Legal Trickery – Eric A. Parzianello

Business Law News from Michigan and Florida

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Employee’s Facebook Vacation Pictures Lead to Termination

Posted by Eric Parzianello on March 20, 2013

A winter trip to Cancun is the perfect backdrop for Facebook picture posting – unless you happen to be on FMLA leave for “excruciating” back and leg pain.

Lineberry v. DMC

That is the message from a recent federal case out of the Eastern District of Michigan, Lineberry v. Detroit Medical Center.

Carol Lineberry was performing satisfactorily as a registered nurse at the  Detroit Medical Center (“DMC”).   On January 27, 2011, she was moving stretchers at work and woke up the next day with “excruciating pain in her lower back and leg pain.”  The DMC approved leave for Lineberry under the Family and Medical Leave Act (“FMLA”) from January 27, 2011, through April 27, 2011. While on FMLA leave, she took a trip to Mexico.   Her co-workers saw Facebook photos of Lineberry on vacation, including photos of her riding in a motorboat (above) and lying on a bed holding up two bottles of beer in one hand.  Lineberry also posted Facebook pictures of herself holding her grandchildren.  Based on these Facebook postings, Lineberry’s co-workers (and Facebook friends) complained to her supervisors about what they thought was a misuse of FMLA leave.

On her return, she was questioned about her trip during an investigative meeting attended by the DMC’s human resources personnel.  Lineberry claimed that she was wheeled around the airport in a wheelchair.  When reminded that airports have security cameras, she recanted and admitted that the use of a wheelchair was a lie.  The DMC terminated her for violating the DMC’s Progressive Discipline Policy concerning  “Dishonesty, falsifying or omitting information, either verbally, [or] in written format (including electronically) on DMC records including, but not limited to payroll records, human resources records etc.”  Lineberry naturally sued for violation of her FMLA rights.

In February of 2013, the court dismissed her complaint.  It held that employees may be dismissed so long as the dismissal would have occurred regardless of the employee’s taking of FMLA leave.  The court found that she was terminated for dishonesty and not as a retaliation for taking FMLA leave.  The court also found that if an employer, like the DMC’, honestly believes that an employee lied and misused FMLA leave time, it may terminate the employee based on that belief.

Lesson for employers:  have a good employee handbook policy regarding dishonesty.  Lesson for employees:  use better judgment in Facebook posts — and Facebook “friends.”

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Employers Violating Michigan’s New Internet Privacy Protection Act Will Face Criminal and Civil Penalties

Posted by Eric Parzianello on January 2, 2013

A new Michigan law which was unanimously passed by the Michigan legislature and signed by Governor Rick Snyder on December 28, 2012, will impose criminal and civil penalties on employers for requesting an employee or applicant for employment to permit access to or allow observation of that person’s “personal internet account.” A “personal internet account” is defined as a:

bounded system established by an internet-based service that requires a user to input or store access information via an electronic device to view, create, utilize, or edit the user’s account information, profile, display, communications, or stored data.”

Personal internet accounts include popular social media sites such as Facebook and Twitter. The law will be known as the “Internet Privacy Protection Act” (“IPPA”). The IPPA which is immediately effective also applies to educational institutions and prohibits colleges, for instance, from requesting access to personal internet accounts as part of their admission process.

Aside from prohibiting a request for access, an employer is now prohibited from taking adverse action against an employee or applicant for any refusal to allow the employer to access or observe the person’s private social media accounts. A violation of the law is a misdemeanor punishable by a maximum fine of $1,000.  An individual who was the subject of the violation can also bring a lawsuit and recover up to $1,000 in damages plus reasonable attorney fees and court costs after the person makes a written demand on the employer for payment.

Certain actions remain permissible for employers, including:

  • viewing information which is publicly available;
  • requesting access to an electronic device paid for by the employer; reviewing data stored on an electronic device paid for by the employer; and
  • requesting access to an employee’s personal internet account to investigate misconduct if specific information about misconduct exists.

The issue of employee use of social media continues to be a thorny one for employers. An employee’s privacy rights must be balanced with an employer’s right to hire and fire as it pleases. Some cases have already restricted employers’ firing rights such as one which prohibited an employer from firing an employee for inappropriate posts on her Facebook page. To now subject an employer to potential criminal penalties for merely requesting access to personal information seems excessive.

Further, this law creates an invitation for litigation by rejected job applicants. Even if access is not actually requested from a job applicant, if the applicant’s Facebook page or Twitter account is even mentioned during an interview, the likelihood that litigation will be commenced increases. If an employer receives the required demand letter from an applicant, it will need to decide whether to simply pay $1,000 or go to court. If it decides not to pay, it will need to hire an attorney and then face the possibility of paying the applicant’s attorney fees if it loses in court. There is no provision in the proposed legislation which allows an employer to recover its attorney fees if it is successful in court.

There is also an issue of who is liable in the event of a violation. Since the IPPA refers to a ‘person’ who violates the law, training interviewers is important. A company supervisor could be unknowingly subjecting herself to personal liability. Training for anyone who interviews candidates on behalf of a company now becomes even more vitally important to address not only this potential law but all types of questions which are ‘off-limits’ in an interview.

