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Virginia Supreme Court Limits Employers’ Ability To Enforce Post-Employment Non-Compete Agreements

theman6 — Sun, 11 Dec 2011 00:10:57 +0000

HOME PARAMOUNT PEST CONTROL COMPANIES, INC.,v.JUSTIN SHAFFER, ET AL.

Court of Appeals of Virginia.November 4, 2011.OPINION

JUSTICE WILLIAM C. MIMS.

In this appeal, we consider whether a “non-compete” provision in an employment agreement is overbroad and therefore unenforceable.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

Justin Shaffer was an employee of Home Paramount Pest Control Companies, Inc. (“Home Paramount”). In January 2009, he signed an employment agreement containing the following provision (“the Provision”):

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].

In July 2009, Shaffer resigned from Home Paramount. Soon thereafter and within the two-year period set forth in the Provision, he became employed by Connor’s Termite and Pest Control, Inc. (“Connor’s”).

In September 2009, Home Paramount filed an amended verified complaint asserting that Shaffer’s employment by Connor’s violated the Provision and alleging, among other things, breach of contract by Shaffer and tortious interference with contract by Connor’s. The defendants filed a plea in bar to these claims, asserting that the Provision is overbroad and therefore unenforceable. After an evidentiary hearing, the circuit court granted the plea in bar and dismissed the relevant counts of the amended complaint. The remaining counts then were nonsuited and we awarded Home Paramount this appeal.¹

II. ANALYSIS

The enforceability of a provision that restricts competition is a question of law that we review de novo. Omniplex World Servs. Corp. v. US Investigations Servs., Inc., 270 Va. 246, 249, 618 S.E.2d 340, 342 (2005). It is enforceable if it “is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.” Id. The employer bears the burden of proving each of these factors. Modern Env’ts, Inc. v. Stinnett, 263 Va. 491, 493, 561 S.E.2d 694, 695 (2002). When evaluating whether the employer has met that burden, we consider the “function, geographic scope, and duration” elements of the restriction. Simmons v. Miller, 261 Va. 561, 581, 544 S.E.2d 666, 678 (2001). These elements are “considered together” rather than “as three separate and distinct issues.” Id.

Home Paramount asserts that the circuit court erred by focusing on the language of the Provision prohibiting Shaffer from “engag[ing] indirectly or concern[ing] himself . . . in any manner whatsoever” in pest control “as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever.” By doing so, Home Paramount argues, the court took those words out of context and gave undue weight to the function element of the enforceability analysis to the exclusion of the geographic scope and duration elements. Home Paramount contends the geographic scope was relatively narrow and the duration was one commonly accepted for such provisions, so those elements compensate for the breadth of the function element, making the Provision as a whole no broader than necessary to protect its legitimate business interests. We disagree.

We have consistently assessed the function element of provisions that restrict competition by determining whether the prohibited activity is of the same type as that actually engaged in by the former employer. For example, in Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 389 S.E.2d 467 (1990), the employer was a medical equipment vendor. We upheld a provision that prohibited employees from “open[ing] or be[ing] employed by or act[ing] on behalf of any competitor of [the] [e]mployer which renders the same or similar services.” Id. at 370, 389 S.E.2d at 468. However, that provision included explicit language allowing employees to “work[] in the medical industry in some role which would not compete with the business” of the employer. Id. at 371, 389 S.E.2d at 468. We noted that “the former employees are not forbidden from working in anycapacity for a medical equipment company, or from selling any type of medical equipment. They are only prohibited `from working in the medical industry in some role which would . . . compete with the business’” of the employer. Id. at 373, 389 S.E.2d at 469 (emphasis in original).

We upheld a similar provision in Advanced Marine Enterprises, Inc. v. PRC Inc., 256 Va. 106, 501 S.E.2d 148 (1998). In that case, the employer provided marine engineering services and included in its employment agreement a provision prohibiting its employees from “rendering competing services to” any customer of the employer for whom the employee had performed services during the period of his employment. Id. at 111, 501 S.E.2d at 151. We noted that the provision “does not contain a blanket prohibition against working for a competitor. Instead, [it] merely prohibits an employee . . . from `rendering competing services to’” the former employer’s customers. Id. at 119, 501 S.E.2d at 155.

