Rogers & Tartaro Business Litigation Blog : New York and Connecticut Business Litigation Lawyer & Attorney : Rogers & Tartaro Law Firm : Commercial Litigation : Westchester County NY, Fairfield County CT

Mom always said, “think before you speak,” but nowadays that advice extends to “think before you type” – especially when it’s on your employer’s keyboard.

In the case of the City of Ontario, CA v. Quon, the U.S. Supreme Court upheld the rights of employers to monitor employee communications, in the public and private sector. Mr. Quon had asserted that he had been subjected to an unreasonable "search" under the Fourth Amendment of the Constitution because the city of Ontario, his employer, had read the messages on his pager.

This is a California case but was watched in all jurisdictions because it could be very influential.  However, as True/Slant points out, this opinion may be limited in its applicability to other employees, since Quon works for the government and the law differs somewhat for public employees.

The electronic monitoring policy of the police department, for whom Quon worked, was not very precise or completely distinctive. We join many other bloggers who have commented in asserting that common sense – and now the law – dictates that employers should eliminate ambiguities in their policies. This, however, may be easier said than done, considering the emerging concepts in this new field – including the lack of technical proficiency from the Courts. (The Wall Street Journal Law Blog reported that our esteemed Supreme Court judges are not exactly “tech-savvy,” and needed some explanations regarding pagers, cell phones, etc.)

When it comes down it, why would an employee take a chance to text on an employer’s device? Perhaps because it’s convenient, and who’s really going to carry two electronic devices, one for professional and one for private use? An employer’s device is probably better technology than something one would purchase for oneself. But, if the messages are really meant to be private, is it worth taking the risk?
 

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We’ve been asserting for a while that social network access is becoming a significant area of employment law. Take, for example, a recent California case involving a waitress who was fired for making disparaging remarks on her Facebook page about a customer. According to the California Employment Law Report, the court ruled that, under the circumstances of that case, postings to social networking sites are not private.

It seems we’re developing a legal theory that employers can view, and possibly even act upon, information their employees put on the Internet. To paraphrase an earlier California court ruling, no reasonable person can have an expectation of privacy regarding material published on the internet.

But it can go even further. One employer in Montana asked job applicants to provide the login information to their social networking sites, so the employer could view those sites, thereby learning more about the potential employee.

At some point, perhaps state legislators or the courts will specifically define what employees can and cannot expect regarding online privacy. Until that time, however, employers need to extend their policymaking to cover social networks.

Facebook isn’t going away anytime soon. According to Newsweek, there are now over 500 million members. A final suggestion to disgruntled employees, or anyone who may have had a bad day at the office: keep it off your Facebook. There are clearly a lot of people watching.
 

 image, courtesy news.com.au

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After doctors told a Connecticut woman that genetic testing revealed that she had an "80 percent" chance of getting breast cancer, she underwent a voluntary double mastectomy. After all, according to the New York Times, both of her sisters had already contracted the disease, and test results showed her to be a carrier of the BRCA2 breast cancer gene. When she returned to work, her company started giving her fewer responsibilities, then demoted her and ultimately fired her. Previously, she had received glowing reviews.

The 39-year-old mother of two recently filed complaints claiming that her employer violated the Genetic Information Nondiscrimination Act (GINA) as well as the Americans with Disabilities Act.

GINA prohibits companies and health insurers from considering someone’s genetic background in firing, hiring or promotions.

The Times article states that a representative of the Equal Opportunity Employment Commission said most of the complaints filed since the genetic law took effect six months ago seemed to involve cases in which employers had improperly acquired or disclosed genetic information. But Ms. Fink’s case alleges a more serious offense: her job was terminated because of her genetic risk factors.

A spokesperson for the employer is quoted by the Times as follows: “We are confident that when the facts are revealed, the company’s actions will be seen in a different light and will be seen as being warranted.”

Since we are commenting on a sketchy news report of the bare beginning of what promises to be a complex case, it is important that we refrain from hasty conclusions and await further developments.

Nonetheless, this EEOC complaint, described by an advocacy group as “the first to become public,” raises awareness about GINA and a whole set of new issues for employers relating to the use and misuse of genetic information. We will be keeping a close watch on developments in this emerging area of the law.

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One of our “hot button” topics is the utilization of a company computer for personal use. While we have cautioned employees not to use their employer’s equipment for private purposes, a recent New Jersey judgment puts another spin on the rule, regarding attorney-client privilege.

In Stengart v. Loving Care Agency, Inc, the New Jersey Supreme Court’s decision affirmed that Stengart “could reasonably expect that email communications with her lawyer to her personal account would remain private, and that sending and receiving them via a company laptop did not eliminate the attorney/client privilege that protected them.” The subject matter is of interest in many jurisdictions, not just New Jersey.

 Looking at the details of the case, I found it very interesting that the computer was being used only as a conduit; the employee used it to access a private e-mail account. However, not being sufficiently tech-savvy, she didn’t realize the computer was saving copies in its cache.
This is like an impression being left on the bottom pages of a note pad (movie buff alert: this occurs in Hitchcock’s North by Northwest). There is one difference: you could look down and see the impression on the pad; if you’re not technically savvy, you may not even know there is a cache or even what a cache is.

According to the Employee Rights Blog, the company argued that their policy indicated that emails sent on company equipment could not be considered private or personal. But it also acknowledged that “occasional personal use of email is permitted.” The Court cited other ambiguities, including the fact that there were five versions of the policy floating around.

The Employee Rights Blog has some good suggestions: Employees: don’t use company computers for anything private. Employers: try not to be ambiguous about your company’s computer use policy.
 

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Last week, we posted about confidentiality agreements, referencing a recent case involving English muffins.

Now hot dogs are the hot topic.

The American Academy of Pediatrics released a policy statement this month, reporting that hot dogs cause about 17 percent of food-related asphyxiations in children. The Academy is proposing that hot dogs be redesigned to prevent choking.

For those caregivers who do not cut their children’s food into safe-sized pieces, or heed choking warnings, this is a life-saving solution. However, according to Eric Hummel of Hummel Brothers Meat Products in New Haven, Connecticut, “it would be virtually impossible to make [a hot dog] in really any other shape.” If it could have been done, it probably would have by now.

But if a food scientist did discover how to bypass the grinding-emulsifier-casing process, the new design would undoubtedly involve confidential, proprietary information. Yes, anyone can try to duplicate a new shape. But the process for producing the shape could be proprietary and subject to confidentiality agreements or to other protections for intellectual property.

In the meantime, Mr. Hummel recommends that families with young children purchase skinless hot dogs in the thinnest form.

There are other solutions for small children: alternative foods like eggs, sliced turkey, whole grains…. But, being lawyers and not dietitians, we have to leave the matter to individual adults to decide, including those who "relish" their hot dogs.

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One of America’s most closely guarded secrets sits in an undisclosed location in Louisville, locked away in a safe. Very few people know its location, let alone the information contained in that vault. The select few who do know are obligated to strict confidentiality by contract. The information contained therein are not military codes or emergency instructions. It’s Colonel Harland Sanders’ secret formula for his Kentucky Fried Chicken.

A recent Law.com post reported the case of Bimbo Bakeries USA Inc. v. Botticella. Mr. Botticella was one of a handful of executives who knew the secret “nooks and crannies” formula for Thomas’ English Muffins. Botticella had surreptitiously accepted a position at rival Hostess. Bimbo Bakeries (the company that makes the muffins) successfully sought an injunction to block Botticella from joining Hostess and possibly exposing their trade secrets.

In our practice, we frequently get asked about non-compete and non-disclosure agreements. Often a client will ask: Why me? Some employees can’t believe that they acquired any knowledge so critical to their employer that it justifies stringent intellectual property restrictions . Well the answer is: There are plenty of things can be highly confidential and proprietary, even the nooks and crannies of a muffin or the recipe for the coating on fried chicken. More commonly, the concern is about customer lists, unique methodologies or technical information.

Frank Steinberg of the New Jersey Employment Law Blog explains inevitable disclosure as a doctrine of trade secret law that proceeds from the premise that an ex-employee of one company who knows trade secrets, and takes a job with a competitor, simply will not will not be able to keep his mouth shut in his new job.

Dan Schwartz of the Connecticut Employment Blog commented on the muffin case with both humor and insight. He notes that the judge concluded, in the case of Mr. Botticella, that the disclosure of trade secrets would be inevitable.  Dan suggests that employers who seek to use the doctrine of “inevitable disclosure” should realize the limits of the doctrine, and use it carefully and sparingly.

All these gentlemen should be on the lookout for Todd Wilbur. The former journalist has a website and series of success books called “Top Secret Recipes: creating original clone recipes of America’s Favorite Foods.” We don’t know whether he found out the true secrets or did some “reverse engineering” in order to get close. Can you tell?
 

photo courtesy Wikimedia

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The other night I was watching an episode of “The Office.” The company of the title, Dundler Mifflin, had recently been acquired by a large corporation. Much to the horror of the DM employees, the new company sent an IT manager in to remove access to any questionable websites and social networking arenas, including Twitter and Facebook.

Apparently this is not just material for television. According to the National Law Journal, more than half of surveyed companies said they prohibit employees from visiting sites such as Twitter, Facebook and MySpace. In fact, the article says, 76 percent of companies are actually blocking employees' use of social networking.

It stands to reason that employers can prohibit activities not related to their work. Legally, employers have the right to institute such policies. However, company policy about such things should be done in a way that doesn’t humiliate employees or create resentment. After all, social media is here to stay, and can actually benefit companies. As Daniel Schwartz of the Connecticut Employment Law Blog says, developing a social media policy and practice should be part of many companies' overall strategy.

A Canadian woman might have fared better with these regulations in place. A recent Law.com post reported that the woman is fighting an insurance company's decision to cut her benefits after an insurance agent found photos of her vacationing, at a bar and at a party.

She posted them on Facebook.

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The New York Times recently ran an informative article about NBC’s late night television woes. Low ratings and pressure from affiliates have made NBC move Jay Leno from 10 pm to 11:35 pm, thereby bumping Conan O’Brien’s The Tonight Show to 12:05 am (actually, wouldn’t that be tomorrow?)

Mr. O’Brien issued a respectful but witty statement expressing his thoughts and disappointment. He also remarked on the speculation that a rival network is wooing him. But the Times suggests that O'Brien's contract with NBC includes a non-compete clause that could prevent him from jumping to another network.

Time to call in the lawyers.

As an attorney, I don’t practice in entertainment law but I find the story raises some interesting general contract issues. Of course, the terms of the contract are not public, so I can only draw some general inferences. Mr. O’Brien signed a contract with NBC to take over The Tonight Show. According to the Times, although the contract did not specifically state that the show will begin at 11:30 pm, for 60 years it has immediately followed the local nightly news. In order for O'Brien to extricate himself from the contract, he would have to show that the time change constitutes a breach. Or, he could leave and possibly breach the contract.

The article states that NBC executives are confident they have not breached Mr. O’Brien’s contract, since he still will be the host of The Tonight Show.

What does this story teach us about contracts? First, a decision to breach a contract is usually a business decision, not a moral one. But, if a contract is enforceable, the breach is going to cost. The question is whether the cost of the breach is greater than the cost of faithfully carrying out the contract.