Posted in General Employment Law | Tagged: , , , , | Leave a Comment »

Employment Handbook Provisions Remain Critically Important

Posted by Eric Parzianello on December 19, 2012

A recent Michigan case shows the importance of employment handbook provisions.  In Woofter v. Mecosta County Medical Center, the Michigan Court of Appeals considered a fired employee’s argument regarding her employee handbook.  She claimed that the disciplinary action policy created a grievance-like procedure and progressive form of discipline leading up to termination which therefore created her legitimate expectation of just-cause employment.  In ruling for the employer, the Court held that language in the handbook which stated that it was not intended to establish a contract between the employer and its employees was “sufficient to overcome contrary language suggesting just-cause employment.”  Employers should conduct an annual review of their employment policies to ensure, among other things, that their policies are consistent with any desired at-will employment arrangements.

Posted in General Employment Law | Leave a Comment »

Does Your Employee Handbook Prohibit Texting While Driving? It Should

Posted by Eric Parzianello on November 28, 2011

There is no doubt that texting while driving creates incredible and often deadly dangers.  A recent Florida case not only highlights those dangers but shows the financial risks which employers may face if their employees are texting while driving company cars.

On the morning of August 12, 2008, Lawrence Daniels, a pharmaceutical representative employed by Astellas Pharma US Inc., was driving a car owned by Astellas.  That same morning, James Caskey, was riding his bicycle around his North Naples neighborhood.  He was biking home when he was struck and killed by the car driven by Daniels.   A criminal proceeding found Daniels guilty of failing to yield at a stop sign.  Now, a civil case will determine whether Daniels was texting while driving.  If so, Collier County Circuit Judge Hugh Hayes has permitted Caskey’s widow to seek punitive damages against the driver and his employer according to a story in the Naples Daily News.  Punitive damages have no relation to the actual damages incurred but, rather, are intended to punish the defendants and deter others from engaging in similar conduct.

Although Daniels denies he was using his cellphone while driving, cell phone records suggest otherwise.  Importantly for Daniels’ employer, its employee handbook did not require its drivers to pull to the side of the road to text. Daniels’ handbook simply said: “Use of a cellular phone in a company vehicle is permissible; however, cellular phone usage should be restricted as much as possible while driving.”  While Michigan laws prohibit texting while driving, Florida has not yet enacted such laws.  If Daniels was indeed texting while driving, his company’s failure to issue a policy prohibiting texting while operating its vehicles could be costly, as it eliminates at least one possible defense to company liability.  In Florida DUI cases, punitive damages of up to $500,000.00 are permitted.

While there are many employee handbooks available for download on various websites, including one found on the Small Business Administration’s website, consult your attorney to ensure particular issues which may be important to your business are addressed.

Once your policies are implemented, it’s also important to take measures to enforce them.   Last year, the Walt Disney Company updated their employee policies to prohibit the use of any electronic device to send or read text messages, e-mails or any other written communication while operating a vehicle.   Employees who fail to comply are subject to disciplinary action up to and including termination.

Posted in General Employment Law, Social Media in the Workplace | Leave a Comment »

Law Firm’s Arbitration Clause Not Broad Enough to Include Age Discrimination Claim

Posted by Eric Parzianello on November 20, 2011

A recent Michigan Court of Appeals decision shows that even lawyers’ own arbitration clauses may not be as broad as they intended.

In Hall v. Stark Reagan, former shareholders of the law firm alleged that their shareholder status in the firm was terminated by the remaining attorneys based on their age. The attorneys filed suit in Oakland County Circuit Court based on age discrimination.

The law firm claimed that the parties’ shareholder agreement required the parties to arbitrate any age discrimination claims. The Circuit Court agreed and dismissed the complaint.

The Court of Appeals reversed that decision. It found that the arbitration clause in the shareholder agreement was limited in its scope to disputes relating to the “interpretation or enforcement” of the “rights or obligations” described in the agreement. Since those “rights or obligations” only involved various forms of entitlement to stock ownership, a dispute involving age discrimination was not contemplated by the shareholder agreement.

Because the complaint did not contain any allegation that defendants violated the shareholder agreement, the court concluded that including an age discrimination case “within the scope of an arbitration provision expressly limited to the ‘interpretation or enforcement’ of ‘rights or obligations’ concerning corporate stock would expand the clause’s reach beyond that intended by the parties.”

In many cases, arbitration is preferable to litigation. If you currently have arbitration clauses in your agreements with your employees, make sure they cover all of the potential disputes that can arise.

Posted in General Employment Law | Leave a Comment »

IRS To Crack Down on Improper Use of Independent Contractors But Offers Early Settlement

Posted by Eric Parzianello on September 27, 2011

A prior blog post examined some of the dangers of classifying workers as independent contractors when the Department of Labor may consider them to be employees.  If the DOL concludes that employees have been erroneously classified as independent contractors, then  minimum wage, overtime, penalties and interest may be only a part of a business owner’s problems.   Another looming risk as a result of an erroneous classification is the IRS seeking to recover unpaid federal employment taxes.  The IRS has publicized its intent to be more vigilant about worker misclassification in the future.