By contrast, we held that a broader provision was unenforceable in Simmons. It prohibited former employees from “directly or indirectly own[ing], manag[ing], control[ing], be[ing] employed by, participat[ing] in, or be[ing] connected in any manner with ownership, management, operation, or control of any business similar to the type of business conducted by” the former employer. 261 Va. at 580, 544 S.E.2d at 678. We concluded the provision was “considerably broader than” the former employer’s business activity, which was limited to the importation of a single, “particular brand of cigars grown and manufactured in the Canary Islands.” Id. at 581, 544 S.E.2d at 678.

Likewise, we held the provision to be unenforceable in Motion Control Systems, Inc. v. East, 262 Va. 33, 546 S.E.2d 424 (2001). That provision also prohibited any employee from “directly or indirectly own[ing], manag[ing], operat[ing], control[ing], be[ing] employed by, participat[ing] in, or be[ing] associated in any manner with the ownership, management, operation or control of any business similar to the type of business conducted by” the former employer, namely the “design[], manufacture[], [sale] or distribut[ion of] motors, motor drives or motor controls.” Id. at 36, 546 S.E.2d at 425. The functional limitation was too broad because the former employer dealt solely with specialized brushless motors. Id.at 37-38, 546 S.E.2d at 426.

In Omniplex World Services, we observed that valid provisions prohibit “an employee from engaging in activities that actually or potentially compete with the employee’s former employer.” 270 Va. at 249, 618 S.E.2d at 342 (emphasis added). But a former employee may find new employment with his former employer’s competitor in which he engages exclusively in activities that do not compete with the former employer. See Blue Ridge Anesthesia, 239 Va. at 373, 389 S.E.2d at 469 (noting the unenforceability of a provision prohibiting employment that competed with any branch of the former employer’s operations when the former employee had no connection to some of those branches). When a former employer seeks to prohibit its former employees from working for its competitors in any capacity, it must prove a legitimate business interest for doing so. Modern Env’ts, 263 Va. at 495, 561 S.E.2d at 696.

In this case, the Provision is akin to those we found unenforceable in Simmons andMotion Control. On its face, it prohibits Shaffer from working for Connor’s or any other business in the pest control industry in any capacity. It bars him from engaging even indirectly, or concerning himself in any manner whatsoever, in the pest control business, even as a passive stockholder of a publicly traded international conglomerate with a pest control subsidiary. The circuit court therefore did not err in requiring Home Paramount to prove it had a legitimate business interest in such a sweeping prohibition.

Home Paramount protests that this rule of law invites circuit courts to do what the court did in this case, to contemplate various “hypothetical job duties” including bookkeeping, vehicle maintenance, and janitorial services. But Home Paramount invited the circuit court to contemplate such hypotheticals when it drafted a provision that prohibits former employees from working for competitors in any capacity. Because Home Paramount did not confine the function element of the Provision to those activities it actually engaged in, it bore the burden of proving a legitimate business interest in prohibiting Shaffer from engaging in all reasonably conceivable activities while employed by a competitor.

Home Paramount also argues that the circuit court erred in failing to consider its evidence of Shaffer’s academic training and work experience — for example, that Shaffer had a bachelor’s degree in entomology and had no experience in bookkeeping, vehicle maintenance, or janitorial service. This evidence, Home Paramount contends, would have eliminated these hypothetical job duties from the scope of the court’s consideration. The argument that the scope of the function element could be altered by extrinsic and extraneous evidence to mean something narrower than its clear language is without merit. Home Paramount has not argued that the Provision is ambiguous and that recourse to parol evidence was required to interpret it. Home Paramount thus was limited to adducing evidence to prove that the language it chose furthered its legitimate business interests, did not unduly burden Shaffer’s ability to earn a living, and was not contrary to public policy. See Simmons, 261 Va. at 580-81, 544 S.E.2d at 678.

Although we weigh the function element of a provision that restricts competition together with its geographic scope and duration elements,² the clear overbreadth of the function here cannot be saved by narrow tailoring of geographic scope and duration. Accordingly, we will affirm the circuit court’s judgment that the Provision was overbroad and therefore unenforceable.

