation, Ramirez bought a fake SSN card for $180. In February, the payroll service informed the employer that the number was false. Ramirez was deported in March.

In late January, shortly after he was converted to employee status, Ramirez fell down six steps and landed on his back. The company's president, who witnessed the fall, reported the accident to the company's workers' compensation carrier and made arrangements for Ramirez to get medical treatment. The treating physician determined that Ramirez was totally disabled.

Issues
The Industrial Board awarded benefits to Ramirez. (See Cassandra Robert's cleverly named post about the Board's decision, The Dearly Deported--Illegal Alien Status Does Not Work a Forfeiture in Delaware). The employer appealed to the Delaware Superior Court, where it made several arguments, including:

  • the employee's "fraudulent inducement" in obtaining the job disqualified him from receiving benefits;
  • because, pursuant to the federal immigration laws, Ramirez could not be lawfully hired, those laws preempted the State's workers' compensation laws; and
  • the employee's exclusion from the U.S. was the equivalent of being incarcerated, which would result in the suspension of benefits.
Judge Herlihy rejected each of the three arguments in turn and concluded that, despite his status as an illegal alien at the time of his employment, Ramirez was not disqualified from receiving workers' compensation benefits.

Nuts and Bolts
Regular readers may be mildly surprised to read that I actually side with the employee in this case. Not so much because of complicated legal reasons but more because of the basic facts. The employer hired Ramirez. The basic employment relationship involves the performance of services by the employee and the provision of certain compensation and benefits by the employer in return. One of those benefits is workers' compensation insurance.

Here, there is no dispute that Ramirez performed the services for which he was hired. Thus, the employer received the bargained-for benefit of the employment relationship. Ramirez, in return, was entitled to receive, in exchange, the benefits for which he had bargained, including wages for work performed and workers' compensation insurance.

There is no dispute that Ramirez was injured during the course and scope of his employment and there appears to be no dispute as to the extent of his injuries. Thus, it seems fair to me that he receive the benefits of the employment relationship, just as his employer did.

Feel free to disagree with me--I'm open to different opinions. Sean O'Sullivan reported the case in an excellent article in the News Journal today and notes that the case has been appealed to the Delaware Supreme Court. So we'll keep you posted.

Employer Liability for Employee Injuries In the Company's Gym

Posted by Molly DiBiancaOn August 21, 2012In: Cases of Note, Policies, Wellness, Health, and Safety

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Health-and-wellness benefits are all the rage. Some employers offer their employees a discount on gym memberships. Some offer a monthly stipend to be used towards the fees at a health-club. And some have an on-site fitness center.

Employers who are considering building an on-site fitness center for employees commonly want to know how they can protect themselves against a personal-injury lawsuit. For example, an employee drops a dumbbell on his foot and breaks a toe. (Don't laugh, people, broken toes are brutal!)

What's to stop the employee from suing his employer for his injury? Assuming that lifting weights is not part of the employee's job, it would not have been an injury incurred in the "course and scope" of his employment and, therefore, would not be covered by workers' comp. And you, dear employer, own the equipment, including the dumbbell, so you'd surely be the first defendant to be named.

To avoid the "no-good-deed-goes-unpunished" phenomenon, employers will ask whether they can require employees to sign a waiver or release as a condition of using the fitness center. Until a few years ago, the answer was, "not really." Of course, you could require that they sign a waiver but it would not be effective if you ever needed to use it because the law prohibited waivers of claims for future injury.

In 2008, in Slowe v. Pike Creek Court Club, the Delaware Superior Court held that such claims could be released but only if "the language makes it crystal clear and unequivocal that the parties specifically contemplated such a release." In Slowe, the court held that the waiver at issue did not meet this "crystal-clear-and-unequivocal" standard and, consequently, the waiver was not effective, but left open the possibility that a "properly-worded release might effect a waiver of premises liability."