However, under a new IRS settlement program, business owners have the opportunity to “come clean” regarding workers who have been previously misclassified as independent contractors.  The Voluntary Classification Settlement Program allows eligible business owners to voluntarily agree to reclassify independent contractors as employees (one of the eligibility requirements is that the taxpayer is not currently being audited).  The business owners would then pay only 10% of the payroll tax liability which would have been due on the employee’s compensation for the past year, without interest or penalties.  Participating taxpayers agree to treat applicable workers as employees for future tax periods and extend the period of limitations on assessment of employment taxes for three years to allow the IRS to monitor future compliance.  In exchange, the IRS agrees to:

  • Accept 10 percent of the employment tax liability that may have been due on amounts paid to the workers for the most recent tax year;
  • Waive all interest and penalties on unpaid amounts; and
  • Not conduct an employment tax audit with respect to worker classification of those workers being reclassified for prior years.

To determine whether to consider participating in this program, a business owner should consult with counsel to analyze whether the workers are independent contractors or employees.  The factors used by the IRS center around degrees of control and independence:

  1. Does the owner control or have the right to control what the worker does and how the worker does the job?
  2. Are the business aspects of the worker’s job, including how the worker is paid and who provides tools for the job, controlled by the owner?
  3. How continuous is the relationship?
  4. Is the work performed a key aspect of the owner’s business?

The IRS says that “there is no ‘magic’ or set number of factors that ‘makes’ the worker an employee or an independent contractor, and no one factor stands alone in making this determination.”  The entire relationship must be considered.

For business owners who want a free analysis, the IRS is more than willing to conduct one through the filing of Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.   Although it may take at least six months, the IRS will review the facts and circumstances and officially determine the status of any workers.  However, in light of the publicized vigilance in the pursuit of unpaid taxes by the IRS for misclassified workers, this particular option may fall into the category of “be careful what you ask for.”

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Bank of America Fires Poor Manager; U.S. Says She Was a Whistleblower and Awards Her $930,000

Posted by Eric Parzianello on September 15, 2011

As a timely follow-up to a recent blog regarding documentation of employee deficiencies, whether a former Bank of America employee’s personnel file was sufficiently “papered” with negative performance reviews will almost certainly be at issue on appeal.  The bank was ordered to reinstate and pay a former employee approximately $930,000 in back wages, interest, compensatory damages and attorney fees after the United States Department of Labor found that she was fired for being a whistleblower.

The employee worked for Countrywide Financial Corp., which merged with Bank of America in July 2008.   According to the Department of Labor, the employee revealed “widespread and pervasive wire, mail and bank fraud involving Countrywide employees”  and was fired shortly after the merger.

In a Bank of America statement reported by the Los Angeles Times the bank said it fired the employee “solely based on issues with the employee’s management style and in no way related to the employee’s complaints and the allegations made in the complaint.”  The bank said it will appeal the ruling to the Labor Department’s Office of Administrative Law Judges within 30 days.

Posted in General Employment Law, Uncategorized | Leave a Comment »

Documentation of Your Employees’ Job Deficiencies Could Be Important After They Sue

Posted by Eric Parzianello on September 6, 2011

Are you sufficiently documenting your employees’ performance deficiencies? A recent Florida federal decision shows the importance of maintaining records which evidence any performance issues should that employee file a lawsuit for discrimination or retaliation.

In the case of Deer v. Saltzman, Tanis, Pittell, Levin & Jacobson, Lavern Deer, who is black, was employed by a pediatric medical practice. While her performance reviews were generally excellent for her first several years of employment, they included constructive comments on areas of improvement. When Ms. Deer was passed over for a promotion, she filed an EEOC complaint for discrimination while she was still employed by the medical practice.

Around that same time, her supervisor gave Ms. Deer low scores for “Individual Initiative,” “Personal Job Efficiency,”and “Planning” in her written performance evaluation. The supervisor noted that Ms. Deer “should spend more time with her staff,” and that she “needs to organize her work in order to spend more time on the floor managing her staff.” The supervisor provided a written performance warning to Ms. Deer which she signed. A subsequent investigation also found that she was spending work time using the office computer which was prohibited by office policy.

Ms. Deer was fired after admitting she sent private e-mails on company time. Ms. Deer then sued, alleging that her termination was in retaliation for her EEOC complaint.

In order for an employee to prevail on a retaliation claim, she must show (1) that she engaged in statutorily protected activity (for Ms. Deer, it was the filing of the EEOC complaint); (2) that she suffered a materially adverse employment action (termination, in Ms. Deer’s case); and (3) that there was some causal relationship between the two events.

As to the last issue, the Southern District of Florida federal court found that the earlier performance evaluations showed that her termination was caused by her performance deficiencies and not because of the filing of the EEOC complaint. The court found that the medical practice demonstrated “legitimate, nondiscriminatory reasons for its employment decisions,” and dismissed Ms. Deer’s complaint.