Secondly, a contractual right provides certain protections. But, it doesn’t protect individuals or a management team from sabotaging their own interests. As I’ve told clients numerous times, it may seem attractive to play “hardball,” but it’s not always the best alternative.

A case in point is the subplot mentioned in the article concerning the Fox network. I’m curious as to whether Fox, which, according to the article, has the contractual right to impose a new late-night program on its affiliates, would actually enforce its contractual right if that action jeopardized its long-term relationship with the affiliates. Those "Seinfeld" re-runs are reportedly very lucrative.

Finally, aggrieved employees should follow Mr. O’Brien’s example and take the high road. Don’t burn any bridges or publicly lash out at those you believe wronged you.

Incidentally, another Celebrity vs. Network case was put to bed today. The AP reports that New York's top court rejected Dan Rather's bid to reinstate his $70 million breach-of-contract lawsuit against CBS. Apparently, the court ruled that since he was paid, there was no breach of contract.

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According to Workforce Management, on December 19, Congress approved -- and the President signed -- a military spending bill that includes the extension of federal COBRA health insurance premium subsidies for unemployed workers.

The article states that the legislation will provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA 65% premium subsidy has run out. It also gives beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. The legislation also requires employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

COBRA is simple in concept but complex in implementation. More information can be found on the Department of Labor website, and of course, you can consult a professional.

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The Supreme Court has not been historically sympathetic to age discrimination cases. A recent New York Times editorial post stated that Congress is considering overturning a court ruling about age discrimination (Gross v. FBI Financial Services, Inc.) The ruling said that older workers must show that age was the decisive factor in their firing — not merely a contributing factor.

In 1967 Congress passed the Age Discrimination in Employment Act (ADEA), but the courts have made age discrimination suits very difficult. According to the Times piece, in 1993, in one of its most damaging rulings, the Court decided that if employers fire workers whose pension costs or salaries are high, they are not discriminating — even if the overwhelming number of people fired are older workers.

In our practice, we often see age discrimination that is subtle, with other factors involved. In those cases, we help negotiate a severance package and advise the client to move on.

What’s surprising is that there are still instances where it’s blatant and systemic (as pointed out by the Times article). Clients with the emotional -- and financial --resources may then choose to take a stand. But the burden of proof is on the plaintiff. The Supreme Court’s ruling in Gross v. FBI Financial Services (the case that Congress is thinking about reversing) said when there are mixed motives, the plaintiff has to prove age was the “but for” reason. This doesn’t work in terms of fairness and is inconsistent with the way other forms of discrimination are treated.

Interestingly, one blog reporting on this case rightly points out that the Supreme Court opinion states that Congress neglected to provide for a “mixed motive” analysis in age discrimination cases. On one level, as citizens, we might find it annoying that Congress and the Supreme Court are engaged in finger-pointing on an important issue. On another level, it shows that if Congress does act to reverse the rule in this case, it is not necessarily repudiating the Supreme Court but accepting the message that the law requires correction.

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In a previous post, we cautioned that employees should never use company-owned computer equipment for any personal communication, specifically e-mail messages, that they wish to remain confidential.

Now it’s going a step further.

According to a recent Law.com post, the same caution should apply to texting. The post, discusses the diffuculties of investigating cases of "textual harassment."  That there are such cases should give us pause.  But, Law.com goes on to state that the federal Stored Communications Act generally makes it unlawful for employers to intentionally access stored electronic communications such as e-mails and text messages without an employee's authorization or in excess of authorization. HOWEVER, if the employer is the provider of the communications service (Blackberry, cell phone, etc.) used to store the electronic communications, or the employee agrees, the employer may access such communications.

Employees need to remember that messages are not just stored in computers or handhelds, but may be in a server somewhere, maybe in a computing “cloud”. So we're going to reiterate our earlier warning: employees can't assume they have privacy rights when using an employer's facilities for email, and now, texting.

According to the post, employers need to be wary as well. The Electronic Communications Protection Act prohibits an employer from intercepting in-transit electronic communications unless the employee consents; the employer is a party to the communication; or the employer provides the electronic communications service and intercepting the messages is necessary to protect the employer's property rights.

We would add, as we have said before with resect to e-mail, make your electronic communications policy clear so that there is no ambuguity about employee's reasonable expectations of privacy (or, more importantly, the lack thereof).

These points simplify a complex area where law and technology converge but they provide a good starting point for coping with future developments in both. 

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Good news, bad news.

Bad news first:  Health officials are warning there will be another H1N1 virus outbreak this fall, potentially worse than last year’s.

Good news: The Center for Disease Control (CDC) anticipates that an H1N1 vaccine will be ready for distribution by mid-fall of 2009. Connecticut Governor Jodi Rell announced that she will be making the flu vaccines free for all Connecticut residents. (The Ridgefield VNA is already planning flu and pneumonia clinics).

If there is flu pandemic, big business will likely go on as usual. However, according to a national survey recently conducted by the Harvard School of Public Health, only one-third of businesses believe they can sustain operations without severe problems, if half their workforce were on sick leave for two weeks due to swine flu. Those in a smaller workplace should take precautions now.

Business Week suggests that employers update employee contact information and develop a “pandemic preparedness plan.” The Connecticut Employment Law Blog (CELB) offers specific steps from the CDC’s website, including encouraging sick workers to stay home, and providing flexible leave policies.

Employers should consider consulting an attorney for potential issues that may arise: what are the confidentiality guidelines for disclosing information about an employee’s health? How much sick leave do you have to provide?  We hope it would not be often needed but, in case of complications triggered by the flu, the Family and Medical Leave Act provides eligible employees with certain provisions of unpaid leave. CELB discusses other legal issues that may be of interest to employers.

According to the CDC, the best advice regarding H1N1 is relatively simple: cover your mouth when sneezing or coughing, wash hands well, and stay home when sick.
 

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Recently, the NY Labor and Employment Blog offered a description of changes to New York’s “mini-COBRA” law, along with other recently-passed employment legislation. The Governor’s Office notes that the legislation was passed so that New Yorkers can access the subsidy available under the Federal Stimulus Program.

We practice in New York, and health insurance coverage laws can be very confusing, so we offer a few comments that might be particularly helpful to both employers and employees.

First, a little background: Since the federal COBRA law covers only employers with 20 or more employees, some states have enacted similar laws to cover employers with 2-19 employees. By “cover” we mean, of course, that terminated employees (and some others) must be offered the opportunity to continue their health insurance coverage for a limited period, albeit without the employer subsidy (but now, for some, with a temporary federal “Stimulus” subsidy). Usually, the state laws mirror the federal law, although each state may have enacted one or two variations.

The New York amendment to its “mini-COBRA” law is one such variation. The amendment extends coverage from 18 months to 36 months following termination of employment. On the surface, this new extension to 36 months seems to cover all New York employers (and, thus, all terminated employees in New York). It does not.

As mentioned by The New York Labor and Employment Blog, New York’s law applies only to insured plans. Thus, New York’s law would not apply to the largest, self-insured employers. They continue to be covered only by the federal law, even in New York.

Although well-intended and undoubtedly of benefit to some individuals and their families, the New York provision may become a source of further confusion. Employers are required to provide notice to terminated employees in a detailed COBRA letter and with all the recent changes to COBRA, state and federal, it pays to review the letter carefully and to ask appropriate questions. 
 

The NY Labor and Employment Blog offers a detailed description of these changes, along with other recently passed legislation. 
 

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As indicated by a recent Employee Rights Post, firing an employee on trumped-up charges in retaliation for filing discrimination charges is a definite no-no.

The story illustrates the importance of context. For example, New York and Connecticut are both “at will” states. This means that employees can be fired at any time for any reason, even “trumped up” reasons. But, there are always exceptions, prohibited discrimination being one of the biggest, and retaliation being another.

When employer and employee are covered by non-discrimination laws (not all are), the firing can’t be for a discriminatory reason. And, even if the firing is for a seemingly legitimate reason, it can’t be in retaliation for filing discrimination charges.

Retaliation occurs when the employee has already made a complaint about some kind of discrimination and the employer takes an adverse action, such as firing the employee. Retaliation can also involve actions other than firing, such as demotion, unfavorable assignments and general harassment.

To be clear, an employee can still be fired or transferred for legitimate reasons. But, as suggested by Ellen Simon, those reasons will need to stand up to scrutiny because of the context - - a pending discrimination complaint.

Note, too, that the original discrimination claims can be dismissed while the retaliation claim survives.
 
 

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We’vecautioned about e-mail before. The New Jersey Employment Law Blog recently posted an interesting court decision that involved a number of issues, among them whether the attorney-client privilege trumps employer policies.

In the case, Stengart v. Loving Care Agency, Inc., an employee used a company issued laptop to send an email to her attorney through a personal, web-based email account. Could the employer access and review those communications if they’re found on the computer's hard drive? In broader terms, does a company's electronic communications policy trump the attorney-client privilege? In this particular case, no -- but it’s a close call.

We usually would not cover a New Jersey decision because it is not legal precedent for New York and Connecticut. And there is still another level of appeal available to the litigants.

However, what's really interesting is that the e-mails were on a web-based, password protected account. But, to quote the Court’s description of what happened:

"After plaintiff filed suit, the company extracted and created a forensic image of the hard drive from plaintiff's computer."

Isn’t technology great?

We liked two “lessons” articulated by Frank Steinberg of the NJLB, so we quote:

1. For everyone: despite the ruling of this case, never use company-owned computer equipment for any personal communication that you wish to remain confidential. Just don't. Period.

2. For companies: review your electronic communication policy right away. If there are ambiguities in it, clarify them. Courts are going to look not at your intent, but at the reasonable expectations of your employees based upon a variety of plausible readings of the policy.

Attorney Joe Wilson blogged that in a  New York case, an appellate court found that "a 'no personal use' policy combined with a policy allowing for employer monitoring and the employee's knowledge of these two policies diminishes any expectation of privacy." The court held that the emails were not protected, and were properly discoverable in litigation.

And what about the issue of the increasing number of telecommuters? How much privacy can one expect on a computer used for both personal and business purposes?

I'm sure we'll be hearing about many more cases, in many more jurisdictions.

Image:  Laptop; courtesy of Wikimedia Commons and Jon Sullivan

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A story about the reasonable accommodation for a dog was brought to my attention by the New Jersey Employment Law Blog.

The employer accommodated the disabled employee with the service dog, but did not accommodate the dog with non-skip strips on the floor. A court disagreed with the employer. NJELB rightly points out that this is new: an accommodation for an accommodation.

But here’s my perspective: was the dog serving the role of the “canary in the coal mine”? Apart from any accommodation, was it in the employer’s own self interest to eliminate the condition that was probably also unsafe for humans?

The case is from Montana, far from our usual coverage area. But employers everywhere should be cautious about overlooking their own self-interests and look for the win-win.
 

Image:  Suzi Q, a certified service dog, working in snow in Finland - - also far from our usual coverage area, but it’s a nice photo.  Courtesy Wikimedia

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The Ridgefield area has unfortunately not been immune to the recession, and our office has seen an increase in requests for consultations from employees working in either Connecticut or New York who have been laid off and believe their employers did not appropriately respect their rights.