In July, the court had the opportunity to address the issue again and, this time, found the waiver to be enforceable. In Hong v. Hockessin Athletic Club, the plaintiff, a member of the athletic club, signed a comprehensive waiver of liability and release in connection with her membership agreement. The waiver expressly stated that she and all others on her membership assumed the risk of "any injury or damage incurred while engaging in any physical exercise or activity or use of any club facility on the premises," including the use of "any equipment in the facility." The court held that this was sufficient to constitute a waiver in "crystal clear and unequivocal" terms and dismissed the suit.

There are no guarantees in life or in the law and this situation is no exception. Although this case offers employers some very good news when it comes to avoiding liability for on-site injury of employees and visitors, it is, of course, not a guarantee. Nevertheless, in light of this case, there seems to be no reason not to require a waiver for your on-site fitness center.

Hong v. Hockessin Athletic Club, No. N12C-05-004-PLA (Del. Super. July 18, 2012).

Facebook "Like" as 1st Am. Speech: The Appeal

Posted by Molly DiBiancaOn August 10, 2012In: Cases of Note, Public Sector, Social Media in the Workplace

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Does a Facebook "Like" constitute speech for the purposes of the 1st Amendment? In April, a federal judge in Virginia concluded that it did not in Bland v. Roberts (E.D. Va. Apr. 24, 2012). Many legal spectators, including me, disagreed with the holding and speculated that the decision would be appealed.
facebook-like.png
It's nice to be right once in a while.

The case has been appealed to the Fourth Circuit and, on Monday, Facebook filed an amicus brief in support of having the decision reversed. The brief is not quite as exciting as I'd hoped and contains only minimal legal analysis. Most of the brief is devoted to providing factual background about Facebook, how it's used, and the idea of "Liking" a page or post.

To the credit of Facebook's counsel, though, I suppose there's not much legal analysis to provide. The analysis, actually, is quite simple. Contrary to the District Court's finding, Liking online content is speech--it is a statement by the User. In Bland, the plaintiff-appellant Liked a candidate in the Sheriff's race (who happened to be running against the plaintiff's boss). Liking the campaign Page was the digital equivalent of putting a sign in your front lawn that reads, "Support X for Sheriff."

Moreover, because the Like was an endorsement of a candidate running for elected office, it seems difficult to imagine how it would not be considered political speech, which receives the highest level of First Amendment protections.

The District Court avoided this conclusion by holding that the Like did not "involve[] actual statements." But "statements" are not the only type of "speech" to receive constitutional protection. It has been long settled that "symbolic" speech receives First Amendment protection. The example that comes to mind is the burning of the American flag, which the U.S. Supreme Court held to constitute symbolic speech protected by the First Amendment in Texas v. Johnson.

If the appellate court does reverse, the plaintiff-employee does not win by default. The employer still could argue that he was not terminated as a result of his protected speech or any other defenses that may apply. In the meantime, I'll be curious to see how the employer deals with the present question--is Liking a Facebook page or post "speech" for the purposes of the First Amendment.

See also: Judge's Facebook "Like" Leads to Ethics Complaint

Cal. Meal-Break Decision and Delaware Employers

Posted by Molly DiBiancaOn April 16, 2012In: Cases of Note, Fair Labor Standards Act (FLSA), Wages and Benefits

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The California Supreme Court issued its long-awaited decision in Brinker Restaurant Corp. v. Superior Court on April 12, 2012. The decision contains some very good news for employers regarding obligations relating to employee meal breaks and could have some significant implications for Delaware employers covered by Delaware's meal break law, 10 Del. C. § 707.

Background

Brinker Restaurant Corporation operates 137 restaurants in California, including Chili's Bar and Grill, Maggiano's Little Italy, Romano's Macaroni Grill and others. In 2002, a former employee brought a putative class action against Brinker on behalf of nearly 6,000 hourly restaurant employees. The complaint alleged that Brinker failed to provide rest and meal periods in accordance with California legal requirements, required employees to work off-the-clock during meal periods, and unlawfully altered their time records. The plaintiffs obtained class certification in the trial court on each of these claims, but the Court of Appeal reversed, holding that class certification was improper as a matter of law. The Supreme Court, in a unanimous decision, partially agreed and partially disagreed with both the trial court and the Court of Appeal.