Lesson for employers? Document everything relating to your employees’ job performance especially any performance deficiencies. Even in an at-will employment situation, an employer can still be liable for wrongful termination if discrimination or retaliation can be proven. With proper documentation, these types of claims are easier to defend.

Posted in General Employment Law, Uncategorized | Leave a Comment »

We’re Hiring: Litigation Paralegal Needed

Posted by Eric Parzianello on June 21, 2011

My firm is looking for an experienced legal assistant to support our business litigation and transactional practices. Candidates must: have excellent organization and writing skills; be attentive to detail; be proficient in transcription; and have the ability to work in a fast-paced environment. Please send resumes to mosborn@bealshubbard.com.

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Supreme Court Gives Wal-Mart Huge Legal Victory in Sex Bias Case

Posted by Eric Parzianello on June 20, 2011

A divided United States Supreme Court this morning handed Wal-Mart Stores a huge legal victory in a sex bias case. The plaintiffs, who were current or former employees of Wal-Mart, sought damages on behalf of themselves and a nationwide class of some 1.5 million female employees, because of Wal-Mart’s alleged discrimination against women. The plaintiffs claimed that “local managers exercise their discretion over pay and promotions disproportionately in favor of men, which has an unlawful disparate impact on female employees.” A link to the complete decision can be found here.

The District Court for the Northern District of California had previously certified the class action and the Ninth Circuit Court of Appeals affirmed that ruling. The Supreme Court reversed the ruling of the Ninth Circuit and found that a class action, which would have been one of the largest in United States history, was inappropriate. The Court found that that the alleged class of workers would not have enough common “questions of law or fact” to result in a class action.

The plaintiffs wanted “to sue for millions of employment decisions at once,” but the Court held that “without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.”

The Court determined that there was no significant proof that Wal-Mart operated under a “general policy of discrimination.” In fact, Wal-Mart’s announced policy forbids sex discrimination, and the company has penalties for denials of equal opportunity. The plaintiffs’ only “evidence of a general discrimination policy was a sociologist’s analysis asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias.” Because the sociologist was unable to estimate what percentage of Wal-Mart’s employment decisions might be determined by stereotypical thinking, his testimony was worlds away from “significant proof” that Wal-Mart “operated under a general policy of discrimination.”

Justice Scalia wrote the the opinion of the Court, in which Justices Roberts Kennedy, Thomas and Alito joined. Justice Ginsburg wrote a dissent as to the issue of whether there were enough facts uniting the claims and believed that “Wal-Mart’s delegation of discretion over pay and promotions is a policy uniform throughout all stores.” Justice Ginsburg was joined by Justices Breyer, Sotomayor and Kagan in finding that the plaintiffs should have been permitted to “show that common class questions ‘predominate’ over issues affecting individuals.”

While Wal-Mart will still have to defend the original claims of the handful of women who brought the lawsuit and may end up facing new claims around the country, the ruling will prevent the possibility of billions of dollars in damages in a single case. Although this ruling will protect businesses from class action lawsuits based on a lack of common facts, the ruling should also highlight the importance of a written anti-discrimination policy in defending these types of actions.

Posted in General Employment Law, Uncategorized | Leave a Comment »

Florida Physician’s Non-Compete Agreement With Hospital Was About 10 Miles Too Long

Posted by Eric Parzianello on May 5, 2011

How important are 10 extra miles in a non-compete clause? A recently filed case in Lee County, Florida, shows that they can be critically important.

Dr. Eric Eskioglu filed a complaint which alleges that the non-compete clause in his 2006 employment contract with Lee Memorial Hospital is not enforceable. The clause prohibits the doctor from engaging in a neurosurgical practice within a 50-mile radius of Lee Memorial Hospital. Specifically, the clause in his employment contract states:

“Physician shall not engage in the practice of neurosurgery or any related field of medical or surgical practice, within a radius of fifty (50) miles from the LMHS facility located on Cleveland Avenue, Fort Myers, Florida for a period of three (3) years following the date of termination of employment. Physician expressly agrees that this paragraph 10.c. is reasonable.”

Dr. Eskioglu voluntarily resigned from Lee Memorial and his last day of employment was March 18, 2011. Unfortunately, for him, he wants to continue his practice at Physicians Regional Medical Center in Naples, which is a little over 40 miles from Lee Memorial. Among other arguments, the doctor alleges that enforcement of the non-compete clause would harm the public because it would limit the public’s access to services in his neurosurgical specialty.

Unless Lee Memorial Hospital breached the employment contract with Dr. Eskioglu, he will have an uphill battle in attempting to invalidate the non-compete provision. Florida law enforces restrictive covenants if they are reasonable in time, area and line of business and set forth in a writing signed by the party against whom enforcement is sought, and the contractually specified restraint is supported by at least one legitimate business interest justifying the restraint, and reasonably necessary to protect that interest. Envtl. Servs. v. Carter, 9 So. 3d 1258, 1263 (Fla. Dist. Ct. App. 5th Dist. 2009); § 542.335, Fla. Stat.