 Fortunately, several of these disputes are successfully resolved with just a letter. It’s great for the employee and, actually, great for the employer too. Who needs protracted disputes while trying to survive in a tough economy?

 But, to those who are thinking of dispensing with legal advice and writing your own letters, “Don’t try this at home.” When there is a potential dispute, it’s imperative to get both the content and tone right, and that takes expertise. Threats of legal action rarely intimidate a party who has access to competent counsel. What’s even worse is making empty or ill-informed threats about non-existent rights that go nowhere.

 Really good “lawyer letters” do not threaten. A good letter educates the reader as to the specific nature of the rights being asserted on behalf of the client. The tone, whether conciliatory or firm, must always convey a professional respect for the other side and a willingness to work to resolve the issues.

 Sometimes, it can be done with a short letter. Sometimes circumstances require a detailed description of the facts. And, sometimes it works… really well.

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The recession has understandably caused a significant increase in the number of people, in Ridgefield and beyond, seeking counsel about employment-related issues, especially severance agreements and COBRA.

COBRA, of course, is the program that mandates that certain discontinuing employees be offered the opportunity to continue health insurance coverage for a limited period of time. Recent changes in COBRA premium subsidies have been enacted as part of the federal economic stimulus program.

I’ve found some interesting information in the Connecticut Employment Law Blog (CELB), one of my favorite sites. Recent CELB posts offer valuable online resources, primarily for employers but also for employees and other lawyers (like us) who counsel individuals and smaller employers.

Two recent posts on CELB discuss: (1) the penalties and other reasons why employers may want to get active in planning for changes to COBRA: Sounding the Alarm Bells: Three Reasons Why Most Employers Should Get Their Act Together on the COBRA Subsidy Provisions; and (2) resources to help employers meet the April 18, 2009, deadline to provide certain notices: COBRA Changes Are Here: Do You Have An Action Plan?

An earlier post pointed to online sites with general information about employment law, including sites featuring an “employee-oriented” perspective: Looking for Other Employment Law Resources? Look Up The "Top 100" Employment Law Blogs.

A still earlier post featured and pointed to resources available online from the Connecticut Department of Labor: Four for...General HR Knowledge for Employers from the Connecticut Department of Labor. These include discussions of federal and state Family Medical Leave Acts, an updated FAQ: site, a site to obtain posters and guide books and an “Employer’s Guide to Unemployment Compensation.”

Links available on the CELB posts take you right to the resources being discussed.

My thanks to Attorney Daniel Schwartz, author of CELB, for alerting us to these valuable resources.

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Most employees in Connecticut and New York are not offered contracts and are hired as “employees at will.” That means their employment can be terminated at any time, for any reason, provided that antidiscrimination statutes are not violated. However, even if hired as an employee at will, a new hire may be offered agreements that are legally binding, such as, non-compete agreements, confidentiality agreements, agreements as to ownership of intellectual property rights.

And, some employees, primarily executive, managerial and professional employees, are offered comprehensive employment contracts. These contracts vary so much it is difficult to identify “what you should look for.” Typically, the contract will have a definite term, provisions for terminating the contract for cause or not for cause, compensation, duties and responsibilities (by incorporating a position description) and provisions governing confidentiality and intellectual property rights. You may be asked to give up the right to sue and to submit any disputes to arbitration. The contract could include many, many other provisions covering specific jobs in specific industries.

So, the short answer to your questions is: if you sign any type of agreement relating to your employment, you are always better off reviewing it first with an attorney of your choice.

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If you’ve been laid off and offered a severance package, you have probably also been given 21 or 45 days to consider the package. First, use the time well. Here are some general principles:

Severance packages are generally negotiable. But, the extent to which you can negotiate varies quite a bit. Employers are not required to offer the same package to everyone as long as they don’t violate federal, state or even local antidiscrimination laws. 

Many employers will negotiate because they want something before you leave. They want you to give up your right to sue them for anything in the past or present. They may also want non-compete and confidentiality agreements if you are not covered by similar agreements signed at hiring.     

If you ask for a better package, you are technically rejecting the offered package and the employer may withdraw it. Your severance package probably also advises that you have the option to review it with your own attorney. That’s good advice; take advantage of that option. If you try to improve on the package, you will probably be better off negotiating through an attorney who practices employment law.

Image: US Whig Poster showing unemployment during the Panic of 1837, Wikipedia Commons.

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This blog, as we’ve mentioned before, straddles the worlds of law (more particularly, litigation) and management. Our presumption is that powerful lessons and insights are available where they intersect.

Today, we discuss a Law.com article that hardly deals with legal issues and, instead is focused on management issues, more particularly the impact of how layoffs are handled on morale. The article is by Melanie A. Klinghoffer, a writer for Legal Times  and an attorney (“There’s a Better Way to Lay Off Employees”).

(There is discussion of the legal risks of layoffs in a recent post on the Connecticut Employment Law Blog by Daniel Schwartz, Reducing Risks in a Reduction in Force – Is There a Perfect Solution.)

With a focus on management issues, Ms Klinghoffer counsels that the better way to layoff employees involves a plan that incorporates three parts:

(1) provide sensitivity coaching for staff executing the downsizing, (2) develop a well-structured transition program for employees leaving the organization, and (3) carry out an internal reassurance and motivation program for remaining employees.

I recommend the article itself for elaboration and discussion of these elements. 

In my prior life before joining the Bar, I experienced layoffs from both sides: helping to plan them (when they were uncommon, if not unheard of in the company in question) and having been laid off. There is nothing pleasant about either side. I empathize, therefore, with the personal story that introduces the Law.com article. 

As mentioned, the emphasis is on management issues: layoffs can damage the morale of the remaining employees but the damage can be contained and minimized by careful planning, sensitivity and appropriate transition strategies. Not all of the specific suggestions will be applicable in all cases but in appropriate circumstances most make good sense.

Strictly speaking, the article is off-topic for us because the “better practices” identified in it are not drawn from the world of litigation. On the other hand, the article clearly identifies “better practices” so why quibble about the source. Besides, costly, avoidable litigation is always a possibility when layoffs are handled in something less than the better way.

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Last week the New Jersey Employment Law Blog discussed an amusing and interesting article about an Austrian company that would hire only people born under certain signs of the Zodiac (“What’s Your Sign? Really? You’re Hired”).

At first, I smiled and forgot about the post. But, then I thought about it a little.

NJELB was kinder than I might have been by observing hat the policy was not irrational. It was backed up by a statistical correlation. I might have pointed out that a statistical correlation establishes no cause and effect relationship. So, while not irrational, the policy was based on faulty reasoning. On the other hand, I would agree with NJELB that if the policy does not discriminate against a protected class and reflects the company’s business judgment (poor or otherwise), then the company would have every right to implement that policy here in the U.S.

That somewhat lengthy introduction leads to my point: As attorneys we are often in the position of counseling disgruntled employees that there is no law against quirky or even poor management. Often consultations are extended simply because it takes some time to draw out of the facts to distinguish between actionable discrimination and merely annoying, even counter-productive supervisory practices. In the interest of full disclosure, in the distant past I have had, as you might have guessed, first-hand experience with that kind of business judgment

Quirky management and arbitrariness, however, do not entirely escape judgment. The marketplace has a way of imposing its own judgment.

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Daniel Schwartz’s Connecticut Employment Law Blog, which often has interesting, thought-provoking posts, reports that the New York Yankees have considered adding non-disparagement clauses in future contracts for managers and coaches (“Yankees Mull Non-Disparagement Clauses, but What Does One Look Like?”). Of course, the Yankees’ thinking was obviously a reaction to the Joe Torre book that has received recent media attention. CELB provides some examples of what a non-disparagement clause, in an employment or a severance agreement, might look like.

Here are the thoughts (or questions that popped into my mind: truth is a defense to a claim of defamation, is it also a defense to a claim of disparagement? Is one free to publish disparaging truths? Is there such a thing as a qualified privilege to disparage if the disparaging comments were published in the course of managerial duties?

Especially intriguing: the mutual non-disparagement clause. That would preclude bad references (but an easier approach would be to limit disclosure to confirmation of employment and dates of service). Can you commit disparagement by simply commenting publicly that your new shortstop (or sales manager) is a whole lot better than your old one? Or, by saying that a pitcher (or technology officer) is simply getting old?

Going beyond CELB’s discussion of what a disparagement clause looks like, I’m wondering what disparagement litigation looks like. It is obviously a breach of contract action. But, that leaves open the question of what constitutes disparagement.

For our blog readers, we would counsel to stay away from non-disparagement (but not necessarily confidentiality, non-compete or non-disclosure) clauses unless the circumstances make it absolutely necessary.  High profile organizations with ample resources, like the Yankees, might have to consider them.  But, in most other circumstances, interpretation and enforcement would seem to be a bigger problem than the disparagement itself.

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An article in Law.com provides a clear and concise analysis of the possible impact of the new administration on immigration while advising diligence and compliance for the present (“How Will Obama Administration Impact Immigration?”). The article is by Elena Park who, according to the bio posted with the article, heads the immigration practice at Cozen, O’Connor, a large national law firm.

In keeping with the focus of this blog, we emphasize that if there is any area where business clients would want to stay away from litigation and follow “best practices”, it is in the employment of foreign workers. We have commented before on the narrow path that employers must walk between non-compliance and over-zealous enforcement, for example, here. Ms. Park expresses the dilemma faced by employers as follows:

Employers are feeling the pressure of government scrutiny for potentially hiring unlawful workers, while having to avoid discrimination claims for over-zealously limiting jobs to U.S. employees.

Among the advice offered in the article: Verify - complete I-9 employment verification forms for all new employees; “Document, document, document” – any employment verification issues; follow the same employment verification procedures for all employees.

Looking ahead, the article describes future reform of immigration laws under the new administration that may include legalization of currently undocumented workers, increase in H-1B numbers to allow more hiring of skilled foreign workers, continued worksite enforcement, greater border security and other changes. Recognizing that these predictions are speculative, the article points to statements by the new President (while campaigning) as evidence that immigration is not likely to remain on the back burner.

The focus of this blog is not political so I won’t comment on the pros or cons of these predictions. I am in agreement with this article, however, to the extent that it advises employers to remain diligent to comply with existing law and stay tuned for a possibly more manageable legal environment in the future.

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This blog occupies a niche straddling the legal profession and general business management. Thus, today we find connections between two articles or posts, one addressing management issues from the small business section of the New York Times and the other addressing employment litigation issues from a the New Jersey Employment Law Blog.

The Times gives us as an example of “making lemons into lemonade” (“A Business Forced to Shrink May Be Stronger” by Paul B. Brown). The premise is stated in the title.   The article identifies certain advantages to a business from staying small: less bureaucracy, greater engagement, easier to understand where people fit in and people believe in the company. The article also gives suggestions on ways to get stronger while staying small: outsource low-impact functions, focus on only profitable clients, stay flexible and change the business model when competition changes.