Meal Periods

There were two distinct questions before the Supreme Court concerning meal periods. First, does an employer have a duty to ensure that a meal period is taken and thus violates the law if the employee does not in fact take a 30-minute duty-free break? To that question, the Supreme Court answered "no" - employers are not required to ensure that an employee performs no work during the meal period. Instead, the Supreme Court held that an employer satisfies its meal period obligations by:

• Relieving the employee of all duty for the period;
• Relinquishing control over the employee's activities;
• Permitting the employee a reasonable opportunity to take an uninterrupted meal period; and
• Neither impeding nor discouraging the employee from taking the meal period.

The Court cautioned that employers unlawfully discourage employees from taking meal breaks if they provide incentives for or encourage skipping breaks, coerce employees to forego them, or otherwise make it difficult for employees to take breaks, whether through scheduling or otherwise.

It is this ruling that has the most significance for Delaware employers. Under the Delaware meal break law, an employer "must allow" a 30 minute meal break to persons working 7 ½ or more consecutive hours. Like the California law, the break must be given after the first 2 hours of work, but unlike the California law, the Delaware statute imposes an additional restriction in that the meal break must be given "before the last 2 hours."

Based on the guidance from Brinker, as long as a Delaware employer "allows" the employee to take a meal break during the specified time, the employer need not require the break. If the employee, without any employer pressure, works through his or her break and is paid for it, that would not be a violation of the law. It should also be noted that the Delaware law does not mandate that the meal break be a paid break.

The second meal period question in Brinker concerned the timing of meal periods (the so-called "floating five-hour rule"): must meal periods be scheduled so that an employee is not working more than five hours either before or after the meal period? The Court answered "no" to this question too. The employees in Brinker were sometimes required to take their meal periods an hour into their shifts, such that they were working seven hours after the meal period.

The Court held that this practice was not unlawful and that there is no limit on the number of hours that can be worked after the meal period. Instead, it concluded that:

• Employees must be provided a 1st meal period at some time before the end of the 5th hour of work; and

• Employees who work 10 or more hours must be provided a 2d meal period before the end of the 10th hour of work.

Since the Delaware law is more specific as to when the break must occur, this holding has less significance for Delaware employers. For employees working 7 ½ consecutive hours, the meal break must be allowed no later than 5 hours after the beginning of the work day. Delaware law is silent on the need for a second break if the work day extends beyond 7 ½ hours.

Rest Periods

There were two questions regarding rest period rules. First, does California law require that the rest period be taken before the meal period is taken? The Court answered "no" to this question.

Second, what does the Wage Order mean when it says that employees have a right to a 10-minute rest period for each "four hour work period or major portion thereof"? The Court rejected Brinker's argument that "major portion" means 3-1/2 hours, and held instead that it means "more than two hours." Since Delaware has no rest period law at present, that ruling has no Delaware implications.

Off-the-Clock Work

The sole question regarding the off-the-clock work claim was whether class certification should have been granted or denied. In support of class certification, the plaintiffs had offered anecdotal evidence of "a handful of individual instances" of off-the-clock work. The Court held this evidence insufficient to establish a "uniform, company-wide policy" of allowing off-the-clock work. Instead, Brinker's written policy prohibited working off the clock.

Furthermore, Brinker's time records showing an employee was clocked out created a presumption that the employee was not working. Finally, an employer is liable for off-the-clock work only when it knew or should have known that the employee was performing work off the clock. The Court held that to rebut the time records and establish employer knowledge would require individual evidence and determinations. Therefore, liability could not be established on a class-wide basis, and class certification was improper.