I will be watching for any resolution of this case.

Posted in Non-Compete Law, Uncategorized | Leave a Comment »

Facebook Case Update: Case Settled; Employer’s “Overly Broad” Internet Policies To Be Revised

Posted by Eric Parzianello on March 2, 2011

In an update to last month’s NLRB Facebook case story, that case has been settled. The details of the NLRB’s complaint are found in a prior post below.

The NLRB issued a press release advising that “a settlement has been reached in a case involving the discharge of a Connecticut ambulance service employee for posting negative comments about a supervisor on her Facebook page.” The NLRB alleged, among other things, that the company maintained overly broad rules in its employee handbook regarding blogging, Internet posting, and communications between employees. Under the settlement, “the company agreed to revise its overly-broad rules to ensure that they do not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work, and that they would not discipline or discharge employees for engaging in such discussions.”

Although the precise language of the original rules and the revised rules was not published, it would be surprising if the employer was not allowed to maintain a policy prohibitting its employees from referring to supervisors as “scumbags” and other vulgar names as this employee posted on Facebook. Another undisclosed aspect of this case is why the National Labor Relations Board is wasting its resources and those of a private employer in attempting to protect this type of employee behavior.

Posted in Social Media in the Workplace, Uncategorized | Leave a Comment »

“My Supervisor Is A Psychopathic Scumbag”: Protected Facebook Post? NLRB Incredibly Says “Yes”

Posted by Eric Parzianello on February 2, 2011

From an employer’s perspective, the National Labor Relations Board complaint against a company for firing an employee after she posted derogatory comments about her supervisor on Facebook is beyond absurd. The complaint was filed after an ambulance company fired an employee for venting on her Facebook account that she “love[s] how the company allows a 17 [the company’s term for a psychiatric patient] to be a supervisor,” before calling the supervisor a “scumbag” among other things.

The NLRB’s position, taken directly from its own Office of the General Counsel News Release is as follows:

“An NLRB investigation found that the employee’s Facebook postings constituted protected concerted activity, and that the company’s blogging and internet posting policy contained unlawful provisions, including one that prohibited employees from making disparaging remarks when discussing the company or supervisors and another that prohibited employees from depicting the company in any way over the internet without company permission.”

The NLRB is an independent federal agency which has the authority to safeguard employees’ rights to organize and to remedy unfair labor practices committed by private sector employers. One reporter notes that this case appears to be the first time “the board has argued that workers’ criticisms of their companies or bosses on a social media site is considered a protected activity.”

The purported basis of the complaint rests in Section 7 of the National Labor Relations Act which permits employees “the right to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

While a hearing was scheduled for January 25, 2011, a postponement of that hearing until February 8th to allow for additional settlement discussions may show that the NLRB is reluctant to have a written opinion issued in favor of the company.

A television news account of the case can be found on YouTube.

Posted in Social Media in the Workplace, Uncategorized | Leave a Comment »

Hiring Your Competitor’s Employee? Undertake a Cost-Benefit Analysis

Posted by Eric Parzianello on November 3, 2010

Are you contemplating stealing away a competitor’s employee for your own company? While you may ultimately not have to pay damages for interfering with your competitor’s business, your defense costs may be significant.

On October 25, 2010, the Florida First District Court of Appeal reversed a trial court’s decision, prior to trial, to dismiss a lawsuit brought by a physician group against a former employee and her new employer. In Southeastern Integrated Med., P. L. (“SIMED”) v. North Florida Women’s Physicians, P. A. (North Florida) , SIMED and Dr. Carroccio entered into a Employment Agreement. Dr. Carroccio agreed to provide professional services to SIMED’s patients as a full-time medical doctor. The parties’ Employment Agreement contained a covenant not to compete which provided that upon termination of employment, “Dr. Carroccio was restricted for two years from providing medical services within a twenty-five mile radius of any SIMED medical office.”

Eleven months into the Employment Agreement, SIMED learned that North Florida solicited Dr. Carroccio to leave SIMED and to work at North Florida despite having knowledge of the Employment Agreement. Dr. Carroccio accepted the offer to work for North Florida and informed SIMED that she was quitting. SIMED sued Dr. Carroccio and North Florida alleging that it suffered damages in the loss of legitimate business interests, including substantial relationships with specific patients.

The trial court found that North Florida’s conduct was not actionable because it had a legitimate, competitive business purpose, “i.e., North Florida was free to compete with SIMED in recruiting physicians to its practice.” The trial court therefore dismissed the complaint. However, the appellate court found that it was improper for the trial court to consider North Florida’s motives in recruiting Dr. Carroccio without hearing evidence on the issue. It therefore sent the case back to the trial court for further proceedings.

While North Florida may ultimately prevail in the trial court, it will have already paid considerable attorney defense costs for the original proceedings in the trial court, then in the appellate court, then back in the trial court and then, perhaps, in the appellate court again. If you’re planning to hire an employee with a non-compete agreement away from a competitor, consult your counsel and develop a cost-benefit analysis. That employee may provide a considerable amount of profit for you. On the other hand, the analysis may conclude that the potential upside does not outweigh the cost of litigation.

