Lawyers Who Crippled Former Firm Can’t Steal Its At-Will Employees, September 28, 2004
Thomas A. BowdenAs a general rule, any competitor is free to offer a job to an at-will employee at another company. An well-known exception occurs when the competitor is subject to a non-solicitation agreement.
Now here’s another exception: you cannot hire away your former firm’s at-will employees if they are quitting because you have just crippled their employer through illicit methods. In a recent California case, two attorneys left a trail of destruction as they quit their former firm. In conjunction with their abrupt resignation, they intentionally erased client files from the firm’s computer server, copied and took the firm’s 2,200-name client list, left no status reports or schedules concerning some 500 active cases, and rapidly convinced 144 clients (many of whom had limited English skills) to change firms.
In the process, the bolting lawyers induced nine at-will employees to quit the former firm. Although hiring away an at-will employee is generally permissible, here it gave rise to liability for intentional interference with contractual relations because the dissatisfaction leading to the resignations was induced by improper methods.
Lesson: you can hire at-will employees by fair competition (such as offering higher salary or better working conditions) but not by using unlawful and unethical means to foment employee dissatisfaction with the present employer.
Reeves v. Hanlon, 21 IER Cases (BNA) 1244 (Calif. Supreme Ct., August 12, 2004).
Sick Leave “Hotline” Passes FMLA Muster, September 28, 2004
Thomas A. BowdenThe City of Philadelphia requires employees on sick leave to call its “hotline” whenever they leave home during working hours. A federal court has ruled that this requirement does not violate the Family and Medical Leave Act, because it does not discourage employees from using FMLA leave. Instead, the “hotline” serves the legitimate purpose of preventing employee abuse of FMLA leave, the court ruled.
The plaintiff’s absence for 26 sick days had landed him on the “Sick Abuse List,” which meant that he was required to stay at home during working hours and was subject to random checks by a sick leave investigator. Later, he went on FMLA leave but was still required to stay home and be subject to random visits. He argued that such surveillance violated the FMLA. The federal judge said no.
Callison v. City of Philadelphia, 9 WH Cases (BNA) 1579 (E.D. Pa., March 31, 2004).
New Overtime Rules In Jeopardy? September 16, 2004
Darrell R. VanDeusenWhat is “maybe,” Alex? The Congressional effort to fight the DOL’s new overtime rules continues. Yesterday the Senate Appropriations Committee voted 16-13 to approve an amendment that would deny funding for most of the DOL’s enforcement of the final rule on overtime pay. The amendment, was offered by Democratic Senator Harkin of Iowa.
The Harkin amendment mirrors language passed on September 9 by the House when it approved the Labor-HHS bill for fiscal 2005 (H.R. 5006). With the exception of language raising the new minimum salary threshold beneath which all workers are eligible for overtime, the amendment denies funding for DOL implementation and administration of the new overtime rule. Responding to statements from the DOL that the House amendment would not actually rescind the new rule or reinstate the old rule, Harkin’s amendment includes language that was not in the House version explicitly reinstating the old FLSA regulations.
It’s politics as usual in Washington. Stay tuned for more developments.
Religion v. School - Religion Wins! September 14, 2004
Darrell R. VanDeusenA public school teacher who was barred from participating in an after-school program sponsored by a evangelical Christian group has won her First Amendment lawsuit against the school district. Wigg v. Sioux Falls Sch. Dist. 49-5, No. 03-2956 (8th Cir. September 3, 2004). The school district’s “policy of prohibiting all employees – even on their own time – from participating in any religious-based programs held on school grounds is an overly-broad remedy” for avoiding establishment clause problems, said the Court.
Public school districts often struggle with “church and state” issues. Does a school’s willingness to permit prayer groups or religious clubs to meet after school violate the First Amendment’s establishment clause? Courts have most often said “maybe – it depends,” creating a mine field of legal issues that often fall to school administrators to navigate. In an effort to be “religion free” some school district’s enact blanket policies against employees engaging in any religious activity on school grounds at any time. The Sioux Falls, South Dakota school district did just that.
The school’s “community use” policy permitted community organizations, including both religious and nonsectarian groups, to use its facilities. However, the school’s “religion in the schools” policy prohibited school employees from participating in religious activities at school-sponsored activities or on school property – with the exception of religious activities by organizations that temporarily leased school property while looking for a permanent location.