Bottom Line

The Brinker decision is a welcome relief to employers because the California Supreme Court declined to impose strict liability for missed or non-compliant meal periods. Since California has been a leader in providing work benefits to employees, and over time, policies that began in California have drifted to Delaware (the implied covenant of good faith and fair dealing being a prime example), the Brinker ruling should cause Delaware employers to breathe a sigh of relief.

3d Cir. Finds Individual Supervisor Liable Under FMLA

Posted by Molly DiBiancaOn February 1, 2012In: Cases of Note, Family Medical Leave

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Can an individual supervisor be held liable when an employee files suit? Well, like all legal questions, it depends. The Third Circuit Court of Appeals issued an opinion yesterday expanding the instances when the answer to this question is yes in Haybarger v. Lawrence County Adult Probation & Parole, No. 10-3916 (3d Cir. Jan. 31, 2012).

Background
The plaintiff, Debra Haybarger, was the office manager for Lawrence County Adult Probation and Parole, an agency of the Lawrence County of Court of Common Pleas. Haybarger reported to Director William Mancino who, turn, reported to Court Adminstrator Michael Occhibone. Occhibone reported to the President Judge of the Court, Judge Dominick Motto.

Hayberger missed a lot of work due to various illnesses. Her boss, Mancino, was "displeased" by the absences, writing on her performance evaluations that she needed to "improve her overall health and cut down on the days she misses due to illness." He also commented about her health and suggested that she need to "start taking better care of [her]self." Yikes.

Mancino put Haybarger on a six-month probation, which required weekly progress reports and formal monthly meetings. In a disciplinary letter, he wrote that Haybarger's "conduct, work ethic and behavior [were] non-conducive to the Adult Probation Office." He also wrote that she demonstrated a "lack of leadership," and "no clear understanding of the subordinate positions" that she supervised. Gulp.

At the end of the six months, Mancino told his superiors that Haybarger's performance had not improved and recommended that she be terminated. They followed his recommendation.

The Suit
Haybarger sued the agency, the county, and Mancino under the ADA, Rehabilitation Act, Pennsylvania's state discrimination statute, and the FMLA. Initially, the District Court dismissed all of the claims except for the Rehabilitation Act claim against the agency and the FMLA and state-law claims against Mancino.

After limited discovery, the agency moved for summary judgment, alleging it was immune from suit pursuant to the 11th Amendment. The motion was denied and the Third Circuit affirmed.

On remand, the agency again moved for summary judgment, as did Mancino. The agency's motion was denied but the parties subsequently settled, leaving only the FMLA claim against Mancino in his individual capacity.

The District Court held that, while the FMLA permits individual liability against supervisors at public agencies, the plaintiff failed to show that Mancino had "sufficient control over [her] conditions and terms of employment" because he did not have authority to hire and fire and, therefore, was not a supervisor.

The Holding
The Third Circuit determined, as a matter of first impression, that supervisors at public agencies are subject to liability under the FMLA was one of first impression. The court then went on to find that Mancino could be considered a supervisor and, in turn, an "employer" for purposes of the FMLA.

In its first finding, the court rejected the positions of the 6th and 11th Circuits, both of which have found that the FMLA does not provide for individual liability for supervisors and, instead, adopting the reasoning of the 5th Circuit. This conclusion was based on the determination that the language of the FMLA and its implementing regulations are more like the FLSA, which permits individual liability, rather than Title VII, which does not.

The court then turned to the facts that could support a finding that Mancino could be considered to be an "employer" for the purposes of the FMLA. In sum, the court explained, "an individual is subject to FMLA liability when he or she exercises 'supervisory authority over the complaining employee and was responsible in whole or part for the alleged violation' while acting in the employer's interest."