The “lemons and lemonade” part comes in because staying small may, in fact, be forced on a business by the declining economy, which is the lemon part. Using the bitter experience to get stronger is the sweet, lemonade part. Incidentally, I first encountered the lemon and lemonade metaphor many, many years ago in advice columns be either Ann Landers and Dear Abby (or both, being twins, they thought alike). So, a metaphor that old is on its way to becoming a cliché but there is always an element of truth that creates clichés.

The reminder about the lemonade cliché or metaphor caused me to read a little differently the recent post about the ADAA in the NJ Blog (“2009 Starts with New Challenges for Employers” by Frank Steinberg). The ADAA is the Americans with Disabilities Amendments Act, signed into law this past fall by President Bush and effective with the new year.

Citing other writers, the post concisely identifies key issues raised by the amendments to the ADA: Congress, in passing the amendments, reversed a series of Supreme Court decisions that had limited the definition of “disability” and, therefore, limited the ability of employees to sue for damages claiming discrimination in employment because of disability. The author (and other commentators cited in the post), raises the fear that an enormous percentage of employees can now claim to be disabled.

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AbaJournal.com reported recently that the median employment discrimination verdict rose 70 percent in 2007 to $252,000 from $147,000 in 2006. The post also reports that employers won only 38 percent of the cases that went to the jury.   

The post was by Jill Schachner Chanen was based on a report by Jury Verdict Research (“Employing the Law.”)

Although these numbers are interesting and somewhat useful, neither employers nor employees should depend too much on them. Many jury verdicts are reduced at some point after trial - - either by settlement to avoid a costly, time-consuming appeal or by the Court for various legal reasons. And, the amount of the verdict gives no indication of what the client actually recovered after costs.

Sometimes clients, hurt and embittered by the controversy, are confused when they are counseled to settle a case. Having hired attorneys to litigate, they wonder why don’t we want to litigate to the end? Lawyers are probably well-aware of the issues but for our non-lawyer readers: there are a number good reasons but one very good one is to exert a degree of control and achieve a degree of certainty as to what will be recovered by the client (when plaintiff) or what the litigation will cost (when defendant).

Some cases will inevitably have to go to trial but for most, despite the apparent uptick in the size of verdicts, it’s still far better to look to settle the case.

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First, thanks to our readers for your patience during our suspension of posts while we addressed some technical issues (I lost some key data, recovered it but it took days to finish the task).

We normally don’t comment on politics but we came across a very interesting post by Michael P. Masanka, a Texas attorney (“Employment Law Lessons From the Presidential Campaign”). We saw the story on Law.com but the byline is from Texas Lawyer.

The presidential campaign is one of those events or happenings with which we are so much saturated that we begin to see in them whatever it is we are predisposed to see. Luckily, the author was predisposed to see in the recent campaign some interesting and useful insights for his area of practice, employment law.

Mr. Maasanka draws six lessons and each is interestingly presented and illustrated with appropriate anecdotes from the campaign and selected cases. I refer the reader to the post for most of the lessons but one, in particular, caught my attention. The lesson is “Pick a narrative and stick with it -- Don't pile.” The lesson is illustrated with a litigation case as follows:

Employers who go with clarity stand a better chance of coming out on top. I was working on an appeal of a case where the employer, at trial, opened with, "We fired the plaintiff, because he was a poor performer," but the employer ended it with, "Not only was he a poor performer but he may have stolen from the company as well." Too big a shift.

As is often the case in this blog, we would like to take the same lesson, draw it back and apply it well before the employer winds up in litigation. We think the lesson applies in day-to-day management whether of employees or the business in general. A good story and clarity build credibility which comes in handy when delivering a message about performance - - long before performance has become an issue in litigation.

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Wal-Mart, which is always in the news anyway, appears to be especially so with regard to Wage-Hour controversies. This time, ABAJournal.com reports that it has reached a $54.3 million dollar settlement over alleged violations involving “off-the-clock” work” (“Wal-Mart Agrees to $54.3 M Settlement of Minn. Wage-Hour Suit”). A couple of prior cases are cited in the article.

This brings up some long-last memories. When I was working for $1.00 an hour minimum wage (a long, long time ago and definitely not for Wal-Mart) it irked me that we had to clean up off the clock. I could have made another $1.00 or at least $0.50 each time. Anyway, it was accepted practice at the time that we would clean up “off the clock” and I never really complained.

As we have before, we won’t directly comment on Wal-Mart’s case because, frankly, we don’t know anything about it. However, ABAJournal.com reports, and all managers and business owners should, again, note that each violation (2,000,000 of them) carried a potential fine of $1,000 and that punitive damages were also on the table.

The best practice for any business, especially small ones without the resources to defend against major claims: be very, very careful about wage-hour compliance.

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A recent post on the Connecticut Employment Law Blog reports some useful information about the number of weeks of severance pay being provided by employers upon the termination of employment (“Separation Agreements: How Much Severance is Appropriate in Exchange for a Release?”). CELB provides references to its sources which are not repeated here to keep things brief.

Incidentally, I prefer the term “severance agreement” to “separation agreement” (even if not entirely correct) because the latter term makes me think of matrimonial actions. I’m sure some employment terminations are like divorces but let’s leave that metaphor alone.

We are asked by clients, when helping them to review their severance agreements, whether the severance pay being offered is adequate. That’s a question that is extremely difficult to answer because of the wide variations in size of company, industry practices, financial strength of the company, service with the company and, not least, other benefits and compensation being offered along with the salary continuation. For employees of a certain age, to cite just one example, age and service bridges to retirement can be valuable enhancements of the severance package.

I appreciate that CELB and the survey sponsors have provided some useful insight about general patterns with respect to severance pay. 

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Recently, two blog posts had some very good advice about e-mail in the context of litigation.

Daniel Schwartz in the Connecticut Employment Law Blog entitle his post, “You’ve Been Sued, What Phrases Are ‘Hot’ for Electronic Discovery Searches?”   ABAJournal.com, carried a post by Molly McDonough entitled “Things You Should Never Put in an E-mail.”

Here is, for me, the simple version of Mr. Schwartz’ advice:

don't put something in an e-mail that you wouldn't want your mother to see on the front page of the New York Times six months later.

Here is the essence of Ms. McDonough’s advice, quoting a court reporter, Ron Sylvester:

My wife says you should never put anything in a company e-mail that you don’t want to be shown to 12 strangers on a big movie screen.

How could I say it any better? Thus, I merely make a modest effort to distribute the message further.

The message is on the surface merely defensive. In the context of litigation, it says that through discovery, things you put in e-mail will come back to hurt your case. Or, in a more general context, it says e-mail can come back to really embarrass you. More positively, careful attention to what and how you communicate, by e-mail in this case but in any medium generally, can only be beneficial to the business and all connected with it.

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New regulations have been issued for the Family Medical Leave Act (FMLA). Law.com reports on them and predicts more confusion and litigation in a post by Tresa Baldas of the National Law Journal entitled (“New FMLA Rules Will Create More Confusion and Litigation, Attorneys Warn”). 

Daniel Schwartz in the Connecticut Employment Law Blog takes a somewhat more positive approach and in two recent posts has reported on “What Employers Need to Know About the New FMLA Regulations - Part I” and “ What Employers Need to Know About the New FMLA Regulations - Part II”).

We have to admit to not having had the opportunity to study the new regulations and refer you to the above posts until we can catch up a little. 

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In an “Update Post,” Daniel Schwartz in the Connecticut Employment Law Blog comments, among a number of items, on an article suggesting that performance reviews should be eliminated and a more recent one suggesting that performance reviews should not be eliminated but “owned” by managers.

I have a long history with performance reviews, starting, of course, as a corporate employee and manager being reviewed; then, as human resources professional and as manager doing reviews; and now, as an attorney using them to help resolve emploument disputes.

The last experience has been the most consistently interesting. In litigation, performance reviews can cut either way. They can be a rich source of discovery for employee plaintiffs - - practically demonstrating inconsistencies and discrimination. On the other hand, reviews can embody an effective defense for management showing business justification for whatever adverse employment action may be at issue.

For managers, “ownership” may be the right metaphor. Eliminating the reviews may mean eliminating the hard evidence that justifies management’s actions with regard to employment issues (both positive and negative). 

On the other hand, if the reviews do exist, managers are going to “own” them one way or the other. Either the reviews establish clarity of communications on performance-related issues. Or, the reviews become a permanent record of management’s lack of clarity on those same issues.

And, it’s not just a matter of taking a defensive posture toward litigation. Long before that it’s a matter of establishing credibility with employees and communicating clearly on issues of performance.

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As if in counterpoint to our last post, about avoiding litigation through greater professionalism is managing workers, ABAJournal.com, in a post by Martha Neil, reports that workers laid off from failing investments banks are suing their former employer (“More Laid-Off Workers, More Work-Related Lawsuits”).

The post includes an observation that to protect themselves companies are requiring terminated employees to sign releases. Actually, that’s old news for major employers: as part of a severance agreement (with or without generous severance benefits), employers expect a release. 

The “takeaway” here covers both sides of the equation: (1) smaller employers (more likely to be among our readers) should consider carefully thought-out severance agreements when laying off workers; and (2) corporate mid-to-senior-level professionals (also among our readers) should review their severance agreement with an attorney- - sometimes negotiations can improve them a little but, just as important, you should be aware of the rights you are signing away.

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A short post in the New Jersey Employment Law Blog succinctly makes the point that while a deteriorating economy means belt-tightening, layoffs and severance agreements, obtaining advice before taking action is the one way to avoid making a difficult situation even worse.

I’d like to elaborate on that point and comment on a related but different aspect of the economy. There is no doubt that survival is the overriding business objective when the economy deteriorates. The real question though is whether the actions being taken to “survive” might actually accelerate the demise of the business. 

The business will not only survive but may actually come out stronger if (1) costly and demoralizing litigation and controversies are avoided while (2) building habits that establish a more professional, effective style of management towards workers and the business in general. 

On a different aspect of the deteriorating economy: there has not been sufficient time for all the government-generated liquidity and rescue funds to make any kind of impact. Without being over-optimistic, there is a good chance better times may be coming sooner than widely expected. Our businesses and professional practices need to exercise patience, professionalism and perseverance to position themselves for better times ahead.

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ABAJournal.com reports that more individuals are evading the “Nanny Tax,” that is, they are failing to pay payroll taxes for domestic employees (“More Individuals Evade ‘Nanny Tax,’ a Risky Strategy in a Tough Economy,” posted by Martha Nell). The data on “Nanny Tax” evasion was first reported by the Wall Street Journal.

The requirement, summarized by ABAJournal.com and WSJ is as follows:

Those who pay a household employee more than $1,600 annually are required to pay Social Security and Medicare taxes, federal and state unemployment insurance and other taxes on their behalf . . .

Domestic workers seem to present the greatest temptation but small businesses in general, for any type of workers, may be tempted to rationalize away their payroll tax-compliance obligations.  The "Nanny Tax" designation is used when applied to domestic workers but the concept is the same when applied to any small business.  In either case, It’s a bad idea. Or as ABAJournal.com put it, it’s a “risky strategy.”