Wigg, an elementary school teacher, participated in after-school programs at the schools where she taught, including helping a Girl Scouts troop and giving private guitar and reading lessons. A evangelical Christian club obtained permission to hold after-school meetings at several schools, and Wigg attended the first meeting. Another school employee complained that Wigg was “teaching religion in the library.” The principal told Wigg to stop going to the meetings because her participation might be perceived as government establishment of religion. Wigg sought permission from the superintendent to attend the meetings, which was denied.
Wigg sued, alleging a violation of her First Amendment rights. She kind of won at the trial level, with the court holding that she could attend the meetings at every school except the one she was teaching at. On appeal, the Eighth Circuit struck down that limitation, holding that Wigg was exercising her right as a private citizen to attend the meetings and that the school district’s policy impermissibly interfered with that right.
Sioux Falls' policy “of prohibiting all employees – even on their own time – from participating in any religious-based programs held on school grounds” unnecessarily limits employees’ right to engage in private religious speech, said the court. It found that “[a]lthough [Sioux Falls] allows access to the Club, [the school district] impermissibly discriminates by limiting those who can attend based upon the subject matter of the speech.”
Arbitration Agreement Unenforceable Under Maryland Law, September 13, 2004
Darrell R. VanDeusenA former employee of PeopleSoft USA Inc. whose employment agreement contained an arbitration agreement does not have to arbitrate her sex and race discrimination claims, Maryland’s federal district court recently held. Hill v. PeopleSoft USA Inc., D. Md., No. 04-cv-237 (August 31, 2004).
Denying PeopleSoft's motion to compel arbitration, Judge Titus found that the arbitration agreement was not enforceable because the company retained the right to modify its dispute resolution policy at any time and without notice. PeopleSoft's promise to arbitrate, said the court, was illusory because the “right to modify” language was a lack of sufficient consideration to support the agreement.
Judge Titus’s decision was consistent with Maryland state court decisions on the issue, In Cheek v. United HealthCare of the Mid-Atlantic, 835 A.2d 656 (2003), the Maryland Court of Appeals refused to enforce an arbitration agreement because the employee handbook's summary of the arbitration policy provided that the employer reserved the right to revise or revoke the policy at any time and without notice. The Court held that the employer's promise was illusory and was insufficient consideration to support an enforceable arbitration contract.
Negative Recommendation to Prospective Employer is Adverse Employment Action, September 2, 2004
Terrie Hillig had been employed by the Defense Finance Accounting Service (DFAS) in a clerical position for five years when she applied for a position as a Personnel Clerk/Assistant at the Department of Justice (DOJ) in March of 1998. Hillig had filed two discrimination complaints with the EEOC in 1995 and 1996 alleging that her supervisors at DFAS had discriminated against her in connection with her approval ratings in 1995, her 1995 request for annual leave, and in job training. These complaints were settled with DFAS agreeing to upgrade Hillig's performance appraisal, expunge negative information from her personnel file, and retroactively promote her.
Hillig was not offered the position at the DOJ. She claimed that the denial was the result of two negative evaluations given to the DOJ by her DFAS supervisors; evaluations included "very strong negative feedback," statements to the DOJ representative that Hillig had performance problems at work, and characterizations that Hillig was a "sh**** employee." The DOJ interviewer testified that these evaluations did not influence his decision not to hire Hillig (rather, he thought that her long fingernails would adversely affect her typing speed). He did, however, state that such negative information would have disqualified a candidate for the DOJ position.
The court compared its decision to another case where the filing of criminal charges was held to be an adverse employment action because it caused harm to future employment prospects. It further stated that an act by an employer that causes more than de minimus harm to a plaintiff's future employment prospects can, when fully considering the "unique factors relevant to the situation at hand", be regarded as an adverse employment action, even where the plaintiff does not show that the act precluded a particular employment prospect. Because such negative comments would disqualify Hillig from a DOJ job, according to the court, she suffered an adverse employment action.
Even though Hillig could not show that she suffered an actual tangible injury, the court reversed the U.S. District Court Judge's grant of judgment as a matter of law for the employer and ordered that the $25,000 jury verdict be reinstated. "The longstanding rule in our circuit has been to "liberally define the phrase adverse employment action' and not limit term to simply 'monetary losses in the form of wages or benefits.'" Hillig v. Rumsfeld, No. 02-1102 (10th Cir. Aug. 27, 2004).
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