The Impact on Supervisors
There are several lessons to be learned from this case--some more obvious than others. First, do not comment (or care) about the reasons for an employee's absence. If an employee is absent and is permitted to be absent--because of your leave policy, because of the FMLA, or otherwise--then the reason(s) for the absence is irrelevant. Do not care and do not comment about why an employee is taking leave when she is permitted to do so.

Second, learn how to write a better performance evaluation. Ambiguous comments like, "employee demonstrates poor leadership skills" do not help the employee improve because they do not identify the underlying conduct that you want her to change. Give an example of how she fails to be a good leader. If you cannot articulate a specific example of what you consider to be poor performance, it is not poor performance under the law.

Third, to avoid being held individually liable under the law, supervisors are best advised to let HR do what they do best--including administering FMLA leave. Simply turn it over to HR and then get the pros involved when writing performance evaluations and considering disciplinary action for any employee who has been approved for FMLA leave. This stuff isn't easy--get help from the pros.

Reasons to Terminate: More Is Not Merrier

Posted by Molly DiBiancaOn October 4, 2011In: Cases of Note, Gender (Title VII), Terminations & Layoffs

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When terminating an employee, employers need only one reason. Of course, there is rarely just a single reason for reaching the decision. But the existence of multiple reasons does not mandate that each reason be shared with the employee.  In other words, when an employer makes the decision to terminate, there should be only one reason upon which the employer relies and which is shared with the employee—the “final straw.” When an employer changes its “final straw,” it raises doubts both with the employee and with the court and changing reasons are evidence of unlawful discrimination. 

In Smizer v. Community Mennonite Early Learning Center, the employer told the employee that he was being fired due to a Facebook posting he’d made. But the employee didn’t buy it.  He claimed that he really was fired because of his “tardiness and lack of cleanliness in his classroom.”  He claimed that similarly situated female employees, who also were tardy and who kept equally messy classrooms, had not been fired.

If this claim were true, and there were late and messy female employees who had not been fired and the plaintiff was really fired for these reasons, it would support the plaintiff’s Title VII claim.  So the plaintiff sought the court to compel his former employer to produce documents he claimed would show these failings of his female counterparts.

The employer responded that evidence relating to tardiness and messiness were not relevant to the suit because, as you may recall, it fired the plaintiff due to a “troubling” comment he’d made about coworkers on his Facebook page. Thus, the employer contended, the evidence that the plaintiff sought was irrelevant to his claim.

The court disagreed.  In its opinion, it stated that the plaintiff had provided “ample documentation” tending to show that the Facebook posting may not have been the real reason for his termination.  Instead, the documentation apparently showed that the employer had claimed at various other times that there were other reasons for terminating Smizer—including his tardiness and lack of cleanliness.  In employment-discrimination claims, “a shifting justification for an employment action can itself be circumstantial evidence of an unlawful motive.”  Because evidence of “shifting justifications” may be admissible at trial, the requested documents were discoverable and ordered the employer to produce them. 

So what’s the big lesson employers can learn from this story?  In short, pick a reason and stick to it.  One reason to terminate an employee is all you need—and all you should have.  Certainly, there may be (and usually is) a long history of performance issues with the employee.  And all of these would be relevant to the employer’s decision to proceed to termination. But the “final straw” is not a “bail of hay.”  Pick a reason, stick with it, and don’t muck it up by giving multiple reasons for the decision at the termination meeting or in a termination letter.  If you’ve done what you’re supposed to do, you’ve addressed the other issues as they came up with the employee and he’s aware of those issues. 

Smizer v. Community Mennonite Early Learning Ctr., No. 10 C 4304, 2011 U.S. Dist. LEXIS 102212 (N.D. Ill. Sept. 7, 2011).