Posted in Non-Compete Law, Uncategorized | Leave a Comment »

Looking Through Your Employees’ Personal E-mails or Texts? Supreme Court Highlights Need For Written Policy

Posted by Eric Parzianello on September 16, 2010

Can employers delve into their employees’ personal lives by looking through their e-mails and texts? The answer could be yes, if the information is on company equipment and your written policy permits it.

In a case which was the subject of two prior blog articles below, this summer’s decision by the United States Supreme Court in the case of City of Ontario v. Quon highlights the need for employers to have written policies addressing employee use of work-issued electronic devices. In Quon, a police officer’s sexually charged text messages to his estranged wife and office girlfriend were reviewed by the officer’s police chief. Although he was only issued a reprimand for sending the personal text messages in violation of a written policy, Quon and the people he was messaging sued, claiming that the department had no right to look at the communications.

The Supreme Court held that the officer did not have a right to privacy under these circumstances since the police department had a legitimate interest in its review and the search was reasonable in scope. Importantly, the court noted that the city’s policy that allowed it to monitor and log text messages resulted in the employees having no expectation of privacy or confidentiality when using those devices. Although the decision dealt with the constitutional issues surrounding a public employer’s search of an employee’s text messages, private employers should note that the Court’s decision was based on the employee violation of an explicit policy governing the use of company-owned devices.

The importance of a written policy governing the use of employer-owned devices for electronic communications and notifying the employees of the employer’s right to monitor such use cannot be overstated. The necessity for clarity in such a policy became evident in a New Jersey case regarding employee e-mails.

In Stengart v. Loving Care Agency Inc., the New Jersey Supreme Court ruled that an employee who exchanged personal e-mail messages with her attorney on an employer-issued laptop computer had a reasonable expectation of privacy in those communications. While the employer had a policy that allowed the company to review any messages sent on its equipment, the policy also permitted personal use of e-mail. The court noted that it was “not clear” from the policy “whether the use of personal, password-protected, web-based e-mail accounts via company equipment” was covered by the policy; therefore, the policy did not destroy an expectation of privacy by the employee in her personal e-mails.

As noted in a recent Law.com article, “employers should have clearly worded policies related to the use of employer-issued electronic devices and computers. At a minimum, the policy should contain:

• specific definitions of the work devices and messages that are covered by the policy — for example, work-issued computers, BlackBerrys, and cell phones;

• a provision addressing whether an employee is permitted to use work devices for personal use; and the extent to which that use is allowed;

• a provision informing employees that the employer may monitor and log all work devices and accounts;

• a provision informing employees that the employer may access and search work devices and accounts, and that employees have no expectation of confidentiality or privacy in messages sent over those devices;

• a provision allowing for disciplinary action if the policy is violated;

• a form for employees to sign acknowledging receipt of the policy.

If there is any question about the purpose and scope of the search, the employer should consult with legal counsel prior to any action. Having clearly defined policies and procedures will define the line between personal and private use of work-issued devices and minimize the employer’s exposure to litigation.”

Posted in Social Media in the Workplace, Uncategorized | Leave a Comment »

Employee or Independent Contractor? The Answer May Be Costly . . . and Your Agreement May Be Irrelevant

Posted by Eric Parzianello on July 20, 2010

Recent court rulings continue to make clear that regardless of what your independent contractor agreement says, minimum and overtime wages may be required to be paid to workers under the Fair Labor Standards Act (“FLSA”). An Indiana federal court recently found exotic dancers to be employees of a topless nightclub and a Tennessee federal court found nurses who signed Independent Contractor Agreements to nevertheless be employees of a business which provides nurses for long-term nursing care. Once a company is found liable, corporate officers who have operational control and are involved in the day-to-day business operation or have some supervision responsibility for the employees are personally liable for back wages and overtime. Additionally, joint employers may be liable where the alleged employer had the power to hire and fire the employee, supervised and controlled the employee’s schedule and conditions of employment, determined the rate and method of payment, and maintained employment records.

The FLSA requires employers to pay minimum wage to “employees” and wages at a rate of one and one-half times their regular rate of pay to “employees” who work more than 40 hours in one workweek. While the Act provides little guidance in its definition of “employee” as “any individual employed by an employer,” courts have interpreted “employees” to be “those who as a matter of economic reality are dependent upon the business to which they render service.”

The “economic realities” test considers these factors: (1) the permanency of the relationship between the parties; (2) the degree of skill required for rendering the services; (3) the extent of the worker’s investment in equipment or materials for the task; (4) the worker’s opportunity for profit or loss; (5) the degree of the employer’s right to control the manner in which work is performed; and (6) whether the service rendered is an integral part of the employer’s business. Importantly, the parties’ written agreements do not control whether a worker is considered an employee for FLSA purposes. Although a contract may provide some evidence of the economic relationship between parties, the FLSA is designed to defeat contractual arrangements.