And, equally bad is the idea of rationalizing that the workers (domestic or otherwise) are not employees but “independent contractors.” As we have said quite often before: the determination of whether a worker is an independent contractor is very fact-dependent and can be challenged in litigation, whether with a disgruntled ex-employee or the IRS.

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When a former employee is to be a witness in litigation involving the employer, issues are raised which need to be resolved carefully and thoughtfully. Law.com, in an In-House Counsel post by Linda L. Listrom of The Corporate Counselor, has covered the issues and developed useful guidelines for attorneys acting as in-house counsel for the employer (“When Your Witness Is a Former Employee”). We offer some additional insights for the smaller business employer, especially one too small to employ in-house counsel.

The guidelines offered by Ms. Listrom are summarized in her conclusion:

A former employee can be a pivotal witness for your company. Fortunately, the ethics rules permit you to help your former employee by alleviating some of the hardships of testifying. If a former employee wants counsel, you can provide it. If he wants to be compensated for his time, you can do that, as long as the fee is reasonable. But you cannot discourage him from cooperating with your opposing counsel, if he chooses to do so.

The analysis presented by the post is primarily for in-house lawyers since it is focused on the interpretation and application of ethical rules for lawyers, relying on the ABA Model Rules. Here are a few thoughts that may be of interest to the nonlawyers who may be running a small business (as well as the attorneys who advise them):

• The situation where a former employee is to be a witness highlights the problem of “burning bridges,” a problem we usually associate as the employee’s, not the employer’s. An employee who is “forced out’ by harassing tactics, rather than leaving on good terms may present a whole new set of issues. The better management practice is to be aware of the possibility and always take the high road when it comes to terminations and performance management.
• The Law.com post notes that it is proper to compensate former employees for their time acting as witnesses, within certain limits. If you use a severance agreement, and you probably should, you should discuss with counsel the possibility of including these provisions. They cost nothing unless you really are in litigation. Then, cooperation may be priceless.
•  If the business has no in-house counsel, it is all the more important to contact to get advice from outside counsel on how to handle the former employee witness. In fact, as reflected in the Law.com post, it is primarily the lawyer’s role to contact former witnesses, even employers. Conversations about the case between a manager and a former employer are not likely to be privileged and are likely to be the proper subject of cross-examination,

Common sense tells us that if the employer business is involved in litigation, it is no stretch to anticipate that an employee may be a witness.  That's why it is important to understand the issues presented and the appropriate ways to deal with the situation.

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Out partners having taken turns being “under the weather” these last two weeks we refer you to two interesting posts without comment. We will be back real soon offering out own perspectives.

The first, a little bit “tongue in cheek” but appropriate for the day is from Law.com, by Tresa Baldas,  “Employment Attorneys’ Halloween Advice: Beware Tarzan, Toga’s and Naughty Nurses.”   The second, very serious, is from ABAJournal.com, by Martha Nell, “Dell Sued Over Claimed ‘Concrete Ceiling.’

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A recent Law.com post explored retaliation claims from both the employer and the employee side. The post was entitled “Lawyers Urge Employers to Shift Strategy Toward Retaliation Claims” and was by Tresa Baldas of The National Law Journal.

By “retaliation claims’ we mean claims made by employees under anti-discrimination statutes claiming that after they complained of discrimination the employer retaliated. Law.com reports that retaliation claims rose by 18% in 2008 and reached record levels.

According to the post, employer-side attorneys are urging employers to fight back against an “onslaught’ of retaliation claims. They stress that “shoddy” work or “unethical”behavior should not be ignored just because a retaliation suit could follow. Law.com also reports that employers are wary of retaliation claims, especially after one court held that reprisals such as changes in shifts and exclusion form meetings as retaliation.

But, according to Law.com, employee-rights attorneys stress that retaliation claims are even more difficult for employees. They note that employers have gotten “very clever” at retaliation. Law.com quotes one employment attorney, Gary Phelan, summing it all up as a matter of timing and comparison:

Retaliation is all about timing. You complain, and then compare what happened before and what happened after. It makes juries angry and it lends itself to punitive damages.

We agree. In this blog, we take the perspective of the small business owner or manager and try to derive better management practices from developments in the world of business litigation (within which we include employment matters). From that perspective, documentation of “shoddy” work and “unethical” behavior should have begun long before a retaliation complaint was made. In that case, documentation and disciplinary action related to  “shoddy” work would merely have continued as before.  It should not be seen as a new practice, possibly a reprisal, in response to a discrimination complaint.

And, if trying to employ “better” practices, an employer just wouldn’t think of resorting to petty actions such as arbitrary shift changes or exclusion from meetings.   If the employer needs to make some legitimate changes in working conditions that might be perceived as “retaliation,” the employer should consult an attorney.

In legal blogs, the suggestion “consult an attorney” can sometimes come across as mere self-promotion. But, remember the situation we’re discussing is that a discrimination complaint has already been made. The complaint needs to be taken seriously. At that stage, you absolutely should be consulting an attorney and reviewing proposed changes in the complainant’s working conditions.

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A recent decision by New York’s highest court offers many practical lessons while ruling that “Executives” can be considered “Employees” for the purpose of determining whether certain deductions from wages are permissible under New York’s Labor Law.

The case, Pachter v. Bernard Hodes Group, Inc., 10 N.Y.3d 609, 861 N.Y.S.2d 246 (2008) was brought to our attention by the New York Law Digest, edited by David D. Siegel, No. 586 (October 2008) of the New York State Bar Association,

At a minimum, we draw the following lessons from the facts and the rulings of the Court:

• Regardless of a long-standing relationship or the advantageous nature of the relationship, some employees will sue;

• Employee classifications subject to legal exemptions, such as “Executive” in this case, can be successfully challenged;

• The Court can “giveth” with one hand, and “taketh away” with the other;

• A written contract might prevent litigation or reduce the trouble and expense.

In brief, the facts are that an employee for a marketing organization chose to be compensated on a commission basis rather than straight salary. The Court noted that the arrangement, going on for over a decade, allowed the employee to earn $100,000 to $200,000 per year instead of the $40,000 to $75,000 available on straight salary. Certainly, that can be considered an advantage to the employee. 

Nonetheless, when the employee left, the employee sued claiming that certain deductions taken from the commissions, although the employee was aware of them at all times, are not permitted under New York’s Labor Law. The company countered that the employee was an “Executive” as defined under the Labor Law and exempt from the prohibition against the deductions.

The Court of Appeals had two somewhat technical legal questions before it: (a) is an executive entitled to the protections extended to employees in Article 6 of the Labor Law; and (b) in the absence of a written agreement, when is a commission “earned” and, therefore, becomes “wages” subject to the Labor Law’s prohibition against the deductions.

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A post by Frank Steinberg in the New Jersey Employment Law Blog provides some good advice about severance agreements (“More Terminations, More Severance Agreements”).

Although we do not practice in New Jersey, the advice is generally applicable in other jurisdictions.

I recommend the entire post and will not try to summarize it because a lot would be lost. As a highlight, however, I like the following point: if you are going to hire an attorney, do so from the start because employers will tend to be inflexible if an attorney is introduced into the middle of negotiations. I would add only: act quickly before your time to review the severance agreement is about to expire.

Image: George Washington Bridge from Wikipedia Commons.

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The Connecticut Employment Law Blog, in a post by Daniel Schwartz, offered some good advice for employers managing through the present economic downturn (“Five Laws and Issues Employers Should Think About In This Credit Crunch and Economic Crisis”).

For small businesses, I would particularly emphasize the points concerning layoffs. We’ve mentioned from time to time that anti-discrimination laws at the state and local levels apply to some fairly small businesses with a minimal number of employees. We’ve also mentioned that businesses should not take too much comfort in thinking that they employ independent contractors rather than employees because independent contractors can be redefined to employees during litigation. We’ve also mentioned that there is not too much comfort in the “employment at will” policies of states like New York and Connecticut because anti-discrimination laws trump the employment at will policies.

During an economic downturn, businesses may be tempted to cut staff quickly without much planning. We suggest a more careful approach and the CELB post provides sound advice for proceeding with appropriate care.

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The title of a recent Legal Blog Watch post highlighted bleak prospects for plaintiffs bringing employment cases in federal court: “Plaintiffs Win Only 15 Percent of Employment-Related Cases in Federal Court.” The study was by the American Constitution Society. LBW reports that in many instances, employment cases do not survive a summary judgment motion (a disposition without trial because there are no material facts in dispute). According to the study, prospects on appeal are also bleak.

Whether or not the numbers generated by this particular study are precisely accurate, we believe the study generally reflects reality. Our experience and perusal of cases in the federal reporters tends to confirm that it is tough (but not impossible) to win employment cases in federal court (or any court). 

LBW suggests there may now be a tendency to bring cases in state court or a resort to mediation. The success rate in state courts is not reported.

In our experience, many employment disputes are settled before a lawsuit is even filed and, then, many are settled before the litigation runs its course. Litigation is expensive win or lose. Negotiation, with or without mediation, may be just as important a factor reducing the cases brought in federal courts than forum shopping in state courts.  

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The Connecticut Employment Law Blog, a favorite of mine, has recently posted an informative summary of the ADA Amendments Act of 2008 which, CELB reports, is due to be signed into law any day. The ADA is the Americans With Disabilities Act. The post is entitled “What Employers Need to Know About the ADA Amendments Act of 2008.” 

I will not duplicate the thoughtful summary and comments on CELB. However, I would like to add one point for our small business clients.

The general tendency of the amendments, as noted by CELB, is to shift litigation from threshold issues, such as whether the plaintiff is “disabled” to liability issues, such as whether the plaintiff actually was the victim of discrimination. I would add, however, that one threshold issue remains largely unchanged: whether the employer is covered under the ACT.

Coverage begins with 15 or more employees, which, of course, includes many small businesses. In addition, small businesses that think the ADA does not apply but employ independent contractors should be very careful. Whether an individual is an employee or independent contractor can depend on the specific facts and circumstances of each case. And, the independent contractor status can be challenged in litigation.

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We commented in an earlier post on a Wall Street Journal Law Blog report that a law firm was being audited by the United States Labor Department for giving “improper” advice to its client.

Now, Law.com, in a post by Mark Hamblett reports that the audit has been quietly dropped (“Labor Department Drops Green Card Audit of Nation’s Largest Immigration Law Firm”). 

It may come as a surprise that a government agency presumes to tell any law firm what advice it can give its client. As pointed out in the prior post, the immigration laws and regulations are complex and the Labor Department believed then that its interpretation of the regulation raised an appropriate issue. In any case, that interpretation has, for now, been dropped. 

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The Connecticut Employment Law Blog often has informative and interesting posts and one of its most recent by Daniel Schwartz reports that the EEOC has issued performance/conduct FAQ’s to help employers and employees understand the ADA (“EEOC Issues FAQs for Employees and Employers on Performance/Conduct Issues Under the ADA”). CELB also provides a link to the guidelines which is reproduced here.

The CELB post also provides some informative commentary.

The FAQs provide an important resource. The premise of our blog is that practices that avoid litigation, especially in employment, also have a positive impact on the effectiveness of the organization as a workplace and as a going concern. In addition to the specific guidelines and hypotheticals, employers and employees should note the overall pattern: well understood standards that are applied even-handedly help establish a semi-safe harbor from litigation and can’t hurt performance.