See also:

Bad Reason #29 to Fire an Employee

Don’t Hate Me Because I’m Brilliant: One Employee’s Tale

3d Cir.: No Protection for an Employee Who Lies

3d Cir.: Disparate Impact of Newark, NJ’s Residency Requirement

Posted by Molly DiBiancaOn October 3, 2011In: Cases of Note, Discrimination, Race (Title VII)

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In Meditz v. City of Newark (PDF), the Third Circuit concluded that the City of Newark, New Jersey’s residency requirement may have unlawful disparate impact on non-Hispanic white applicants.  The case was brought Gregory Meditz, an attorney acting pro se.  Meditz alleged that the City’s residency requirement disparately impacted white, non-Hispanics and, as a result, white, non-Hispanics were under-represented in the City’s workforce.

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Meditz, a white male, applied for a job as an Analyst with the City of Newark, New Jersey.  He was rejected for the job because he lived in Rutherford, New Jersey and a City ordinance required that non-uniformed employees live within City limits.  Meditz filed suit, alleging that the City’s residency requirement negatively impacted the hiring of white, non-Hispanics.

In support of his suit, Meditz provided statistical information that he’d gathered from publicly available sources.  Newark argued that the disparity reflected by the statistics were not sufficiently substantial.  The federal district court agreed with the City and found that the statistical evidence Meditz presented did not “constitute sufficient evidence of a significantly discriminatory hiring pattern.”  The Third Circuit Court of Appeals did not agree and reversed.

The Third Circuit found, instead, that the statistics showed that the percentage of white, non-Hispanics in Newark’s non-uniformed workforce was lower than the percentage that would be expected based on Newark’s general population.  The case was remanded for the District Court to analyze the evidence in accordance with the correct standard, as described in the Third Circuit’s decision.

Meditz v. City of Newark, No. 10-2442 (3d Cir. Sept. 28, 2011) (PDF).

 

For more on disparate impact, see also:

9th Cir. on ADA and Drug Addiction

Overview of the Risks of Employment Testing

The Link Between Race and Obesity—Disparate Impact Waiting to Happen?

EEOC’s Proposed Regs for Age Discrimination Disparate-Impact Claims

3d Cir.: Enforceability of Non-Competes Where Employee Misclassified

Posted by Lauren Moak RussellOn June 3, 2011In: Cases of Note, Independent Contractors, Non-Compete Agreements

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The Third Circuit gave employers new reasons to worry about misclassifying their employees in its decision in Figueroa v. Precision Surgical, Inc., (PDF), C.A. No. 10-4449.  A former employee brought suit seeking to invalidate the non-competition provision in his independent-contractor agreement (“ICA”).  The plaintiff alleged that his former employer had materially breached the contract and, therefore, could not enforce it against him. approved-stamp

During the course of his 6-years with the organization, the plaintiff's relationship became more like that of an independent contractor.  For example, the company required that the plaintiff: (1) devote 100% of his energy to selling the company's products; (2) report to his supervisors daily and attend monthly meetings; (3) abide by a dress code; and (4) obtain permission from before giving quotes to certain prospective customers.

As the supervision and reporting requirements became more onerous, the plaintiff objected and, eventually, requested a new contract that clarified his status as an independent contractor.  The company refused and stated that it intended to convert all sales positions to employees, eliminating all independent contractor positions.  When he refused to make the conversion to employee status, his contract was terminated. 

The employee brought sought suit seeking declaratory relief invalidating the non-compete provision in the agreement. The company filed a counter-claim alleging breach of the non-compete agreement based on the plaintiff's new contract position as a sales representative for a competitor.

The District Court denied the employer's request for a preliminary injunction, finding that the employer had more likely than not breached its obligations under the independent-contractor agreement.  The Third Circuit affirmed, finding that the requirements to which the plaintiff had objected were not consistent with requirements for an independent contractor.  As a result, the court held, the employer breached the agreement by treating the plaintiff as an employee. 

Well-informed employers understand the significance of properly classifying employees for tax and benefits purposes. The Third Circuit’s recent opinion gives employers another reason to avoid misclassifying their employees: failure to properly classify workers as employees or independent contractors may impact their ability to enforce restrictive covenants and non-compete agreements.