Citing Paramount Termite Control Co. v. Rector, 238 Va. 171, 380 S.E.2d 922 (1989),³Home Paramount also argues that “[i]t has been settled law for more than 20 years that similar language of Home Paramount’s non-compete agreement is not overly broad and is enforceable.” Home Paramount thereby suggests that the doctrine of stare decisis compels us to uphold the Provision in this case. We disagree.

Stare decisis “is not an inexorable command.” McDonald v. City of Chicago, 561 U.S. ___, 130 S.Ct. 3020, 3063 (2010) (Thomas, J., concurring) (quoting Lawrence v. Texas, 539 U.S. 558, 577 (2003)) (internal quotation marks omitted). It “was never meant to prevent a careful evolution of the law. Stare decisis, pushed to extremes, would mean the law, once stated by the courts, could never be changed by the courts.” Selected Risks Ins. Co. v. Dean, 233 Va. 260, 276, 355 S.E.2d 579, 588 (1987) (Poff, J., dissenting).

Without such change, we would be compelled to ignore our duty to develop the orderly evolution of the common law of this Commonwealth. Indeed, this Court’s obligation to reexamine critically its precedent . . . enhance[s] confidence in the judiciary and strengthen[s] the importance of stare decisis in our jurisprudence. Although we have only done so on rare occasions, we have not hesitated to reexamine our precedent in proper cases and overrule such precedent when warranted.

Nunnally v. Artis, 254 Va. 247, 253, 492 S.E.2d 126, 129 (1997). One condition warranting a departure from precedent is where the law has changed in the interval between the earlier precedent and the case before us. See Lentz v. Morris, 236 Va. 78, 81-82, 372 S.E.2d 608, 609-10 (1988). Then “[w]e have a duty . . . to acknowledge when our later decisions have presented an irreconcilable conflict with [the earlier] precedent.”Newman v. Erie Ins. Exch., 256 Va. 501, 509, 507 S.E.2d 348, 352-53 (1998).

We acknowledge that the language of the provision we upheld in Paramount Termite is identical to the Provision. However, we have incrementally clarified the law since that case was decided in 1989. In the intervening twenty-two years, we have gradually refined its application beginning with Blue Ridge Anesthesia and continuing through Advanced Marine Enterprises, Simmons, Motion Control Systems, and ultimately Omniplex World Services in 2005. Therefore, to the extent that Paramount Termite conflicts with any portion of our holding today, Paramount Termite is overruled.

Finally, Home Paramount argues the circuit court erred in failing to consider its evidence that Shaffer actually breached the Provision by soliciting its customers. However, the threshold question is whether the Provision is enforceable. Since the circuit court determined that the Provision cannot be enforced, the issue of its actual breach was not reached. To the extent that Home Paramount argues its evidence of actual solicitation proved it had a legitimate business interest in prohibiting Shaffer from engaging in the same activity for Connor’s that he engaged in during the course of his employment by Home Paramount, such evidence would have been relevant if the function element in the Provision had been confined to barring such activity. Because we have found the circuit court did not err in ruling the Provision unenforceable, Home Paramount’s evidence of Shaffer’s actual breach was not relevant.

III. CONCLUSION

For the foregoing reasons, we will affirm the judgment of the circuit court.

Affirmed.

Overview of FLSA

Marx and Lieberman, PLLC — Thu, 08 Dec 2011 20:26:40 +0000

The following language from Garner v. Chevron Phillips Chemical Company, 2011 WL 5967244 (S.D.Tex.) provides an excellent overview of the FLSA:

The FLSA mandates that employers pay overtime compensation for nonexempt employees.FN7 Rainey v. McWane, Inc., 314 Fed. Appx. 693, 694 (5th Cir. Mar.12, 2009), citing 29 U.S.C. § 207(a). The FLSA, 29 U.S.C. § 207(a)(1), generally requires an employer to pay employees who work more than forty hours per seven-day work week at a rate not less than one and one-half times the employee’s regular rate. Allen v. Coil Tubing Servs., LLC, Civ. A. No. H–08–3370, 2011 WL 4916003, *5 (S.D.Tex. Oct.17, 2011); Vela v. City of Houston, 276 F.3d 659, 666 (5th Cir.2001); Thibodeaux v. Executive Jet Intern., Inc., 328 F.3d 742, 749 (5th Cir.2003). Under 29 U.S.C. § 216(b), an employer who violates the FLSA shall be liable for “unpaid overtime compensation … and in an additional equal amount as liquidated damages.” Moreover any person who repeatedly or willfully violatesSection 206 or 207, relating to wages, shall be subject to a civil penalty not to exceed $1,100 for each such violation.” 29 U.S.C. § 216(e)(2).FN8

FN7. Section 207(a) does not apply to those “employed in bona fide executive, administrative, or professional capacity.” Rainey, 314 Fed. Appx. at 694–5, citing 29 U.S.C. § 213(a)(1). Exemption is narrowly construed against the employer, and the employer bears the burden of demonstrating that an employee is exempt. Tyler v. Union Oil Co. of Cal., 304 F.3d 379, 402 (5th Cir.2002), citing Dalheim v. KDFW–TV, 918 F.2d 1220, 1224 (5th Cir.1990). Whether an employee is exempt or not exempt under FLSA is mainly a fact issue determined by his salary and duties and applications of the factors in 29 C.F.R. § 541.200(a), but the ultimate decision is a question of law. Lott v. Howard Wilson Chrysler–Plymouth, Inc., 203 F.3d 326, 330–31 (5th Cir.2000); McKee v. CBF Corp., 299 Fed. Appx. 426, 429 (5th Cir. Nov.17, 2008). For discussion of exemptions see, e.g., Thibodeaux, 328 F.3d 742; Vela, 276 F.3d 659. There is no dispute in the instant case that Garner was a nonexempt employee.

FN8. Under FLSA, a violation is “willful” if the employer “ ‘either knew or showed reckless disregard for … whether its conduct was prohibited by the statute.’ ” Singer v. City of Waco, Tex., 324 F.3d 813, 821 (5th Cir.2002), quoting Reich v. Bay, Inc., 23 F.3d 110, 117 (5th Cir.1994),quoting McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). The plaintiff bears the burden of demonstrating that the FLSA violation was willful. Id.
Under 29 U.S.C. § 255(a), a cause of action for unpaid overtime under the statute “shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.”
Thus an employer who violates the FLSA is liable for liquidated damages equal to the unpaid overtime unless the court finds that the employer acted in good faith and had reasonable grounds to believe that his actions complied with the statute and therefore declines to award or reduces the amount of the liquidated damages.Stokes v. BWXT Pantex, LLC, 424 Fed. Appx. 324, 326 (5th Cir. May 4, 2011), citing29 U.S.C. § 260. The employer bears the burden of demonstrating that it acted in good faith to escape mandatory liquidated damages under the statute. Perez, 2011 WL 2672431, at *9, citing Singer v. City of Waco, Tex., 324 F.3d 813, 821 (5th Cir.2003), and Stokes v. BWXT Pantex, LLC, 424 Fed. Appx. at 326.

Plaintiffs are only entitled to overtime compensation for tasks of which the employer had actual or constructive knowledge that the employee was working.Newton v. City of Henderson, 47 F.3d 746, 748 (5th Cir.1995), citing Davis v. Good Lion, 792 F.2d 1274, 1276 (4th Cir.1986); Perez v. Guardian Equity management, LLC, 2011 WL 2672431, *9 (S.D.Tex. July 7, 2011). Constructive knowledge exists if an employer “exercising reasonable diligence” would become aware that an employee is working overtime. Von Friewalde v. Boeing Aerospace Operations, Inc., 339 Fed. Appx. 448, 455 (5th Cir.2009), citing Brennan v. Gen. Motors Acceptance Corp., 482 F.2d 825, 827 (5th Cir.1973). “ ‘An employer who is armed with [knowledge that an employee is working overtime] cannot stand idly by and allow an employee to perform overtime work without proper compensation, even if the employee does not make a claim for overtime compensation.’ ” Newton, 47 F.3d at 748 (If an employer knows its employee worked overtime, it must pay overtime wages “even if the employee does not make a claim for overtime compensation.”), quoting Forrester v. Roth’s I.G.A. Foodliner, Inc., 6346 F.2d 413, 414 (9th Cir.1981), and 29 C.F.R. § 785.15 (“Work not requested but suffered or permitted is work time.” FN9). Under 29 C.F.R. § 785.13, “[i]n all such cases it is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept benefits without compensating for them.” See also Prince v. MND Hospitality, Inc.,Civ. A. No. H–08–2617, 2009 WL 2170042, *7 (S.D.Tex. July 20, 2009); in accord,Reich v. Dept. of Conservation and Natural Res., State of Ala., 28 F.3d 1076 (11th Cir.1994).