On June 21, 2010, applying the factors to nurses in the case of Lemaster v. Alternative Healthcare Solutions, Inc., a federal court in Tennessee found: (1) the most transient nurse worked for over six months and the permanence factor therefore leaned slightly in favor of an employment relationship; (2) while nurses are skilled workers, nothing suggested that they were capable of finding their own clients, a factor clearly supporting a finding of employee status; (3) the nurses supplied their own stethoscopes and blood pressure cuffs, but otherwise did not provide any medical equipment used at the patients’ homes, a factor weighing in favor of finding that the nurses were employees; (4) all of the nurses were compensated at an hourly rate and they had no opportunity for profit or loss beyond their hourly wage, a factor falling squarely on the side of employee status; (5) the company exercised control over the nurses’ work schedules which weighed slightly on the side of employee status; and (6) because nurses are integral to a company in the business of recruiting nurses, this factor also weighed in favor of finding employee status.

The court concluded that the nurses were employees regardless of their Independent Contractor Agreements (“ICAs”). As to the agreements, the court went out of its way to signal a possible attorney malpractice action by stating: “The attorney drafted the ICAs and advised [the employer] on the use of independent contractors, although she never mentioned the application of the Fair Labor Standards Act to the nurses.”

On June 4, 2010, an Indiana federal court found that topless dancers were employees of the Dancers Showclub in Indianapolis. The court in Morse v. Mer Corp. found that the club’s exercise of control over the dancers, the lack of the dancers’ control over their profit and the fact that “a dancer’s investment is limited to her costumes and a padlock,” all weighed in favor of employee status. As to the issue of whether the dancers required highly developed skills, the court rejected the club’s argument that a dancer “must be a peculiar combination of a customer service representative and counselor: she must have excellent listening skills, the ability to read another person’s affect and discern from that demeanor his particular conversational or emotional needs, and the ability and willingness to fulfill those needs in a purely non-sexual way.” The court found that argument to be “unconvincing, especially because nothing in the record indicates that the [club’s] hiring process included an assessment of a prospective dancer’s communication or counseling skills.”

These cases highlight the dangers of hiring independent contractors without a careful analysis of whether the FLSA requires compliance with minimum wage and overtime laws. Even if you have a written agreement and pay an hourly rate which is significantly higher than minimum wage, the workers or the Department of Labor may challenge your workers’ status and seek to collect back wages from your company and its officers.

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Reverse Weight Discrimination? Attractive Banker Says She Was Fired For Being “Too Distracting”

Posted by Eric Parzianello on June 10, 2010

A Citibank employee in New York alleges that she was fired because her male co-workers found her to be “too distracting” in a standard business suit and classic high heels. The ABA Journal reports that Debrahlee Lorenzana said that she was “being treated in a sexist and discriminatory manner.” Lorenzana said that other women at the bank dressed more provocatively than she did, but were allowed to wear what they liked because of their “general unattractiveness.” Whether her appearance could have caused such distractions will be left to the authors on the websites and blogs which have posted her pictures. Nevertheless, the case raises various interesting workplace issues including the appropriate attire for professionals in corporate America, maintenance of a dress code and discrimination (in this case, reverse discrimination) based on appearance.

Under Michigan law, an employer may generally maintain a non-discriminatory dress code but may not discriminate against an employee based on weight. If an employee proves that he or she was discharged from employment with weight being a determinative factor in the termination, then the employee has established a claim of weight discrimination. Michigan law does not limit weight discrimination to overweight individuals; if Michigan law were applied to Lorenzana’s claims, she could have a potential weight discrimination claim if she could prove she had been fired for being too thin.

Lorenzana’s allegations are in direct contrast to a recent case brought by a Michigan Hooters’ waitress who claims that she was wrongly required to lose weight in order to look more attractive. Neither Florida nor any other state has a weight discrimination law similar to Michigan, a point which Hooters laments is “one of the long list of things that make it harder for us to do business in Michigan than in our 45 other states.”

Because Lorenzana’s employment agreement contained an arbitration clause (something all employers should consider), her case will not go to a jury. Expect to read more about this, however, as Citibank plans a vigorous defense.

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Facebook At The Office? Make Sure It’s Covered By Your Employment Policies

Posted by Eric Parzianello on May 21, 2010

Are your employees allowed unlimited access to Facebook? Across the country, not many employers allow it and those which do are restricting usage through written policies.

A recent survey commissioned by Robert Half Technology found that 54% of American companies banned employees from logging on to Twitter, Facebook and other social networking sites from the office. Of more than 1,400 executives surveyed, only 10% gave employees unlimited access to social networks at work, while 16% allowed some personal use. Another Robert Half survey found that 38% of chief information officers interviewed have implemented stricter social networking policies — more than twice the number (17%) who say they have relaxed the rules.

A Detroit Free Press article noted that companies which allow unrestricted access to Facebook say factors such as boosting company branding and employee morale “outweigh the risks of wasted time and dips in productivity.” Ford Motor Company believes that employees on Facebook and blogs “can be powerful advocates” for the company but it also has this warning for employees: “Don’t share secret information. Don’t trade on insider information. And remember, whatever happens in Vegas, stays on Google.”