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Our thanks to the Immigration Law Answers Blog   which, in a post by Robert A. Kraft brought to our attention the reversal of LPGA of its English-Only rule (“LPGA Reverses Decision On English-Only Golfers”). We commented on the rule in aprior post.

Actually, as we understood it, the rule was not an English-Only rule but a requirement that golfers speak English for their victory speech and to communicate with the media.

In any case, our take remains the same: in the interest of avoiding litigation and implementing effective management practices, businesses considering any similar rule should carefully and closely scrutinize the “business necessity” and be sure it is genuine.

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We are happy to see that the New Jersey Employment Law Blog is back “on the air.”   Welcome back.

The first post on its return, by Frank Steinberg, involves a New Jersey case.  It provides management lesson as valid under New York or Connecticut law as for New Jersey (“Back to Work – And Read Those Contracts!”).

The arbitration clause of a contract was enforced against an employee who did not have a command of English. Although the outcome was favorable for the employer, a quote from NJELB, in the original bold face, sums up the lesson for employers:

If employees do not have the language skills and ask you to translate the agreement for them, do it thoroughly or you run the risk of having a court refuse to enforce your agreement.

We second the advice and go one step further: do not wait to be asked. The better management practice is to offer a translation if your employee’s command of English is limited to be sure that the employee can understand the contract terms. 

Image: Babylonian Contract-tablet, inscribed in the reign of Hammurabi.  Photograph by Messrs Mansell & Co.; Wikipedia Commons.

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Last week, a story by Martha Neil in ABAJournal.com reported that the LPGA’s rule requiring English fluency is likely to be tested in court (“Court Battle Likely Over LPGA’s New English-Fluency Rule”). Legal issues always seem to be more interesting when they involve well-known entertainment or sports organizations. But, the same issues are often important to not-so-well-known organizations as well.

Our reader/client base being small and growing businesses, the question arises for them: should they consider a similar rule? I believe the essence of the issue was expressed by ABA Journal’s quotation of attorney Steven Jacobs who represents plaintiffs in suits contesting English-only rules in workplaces:

While it is permissible to require workers to speak English for reasons of safety or efficiency, such a rule can also be used to discriminate on the basis of national origin.

An LPGA representative is also quoted and states that LPGA not trying to control what language the LPGA players speak to other players or their caddies. Rather, LPGA’s requirement is that players be able to give a victory speech in English and speak to their playing partners and the media in English. While LPGA’s position might be challenged in court, please note that they at least have a business-related reason for their rule.

Small business owners and managers do not need to involve their businesses in protracted and expensive lawsuits while also needlessly restricting their pool of potentially productive employees or contractors. English-fluency rules may very well make sense and be entirely defensible in some situations. The obvious example that comes to mind is telephone customer service - - it seems reasonable that English-speaking customers be able to reach someone who speaks their language. 

I understand that there are people who feel strongly about both sides of the English-only issue and I don’t mean to challenge anyone’s convictions. However, if the goal is to implement management practices to avoid litigation, if possible, or effectively manage it if not, the “business reason” should be scrutinized closely before imposing a language requirement on employees and contractors.

Image: Green with two bunkers, taken by member or employee of U.S. Air Force, Wikipedia Commons.

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In an earlier post, we commented on a Law.com story about a discrimination suit based on pregnancy that went to trial. Now, the verdict is in and it is for the plaintiffs. The Law.com report on the verdict (“Ex-Associate, Paralegal Win Damages From Former Firm”) is again by Vesselin Mitev of the New YorkLaw Journal.

The jury actually found against the associates’ claim based on pregnancy but awarded her $16,000-plus in damages based on unequal pay. The other plaintiff, a paralegal, was awarded $700,00-plus, including $500,000 in punitive damages. The defense attorney – no surprise – is quoted as stating that the punitive damages were in excess of damages allowed by federal statute and that the verdict was inconsistent. In other words, the appeal is already being outlined.

Coincidentally, Law.com also reports that the American Bar Association (“ABA”) has issued guidelines on gender bias in law firms. That story (“ABA Releases Guide on Gender Bias in Firms”) is by Maris McQuilken of the Legal Times. Lest we be misled by a grammatical quirk in the title of the story, the guidelines released by the ABA are not about how to be biased but on how to eliminate bias.

According to the Law.com post, one of many tips in the guide is the following:

be as specific as possible during performance reviews by focusing on certain skills and results as opposed to relying on broad generalizations.

That seems to be good advice and not just for law firms but for any organization.   We look forward to reviewing the entire guide. We’ve noted before, for example here, that performance reviews can be problematic avoidance of discrimination lawsuits.

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The Philadelphia Immigration Lawyer Blog  in a recent post (U.S. Passport Card Now an Accepted List A I-9 Document"), brought to our attention  a USCIS announcement that the U.S. Passport Card is now a “List A” document that can be used to verify identity and authorization to work for I-9 purposes . Think of the Passport Card as a short-form passport for travel in North America, the Caribbean and Bermuda.

We have commented on the I-9 process in a prior post since there should be an interest in staying out of one of the most unpleasant forms of business litigation: compliance litigation with the U.S. government. We made and reiterate the short and simple suggestion that employers should take care to comply with I-9 rules and also, to avoid charges of discrimination, take care not to go beyond them. Staying up to speed on changes such as this is one small way to help ensure compliance.

Image from Wikipedia Commons.

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Late last week, Law.com reported that a trial had begun in the case of a former law firm associate and a former legal assistant who claim a law firm discriminated against them because they were pregnant. The story (“At trial, Lawyer Claims Former Firm Cut Her Salary Over Pregnancy”) was by Vesselin Mitev of the New York Law Journal. The case is Todaro v. Siegel Fenchel & Peddy, CV-04-2939 (E.D.N.Y.).

The Law.com post provides a good summary of the opening stages of the trial. We note several interesting aspects to this story. 

First, it is interesting that we often see stories of law firms getting themselves into discrimination suits. One reason, of course, could be that the plaintiffs are themselves lawyers and prone to sue. Another is that law firm managers typically are too busy being successful as lawyers to be conscious of (or to give priority to) their roles as managers. It would probably be wise not to use the partial validity of the first reason as an excuse to dismiss the second.

Second, the story serves as a reminder to all types of businesses that pregnancy can be the basis of a discrimination suit. As they used to say in the military: be guided accordingly.

Third, although it would be naïve to believe all civil cases should settle bfore trial, when another case goes to trial, we are reminded of the advantages of settlements over litigated resolution of disputes. That point was discussed recently ("Another Reason to Settle") and more extensively in the Connecticut Employment Law Blog in a post by Daniel Schwartz (“Estimating the Costs of Litigation; Parallel Stories Illustrate Difficulty of Predicting Costs and Outcome of Litigation”). I may not be long before our litigation practice is re-designated “Dispute Resolution” because that’s what’s important: resolving the dispute.

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This is the second installment of our comments generated by  Collins v. Cohen Pontani Lieberman & Pavane, S.D.N.Y.,  04 CV 8983(KMW)(MHD, a decision of the Southern District of New York, and the Law.com article that brought it to our attention. In the first installment, we commented on one of the legal issues that caught our attention. We now offer comments on some of the facts, as presented in the Court’s opinion.

First, please note that the decision was on a motion for summary judgment and, therefore, the alleged facts have not been proven. The Court merely determined whether the factual allegations were sufficient to present issues for trial. Here are a few of those allegations.

• Plaintiff was informed at the employment interview that lack of technical background would not bar promotion to partner but lack of technical degree was later cited as a reason for not promoting plaintiff;

• Plaintiff was informed at the employment interview that business origination affects compensation but not eligibility for promotion to partner - - insufficient business origination was cited as a reason for not promoting plaintiff;

• Defendant did not investigate plaintiff’s sex discrimination complaint;

• A partner’s e-mail notes a disconnect between a favorable performance review and the lack of increased compensation;

I acknowledge that the risks of litigation and the managerial issues that we identify on this blog may not be very important to organizations large enough and with sufficient resources to be successful despite them. Organizations whose resources are more limited and that may be looking for an edge may have more to consider. Also, although this case involved a law firm, I think the principles are general and I will discuss them as such, not in relation to the one firm with the misfortune to be the defendant in this case.

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A recent federal court decision in a sex discrimination lawsuit was a partial victory for each of the two parties but a great opportunity for those of us who wish to learn from it.

Actually, a partial victory in a discrimination case is often a better outcome for the plaintiff than for the defendant because at least some claims go forward. And, that’s the reality reflected in the headline of the story in Law.com reporting on the case: “Associate’s Sex Discrimination Claims Proceed Against Law Firm” by Anthony Lin of the National Law Journal. The case is Collins v. Cohen Pontani Lieberman & Pavane, S.D.N.Y.,  04 CV 8983(KMW)(MHD).  The story was also mentioned on the Sui Generis- a New York Blog.

The 53-page decision by Hon. Kimba M. Wood, Chief U.S. District Judge for the Southern District of New York, systematically analyzed the defendant’s summary judgment motion and granted it in part but denied it in part. In the process, the decision provides so much material for comment that we will cover it in two installments and even then we will just touch on a few interesting points. This first installment will discuss one of the legal issues presented and a future second installment will have a few comments about the facts presented in the decision.

One of the more interesting legal issues presented in this case involved the “continuing violation doctrine.” That doctrine applies to “a series of separate acts that collectively constitute one ‘unlawful practice’” (Page 53 of the Decision.)  By contrast, discrete discriminatory acts, even if related, are not covered by the doctrine. The distinction is important because the appropriate statute of limitations will apply separately to each discrete act. The Court did note that time-barred discrete acts or incidents can be admissible as circumstantial evidence of the intent to discriminate but they cannot be independent bases for liability. (Page 18 of the Decision) 

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According to the Wikipedia entry, in Greek mythology Scylla and Charybdis were two sea monsters who were on opposite sides of the Strait of Messina between Sicily and Italy. They were located close enough to each other so that they posed an inescapable threat to passing sailors. Avoiding Charybdis meant passing too closely to Scylla and vice versa. Passing between them was one of Odysseus’ adventures in the Odyssey.

In the interest of full disclosure: my origins are from an island in the Strait of Messina. But, I am not related to either Scylla or Charybdis.

I was reminded of the story by a post in the blog of the Capitol Immigration Law Group, LLC concerning issuance of a revised Form I-9, Employment Eligibility Verification ("New I-9 Form Released"). Employers are required to complete and maintain an I-9 on file for all new employees. The CILG post provides useful information about the form and its most recent revision.

The thought came to my mind that employers need to navigate carefully between the monsters of Non-compliance and Over-zealousness.

Immigration is such a hot button topic that I’ll preface further remarks by mentioning that in this blog our perspective is legal and managerial, not political.

Right on the first page of the I-9 instructions is a box warning that it is illegal to discriminate because of national origin or citizenship. The same instruction warns against one of the most common discriminatory practices: employers cannot specify which documents they will accept.  