FN9. Title 29 U.S.C. § 203 defines “employ” as including “to suffer or permit to work.”

*9 The employer bears the burden of exercising its control to ensure that overtime work is not performed if it is prohibited by the employer. 29 C.F.R. § 785.13. Reich v. Steward, 121 F.3d 400, 407 (8th Cir.1997) (“The employer who wishes no such work to be done has a duty to see it is not performed…. If the employer has the power and desire to prevent such work, he [or she] must make every effort to do so.”). Furthermore “[ a] n announcement by an employer that no overtime work will be permitted, or that overtime work will not be compensated unless authorized in advance, will not impair the employee’s right to compensation for work he is actually suffered or permitted to perform.” 29 C.F.R. § 778.316. “In all such cases it is the duty of management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.” 29 C.F.R. § 785.13.

Nevertheless, the plaintiff must show that the employer had actual or constructive knowledge that he was working overtime. If an employee fails to notify the employer or deliberately prevents the employer from gaining knowledge of his overtime work, the employer’s failure to pay overtime does not violate § 207. Von Friewalde, 339 Fed. Appx. at 455, citing Forrester, in which the appellate court affirmed the district court’s grant of summary judgment for the employer because the employee turned in time sheets that did not include the overtime hours and the employee did not demonstrate that the employer should have known about the overtime hours. In Newton, the court found that the employer could not have constructive knowledge of overtime when the employee never complained about or reported working overtime hours. Id., citing Newton, 47 F.3d at 748. InNewton the City required employees to have overtime hours approved before the work, but the plaintiff never asked for pre-approval nor recorded overtime hours on his time sheet, and there was no evidence that showed that the employer knew or should have known it was violating the FLSA. Id. See also discussion in Prince,2009 WL 2170042, *9.

Title 29 U.S.C. § 211(c) requires that the employer “make, keep and preserve such records of the persons employed by him and of the wages, hours, and other conditions of employment maintained by him.” As summarized in Lynch v. Jet Center of Dallas, LLC, Civ. A. No. 3:05–CV–2229–L, 2007 WL 211101, *5 (N.D.Tex. Jan.26, 2007),

Under the FLSA, “an employee who brings suit for unpaid overtime compensation bears the burden of proving, with definite and certain evidence, that he performed work for which he was not properly compensated.” Reeves v. International Telephone & Telegraph Co., 616 F.2d 1342, 1351 (5th Cir.1980),cert. denied, 449 U.S. 1077, 101 S.Ct. 857, 66 L.Ed.2d 800 … (1981), implicit overruling on other grounds recognized in Heidtman v. County of El Paso, 171 F.3d 1038, 1042 n. 4 (5th Cir.1999). Where an employer keeps incomplete or [in]accurate records, however, “an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.” In re Williams,298 F.3d 458, 465 (5th Cir.2002) ( citing Anderson v. Mt. Clemens Pottery Co.,328 U.S. 680, 687–88, 66 S.Ct. 1187, 90 L.Ed. 1515 … (1946) [superseded in part by statute on other grounds by The Portal–to–Portal Act, amending FLSA in 1947,29 U.S.C. § 251, et seq.]. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference to be drawn from the employee’s evidence. Anderson, 328 U.S. at 687–88. “If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.” Id. at 688.