The majority of companies which prohibit access to social networking sites point to studies such as one conducted by Boston based Nucleus Research which concluded that companies allowing full access to Facebook have a 1.5% drop in total office productivity. Other concerns obviously also exist.

A waitress for Brixx Pizza in North Carolina recently lost her job over her Facebook usage. She served a couple who came in for lunch and stayed for three hours – forcing her to work an hour past her quitting time. The couple then rewarded the waitress with a $5 tip. She did what many Facebookers now do and posted a rant: “Thanks for eating at Brixx,” she wrote, “you cheap piece of – – – – camper.” She was fired for violating the company’s well-drafted policy which specifically prohibits employees from disparaging customers and “casting the restaurant in a negative light” on a social network.

As we wait to see how the Supreme Court rules on the usage of company pagers in the employee “sexting” case, at least one thing remains clear for employers: maintain a written policy on use of the company’s technology.

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Supreme Court Hears Arguments In Employee “Sexting” Case: Written Policy Important

Posted by Eric Parzianello on April 21, 2010

Does your company have a written policy regarding the use of company cell phones or computers? The affirmative answer to that question appeared to be a significant one in a case heard by the United States Supreme Court yesterday. A decision is expected in June in the case of Quon v. Arch Wireless Operating Company and the City of Ontario, which was the subject of a January blog.

Several months after Police Officer Quon was issued a pager by the Ontario (CA) Police Department, Quon’s boss asked for a print-out of his messages because Quon was repeatedly exceeding his monthly message allowance. The review revealed that most of Quon’s texts were not work-related and many were sexually explicit in nature including ones sent to his estranged wife, his office girlfriend and a fellow officer. Officer Quon was reprimanded for sending the personal text messages. Although the department had a written policy — issued before the distribution of the pagers — warning officers that all communications on city-owned equipment were subject to review, Quon and the people he was messaging sued, claiming that the department had no right to look at the communications.

Justice Sonia Sotomayor questioned whether the boss’s reason for looking at the messages mattered: “Let’s assume that in this police department, everyone knew, the supervisors and everyone else, that the police department people spoke to their girlfriends at night,” Sotomayor said. “And one of the chiefs, out of salacious interest, decides: I’m going to just go in and get those texts, those messages, because I just have a prurient interest.” Justice Antonin Scalia said the reason for the search was irrelevant to the case. “So when the — when the filthy-minded police chief listens in, it’s a very bad thing, but it’s not offending your right of privacy,” Scalia observed. A majority of the justices seemed to place great significance in the department’s written policy which would lead to a conclusion that the city acted reasonably in monitoring the text messages in view of its written policy warning employees they have no guarantee of privacy in the use of office computer and electronics equipment.

A decision is not expected until June but it seems likely that if the department is successful, its written policy will be a factor in immunizing it from liability.

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“Come To Jesus” Meeting With Muslim Employee Was Not Evidence of Discrimination

Posted by Eric Parzianello on March 19, 2010

A recent Newsweek article noted that there has been a 17 percent jump in the number of age-discrimination complaints filed since the recession began in 2007. Wrongful discharge cases, in general, appear to also be on the rise. Many have no merit, as evidenced by a recent Michigan Court of Appeals case involving alleged religious discrimination against a Muslim.

After being terminated from his employment by a joint venture between Lear Corporation and Comer Holdings, Yussef Johnson sued the joint venture and Comer for breach of contract and religious discrimination under the Elliott-Larsen Civil Rights Act based upon Johnson’s Muslim religion.

Johnson testified that the owner of Comer promised him in an interview that he would only be terminated “for cause.” However, it was undisputed that after his interview, he signed a letter offer and an employment application which both stated that the employment relationship was terminable at the will of either party. Because under Michigan law, an employee cannot rely on a prior oral agreement for just-cause employment where he later signs an agreement that expressly provides for employment at-will, the trial court properly dismissed the breach of contract claim.

As to the claim that he was subjected to religious discrimination because he was a Muslim, Johnson was required to establish that he was discharged or otherwise discriminated against with respect “to employment, compensation, or a term, condition, or privilege of employment, because of religion . . . .” In one of the incidents Johnson cited as proof that the firing decision was motivated by a religious bias, a supervisor told Johnson that he was going to have a “come to Jesus” meeting with Johnson shortly before Johnson’s termination.

The Court of Appeals patiently explained in its decision that a “come to Jesus meeting” is a commonly used phrase which refers “to a meeting where someone intends to lecture another person about some improper behavior and ask them to “shape up or ship out”; it can also refer to “dressing someone down” or calling him or her “on the carpet.” The Court then concluded that no reasonable jury could find that the statement or the other alleged incidents reflected a bias on Harris’ part either in favor of Christians or against Muslims and affirmed the dismissal of Johnson’s case.

Employers should take note of the significance of an agreement that expressly provides for employment at-will. Additionally, despite the victory for the employer in this case regarding the religious comment, owners would be well advised to have their management team trained in basic discrimination laws.

Posted in General Employment Law, Uncategorized | 2 Comments »