Employers’ focus, in the interest of compliance and avoidance of wasteful litigation or penalties, should be on learning the I-9 rules and implementing appropriate, non-discriminatory procedures but not going beyond the rules. If in doubt, consult an attorney. 

Image from Wikipedia Commons:Odysseus In Front of Scylla and Charybdis by Johann Heinrich Fussli.

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Two mortgage brokers in Pennsylvania might want to consult the Wikipedia entry on Pyrrhus of Epirus after their experience with arbitration and a federal court.

Law.com carries their story in a post by Gina Passarella (“Brokers’ Employment Suit Backfires, Defendant Awarded $1.6 million) of the Legal Intelligerncer. It is an interesting, well written story, about Field v. Gateway Funding, and we won’t go into details since the full story is available by clicking on the title or here.

Essentially, the brokers sued because they claimed the mortgage company infringed on their promised, exclusive sales territory. The case went to arbitration and they won well over $300,000. Problem: the defendant won too, on two claims that: (1) the brokers took advances they did not earn and (2) they provided confidential information when they went to work for a competitor. A federal court confirmed the arbitration award. The net award against the brokers: $1.6 million.  

A few general lessons:

1. The case illustrates the inherent uncertainty of litigation.

2. It is possible that the brokers knew they would be sued so they sued first but, in fact had to litigate. It is also possible the brokers should have had a better understanding or acceptance of their position before commencing litigation. We don’t have the actual back story.  But, it sure looks like if they had quit while ahead, they would have been way ahead.

3. The case illustrates the general nature of arbitration. It is a more efficient, less costly way to resolve disputes and mandatory under some contracts. But, once the arbitrator makes a decision, the courts will generally confirm it. Exceptions are very narrow and hard to get.

Clients will sometimes resist the suggestion to settle or drop a claim. They want a victory. But, a pyrrhic victory is a costly one.   

Image: Pyrrhus of Epirus, from Wikipedia Commons

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Employers concerned about getting workplace litigation under control are including waivers in the employment application process to limit the time within which workers may sue. That is the practice of a growing number of employers ("Waivers Limiting Workers' Time to Sue Draws Fire") according to a report in Law.com, by Tresa Baldas of the National Law Journal.

The Law.com report quotes employment attorneys who represent management as supporting the idea because employers are burdened by lengthy statutes of limitation, litigation is growing and the waivers provide a useful risk management tool. They note that so far some courts have upheld the waivers.

The report notes that attorneys who represent workers are anxious to obtain personnel files when a dispute is brought to them so that they can become aware of what waivers their clients might have signed.

I will preface my remarks with the acknowledgment that I have not seen the language of any actual waivers, it is not clear what causes of action can be waived (discrimination? sexual harassment?) and we have not seen the decisions that upheld the waivers.

However, conceptually the requirement that a prospective employee waive statutes of limitation in the application for employment is probably a bad idea. These waivers would seem to be products of unequal and unfair bargaining positions; there is a question whether the waivers can be knowing waivers if the employment applicant is without counsel; and there is an implication that the waivers seem to give a license for conduct that has public policy considerations. 

A qestion arises as to whether the waivers will reduce litigation or actually produce more litigation for employers.

Large employers may have the resources to work things out so that these waivers are enforceable and can continue to stand up to legal challenge.  Also, large employers can offer other inducements to make up for the recruiting disadvantage that may result. 

Employees should be wary of these waivers. 

Relatively smaller employers should probably wait to see whether and how the law develops to accommodate these waivers.  Their energies are better directed towards positive employment practices which help to avoid litigation and have the added benefit of creating a more productive working environment.     

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Last week Law.com reported, in an article by Alison Frankel of the American Lawyer (“Wal-Mart Loses $6.5 million Wage-and-Hour Class Action”) that Wal-Mart had lost a non-jury trial on complaints of violation of the Wage-Hour laws that resulted in an award of damages of $6.5 million. Law.com also reported that Wal-Mart was 0 for 3, in that, in the preceding several years it has lost two other trials, these with juries, resulting in damages of $172 million and $78 million. Appeals are pending in the latter two cases and planned in the current case, also according to Law.com. The alleged violations involved, apparently, failure to give employees rest breaks.

Normally, we do not comment on “big business.” What caught our attention was not so much the controversy and apparent hostility between Wal-Mart and the class-action bar. Both have the resources, apparently, to be formidable adversaries to each other. Nor was it Wal-Mart’s apparent willingness to accept the public relations consequences of losing these types of cases.

Rather, what caught our attention were several points about the composition of the damages that may be of interest to the attorneys and managers of businesses with much more modest resources:

• Damages accrued on each occurrence, each time there was no break; thus, the number of employees and the number of days multiplied to millions of alleged violations;
• On the table were compensatory damages, attorneys fees and punitive damages;
• After losing the federal case last week, these same allegations of Wage-Hour violations (whether or not employees were appropriately given breaks) will be the subject of state law litigation with potential for even more damages.

The Law.com article notes that not all the damages that were sought were actually awarded. That highlights the fact that the potential liabilities were even greater.

In short, the case serves as a reminder that violations of the Wage-Hour laws can be extremely serious because damages can escalate very rapidly. Business owners and managers should be aware of the potential for damages and pay careful attention to compliance.

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Conduct that amounts to quid pro quo sexual harassment and its potentially devastating liabilities are readily understood by most of our clients as conduct that is generally not inadvertent. They understand it as a forbidden bargain: employment for a sexual relationship.   

Conduct that creates a “hostile work environment,” however, might require a more active managerial approach to steer clear of liabilities that can be just as devastating.   

With that in mind, I recommend a post by Daniel A. Schwartz in the Connecticut Employment Law Blog discussing a recent Connecticut Appellate Court case in which the Court distinguishes and explains the difference between quid pro quo and “hostile work environment” sexual harassment (“Appellate Court Outlines Differences Again Between Quid Pro Quo and Hostile Work Environment Harassment”). 

The case, Griffin v. Yankee Silversmith, Ltd, is well summarized, discussed and available in full on the CT Employment Law post. I will not attempt to duplicate all that on this post.

I will note parenthetically, however, that the case involved a lawsuit against a business with one owner-shareholder, demonstrating that the issues under discussion are relevant to the broader business community and not only to “big business.”

The case under discussion technically turned on a pleading issue that might be instructive only to lawyers: whether or not quid pro quo harassment was complained of in the actual Complaint. However, the Court’s opinion and the CT Employment Law post will be helpful to both attorneys and managers who could use a better understanding of the distinction between the two types of sexual harassment, and that would be most of us.

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A law firm is being audited because it allegedly instructed its clients to contact the firm before hiring U.S. workers, according to a post by Dan Slater (“Do Lawyers Help Companies Find Reasons Not to Hire U.S. Workerson the Wall Street Journal Law Blog, citing a story in the Wall Street Journal by Nathan Koppel.”)

The audit was initiated, apparently, because the U.S. Department of Labor does not consider it proper for an employer to consult counsel before turning down a U.S. worker. when sponsoring a foreign national for permanent residence (“green card”). The issue is described more thoroughly in the LB post.

A quotation in the LB post from an immigration attorney caught our attention:

The audit, according to immigration lawyers, could deter companies from asking attorneys to help them decipher Labor Department rules. “Attorneys need to be involved in [the green-card] process,” said New York immigration lawyer Philip Kleiner. “It’s more complicated than tax work.”

Tax attorneys may argue Mr. Kleiner’s last point. But I think that a consensus is reachable: aspects of both Immigration Law and Tax Law can be complicated and the assistance of counsel is important to achieve compliance. 

Thus, the story raises a concern because the audit seems to discourage employers from seeking counsel when they most need it. Actually, the issue is more subtle than that because there are specific regulations governing the role of counsel in the process being audited and the audit is about whether there was compliance with these specific regulations.

For our business clients, the “lesson” from this story is simpler. Both Tax Law and Immigration Law have another aspect in common. In both, the complexities often (and we will concede, not always) arise when you seek the advantages or benefits of the laws. After all, many people file short-form 1040’s and the Tax Law is not that complicated for short-form filers. But, if you seek to benefit from a tax shelter, you should proceed cautiously and with the advice of counsel. 

Similarly, there are benefits to be gained for both employers and foreign nationals from the provisions of the Immigration Laws. But, the process can be complicated and, despite the audit described in the LB post, it is best to proceed with the advice of counsel.

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The New Jersey Employment Law Blog offers an amusing take on a case in which a female receptionist’s claim of sexual harassment failed when she took offense at being asked to get coffee for her supervisors (“Coffee Demand Fails to Brew Up Sexual Harassment Complaint for Female Receptionist”), 

Since the plaintiff is planning to appeal, we can assume the decision (and not the coffee) left a bitter after-taste.

What especially interests me about the case is the Court’s “Conclusion” at the end of its 14-page decision:

In sum, while the behavior of the Plaintiff’s supervisors and co-workers may have been rude, gauche or undesirable, their actions do not violate federal or state anti-discrimination laws.

 “Rude, gauche and undesirable” behavior is not good business, even when there is no liability.  Defending the case, regardless of the ultimate outcome, must have been costly. There is a lesson here which will be reinforced if the appeal turns out to be expensive.

In any case, I liked the NJEB’s blend (of serious commentary and humor, not coffee).

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At-Will employment is still the rule in New York, as its highest court, the Court of Appeals, reminded us ina decision handed down earlier this year. The decision, in Smalley v. Dreyfus Corp., 10 N.Y.3d 555, 853 N.Y.S.2d 270 (2008), is discussed in the New York State Bar Association’s New York Law Digest, No. 580 (April 2008), edited by David E. Siegel. 

At-Will employment means an employee may be fired for any reason or no reason, at any time. The At-Will concept may be trumped by violation of a statute, such as an anti discrimination statute. It may be trumped by a contract but not if the contract itself explicitly establishes the At-Will nature of the employment relationship. That was the situation in Smalley.    

Because the online version of the Digest is available only in a private area of the Bar’s website, we quote extensively from it here:

An attempt by the plaintiffs (after later being fired) to cast their claim in tort fails. The contract’s at-will employment is plain and rules the day, holds the Court in an opinion by Chief Judge Kaye, dismissing the plaintiffs’ complaint “in its entirety”. 

The tort the plaintiffs sought to allege was “fraudulent inducement to enter into and remain in the employment of” D.  More specifically the claim was that they were misled to believe that D would not merge with a certain other company, T. They said they took their jobs relying on that assurance, but a few years later such a merger did take place, and about half a year after that all the plaintiffs were fired. 

The Court distinguished a federal case applying New York law that was decided differently by the Second Circuit, Stewart v. Jackson & Nash, 976 F.2d 86 (1992). But, in Stewart the promise or representation alleged to be fraudulent concerned something that had occurred, not something that would or would not occur. Plaintiff, an environmental lawyer, took a job when told the employer had an environmental client. Again, the Digest:

She took the job only to learn that while D was still seeking the client, the client was not yet there. P got only “general litigation work”. When she was later terminated, she sued for damages and her claim – albeit at only the pleading stage - was sustained.