*10 As stated by the Supreme Court, “The remedial nature of this statute and the great public policy which it embodies. militate against making [the plaintiff's burden] an impossible hurdle for the employee.” Anderson, 328 U.S. at 687. It is the employer’s duty to keep records of the employee’s wages, hours, and other conditions and practices of employment; the employer is in a superior position to know and produce most probative facts concerning the nature and amount of work performed and “[ e] mployees seldom keep such records themselves.” Id.Therefore if the employer fails to keep proper and accurate records and “the employee cannot offer convincing substitutes,”

[t]he solution is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer’s failure to keep proper records in conformity with his statutory duty; it would allow the employer to keep the benefits of an employee’s labors without paying due compensation as contemplated by the Fair Labor Standards Act. In such a situation we hold that an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference to be drawn from the employee’s evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.

Id. at 687–88.

“ ‘It is … a fundamental precept of the FLSA that an employee should not be denied [recovery] because proof of the number of hours worked is inexact or not perfectly accurate.’ ”). Perez, 2011 WL 2672431, *9, quoting Monroe v. FTS USA, LLC, 763 F.Supp.2d 979, 989 (W.D.Tenn.2011). “A plaintiff need not ‘prove each hour of overtime with unerring accuracy or certainty.’ ” Prince, 2009 WL 2170042, *6. “In the absence of rebuttal by defendants, plaintiffs’ recollection and estimates of hours worked are presumed to be correct.” Id., quoting Ting Yao Lin v. Hayashi Ya II, Inc., No. 08–CV–6071, 2009 WL 289653, *3 (S.D.N.Y. Jan.30, 2009) (finding plaintiffs’ initial burden was satisfied by affidavits based on the plaintiffs’ recollection describing the time spent performing various tasks for which they did not receive overtime compensation). Evidence can include plaintiff’s testimony as to when and how many overtime hours he worked, plaintiff’s affidavit to such, etc. Prince, 2009 WL 2170042, at *6.

The McDonnell Douglas evidentiary framework also applies to a claim of retaliation under the FLSA. Hagan v. Echostar Satellite, L.L.C., 529 F.3d 617, 624 (5th Cir.2008). The plaintiff must establish a prima facie case by demonstrating that he participated in a protected activity under the statute; (2) he suffered an adverse employment action; and (3) a causal link existed between the activity and the adverse action. Id. If he succeeds, the employer must articulate a legitimate, nondiscriminatory reason for its decision. The burden then shifts to the plaintiff to show that the proffered reason is a pretext for discrimination. Id. The ultimate question is whether the employer took the adverse action against the plaintiff because of his protected status. Id.

*11 Regarding an employee’s protected status, which is based on engaging in a protected activity as defined by 29 U.S.C. § 215(a) (3), it is unlawful for the employer “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee.” The Fifth Circuit recognized that an informal internal complaint can be a protected activity but it must be about a violation of the law; “not all abstract grumblings or vague expressions of discontent are actionable complaints.” Hagan, 529 F.3d at 626. The Supreme Court, in considering its language “filed any complaint” as well as the purpose and context of the statute, recently held that the anti-retaliation provision protects both oral and written complaints of a violation of the FLSA. Kasten v. Saint–Gobain Performance Plastics Corp., ––– U.S. ––––, 131 S.Ct. 1325, 179 L.Ed.2d 379 (2011). The complaint must also give fair notice to the employer: “To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.” Id. at 1335.

ADA: Qualification Standards; Disparate Impact

Marx and Lieberman, PLLC — Wed, 07 Dec 2011 19:48:35 +0000

the U.S. Equal Employment Opportunity Commission
EEOC Office of Legal Counsel staff members wrote the following letter to respond to a request for public comment from a federal agency or department. This letter is an informal discussion of the noted issue and does not constitute an official opinion of the Commission.

ADA: Qualification Standards; Disparate Impact

November 17, 2011

[ADDRESS]

Dear ____:

This is in response to your letter, dated October 9, 2009, and postmarked October 12, 2011, asking whether the Americans with Disabilities Act (ADA), as amended by the ADA Amendments Act of 2008 (ADAAA), prohibits the State of Tennessee from requiring students with learning disabilities to take “Gateway tests” or “end-of-course assessments” in order to receive their full high school diplomas. We responded to the same inquiry when we received it in December of 2010, by referring you to the Department of Education. Please find the earlier response attached.

In the event that you found our earlier response incomplete or were seeking additional clarification, however, we are responding to a statement in your letter that raises a concern under Title I of the ADA, 42 U.S.C. §§ 12101 et seq., which EEOC enforces. You correctly point out that some individuals cannot obtain a high school diploma, and therefore cannot obtain jobs requiring a high school diploma, because their learning disabilities caused them to perform inadequately on the end-of-course assessment.

Under the ADA, a qualification standard, test, or other selection criterion, such as a high school diploma requirement, that screens out an individual or a class of individuals on the basis of a disability must be job related for the position in question and consistent with business necessity. A qualification standard is job related and consistent with business necessity if it accurately measures the ability to perform the job’s essential functions (i.e. its fundamental duties). Even where a challenged qualification standard, test, or other selection criterion is job related and consistent with business necessity, if it screens out an individual on the basis of disability, an employer must also demonstrate that the standard or criterion cannot be met, and the job cannot be performed, with a reasonable accommodation. See 42 U.S.C. § 12112(b)(6); 29 C.F.R. §§ 1630.10, 1630.15(b) and (c); 29 C.F.R. pt. 1630, app §§ 1630.10, 1630.15(b) and (c).

Thus, if an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma.

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation. It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant. However, the employer is not required to prefer the applicant with a learning disability over other applicants who are better qualified.
We hope this information is helpful. This letter is an informal discussion of the issues you raised and should not be considered an official opinion of the EEOC.

Sincerely,

/s/
Aaron Konopasky
Attorney Advisor
ADA/GINA Policy Division

This page was last modified on December 1, 2011.

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Dodge’s Chicken To Pay $190,000 To Former Employee Fired After Seizures

Marx and Lieberman, PLLC — Wed, 07 Dec 2011 19:29:59 +0000

Dodge’s Chicken To Pay $190,000 To Former Employee Fired After Seizures.

HOT SPRINGS, Ark. – D&H Company, Dodge Brothers, Inc., and Giant Oil Company of Arkansas, Inc., doing business as Savings Station Dodge Stores and Dodge’s Chicken Store, will pay $190,000 to settle a disability lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.

In its lawsuit, the EEOC charged that the companies denied the store leader of their Dodge’s Chicken Store 631 in Hot Springs, Ark., a reasonable accommodation after she had seizures. Because her doctor restricted her from driving, she requested that the employer allow another employee to conduct daily competitor gasoline price surveys while she handled that employee’s in-store duties. The defendants denied her request for an accommodation and discharged her.

Denial of a reasonable accommodation to people with disabilities violates Title I of the Americans With Disabilities Act (ADA) as amended by the Americans With Disabilities Act Amendments Act of 2008 (ADAAA). The EEOC filed suit on Sept. 28, 2010, No. 6:10-cv-06072, in U.S. District Court for the Western District of Arkansas, Hot Springs Division after first attempting to reach a pre-litigation settlement through its conciliation process. This case was among the agency’s first lawsuits filed under the ADAAA.

EEOC General Counsel P. David Lopez noted that President Barack Obama recognized October 2011 as National Disability Employment Awareness Month.

“The Commission has devoted considerable attention to ensuring compliance with the ADA through the issuance of policy and public attention,” said Lopez. “As reflected by this case, however, the EEOC, when necessary, is prepared to litigate to ensure that persons with disabilities have fair opportunity for economic independence. Indeed, last fiscal year, the EEOC filed approximately 60 disability discrimination cases.”

Faye A. Williams, regional attorney for the EEOC’s Memphis District Office, which has jurisdiction over Arkansas, added, “Reasonable accommodations allow many individuals with disabilities to work. Employers should understand their obligation to provide an employee with a reasonable accommodation unless it poses an undue hardship. The EEOC remains committed to its responsibility in enforcing the ADA.”

In addition to monetary relief, the terms of the 30-month consent decree require that the defendants create a disability policy in its employee handbook for distribution to all its employees; provide for training under the ADA; maintain records of any disability complaints; provide reports to the EEOC; and post a notice to employees about the lawsuit that includes the EEOC’s contact information.