D’s promises in Stewart were “misstatements of present fact”, the Court explains, and her alleged injuries -

thwarting her professional objective to specialize in environmental law, and damaging her career potential – occurred well before plaintiff’s termination and were unrelated to it.

Stressing that the Court is neither adopting nor rejecting the Second Circuit’s reasoning, it observes that here in Smalley the plaintiffs have claimed no injury distinct from termination of their employment and that absent injury independent of termination, plaintiffs cannot recover damages for what is at bottom an alleged breach of contract in the guise of tort.

The Smalley case and the specific issue of whether a fired employee may sue in tort have relevance to two broad categories of our clients though, perhaps, on opposite sides of the issue: (1) business owners and managers; and (2) senior and mid-level corporate employees. For both, we offer the following points:

• A contract can either negate or establish and reinforce the At-Will nature of the employment relationship;

• A contract is not necessarily found in a single piece of paper labeled in capital letters: “CONTRACT;” rather, a contract can be found in employment manuals, offer letters, compensation plans, e-mails, course of dealing and in other ways consistent with basic principles of contract law;

• The Smalley case reaffirms the At-will rule in New York;

• However, the distinction that the Court made from the Stewart case serves as a caution that misrepresentations of present fact may leave the door open to a tort claim.

A tort claim, such as fraudulent inducement, depending on the specific facts, is more likely to put punitive damages and attorneys fees in play than a contract claim in New York. In Connecticut, another At-Will state where we practice, punitive damages are limited to attorneys’ fees but, similarly as in New York, more of a factor in a tort claim than a contract claim.

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The nature of an “adverse employment action” is discussed by Daniel Schwartz in the Connecticut Employment Blog (CEB) in a post entitled Court: Denial of Transfer Is Not Race Discrimination.  The post discusses a Connecticut District Court case, Charles v. State of Connecticut Judicial Branch, decided only a day or so ago (hence, no citation available yet), for which a link is provided in the CEB post.

In this case of alleged discrimination based on race, the Court decided a “truly” lateral transfer with “no significant changes in an employee’s conditions of employment” is not an adverse employment action. The decision still leaves open possibilities where the transfer is not “truly lateral” and where “significant changes” in employment conditions might be identified and argued. That’s a discussion for another case and another time.

The CEB post, after reviewing the case, makes two points: (1) that a small number of employees may sue for anything and (2) a good human resources practice should be about positive options for employee career paths, not just discipline and discharge.

Well said. We would add one other point: “good human resources practice” is not the concern of a specialized department of a large organization but of the management and principals of any organization of any size.   In the 16^th page of the 20 page decision, the Court reminds the parties that the issue in a discrimination case is whether an employer discriminated not whether the employer is “wise, shrewd, prudent or competent.” However, unwise, imprudent and incompetent actions are nothing to be proud of and, among other consequences, invite lawsuits.

For a fuller discussion of the case, we recommend the CEB post.

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Very few of our clients are billionaires. Actually, to our knowledge none of our clients are billionaires. We are not billionaires. It was not because of an immediate sense of identification, then, that a short piece in the Wall Street Journal Law Blog piqued our interest so much that our commentary far exceeds the length of the piece. “Not Your Father’s Employee Handbook” involves Sam Zell, identified as the billionaire owner of the company that publishes the LA Times. 

It seems that under Mr. Zell’s “auspices” (an ambiguous characterization by the Journal that could mean anything from “he was personally responsible” all the way to “he was barely aware of it but he owns the company and dropping the name of a known billionaire makes for a great hook”), the LA Times created a new Employee Handbook. This Handbook, according to the Journal, was of an unusual nature. It was one about which an (unidentified) recruiter said “I don’t think a lawyer got their hands on it and that’s fantastic.” It was a Handbook “laced with humor” and written in plain language but with “mistakes.”

My first reaction was that the root of “fantastic” is that same as that of “fantasy.” What would be truly fantastic, in any sense of the word, would be if that recruiter’s appendix had been removed and no doctors got their hands on it. Without any way of actually knowing, I’m betting lawyers did get their hands on the Handbook but there were other goals (that is, other than a strict defensive avoidance of liability) that shaped the final product. The succinct, breezy style of the Journal’s blog leaves a lot to be filled-n by our own reflections and thoughts.

Through the hazy recollection of my past association with large corporate organizations, I thought about the article a little more seriously. Mr. Zell, or his management, may have subordinated the legal purpose of their Handbook in order to emphasize motivational issues endemic to large, bureaucratic organizations. The writing style, laced with humor, served higher priorities and their “mistakes” might very well have been “tradeoffs.”

And, backed by billions, they could afford to risk the potential liabilities, perhaps merely a few million dollar settlements. They can also afford the legal defense to minimize their losses. Thus, they can afford to downplay the potential legal liabilities while emphasizing other aspects of the employment experience at the LA Times.

This is pure speculation. We have not seen the Handbook. Nor do we have any knowledge of the nature of the LA Times organization or their actual thinking in shaping their Handbook. 

But, somewhat like an ink blot test, the Journal’s story allows us to project into it our own concepts and ideas. Our blog covers developments in business litigation but with a focus on helping clients stay out litigation, if we can and manage it better, if we can’t. Towards that end, we try to derive from the litigation world recommended “best” or at least “better” practices suited to the small and growing businesses, real estate investors and non-profits (as well as professionals who serve them) that make up our intended readership. 

It is tempting to emulate the practices of billionaires with the thought of following their paths to success. But smaller to mid-sized businesses are not backed by billions, nor is it likely that they have passed through the stages of organizational growth that would engender the problems of organizational inertia and bureaucracy to which a larger, older organization may be exposed. We, and our readers, do deal with larger, unresponsive organizations, but for this article we are tending to our own gardens.

In summary, then, the LA Times may have had good reasons to give priority to factors other than avoidance of employment litigation in developing their Handbook. But, the best, or at least better, practice for the principals of smaller, growing organizations is to focus on their own real-world situation. As they grow and have a need to structure and systematize their employment practices, they are better off giving a high priority to avoidance of the potential liabilities of employment litigation. And, it follows that they are better off taking a more serious, straight and narrow approach to their Employment Handbooks. 

More specific comments about how much an organization needs to grow before needing one, what an Employment Handbook should contain and just what are the potential liabilities it addresses must await future postings. This one is long enough. 

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Partner Beverley Rogers led a lively discussion of Employment Law, primarily hiring practices, at the “Brown Bag Lunch” sponsored by the Ridgefield, CT Chamber of Commerce on Thursday, February 21. Our other partner, Angelo Tartaro, also attended and provided light assistance. The questions raised by attendees highlight issues of concern to the Ridgefield business organizations.

Our goal is to keep our clients and readers out of litigation, if possible. With that in mind, in leading the discussion Beverley did not dwell on technical distinctions and defenses such as the varying definitions of “employer” and “employee” under federal and state statutes and caselaw. Rather, the focus, as in this Blog, was on “best or at least better” practices of good management to avoid tangles of a legal dispute over hiring and other employment practices.

With that in mind, Beverley presented and discussed a series of questions that may and may not be asked at an employment interview. For example, an interviewer is asking for trouble when questions involve childcare arrangements but not whether a frequent travel schedule will be acceptable to the applicant. An interviewer should never ask whether an applicant has ever been arrested but it is perfectly acceptable to ask whether the applicant was ever convicted of a crime. Questions relating to sexual preference, religious practices, national origin (such as the derivation of your last name) have not place. Questions relating to whether the applicant can perform the essential functions of the position, with or without a reasonable accommodation, are acceptable. Of course, the interviewer should not suggest that a reasonable accommodation might be necessary; the applicant must request it. The examples discussed are too numerous to review here in detail; to download her handout, click here.

The attendees were very interested in how to handle a situation where the applicant volunteers information about a “forbidden subject.” The interviewer should state that the information is not appropriate to discuss any further and return the discussion to the essential functions of the position. And, the interviewer’s notes should not reflect any information about the inappropriate subject matter.

Beverley advised that notes of the interview should be kept separate from the job application. An attendee volunteered a humorous anecdote that reinforced the point. It seems the organization’s Human Resources auditors wanted to know why a notation of “W” was made an a job application. The implication was that the notation meant “White” or “Woman.” In fact, it denoted the “Western” division of the hiring organization. The better practice is not to have any notations that could be misinterpreted for a discriminatory purpose. Beverley presented and discussed a sample employment application from ____________________, which can be downloaded by clicking here.

Moving on from employment to other practices, Beverley explained that Connecticut and New York are still “employment at will” states in which an employee can be terminated for any reason but that protected classes of employees cannot be terminated for a discriminatory reason or under other circumstances covered by specific statutes or for specific conduct that is actionable under federal or state common law. An example of the latter was illustrated by one of our firm’s recent cases in which a client received a favorable settlement after suing an employer for defamation because he was wrongfully accused of stealing without an investigation.

In that case, an investigation was promised by the Employee Manual but the management largely ignored its manual. Attendees were very interested in Employee Manuals and the nuances of what they should or should not include as policies. That discussion was too extensive for this article but two general points stand out: (1) the better practice is to issue a manual and obtained a signed receipt when first issued and when updated; and (2) the manual does not do much good if actual practices deviate from those promised in the manual.

We may not be the most objective observers but we came away with the impression that the attendees found the event to be enjoyable, informative and topical.

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RIDGEFIELD PRESS

Dec 13, 2007
Business Update: 12/13/07

Rogers & Tartaro expanded law practice to immigration

Rogers & Tartaro, LLP, in Ridgefield has expanded its law practice to include services in immigration law for employers, families and individual clients.

Attorneys Beverley Rogers and Angelo D. Tartaro, the firm’s partners, said immigration law is a natural extension of their employment law practice and an opportunity to meet a growing and essential need.

Born in Italy and fluent in Italian, Mr. Tartaro emigrated to the United States with his parents when he was six years old. He graduated from Brooklyn College with a bachelor of arts in economics, and he holds an master of business administration from the NYU’s Stern School of Business.

He graduated magna cum laude from Pace University School of Law, where he was on the Law Review. He is a member of the American Immigration Lawyers Association, as well as the New York and Connecticut Bar Associations, and the Westchester County Bar Association.

Attorney Rogers, born in Brooklyn, is returning to college to earn a degree in foreign languages.

“Immigration is a dynamic area of law that can be as challenging and as complex as our tax laws,” she said. “Our secretary-paralegal was born in the Portuguese colony of Angola, Africa and speaks Portuguese and Spanish. Angelo speaks Italian. I thought it would be fun to round out our ‘United Nations’ law firm and become fluent in another language.”

Attorney Rogers received a bachelor of arts, cum laude, from Pace and a jurisprudence from Pace University School of Law. She is an active member of the Westchester Women’s Bar Association Judicial Screening Committee, and she is a member of the Connecticut Employment Lawyers Association and the New York Employment Lawyers Association.

She also serves on the Board of Directors of the Ridgefield Visiting Nurse Association and the Ridgefield Library. She is co-president of the Ridgefield Discovery Center.
With offices in Ridgefield and White Plains, Rogers & Tartaro, LLP, is a full service law firm specializing in business and not-for-profit law, commercial litigation, employment law, real estate and land use law, immigration law, and wills, trusts and probate.

 

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