Defendants own and operate convenience stores and gas retailers in 10 states including Arkansas and Mississippi and collectively employ more than 700 people.

Congressional Bill Would Limit IT Worker Overtime Pay

Marx and Lieberman, PLLC — Wed, 07 Dec 2011 04:48:07 +0000

Congressional Bill Would Limit IT Worker Overtime Pay.

7 keys to slaying sexual harassment

Marx and Lieberman, PLLC — Wed, 07 Dec 2011 04:46:31 +0000

7 keys to slaying sexual harassment.

EEOC questions necessity of high school degree as employment requirement | Business Insurance

Marx and Lieberman, PLLC — Wed, 07 Dec 2011 04:43:05 +0000

EEOC questions necessity of high school degree as employment requirement | Business Insurance.

Proposals Pension Reform

Marx and Lieberman, PLLC — Thu, 01 Dec 2011 18:41:13 +0000

The Laura and John Arnold Foundation (LJAF) today released a policy solution paper, Creating a New Public Pension System, outlining effective alternatives to the current pension system that is putting enormous and increasing financial stress on state and local budgets across the nation.
Experts estimate the unfunded pension liabilities at $3 trillion for state-run plans. This figure does not include city-run plans, many of which are facing even more acute problems.
In the paper, LJAF’s Vice President for Public Accountability Initiatives, Dr. Josh McGee, highlights both the source of the problems as well as effective and sustainable solutions that transcend traditional policy perspectives.
“It is time for our political leaders to embrace their responsibility and address the acute underfunding of public employee benefits,” says Dr. McGee. “Failing to do so would lead to severe economic consequences for both public workers and taxpayers alike.”
The paper highlights three structural problems that must be addressed in order to create a sound, sustainable, and fair retirement savings system for public employees: unpredictable costs, incentive to underfund, and labor market distortions.
Dr. McGee also outlines key criteria for sound public pension reform: establishment of transparency with respect to the true cost of the benefits promised to public employees; a mandate that the state or municipality pay the full cost of accrued benefits each year; a mandate that the pension plan sponsor pay down the unfunded accrued liability over a reasonable time horizon; and an improvement of the generational equity, portability, and security of benefits for public employees.
LJAF actively seeks opportunities to invest in states and municipalities where leaders have a sincere interest in implementing fundamental reforms that fully address the cost, incentive, and labor market problems created by the current public pension system. LJAF welcomes the opportunity to be a resource to those leaders that share this goal.
The full paper can be found HERE.
The Laura and John Arnold Foundation is a private foundation that currently focuses on criminal justice, education, and public accountability reform. LJAF has offices in Houston and New York City.

Proposed EEOC ADEA Regulations

Marx and Lieberman, PLLC — Thu, 01 Dec 2011 18:06:57 +0000

On November 16, 2011, the Equal Employment Opportunity Commission (“EEOC”), by a 3-2 vote, approved a draft final regulation redefining the “reasonable factors other than age” (“RFOA”) defense under the Age Discrimination in Employment Act (“ADEA”). The proposed regulation has been sent to the Office of Management and Budget (“OMB”) for review and approval. One of many aspects of the revised regulations is that, if adopted, they make it easier for plaintiffs to pursue disparate impact claims under the ADEA. The draft final regulations can be accessed at http___edocket.access.gpo.gov_2010_2010-3126.

Business & Technology | Boeing, union seal deal for jets, jobs, peace | Seattle Times Newspaper

Marx and Lieberman, PLLC — Thu, 01 Dec 2011 12:35:07 +0000

Business & Technology | Boeing, union seal deal for jets, jobs, peace | Seattle Times Newspaper.

The landmark agreement unveiled Wednesday by the Machinists union and Boeing should secure thousands of local jobs, end the simmering NLRB lawsuit, and offer an unexpected Christmas bonus to start off a four-year contract extension.

Beyond all that, though, the surprise pact may signify a new era for two forces whose bitter adversarial relationship and recurring clashes have repeatedly shaken the region and endangered one of its economic cornerstones.